Exhibit 4.2I


 




 





MORTGAGE


 


NEW JERSEY NATURAL GAS COMPANY


 


To


 


BNY MIDWEST TRUST COMPANY,


As Trustee


 










 


THIRTY-FIRST SUPPLEMENTAL INDENTURE


 


Dated as of October 1, 2005


 










 


Supplemental to Indenture of Mortgage
and


Deed of Trust Dated April 1, 1952




 





 


	
  Prepared by:

  	
   

  	
  William M. Libit

  
	
   

  	
   

  	
  Chapman and
  Cutler LLP

  
	
   

  	
   

  	
  111 West Monroe
  Street

  
	
   

  	
   

  	
  Chicago,
  Illinois 60603

  



 





















 


MORTGAGE


 


THIRTY-FIRST SUPPLEMENTAL INDENTURE, dated as of October 1,
2005, 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, party of the first part, and BNY MIDWEST TRUST COMPANY,
a trust company organized and existing under the laws of the State of Illinois
(hereinafter called the “Trustee”),
having its principal office at 2 North LaSalle Street, Chicago, Illinois,
as Trustee under the Indenture of Mortgage and Deed of Trust hereinafter
mentioned, party of the second part.


 


WHEREAS, the Company has heretofore executed and
delivered to the Trustee its Indenture of Mortgage and Deed of Trust dated April 1,
1952 (hereinafter sometimes called the “Original 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 Company thereafter executed and delivered
to the Trustee its First Supplemental Indenture dated February 1, 1958,
its Second Supplemental Indenture dated December 1, 1960, its Third
Supplemental Indenture dated July 1, 1962, its Fourth Supplemental
Indenture dated September 1, 1962, its Fifth Supplemental Indenture dated December 1,
1963, its Sixth Supplemental Indenture dated June 1, 1966, its Seventh
Supplemental Indenture dated October 1, 1970, its Eighth Supplemental
Indenture dated May 1, 1975, its Ninth Supplemental Indenture dated February 1,
1977, its Tenth Supplemental Indenture dated as of September 1, 1980, its
Eleventh Supplemental Indenture dated as of September 1, 1983, its Twelfth
Supplemental Indenture dated as of August 1, 1984, its Thirteenth
Supplemental Indenture dated as of September 1, 1985, its Fourteenth
Supplemental Indenture dated as of May 1, 1986, its Fifteenth Supplemental
Indenture dated as of March 1, 1987, its Sixteenth Supplemental Indenture
dated as of December 1, 1987, its Seventeenth Supplemental Indenture dated
as of June 1, 1988, its Eighteenth Supplemental Indenture dated as of June 1,
1989, its Nineteenth Supplemental Indenture dated as of March 1, 1991, its
Twentieth Supplemental Indenture dated as of December 1, 1992, its
Twenty-First Supplemental Indenture dated as of August 1, 1993, its Twenty-Second
Supplemental Indenture dated as of October 1, 1993, its Twenty-Third
Supplemental Indenture dated as of August 15, 1994, its Twenty-Fourth
Supplemental Indenture dated as of October 1, 1994, its Twenty-Fifth
Supplemental Indenture dated as of July 15, 1995, its Twenty-Sixth
Supplemental Indenture dated as of October 1, 1995, its Twenty-Seventh
Supplemental Indenture dated as of September 1, 1997, its Twenty-Eighth
Supplemental Indenture dated as of January 1, 1998, its Twenty-Ninth
Supplemental Indenture dated as of April 1, 1998 and its Thirtieth
Supplemental Indenture dated as of December 1, 2003, supplementing and
amending the Original Indenture; and


 


WHEREAS, Bonds in the aggregate principal amount of
Twelve Million Five Hundred Thousand Dollars ($12,500,000) were issued under
and in accordance with the terms of the Original Indenture, as an initial
series designated “First Mortgage Bonds, 4-1/4% Series A due 1977,” herein
sometimes called “1977 Series A Bonds,” which
1977 Series A Bonds have since been paid and redeemed by the Company; and


 





















 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) were
issued under and in accordance with the terms of the Original Indenture, as supplemented
and amended by the First Supplemental Indenture, as a second series designated “First
Mortgage Bonds, 5% Series B due 1983”, herein sometimes called “1983 Series B Bonds”, which 1983 Series B Bonds
have since been paid and redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Four Million Dollars ($4,000,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First Supplemental Indenture and the Second Supplemental Indenture, as a third
series designated “First Mortgage Bonds, 5-1/8% Series C due 1985,” herein
sometimes called “1985 Series C Bonds,” which
1985 Series C Bonds have since been paid and redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Five Million Dollars ($5,000,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through the Fourth Supplemental Indentures, inclusive, as a fourth series
designated “First Mortgage Bonds, 4-7/8% Series D due 1987,” herein
sometimes called “1987 Series D Bonds,” which
1987 Series D Bonds have since been paid and redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal amount
of Four Million Five Hundred Thousand Dollars ($4,500,000) were issued under
and in accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Fifth Supplemental Indentures, inclusive, as a
fifth series designated “First Mortgage Bonds, 4-3/4% Series E due 1988,”
herein sometimes called “1988 Series E Bonds,”
which 1988 Series E Bonds have since been paid and redeemed by the
Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Fifteen Million Dollars ($15,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Seventh Supplemental Indentures, inclusive, as
a sixth series designated “First Mortgage Bonds, 9-1/4% Series F due 1995,”
herein sometimes called “1995 Series F Bonds,”
which 1995 Series F Bonds have since been paid and redeemed by the
Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Ten Million Dollars ($10,000,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through the Eighth Supplemental Indentures, inclusive as a seventh series
designated “First Mortgage Bonds, 10% Series G due 1987,” herein sometimes
called “1987 Series G Bonds,” which 1987 Series G
Bonds have since been paid and redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Ten Million Dollars ($10,000,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through the Ninth Supplemental Indentures, inclusive, as an eighth series
designated “First Mortgage Bonds, 9% Series H due 1992,” herein sometimes


 


