Document:

sjgnote.htm

    EXHIBIT
4.2

    Registered

    

    Registered PPN: 838515
F*0

     

    South
Jersey Gas Company

     

    Medium
Term Note, Series C, 2010-1, TRANCHE A

    

    

    Original Issue
Date:  March 1, 2010                                                 Principal Amount:  $____________

    

    Interest
Rate:  4.84%                                                      Stated Maturity
Date: March 1,
2026

    

    Redemption Terms, if
any: As described below.                                            Other Terms: As
described below.

    

     

    South Jersey Gas
Company, a corporation of the state of New Jersey (the “Company”), for value
received hereby promises to pay to _________________________
or its registered assigns, the principal sum of _______________ Dollars on the Maturity
Date set forth above, and to pay interest thereon from the Original Issue Date
set forth above or from the most recent date to which interest has been paid or
duly provided for, semiannually in arrears on March 1 and September 1 in each
year (each, an “Interest
Payment Date”), commencing September 1, 2010, at the per annum
Interest Rate set forth above, until the principal hereof is paid or made
available for payment. No interest shall accrue on or after the Maturity Date so
long as the principal amount of this Note is paid in full on the Maturity
Date.  The interest so payable and punctually paid or duly provided
for on any such Interest Payment Date will, as provided in the Indenture (as
defined on the reverse hereof), be paid to the Person in whose name this Note is
registered at the close of business on the Regular Record Date for such
interest, which shall be the February 15 or August 15, as the case may be, next
preceding such Interest Payment Date; provided that interest
payable on the Maturity Date set forth above or, if applicable, upon redemption
or acceleration, shall be payable to the Person to whom principal shall be
payable. 

     

    Except as
otherwise provided in the Indenture, any such interest not so punctually paid or
duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and shall be paid to the Person in whose name this Note is
registered at the close of business on a Special Record Date for the payment of
such defaulted interest to be fixed by the Trustee, notice whereof shall be
given to Noteholders not more than 15 days nor less than 10 days prior to such
Special Record Date.  Principal, applicable premium and interest due
at the maturity of this Note shall be payable in immediately available funds in
accordance with the terms of the Note Purchase Agreement (as defined on the
reverse hereof).  Interest on this Note (other than interest payable
at maturity) shall be paid by wire transfer payable in immediately available
funds to the Holder as its name appears on the register as of the close of
business on the Regular Record Date to a bank located within the continental
United States designated by such Holder in its request or by direct deposit into

    
      
        
          2770684.01.01.doc

          1920735

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    the
account of such Holder designated by such Holder in its request if such account
is maintained with the Trustee or any paying agent.

     

    Reference is hereby made to
the further provisions of this Note set forth in full on the reverse hereof,
which further provisions shall for all purposes have the same effect as if set
forth in full at this place. 

     

    Unless
the certificate of authentication hereon has been executed by the Trustee
referred to on the reverse hereof directly or through an Authenticating Agent by
manual signature of an authorized signatory, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any
purpose.  

     

    In Witness Whereof, the
Company has caused this instrument to be duly executed.

    

    
      	
               
      

            	
              South
      Jersey Gas Company

            

    

    

    

    

    
      	
               
      

            	
              By:
       /s/
      Stephen A. Clark

            

    

    
      	
               
      

            	
              Title:
       Treasurer

            

    

    

    

    
      	
              Attest: /s/ Gina
      Merritt-Epps

            

    

    
      	
              Title: Secretary

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Trustee’s
Certificate  of Authentication

     

    This Note
is one of the Notes of the series herein designated, described or provided for
in the within-mentioned Indenture.

    

    
      	
               
      

            	
              THE
      BANK OF NEW YORK MELLON,

            

    

    
      	
               
      

            	
              as
      Trustee

            

    

    

    
      	
               
      

            	
              Dated:  March
      1, 2010

            

    

    

    

    
      	
               
      

            	
              By:
       /s/                                                                  
      

            

    

    
      	
               
      

            	
                     Authorized
      Signatory

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Reverse
of Note

     

    South
Jersey Gas Company Medium Term Notes, Series C, 2010-1, Tranche A

     

    This Note
is one of a duly authorized issue of Medium Term Notes, Series C, 2010-1 (the
“Notes of this Series”)
of the Company issued and to be issued under an Indenture dated as of October 1,
1998 between the Company and The Bank of New York Mellon (formerly known as
The Bank of New York), as trustee (the “Trustee,” which term
includes any successor Trustee under the Indenture) and indentures supplemental
thereto (collectively, the “Indenture”) and pursuant to
that certain Note Purchase Agreement dated as of March 1, 2010 among the Company
and the purchasers listed therein (the “Note Purchase
Agreement”).  Under the Indenture, one or more series of notes
may be issued and, as used herein, the term “Notes” refers to the Notes of this
Series and any other outstanding series of Notes. Reference is hereby made to
the Indenture for a more complete statement of the respective rights,
limitations of rights, duties and immunities under the Indenture of the Company,
the Trustee and the Noteholders and of the terms upon which the Notes are and
are to be authenticated and delivered.  Reference is also hereby made
to the Note Purchase Agreement for certain rights and obligations of the Holder
and the Company referred to in this Note as more fully set forth in the Note
Purchase Agreement, the relevant provisions of which are incorporated by
reference herein. The Notes of this Series
are limited in aggregate principal amount to $60,000,000, of which up to
$15,000,000 aggregate principal amount are designated Medium Term Notes,
Series C, 2010-1, Tranche A (“Tranche A Notes”), and
up to $45,000,000 aggregate principal amount are designated Medium Term Notes,
Series C, 2010-1, Tranche B.  This Note is a Tranche A
Note.

     

    Prior to
the Substitution Date (as hereinafter defined), the Notes will be secured by
first mortgage bonds (the “Pledged First Mortgage
Bonds”) delivered by the Company to the Trustee for the benefit of the
Holders of the Notes, issued under the Indenture of First Mortgage, dated
October 1, 1947 from the Company to The Bank of New York Mellon, as
successor trustee to Guarantee Bank and Trust Company (“Mortgage Trustee”), as
supplemented and amended (the “Mortgage”).  Reference
is made to the Mortgage and the Indenture for a description of the rights of the
Trustee as holder of the Pledged First Mortgage Bonds, the property mortgaged
and pledged under the Mortgage, the rights of the Company and of the applicable
Mortgage Trustee in respect thereof, the duties and immunities of the applicable
Mortgage Trustee, the terms and conditions upon which the Pledged First Mortgage
Bonds are secured and the circumstances under which additional first mortgage
bonds may be issued. 

     

    From
and after such time as all First Mortgage Bonds (other than Pledged First
Mortgage Bonds) issued under the Mortgage have been retired through payment,
redemption or otherwise (including those First Mortgage Bonds the payment for
which has been provided for in accordance with the Mortgage) at, before or after
the maturity thereof (the “Substitution Date”), the
Pledged First Mortgage Bonds shall cease to secure the Notes in any manner, and
the Notes of this Series will be secured by First Mortgage Bonds issued under an
indenture other than the Mortgage in accordance with the terms of the Note
Purchase Agreement.  In certain circumstances prior to the
substitution date as provided in the Indenture, the Company is permitted to
reduce the aggregate principal amount of a series of 

    
      
        
          2770684.01.01.doc

          1920735

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    Pledged
First Mortgage Bonds held by the Trustee, but in no event prior to the
substitution date to an amount less than the aggregate outstanding principal
amount of the related series of notes initially issued contemporaneously with
such Pledged First Mortgage Bonds. 

     

    The
Company will make required prepayments of principal on the dates and in the
amounts specified in the Note Purchase Agreement.  This Note is also
subject to optional 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, shall occur and be
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.