2





















 


called “1992 Series H Bonds,” which
1992 Series H Bonds have since been paid and redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Nine Million Five Hundred Forty-Five Thousand Dollars ($9,545,000)
were issued under and in accordance with the terms of the Original Indenture,
as supplemented and amended by the First through the Tenth Supplemental
Indentures, inclusive, as a ninth series designated “First Mortgage Bonds, 9-1/8%
Series J due 2000,” herein sometimes called “2000 Series J
Bonds,” which 2000 Series J Bonds have since been paid and
redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Ten Million Three Hundred Thousand Dollars ($10,300,000) were issued
under and in accordance with the terms of the Original Indenture, as
supplemented and amended by the First through the Eleventh Supplemental
Indentures, inclusive, as a tenth series designated “First Mortgage Bonds, 10-3/8%
Series K due 2013,” herein sometimes called “2013 Series K
Bonds,” which 2013 Series K Bonds have since been paid and
redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Ten Million Five Hundred Thousand Dollars ($10,500,000) were issued
under and in accordance with the terms of the Original Indenture, as
supplemented and amended by the First through the Twelfth Supplemental
Indentures, inclusive, as an eleventh series designated “First Mortgage Bonds,
10-l/2% Series L due 2014,” herein sometimes called “2014 Series L
Bonds,” which 2014 Series L Bonds have since been paid and
redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Twelve Million Dollars ($12,000,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through the Thirteenth Supplemental Indentures, inclusive, as a twelfth
series designated “First Mortgage Bonds, 10.85% Series M due 2000,” herein
sometimes called “2000 Series M Bonds,” which
2000 Series M Bonds have since been paid and redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Ten Million Dollars ($10,000,000) were issued under and in accordance
with the terms of the Original Indenture as supplemented and amended by the
First through the Fourteenth Supplemental Indentures, inclusive, as a
thirteenth series designated “First Mortgage Bonds, 10% Series N due 2001,”
herein sometimes called “2001 Series N Bonds,”
which 2001 Series N Bonds have since been paid and redeemed by the
Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Fifteen Million Dollars ($15,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Fifteenth Supplemental Indentures, inclusive,
as a fourteenth series designated “First Mortgage Bonds, 8.50% Series P
due 2002,” herein sometimes called “2002 Series P Bonds,”
which 2002 Series P Bonds have since been paid and redeemed by the
Company; and


 


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WHEREAS, thereafter Bonds in the aggregate principal
amount of Thirteen Million Five Hundred Thousand Dollars ($13,500,000) were
issued under and in accordance with the terms of the Original Indenture, as
supplemented and amended by the First through the Sixteenth Supplemental
Indentures, inclusive, as a fifteenth series designated “First Mortgage Bonds,
9% Series Q due 2017,” herein sometimes called “2017 Series Q
Bonds,” which 2017 Series Q Bonds have since been paid and
redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Twenty-Five Million Dollars ($25,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Seventeenth Supplemental Indentures,
inclusive, as a sixteenth series designated “First Mortgage Bonds, 8.50% Series R
due 2018,” herein sometimes called “2018 Series R Bonds,”
which 2018 Series R Bonds have since been paid and redeemed by the
Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Twenty Million Dollars ($20,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Eighteenth Supplemental Indentures, inclusive,
as a seventeenth series designated “First Mortgage Bonds, 10.10% Series S
due 2009,” herein sometimes called “2009 Series S Bonds,”
which 2009 Series S Bonds have since been paid and redeemed by the
Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Nine Million Five Hundred Forty-Five Thousand Dollars ($9,545,000)
were issued under and in accordance with the terms of the Original Indenture,
as supplemented and amended by the First through the Nineteenth Supplemental
Indentures, inclusive, as an eighteenth series designated “First Mortgage
Bonds, 7.05% Series T due 2016,” herein sometimes called “2016 Series T Bonds,” which 2016 Series T Bonds
have since been paid and redeemed by the Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Fifteen Million Dollars ($15,000,000) were authorized, of which
Fifteen Million Dollars ($15,000,000) have been issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through the Nineteenth Supplemental Indentures, inclusive, as a
nineteenth series designated “First Mortgage Bonds, 7.25% Series U due
2021,” herein sometimes called “2021 Series U Bonds,”
which 2021 Series U Bonds have since been paid and redeemed by the
Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Twenty-Five Million Dollars ($25,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twentieth Supplemental Indentures, inclusive,
as a twentieth series designated “First Mortgage Bonds, 7.50% Series V due
2002,” herein sometimes called “2002 Series V Bonds,”
which 2002 Series V Bonds have since been paid and redeemed by the
Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Ten Million Three Hundred Thousand Dollars ($10,300,000) were issued
under and in accordance with the terms of the Original Indenture, as
supplemented and amended by the First through the Twenty-First


 


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Supplemental Indentures, inclusive, as a twenty-first series designated
“First Mortgage Bonds, 5-3/8% Series W due 2023,” herein sometimes called “2023 Series W Bonds,” of which Ten Million Three
Hundred Thousand Dollars ($10,300,000) in principal amount are outstanding at
the date hereof; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Thirty Million Dollars ($30,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twenty-Second Supplemental Indentures,
inclusive, as a twenty-second series designated “First Mortgage Bonds, 6.27% Series X
due 2008,” herein sometimes called “2008 Series X Bonds,”
of which Thirty Million Dollars ($30,000,000) in principal amount are
outstanding at the date hereof; and


 


WHEREAS, thereafter Bonds in the aggregate principal amount
of Ten Million Five Hundred Thousand Dollars ($10,500,000) were issued under
and in accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twenty-Third Supplemental Indentures,
inclusive, as a twenty-third series designated “First Mortgage Bonds, 6.25% Series Y
due 2024,” herein sometimes called “2024 Series Y Bonds,”
of which Ten Million Five Hundred Thousand Dollars ($10,500,000) in principal
amount are outstanding at the date hereof; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Twenty-Five Million Dollars ($25,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twenty-Fourth Supplemental Indentures,
inclusive, as a twenty-fourth series designated “First Mortgage Bonds, 8.25% Series Z
due 2004,” herein sometimes called “2004 Series Z Bonds,”
which 2004 Series Z Bonds have since been paid and redeemed by the
Company; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Twenty-Five Million Dollars ($25,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twenty-Fifth Supplemental Indentures, inclusive,
as a twenty-fifth series designated “First Mortgage Bonds, Adjustable Rate Series AA
due 2030,” herein sometimes called “2030 Series AA
Bonds,” of which Twenty-Five Million Dollars ($25,000,000) in
principal amount are outstanding at the date hereof; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Sixteen Million Dollars ($16,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twenty-Fifth Supplemental Indentures,
inclusive, as a twenty-sixth series designated “First Mortgage Bonds,
Adjustable Rate Series BB due 2030,” herein sometimes called “2030 Series BB Bonds,” of which Sixteen Million
Dollars ($16,000,000) in principal amount are outstanding at the date hereof;
and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Twenty Million Dollars ($20,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twenty-Sixth Supplemental Indentures,
inclusive, as a twenty-seventh series designated “First Mortgage Bonds, 6-7/8 Series CC
due


 


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2010,” herein sometimes called “2010 Series CC
Bonds,” of which Twenty Million Dollars ($20,000,000) in principal
amount are outstanding at the date hereof; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Thirteen Million Five Hundred Thousand Dollars ($13,500,000) were
issued under and in accordance with the terms of the Original Indenture, as
supplemented and amended by the First through the Twenty-Seventh Supplemental
Indentures, inclusive, as a twenty-eighth series designated “First Mortgage
Bonds, Adjustable Rate Series DD due 2027,” herein sometimes called “2027 Series DD Bonds,” of which Thirteen Million Five
Hundred Thousand Dollars ($13,500,000) in principal amount are outstanding at
the date hereof; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Nine Million Five Hundred Forty-Five Thousand Dollars ($9,545,000)
were issued under and in accordance with the terms of the Original Indenture,
as supplemented and amended by the First through the Twenty-Eighth Supplemental
Indentures, inclusive, as a twenty-ninth series designated “First Mortgage
Bonds, Adjustable Rate Series EE due 2028,” herein sometimes called “2028 Series EE Bonds,” of which Nine Million Five
Hundred Forty-Five Thousand Dollars ($9,545,000) in principal amount are
outstanding at the date hereof; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Fifteen Million Dollars ($15,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twenty-Eighth Supplemental Indentures,
inclusive, as a thirtieth series designated “First Mortgage Bonds, Adjustable
Rate Series FF due 2028,” herein sometimes called “2028 Series FF
Bonds,” of which Fifteen Million Dollars ($15,000,000) in principal
amount are outstanding at the date hereof; and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Eighteen Million Dollars ($18,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twenty-Ninth Supplemental Indentures,
inclusive, as a thirty-first series designated “First Mortgage Bonds,
Adjustable Rate Series GG due 2033,” herein sometimes called “2033 Series GG Bonds,” of which Eighteen Million
Dollars ($18,000,000) in principal amount are outstanding at the date hereof;
and


 


WHEREAS, thereafter Bonds in the aggregate principal
amount of Twelve Million Dollars ($12,000,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Thirtieth Supplemental Indentures, inclusive,
as a thirty-second series designated “First Mortgage Bonds, Series HH due
2038,” herein sometimes called “2038 Series HH
Bonds,” of which Twelve Million Dollars ($12,000,000) in principal
amount are outstanding at the date hereof; and


 


WHEREAS, that on May 17, 2000 BNY Midwest Trust
Company, as transferee of the corporate trust business of Harris Trust and
Savings Bank, Trustee under the Original Indenture, became successor Trustee
under the Original Indenture; and


 


WHEREAS, the Original Indenture provides that, subject
to certain exceptions not presently relevant, such changes in or additions to
the provisions of the Indenture (the term


 


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“Indenture” and other terms used
herein having the meanings assigned thereto in the Original 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


 


WHEREAS, the Indenture further provides that the
Company and the Trustee may enter into indentures supplemental to the Indenture
to convey, transfer and assign unto the Trustee and to subject to the lien of
the Indenture additional properties acquired by the Company; and


 


WHEREAS, the Company has entered into a Loan Agreement
dated as of October 1, 2005 (the “Loan Agreement”)
with the New Jersey Economic Development Authority (herein sometimes called the
“EDA”), a public body corporate and
politic of the State of New Jersey, pursuant to which (i) the proceeds of
the issuance by the EDA of Ten Million Three Hundred Thousand Dollars
($10,300,000) in aggregate principal amount of its Natural Gas Facilities
Refunding Revenue Bonds, Series 2005A (New Jersey Natural Gas Company Project)
(the “2005A EDA Bonds”) are to be loaned to
the Company to provide for the refinancing of certain natural gas and
functionally related and subordinate facilities (consisting of the refunding of
$10,300,000 in aggregate principal amount of the EDA’s Natural Gas Facilities
Refunding Revenue Bonds, Series 1993A (New Jersey Natural Gas Company
Project)), (ii) the proceeds of the issuance by the EDA of Ten Million
Five Hundred Thousand Dollars ($10,500,000) in aggregate principal amount of
its Natural Gas Facilities Refunding Revenue Bonds, Series 2005B (New
Jersey Natural Gas Company Project) (the “2005B EDA Bonds”)
are to be loaned to the Company to provide for the refinancing of certain
natural gas and functionally related and subordinate facilities (consisting of
the refunding of $10,500,000 in aggregate principal amount of the EDA’s Natural
Gas Facilities Refunding Revenue Bonds, Series 1994A (New Jersey Natural
Gas Company Project)) and (iii) the proceeds of the issuance by the EDA of
Fifteen Million Dollars ($15,000,000) in aggregate principal amount of its
Natural Gas Facilities Revenue Bonds, Series 2005C (New Jersey Natural Gas
Company Project) (the “2005C EDA Bonds”)
are to be loaned from time to time to the Company to finance a portion of the
cost of the construction of natural gas pipelines and auxiliary equipment
throughout the franchise portion of Morris County, New Jersey, which 2005A EDA
Bonds, 2005B EDA Bonds and 2005C EDA Bonds (herein collectively referred to as
the “2005 Series EDA Bonds”) are being
issued pursuant to the EDA Bond Indenture (as defined below); and