     

    Interest
payments for this Note shall be computed and paid on the basis of a 360-day year
of twelve 30-day months.  Anything in the Note Purchase Agreement or
the Indenture to the contrary notwithstanding (but without limiting the
requirement in Section 8.4 of the Note Purchase Agreement 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 or interest on
this 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 this 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. 

     

    The
Company, at its option, and subject to the terms and conditions provided in the
Indenture, will be discharged from any and all obligations in respect of the
Notes of this Series (except for certain obligations as specifically set forth
in the Indenture) if the Company deposits with the Trustee money, U.S.
Government Obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money, or a
combination of money and U.S. Government Obligations, in any event in an amount
sufficient, without reinvestment, as certified by an independent public
accounting firm of national reputation in a written certification delivered to
the Trustee, to pay at maturity or the applicable redemption date (provided that
notice of redemption shall have been duly given or irrevocable provision
satisfactory to the Trustee shall have been duly made for the giving of any
notice of redemption) all outstanding Notes of this Series, including principal
and any premium and interest due or to become due to such date of maturity, as
the case may be.  

     

    The
Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modifications of the rights and obligations of the Company and
the rights of the Noteholders under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of not less than a majority in
principal amount of the outstanding Notes affected by such amendment or
modifications.  Any such consent or waiver by the Holder of this Note
shall be conclusive and binding upon such Holder and upon all future

    
      
        
          - 2 -

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange therefor in lieu thereof whether or not notation of such consent or
waiver is made upon the Note.  

     

    If any
Default or Event of Default has occurred and is continuing, and irrespective of
whether this Note has become or has been declared immediately due and payable
under the Note Purchase Agreement, the Holder of this 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 in the Note Purchase Agreement
or in this Note, or for an injunction against a violation of any of the terms
thereof or hereof, or in aid of the exercise of any power granted thereby or
hereby or by law or otherwise.  

     

    No
reference herein to the Indenture and to provisions of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and any premium and interest on this
Note as prescribed herein or in the Indenture.  

     

    As
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Note is registrable in the Note register.  Upon
surrender of this Note for registration or transfer at the corporate trust
office of the Trustee or such other office or agency as may be designated by the
Company in the city and state of New York, endorsed by or accompanied by a
written instrument of transfer in form satisfactory to the Company and the Note
registrar, duly executed by the Holder hereof or the attorney in fact of such
Holder duly authorized in writing, one or more new Notes of like tenor and of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. 

     

    The Notes
of this series are issuable only in registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof.  As
provided in the Indenture and subject to certain limitations therein set forth,
Notes are exchangeable for a like aggregate principal amount of Notes of like
tenor and of a different authorized denomination, as requested by the Holder
surrendering the same. 

     

    No
service charge shall be made for any such registration of transfer or exchange
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.

     

    Prior to
due presentment of this Note for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Note is registered as the owner thereof for all purposes,
whether or not this Note is overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary. The Indenture and
the Notes shall be governed by, and construed in accordance with, the laws of
the State of New York. 

    
      
        
          - 3 -

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    All
capitalized terms used but not otherwise defined in this Note shall have the
respective meanings assigned to them in the Indenture; provided, however, that the
terms “Default” and “Event of Default” shall have the meanings assigned to them
in the Note Purchase Agreement.  

     

    ABBREVIATIONS

     

    The
following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:  TEN COM - as tenants in common
UNIF GIFT MIN ACT - ________________ Custodian ________________ (Cust)
(Minor)  TEN ENT - as tenants by the entireties Under Uniform Gifts to
Minors JT TEN - as joint tenants with right of survivorship and not as tenants
in common.

     

    Additional
abbreviations may also be used though not in the above list.

    
      
        
          - 4 -

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    For Value Received the
undersigned hereby sell(s),  assign(s) and transfer(s)
unto  please
insert social security or other identifying number of Assignee
___________________________________________.