 


WHEREAS, the Company has duly determined to create a
thirty-third series of Bonds, to be known as “First Mortgage Bonds, Series II
due 2023,” herein sometimes called “2023 Series II
Bonds,” a thirty-fourth series of Bonds, to be known as “First
Mortgage Bonds, Series JJ due 2024,” herein sometimes called “2024 Series JJ Bonds,” and a thirty-fifth series of
Bonds, to be known as “First Mortgage Bonds, Series KK due 2040,” herein
sometimes called “2040 Series KK Bonds,” each
to be issued and delivered (in conjunction with the assignment by the EDA of
certain of its rights under the Loan Agreement) to JPMorgan Chase Bank,
National Association, as trustee (the “EDA Loan Trustee”)
pursuant to an indenture of trust dated as of October 1, 2005 (the “EDA Bond Indenture”) between the EDA and the EDA Loan
Trustee for the benefit and security of the holders of the 2005 Series EDA
Bonds, all as herein provided, and to add to


 


7





















 


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
Thirty-First Supplemental Indenture in the form hereof for the purposes herein
provided; and


 


WHEREAS, all conditions and requirements necessary to
make this Thirty-First 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.


 


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 party of the second part, 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 property
specifically excepted 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 property specifically excepted
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 anywise
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


 


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or other political subdivisions and all renewals, extensions and
modifications of said certificates, franchises, grants, permits, privileges,
and 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.


 


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 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


 


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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.


 


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 and corporation who
may be or become the holders of the Bonds and coupons hereby secured, if any,
without preference, priority or distinction as to the lien or otherwise of one
Bond or coupon 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 except as
provided in § 9.02 of the Indenture), 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 and coupons, or any thereof, as follows:


 


10





















 


ARTICLE I


 


CERTAIN
AMENDMENTS OF INDENTURE


 


§ 1.1.         The Original
Indenture, as heretofore amended, be and it hereby is further 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
definition be and it hereby is added immediately after the thirtieth sentence
of § 1.01B:


 


“‘THIRTY-FIRST
SUPPLEMENTAL INDENTURE’ shall mean the Supplemental Indenture dated as of October 1,
2005, supplemental to the Indenture.”


 


§ 1.01.       The following definitions
be and they hereby are added immediately after the thirty-second sentence of § 1.01F:


 


“‘2023 SERIES II BOND’
shall mean one of the First Mortgage Bonds, Series II due 2023, issued
hereunder.


 


‘2024 SERIES JJ BOND’
shall mean one of the First Mortgage Bonds, Series JJ due 2024, issued
hereunder.


 


‘2040 SERIES KK BOND’
shall mean one of the First Mortgage Bonds, Series KK due 2040, 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 2023 Series II
Bond, 2024 Series JJ Bond or 2040 Series KK 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 2023 Series II
Bonds, the 2024 Series JJ Bonds and the 2040 Series KK Bonds shall be
redeemed at the redemption price specified in § 10.81, § 10.83 and § 10.85,
respectively.”


 


ARTICLE II


 


2023
SERIES II BONDS


 


§ 2.1.         There shall be a
thirty-third series of Bonds, known as and entitled “First Mortgage Bonds, Series II
due 2023” or “First Mortgage Bonds, Series II” (herein and in the


 


11





















 


Indenture referred to as the “2023 Series II 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 the preambles to the Original Indenture.


 


The aggregate principal amount of 2023 Series II
Bonds which may be authenticated and delivered and outstanding under the
Indenture is Ten Million Three Hundred Thousand Dollars ($10,300,000).


 


The 2023 Series II Bonds shall be payable to the
EDA Loan Trustee, and shall be nontransferable except to a successor of the EDA
Loan Trustee.


 


The 2023 Series II Bonds shall bear interest at
the minimum rate per annum necessary to yield interest in amounts sufficient,
when taken together with other amounts available therefor under the EDA Bond
Indenture, to pay the interest from time to time payable on the 2005A EDA
Bonds, computed on the same basis as the 2005A EDA Bonds (interest on overdue
principal and premium, if any, and, to the extent legally enforceable,
interest, being at the rate of six percent (6%) per annum), but in no event
shall the interest rate on the 2023 Series II Bonds exceed ten percent
(10%) per annum; and the 2023 Series II Bonds shall mature on August 1,
2023, subject to prior redemption as described herein.  The amount of “annual interest charges” on
the 2023 Series II Bonds, within the meaning of any provision of the
Indenture requiring a determination of said amount as a condition to the
issuance of any Bonds thereunder (including, without limitation, the 2023 Series II
Bonds), shall mean the amount calculated by applying to the 2023 Series II
Bonds the interest rate of ten percent (10%) per annum; provided,
however, that if the rate of interest on the 2005A EDA Bonds shall
have become fixed and determined at a per annum rate lower than ten percent
(10%) for a period not less than the remaining maturity of said 2005A EDA Bonds
(whether said 2005A EDA Bonds shall mature at their stated maturity, by earlier
redemption or otherwise), then said lower rate shall be used to determine the
amount of the “annual interest charges” on the 2023 Series II Bonds.