     

    Please
print or type name and address including postal zip code of assignee the within
note and all rights thereunder, hereby irrevocably constituting and appointing
attorney to transfer said note on the books of the Company, with full power of
substitution in the premises. 

    

    
      	
              Dated:_____________________                                                                                                   
      

            

    

    

     

    Notice:  The
signature to this assignment must correspond with the name as written upon the
face of the within instrument in every particular, without alteration or
enlargement or any change whatever.

    

     

    

    

    
      
        
          - 5 -sjinoteagreement.htm

    Exhibit
10

    
      
        Execution
Version

    

    

    

    

    
      

      

    

    

    

    

     

    South
Jersey Gas Company

     

    

     

    $15,000,000
Medium Term Notes, 

     

    Series C,
2010-1, Tranche A

     

    $45,000,000
Medium Term Notes, 

     

    Series C,
2010-1, Tranche B

     

    _____________

     

    Note
Purchase Agreement

     

    _____________

     

    Dated as
of March 1, 2010

     

    

    

    

    
      

    

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          Execution
Version

        

      

    

    Table
of Contents

     

              Section                        Heading                            Page

    

    
      	
              SECTION
      1.

            	
              AUTHORIZATION
      OF NOTES

            	
              1

            
	
              Section
      1.1.

            	
              Authorization
      of Notes

            	
              1

            
	
              Section
      1.2.

            	
              Pledged
      Mortgage  Bonds

            	
              2

            
	 
      	 
      	 
      
	
              SECTION
      2.

            	
               SALE
      AND PURCHASE OF NOTES

            	
              2

            
	 
      	 
      	 
      
	
              SECTION
      3.

            	
              CLOSING

            	
              3

            
	 
      	 
      	 
      
	
              SECTION
      4.

            	
              CONDITIONS
      TO EACH CLOSING

            	
              4

            
	
              Section
      4.1.

            	
              Representations
      and Warranties of the Company

            	
              4

            
	
              Section
      4.2.

            	
              Performance;
      No Default

            	
              4

            
	
              Section
      4.3.

            	
              Compliance
      Certificates

            	
              4

            
	
              Section
      4.4.

            	
              Opinions
      of Counsel

            	
              4

            
	
              Section
      4.5.

            	
              Purchase
      Permitted by Applicable Law, Etc

            	
              5

            
	
              Section
      4.6.

            	
              Sale
      of Notes

            	
              5

            
	
              Section
      4.7.

            	
              Payment
      of Special Counsel Fees

            	
              5

            
	
              Section
      4.8.

            	
              Private
      Placement Number

            	
              5

            
	
              Section
      4.9.

            	
              Changes
      in Corporate Structure

            	
              5

            
	
              Section
      4.10.

            	
              Funding
      Instructions

            	
              5

            
	
              Section
      4.11.

            	
              UCC
      Financing Statements and the Supplement

            	
              6

            
	
              Section
      4.12.

            	
              Pledged
      Mortgage Bond

            	
              6

            
	
              Section
      4.13.

            	
              Proceedings
      and Documents

            	
              6

            
	 
      	 
      	 
      
	
              SECTION
      5.

            	
                REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

            	
              6

            
	
              Section
      5.1.

            	
              Organization;
      Power and Authority

            	
              6

            
	
              Section
      5.2.

            	
              Authorization,
      Etc

            	
              6

            
	
              Section
      5.3.

            	
              Disclosure

            	
              7

            
	
              Section
      5.4

            	
              Organization
      and Ownership of Shares of Subsidiaries

            	
              7

            
	
              Section
      5.5.

            	
              Financial
      Statements; Material Liabilities

            	
              8

            
	
              Section
      5.6.

            	
              Compliance
      with Laws, Other Instruments, Etc

            	
              8

            
	
              Section
      5.7.

            	
              Governmental
      Authorizations, Etc

            	
              8

            
	
              Section
      5.8.

            	
              Litigation;
      Observance of Statutes and Orders

            	
              8

            
	
              Section
      5.9.