 


The 2023 Series II Bonds shall be in the form of
registered Bonds without coupons of denominations of Five Thousand Dollars
($5,000) 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.  The 2023 Series II Bonds shall be dated
as provided in § 2.05 of the Indenture. 
All 2023 Series II Bonds shall bear interest from their respective
dates, such interest to be payable, upon the terms of and otherwise in
accordance with the 2023 Series II Bonds, on the first business day
preceding each date on which interest shall from time to time be payable on the
2005A EDA Bonds; provided, that the obligation of
the Company to make payments with respect to the principal of, premium, if any,
and interest on the 2023 Series II 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, premium, if any, and
interest on any of the 2005A EDA Bonds shall have been fully or partially paid
from payments made by the Company under the Loan Agreement or from other moneys
expressly available therefor in the principal and interest account for the
2005A EDA Bonds under the EDA Bond Indenture or, as far as principal is concerned,
reduced by the principal amount of any of the 2005A EDA Bonds deemed paid
pursuant to Article X of the EDA Bond Indenture.  The principal of and the premium, if any, and
interest on the 2023 Series II Bonds shall be payable at


 


12





















 


the principal office of the Trustee, in the City of Chicago, Illinois,
or, at the option of the Company, at the “Principal Office” (as that term is
defined in the EDA Bond Indenture) of the EDA Loan Trustee, 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 2023 Series II Bonds, payments of the principal of and the
premium, if any, and interest on any 2023 Series II 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 2023 Series II 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.


 


The 2023 Series II Bonds shall be subject to
redemption at the option of the Company or otherwise, in the manner provided in
the applicable provisions of Article Ten of the Indenture, as amended by Article V
of this Supplemental Indenture.


 


The 2023 Series II 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 and
shall also be excluded from the benefits of the covenants of § 9.08 and § 11.01
of the Indenture.


 


Notwithstanding the provisions of § 10.04 or any
other provision of the Indenture, the selection of 2023 Series II Bonds to
be redeemed shall, in case fewer than all of the outstanding 2023 Series II
Bonds are to be redeemed, be made by the Trustee pro rata (to the nearest
multiple of Five Thousand Dollars ($5,000)) among the registered holders of the
2023 Series II Bonds in proportion, as nearly as practicable, to the
respective unpaid principal amounts of 2023 Series II 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 2023 Series II Bonds).


 


The definitive 2023 Series II 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 2023 Series II
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.


 


13





















 


§ 2.2.        2023 Series II Bonds in the
aggregate principal amount of Ten Million Three Hundred Thousand Dollars
($10,300,000) may forthwith upon the execution and delivery of this
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 Supplemental Indenture. 
No additional 2023 Series II 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 2023 Series II Bonds.


 


§ 2.3.        As provided in Section 1002 of the
EDA Bond Indenture, from and after the Release Date (as defined in the EDA Bond
Indenture), the obligations of the Company with respect to the 2023 Series II
Bonds shall be deemed to be satisfied and discharged, the 2023 Series II
Bonds shall cease to secure in any manner any 2005A EDA Bonds outstanding under
the EDA Bond Indenture, and, pursuant to Section 1002 of the EDA Bond
Indenture, the EDA Loan Trustee shall forthwith deliver the 2023 Series II
Bonds to the Company for cancellation.


 


ARTICLE III


 


2024
SERIES JJ BONDS


 


§ 3.1.        There shall be a
thirty-fourth series of Bonds, known as and entitled “First Mortgage Bonds, Series JJ
due 2024” or “First Mortgage Bonds, Series JJ” (herein and in the
Indenture referred to as the “2024 Series JJ 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 the preambles to the Original Indenture.


 


The aggregate principal amount of 2024 Series JJ
Bonds which may be authenticated and delivered and outstanding under the
Indenture is Ten Million Five Hundred Thousand Dollars ($10,500,000).


 


The 2024 Series JJ Bonds shall be payable to the
EDA Loan Trustee, and shall be nontransferable except to a successor of the EDA
Loan Trustee.


 


The 2024 Series JJ Bonds shall bear interest at
the minimum rate per annum necessary to yield interest in amounts sufficient,
when taken together with other amounts available therefor under the EDA Bond
Indenture, to pay the interest from time to time payable on the 2005B EDA
Bonds, computed on the same basis as the 2005B EDA Bonds (interest on overdue
principal and premium, if any, and, to the extent legally enforceable,
interest, being at the rate of six percent (6%) per annum), but in no event
shall the interest rate on the 2024 Series JJ Bonds exceed ten percent
(10%) per annum; and the 2024 Series JJ Bonds shall mature on August 1,
2024, subject to prior redemption as described herein.  The amount of “annual interest charges” on
the 2024 Series JJ Bonds, within the meaning of any provision of the
Indenture requiring a determination of said amount as a condition to the
issuance of any Bonds thereunder (including, without limitation, the 2024 Series JJ
Bonds), shall mean the amount calculated by applying to the 2024 Series JJ
Bonds the interest rate of ten percent (10%) per annum; provided,
however, that if the


 


14





















 


rate of interest on the 2005B EDA Bonds shall have become fixed and
determined at a per annum rate lower than ten percent (10%) for a period not
less than the remaining maturity of said 2005B EDA Bonds (whether said 2005B
EDA Bonds shall mature at their stated maturity, by earlier redemption or
otherwise), then said lower rate shall be used to determine the amount of the “annual
interest charges” on the 2024 Series JJ Bonds.


 


The 2024 Series JJ Bonds shall be in the form of
registered Bonds without coupons of denominations of Five Thousand Dollars
($5,000) 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.  The 2024 Series JJ Bonds shall be dated
as provided in § 2.05 of the Indenture. 
All 2024 Series JJ Bonds shall bear interest from their respective
dates, such interest to be payable, upon the terms of and otherwise in
accordance with the 2024 Series JJ Bonds, on the first business day
preceding each date on which interest shall from time to time be payable on the
2005B EDA Bonds; provided, that the obligation of
the Company to make payments with respect to the principal of, premium, if any,
and interest on the 2024 Series JJ 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, premium, if any, and
interest on any of the 2005B EDA Bonds shall have been fully or partially paid
from payments made by the Company under the Loan Agreement or from other moneys
expressly available therefor in the principal and interest account for the
2005B EDA Bonds under the EDA Bond Indenture or, as far as principal is
concerned, reduced by the principal amount of any of the 2005B EDA Bonds deemed
paid pursuant to Article X of the EDA Bond Indenture.  The principal of and the premium, if any, and
interest on the 2024 Series JJ Bonds shall be payable at the principal
office of the Trustee, in the City of Chicago, Illinois, or, at the option of
the Company, at the “Principal Office” (as that term is defined in the EDA Bond
Indenture) of the EDA Loan Trustee, 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 2024 Series JJ Bonds, payments of the principal of and the
premium, if any, and interest on any 2024 Series JJ 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 2024 Series JJ 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.