            	
              Taxes

            	
              9

            
	
              Section
      5.10.

            	
              Title
      to Property; Leases

            	
              9

            
	
              Section
      5.11.

            	
              Licenses,
      Permits, Etc

            	
              9

            
	
              Section
      5.12.

            	
              Compliance
      with ERISA

            	
              9

            
	
              Section
      5.13.

            	
              Private
      Offering by the Company

            	
              10

            
	
              Section
      5.14.

            	
              Use
      of Proceeds; Margin Regulations

            	
              10

            
	
              Section
      5.15.

            	
              Existing
      Indebtedness

            	
              11

            
	
              Section
      5.16.

            	
              Foreign
      Assets Control Regulations, Etc

            	
              11

            
	
              Section
      5.17.

            	
              Status
      under Certain Statutes

            	
              12

            

    

    

    
      
        
          -i-

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Section
      5.18.

            	
              Environmental
      Matters

            	
              12

            
	
              Section
      5.19.

            	
              Lien
      of Mortgage

            	
              12

            
	
              Section
      5.20.

            	
              Filings
      under Indenture

            	
              13

            
	
              Section
      5.21.

            	
              Status
      of Certain Material Agreements

            	
              13

            
	 
      	 
      	 
      
	
              SECTION
      6.

            	
                REPRESENTATIONS
      OF THE PURCHASERS

            	
              13

            
	
              Section
      6.1.

            	
              Purchase
      for Investment

            	
              13

            
	
              Section
      6.2.

            	
              Source
      of Funds

            	
              13

            
	
              Section
      6.3.

            	
              Purchaser
      Status; Experience

            	
              15

            
	 
      	 
      	 
      
	
              SECTION
      7.

            	
               INFORMATION
      AS TO COMPANY

            	
              15

            
	
              Section
      7.1.

            	
              Financial
      and Business Information

            	
              15

            
	
              Section
      7.2

            	
              Officer’s
      Certificate

            	
              18

            
	
              Section
      7.3.

            	
              Visitation

            	
              19

            
	 
      	 
      	 
      
	
              SECTION
      8.

            	
              PAYMENT
      OF THE NOTES

            	
              19

            
	
              Section
      8.1.

            	
              Required
      Prepayments

            	
              19

            
	
              Section
      8.2.

            	
              Optional
      Prepayments with Make-Whole Amount

            	
              20

            
	
              Section
      8.3.

            	
              Allocation
      of Partial Prepayments

            	
              20

            
	
              Section
      8.4.

            	
              Maturity;
      Surrender, Etc

            	
              20

            
	
              Section
      8.5.

            	
              Purchase
      of Notes

            	
              20

            
	
              Section
      8.6.

            	
              Make
      Whole Amount for the Notes

            	
              21

            
	
              Section
      8.7.

            	
              Change
      in Control

            	
              22

            
	 
      	 
      	 
      
	
              SECTION
      9.

            	
              AFFIRMATIVE
      COVENANTS

            	
              23

            
	
              Section
      9.1.

            	
              Compliance
      with Law

            	
              23

            
	
              Section
      9.2.

            	
              Insurance

            	
              24

            
	
              Section
      9.3.

            	
              Maintenance
      of Properties

            	
              24

            
	
              Section
      9.4.

            	
              Payment
      of Taxes

            	
              24

            
	
              Section
      9.5.

            	
              Corporate
      Existence, Etc

            	
              24

            
	
              Section
      9.6.

            	
              Books
      and Records

            	
              24

            
	
              Section
      9.7.

            	
              Compliance
      with Material Agreements

            	
              24

            
	 
      	 
      	 
      
	
              SECTION
      10.

            	
                NEGATIVE
      COVENANTS

            	
              25

            
	
              Section
      10.1.

            	
              Transactions
      with Affiliates

            	
              25

            
	
              Section
      10.2.

            	
              Line
      of Business

            	
              25

            
	
              Section
      10.3.