 


The 2024 Series JJ Bonds shall be subject to
redemption at the option of the Company or otherwise, in the manner provided in
the applicable provisions of Article Ten of the Indenture, as amended by Article VI
of this Supplemental Indenture.


 


The 2024 Series JJ 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


 


15





















 


Indenture and shall also be excluded from the benefits of the covenants
of § 9.08 and § 11.01 of the Indenture.


 


Notwithstanding the provisions of § 10.04 or any
other provision of the Indenture, the selection of 2024 Series JJ Bonds to
be redeemed shall, in case fewer than all of the outstanding 2024 Series JJ
Bonds are to be redeemed, be made by the Trustee pro rata (to the nearest
multiple of Five Thousand Dollars ($5,000)) among the registered holders of the
2024 Series JJ Bonds in proportion, as nearly as practicable, to the
respective unpaid principal amounts of 2024 Series JJ 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 2024 Series JJ Bonds).


 


The definitive 2024 Series JJ 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 2024 Series JJ
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.


 


§ 3.2.        2024 Series JJ Bonds in the
aggregate principal amount of Ten Million Five Hundred Thousand Dollars ($10,500,000)
may forthwith upon the execution and delivery of this 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
Supplemental Indenture.  No additional
2024 Series JJ 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 2024 Series JJ Bonds.


 


§ 3.3.        As provided in Section 1002 of the
EDA Bond Indenture, from and after the Release Date (as defined in the EDA Bond
Indenture), the obligations of the Company with respect to the 2024 Series JJ
Bonds shall be deemed to be satisfied and discharged, the 2024 Series JJ
Bonds shall cease to secure in any manner any 2005B EDA Bonds outstanding under
the EDA Bond Indenture, and, pursuant to Section 1002 of the EDA Bond
Indenture, the EDA Loan Trustee shall forthwith deliver the 2024 Series JJ
Bonds to the Company for cancellation.


 


ARTICLE IV


 


2040
SERIES KK BONDS


 


§ 4.1.        There shall be a
thirty-fifth series of Bonds, known as and entitled “First Mortgage Bonds, Series KK
due 2040” or “First Mortgage Bonds, Series KK” (herein and in the


 


16





















 


Indenture referred to as the “2040 Series KK 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 the preambles to the Original Indenture.


 


The aggregate principal amount of 2040 Series KK
Bonds which may be authenticated and delivered and outstanding under the
Indenture is Fifteen Million Dollars ($15,000,000).


 


The 2040 Series KK Bonds shall be payable to the
EDA Loan Trustee, and shall be nontransferable except to a successor of the EDA
Loan Trustee.


 


The 2040 Series KK Bonds shall bear interest at
the minimum rate per annum necessary to yield interest in amounts sufficient,
when taken together with other amounts available therefor under the EDA Bond
Indenture, to pay the interest from time to time payable on the 2005C EDA
Bonds, computed on the same basis as the 2005C EDA Bonds (interest on overdue
principal and premium, if any, and, to the extent legally enforceable,
interest, being at the rate of six percent (6%) per annum), but in no event
shall the interest rate on the 2040 Series KK Bonds exceed ten percent
(10%) per annum; and the 2040 Series KK Bonds shall mature on October 1,
2040, subject to prior redemption as described herein.  The amount of “annual interest charges” on
the 2040 Series KK Bonds, within the meaning of any provision of the
Indenture requiring a determination of said amount as a condition to the
issuance of any Bonds thereunder (including, without limitation, the 2040 Series KK
Bonds), shall mean the amount calculated by applying to the 2040 Series KK
Bonds the interest rate of ten percent (10%) per annum; provided,
however, that if the rate of interest on the 2005C EDA Bonds shall
have become fixed and determined at a per annum rate lower than ten percent
(10%) for a period not less than the remaining maturity of said 2005C EDA Bonds
(whether said 2005C EDA Bonds shall mature at their stated maturity, by earlier
redemption or otherwise), then said lower rate shall be used to determine the
amount of the “annual interest charges” on the 2040 Series KK Bonds.


 


The 2040 Series KK Bonds shall be in the form of
registered Bonds without coupons of denominations of Five Thousand Dollars
($5,000) 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.  The 2040 Series KK Bonds shall be dated
as provided in § 2.05 of the Indenture. 
All 2040 Series KK Bonds shall bear interest from their respective
dates, such interest to be payable, upon the terms of and otherwise in
accordance with the 2040 Series KK Bonds, on the first business day
preceding each date on which interest shall from time to time be payable on the
2005C EDA Bonds; provided, that the obligation of
the Company to make payments with respect to the principal of, premium, if any,
and interest on the 2040 Series KK 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, premium, if any, and
interest on any of the 2005C EDA Bonds shall have been fully or partially paid
from payments made by the Company under the Loan Agreement or from other moneys
expressly available therefor in the principal and interest account for the
2005C EDA Bonds under the EDA Bond Indenture or, as far as principal is
concerned, reduced by the principal amount of any of the 2005C EDA Bonds deemed
paid pursuant to Article X of the EDA Bond Indenture.  The principal of and the premium, if any, and
interest on the 2040 Series KK Bonds shall be payable at the principal
office of the Trustee, in the City of Chicago, Illinois, or,


 


17





















 


at the option of the Company, at the “Principal Office” (as that term
is defined in the EDA Bond Indenture) of the EDA Loan Trustee, 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 2040 Series KK Bonds, payments of the principal of and the premium,
if any, and interest on any 2040 Series KK 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 2040 Series KK 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.


 


The 2040 Series KK Bonds shall be subject to
redemption at the option of the Company or otherwise, in the manner provided in
the applicable provisions of Article Ten of the Indenture, as amended by Article VII
of this Supplemental Indenture.


 


The 2040 Series KK 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 and
shall also be excluded from the benefits of the covenants of § 9.08 and § 11.01
of the Indenture.


 


Notwithstanding the provisions of § 10.04 or any
other provision of the Indenture, the selection of 2040 Series KK Bonds to
be redeemed shall, in case fewer than all of the outstanding 2040 Series KK
Bonds are to be redeemed, be made by the Trustee pro rata (to the nearest
multiple of Five Thousand Dollars ($5,000)) among the registered holders of the
2040 Series KK Bonds in proportion, as nearly as practicable, to the
respective unpaid principal amounts of 2040 Series KK 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 2040 Series KK Bonds).


 


The definitive 2040 Series KK 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 2040 Series KK
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.


 


18





















 


§ 4.2.        2040 Series KK Bonds in the
aggregate principal amount of Fifteen Million Dollars ($15,000,000) may
forthwith upon the execution and delivery of this 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 Supplemental
Indenture.  No additional 2040 Series KK
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 2040 Series KK
Bonds.


 


§ 4.3.        As provided in Section 1002 of the
EDA Bond Indenture, from and after the Release Date (as defined in the EDA Bond
Indenture), the obligations of the Company with respect to the 2040 Series KK
Bonds shall be deemed to be satisfied and discharged, the 2040 Series KK
Bonds shall cease to secure in any manner any 2005C EDA Bonds outstanding under
the EDA Bond Indenture, and, pursuant to Section 1002 of the EDA Bond
Indenture, the EDA Loan Trustee shall forthwith deliver the 2040 Series KK
Bonds to the Company for cancellation.


 


ARTICLE V


 


REDEMPTION
OF THE 2023 SERIES II BONDS


 


§ 5.1.        The following § 10.81 and § 10.82
be and they hereby are added to Article Ten of the Indenture:


 


“§ 10.81.     The 2023 Series II
Bonds shall be subject to mandatory redemption as follows:  payments of principal of and premium on the
2023 Series II Bonds shall be made to the EDA Loan Trustee to redeem 2023 Series II
Bonds in such amounts as shall be necessary, in accordance with the provisions
of the Loan Agreement, to provide funds under the Loan Agreement to (a) make,
when due, payment at maturity (including, without limitation, maturity upon
acceleration of the 2005A EDA Bonds) and (b) make, when due, any
prepayment required by the Loan Agreement in connection with any mandatory,
special mandatory, optional or extraordinary optional redemption of 2005A EDA
Bonds; 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 2005A EDA Bonds shall have been fully or
partially made from payments made by the Company under the Loan Agreement or
from other moneys expressly available therefor in a redemption account or
subaccount for the 2005A EDA Bonds under the EDA Bond Indenture or, as far as
principal is concerned, reduced by the principal amount of any 2005A EDA Bonds
deemed paid pursuant to Article X of the EDA Bond Indenture.  Terms used and not defined in this Section shall
have the respective meanings given to them in the Thirty-First Supplemental
Indenture dated as of October 1, 2005.”


 


“§ 10.82.     In the case of the redemption of 2023 Series II
Bonds out of moneys deposited with the Trustee pursuant to § 8.08, such
2023 Series II Bonds shall, upon compliance with provisions of § 10.04,
and subject to the provisions of § 2.1 of the Thirty-First Supplemental


 


19





















 


Indenture, be redeemable at the principal amounts thereof, together
with interest accrued thereon to the date fixed for redemption, without
premium.”


 


ARTICLE VI


 


REDEMPTION
OF THE 2024 SERIES JJ BONDS


 


§ 6.1.        The following § 10.83 and § 10.84
be and they hereby are added to Article Ten of the Indenture:


 


“§ 10.83.     The 2024 Series JJ
Bonds shall be subject to mandatory redemption as follows:  payments of principal of and premium on the
2024 Series JJ Bonds shall be made to the EDA Loan Trustee to redeem 2024 Series JJ
Bonds in such amounts as shall be necessary, in accordance with the provisions
of the Loan Agreement, to provide funds under the Loan Agreement to (a) make,
when due, payment at maturity (including, without limitation, maturity upon
acceleration of the 2005B EDA Bonds) and (b) make, when due, any
prepayment required by the Loan Agreement in connection with any mandatory or
optional redemption of 2005B EDA Bonds; 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 2005B EDA Bonds shall have been
fully or partially made from payments made by the Company under the Loan
Agreement or from other moneys expressly available therefor in a redemption
account or subaccount for the 2005B EDA Bonds under the EDA Bond Indenture or,
as far as principal is concerned, reduced by the principal amount of any 2005B
EDA Bonds deemed paid pursuant to Article X of the EDA Bond
Indenture.  Terms used and not defined in
this Section shall have the respective meanings given to them in the
Thirty-First Supplemental Indenture dated as of October 1, 2005.”


 


“§ 10.84.     In the case of the redemption of 2024 Series JJ
Bonds out of moneys deposited with the Trustee pursuant to § 8.08, such
2024 Series JJ Bonds shall, upon compliance with provisions of § 10.04,
and subject to the provisions of § 3.1 of the Thirty-First Supplemental
Indenture, be redeemable at the principal amounts thereof, together with
interest accrued thereon to the date fixed for redemption, without premium.”


 


ARTICLE VII


 


REDEMPTION
OF THE 2040 SERIES KK BONDS


 


§ 7.1.        The following § 10.85 and § 10.86
be and they hereby are added to Article Ten of the Indenture:


 


“§ 10.85.     The 2040 Series KK
Bonds shall be subject to mandatory redemption as follows:  payments of principal of and premium on the 2040
Series KK Bonds shall be made to the EDA Loan Trustee to redeem 2040 Series KK
Bonds in such amounts as shall be necessary, in accordance with the provisions
of the Loan Agreement, to provide funds under the Loan


 


20





















 


Agreement to (a) make, when due, payment at maturity (including,
without limitation, maturity upon acceleration of the 2005C EDA Bonds) and (b) make,
when due, any prepayment required by the Loan Agreement in connection with any
mandatory or optional redemption of 2005C EDA Bonds; 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
2005C EDA Bonds shall have been fully or partially made from payments made by
the Company under the Loan Agreement or from other moneys expressly available
therefor in a redemption account or subaccount for the 2005C EDA Bonds under
the EDA Bond Indenture or, as far as principal is concerned, reduced by the
principal amount of any 2005C EDA Bonds deemed paid pursuant to Article X
of the EDA Bond Indenture.  Terms used
and not defined in this Section shall have the respective meanings given
to them in the Thirty-First Supplemental Indenture dated as of October 1,
2005.”


 


“§ 10.86.     In the case of the redemption of 2040 Series KK
Bonds out of moneys deposited with the Trustee pursuant to § 8.08, such
2040 Series KK Bonds shall, upon compliance with provisions of § 10.04,
and subject to the provisions of § 4.1 of the Thirty-First Supplemental
Indenture, be redeemable at the principal amounts thereof, together with
interest accrued thereon to the date fixed for redemption, without premium.”


 


ARTICLE VIII


 


MISCELLANEOUS


 


§ 8.1.        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.


 


§ 8.2.        The Trustee assumes no duties,
responsibilities or liabilities by reason of this Supplemental Indenture other
than as set forth in the Indenture, and this 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.


 


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


 


21





















 


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


 


§ 8.5.        Neither the approval by the Board of
Public Utilities of the State of New Jersey of the execution and delivery of
this 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.


 


§ 8.6.        This 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.


 


22





















 


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


 


IN WITNESS WHEREOF, NEW JERSEY NATURAL GAS COMPANY,
party of the first part, 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 BNY MIDWEST TRUST COMPANY, party of the second part, 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 and its corporate seal to
be hereunto affixed and attested by its Secretary or one of its Assistant
Secretaries.


 


 


	
   

  	
  NEW JERSEY NATURAL GAS
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Timothy C.
  Hearne, Jr.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Timothy C. Hearne, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and

  Treasurer

  
	
   

  	
   

  	
   

  
	
  [Corporate Seal]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Oleta J. Harden

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Oleta J. Harden

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice
  President and Secretary

  	
   

  	
   

  
							



 


23





















 


	
  Signed, sealed
  and delivered by NEW JERSEY

  	
   

  
	
  NATURAL GAS
  COMPANY in the presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Sandra R. Pennett

  	
   

  	
   

  
	
  Name: Sandra R.
  Pennett

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kathleen M. Iannuzzi

  	
   

  	
   

  
	
  Name: Kathleen
  M. Iannuzzi

  	
   

  
	
   

  	
   

  
	
   

  	
  BNY MIDWEST TRUST
  COMPANY, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Mary Callahan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mary Callahan

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
  [Corporate Seal]

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ D.G. Donovan

  	
   

  	
   

  
	
  Name: D.G.
  Donovan

  	
   

  
	
  Title:   Assistant Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signed, sealed
  and delivered by BNY MIDWEST

  	
   

  
	
  TRUST COMPANY in
  the presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ L. Garcia

  	
   

  	
   

  
	
  Name: L. Garcia

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Roxane Ellwanger

  	
   

  	
   

  
	
  Name: Roxane
  Ellwanger

  	
   

  
						



 


24





















 


	
  STATE OF NEW
  JERSEY

  	
  )

  	
   

  
	
   

  	
  )

  	
  SS:

  
	
  COUNTY OF
  MONMOUTH

  	
  )

  	
   

  



 


BE IT REMEMBERED that on this 11th day of October,
2005, 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 Oleta J. Harden to me known who, being by me duly sworn
according to law, on her oath, does depose and make proof to my satisfaction
that she is the Senior Vice President and Secretary of NEW JERSEY NATURAL GAS
COMPANY, the grantor or mortgagor in the foregoing Supplemental Indenture
named; that she 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 Timothy C. Hearne, Jr. is a Senior Vice President
and Treasurer of said corporation; that she saw said Timothy C. Hearne, Jr.,
as such Senior Vice President and Treasurer, affix said seal thereto, sign and
deliver said Supplemental Indenture, and heard him declare that he 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
her name thereto, at the same time, as attesting witness.


 


	
   

  	
   

  	
  /s/ Oleta J.
  Harden

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Oleta J. Harden

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and

  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.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Joseph C. Weiss

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Joseph C.
  Weiss, Esq.

  	
   

  	
   

  
	
   

  	
  Attorney-at-Law
  of the

  	
   

  	
   

  
	
   

  	
  State of New
  Jersey

  	
   

  	
   

  
							



 





















 


	
  STATE OF
  ILLINOIS

  	
  )

  	
   

  
	
   

  	
  )

  	
  SS:

  
	
  COUNTY OF COOK

  	
  )

  	
   

  



 


BE IT REMEMBERED that on this 13th day of October,
2005, before me, the subscriber, a Notary Public of the State of Illinois,
personally appeared D.G. Donovan 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 an Assistant Secretary of BNY MIDWEST TRUST COMPANY, the grantee or
mortgagee and trustee 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 a resolution of the Board of Directors of said
corporation; that Mary Callahan is a Vice President of said corporation; that
he saw said Mary Callahan as such Vice President affix said seal thereto, sign
and deliver said Supplemental Indenture, and heard said Mary Callahan declare
that she signed, sealed and delivered the same as the voluntary act and deed of
said corporation, in pursuance of said resolution, and that this deponent
signed her name thereto, at the same time, as attesting witness.


 


	
   

  	
  /s/ D.G. Donovan

  	
   

  
	
   

  	
  Name: D.G. Donovan

  
	
   

  	
  Title: Assistant
  Secretary

  
	
   

  	
   

  
	
  Subscribed and
  sworn to before

  	
   

  
	
  me a Notary
  Public of the State

  	
   

  
	
  of Illinois at
  Chicago, the day

  	
   

  
	
  and year
  aforesaid.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ A. Hernandez

  	
   

  	
   

  
	
  Notary Public of
  the State of Illinois

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [SEAL]