            	
              Terrorism
      Sanctions Regulations

            	
              25

            
	
              Section
      10.4.

            	
              Release
      of Lien of Indenture or Mortgage

            	
              25

            
	 
      	 
      	 
      
	
              SECTION
      11.

            	
              EVENTS
      OF DEFAULT; ACCELERATION

            	
              25

            
	
              Section
      11.

            	
              Events
      of Default

            	
              25

            
	
              Section
      12.1.

            	
              Acceleration

            	
              27

            
	
              Section
      12.2.

            	
              Other
      Remedies

            	
              28

            

    

    

    
      
        
          -ii-

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Section
      12.3.

            	
              Rescission

            	
              28

            
	
              Section
      12.4.

            	
              No
      Waivers or Election of Remedies, Expenses, Etc

            	
              28

            
	 
      	 
      	 
      
	
              SECTION
      13.

            	
              PAYMENTS
      ON NOTES

            	
              29

            
	
              Section
      13.1.

            	
              Home
      Office Payment

            	
              29

            
	 
      	 
      	 
      
	
              SECTION
      14.

            	
               REGISTRATION;
      EXCHANGE; EXPENSES, ETC

            	
              29

            
	
              Section
      14.1.

            	
              Registration
      of Notes

            	
              29

            
	
              Section
      14.2.

            	
              Transaction
      Expenses

            	
              29

            
	
              Section
      14.2.

            	
              Survival

            	
              30

            
	 
      	 
      	 
      
	
              SECTION
      16.

            	
              AMENDMENT
      AND WAIVER

            	
              30

            
	
              Section
      16.1.

            	
              Requirements

            	
              30

            
	
              Section
      16.2.

            	
              Solicitation
      of Holders of Notes

            	
              31

            
	
              Section
      16.3.

            	
              Binding
      Effect, Etc

            	
              31

            
	
              Section
      16.4.

            	
              Notes
      Held by Company, Etc

            	
              32

            
	 
      	 
      	 
      
	
              SECTION
      17.

            	
              NOTICES

            	
              32

            
	 
      	 
      	 
      
	
              SECTION
      18.

            	
              INDEMNIFICATION

            	
              32

            
	 
      	 
      	 
      
	
              SECTION
      19.

            	
              REPRODUCTION
      OF DOCUMENTS

            	
              33

            
	 
      	 
      	 
      
	
              SECTION
      20.

            	
              CONFIDENTIAL
      INFORMATION

            	
              33

            
	 
      	 
      	 
      
	
              SECTION
      21.

            	
                MISCELLANEOUS

            	
              34

            
	
              Section
      21.1.

            	
              Successors
      and Assigns

            	
              34

            
	
              Section
      21.2.

            	
              Accounting
      Terms

            	
              34

            
	
              Section
      21.3.

            	
              Severability

            	
              34

            
	
              Section
      21.4.

            	
              Construction,
      Etc

            	
              34

            
	
              Section
      21.5.

            	
              Counterparts

            	
              35

            
	
              Section
      21.6.

            	
              Governing
      Law

            	
              35

            
	
              Section
      21.7.

            	
              Jurisdiction
      and Process; Waiver of Jury Trial

            	
              35

            
	
              Section
      22.2.

            	
              Payments
      Due on Non-Business Days

            	
              36

            

    

    

    

    

    

    

    
      
        
          -iii-

           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    

      
        	 
      

                Schedule
      A

              	 
      

                —

              	 
      

                Information
      Relating to Purchasers

              
	
                Schedule
      B

              	
                —

              	
                Defined
      Terms

              
	
                Schedule
      4.11

              	
                —

              	
                Collateral
      Filings

              
	
                Schedule
      5.4

              	
                —
      

              	
                Subsidiaries
      of the Company

              
	
                Schedule
      5.5

              	
                —
      

              	
                Financial
      Statements

              
	
                Schedule
      5.15(a)

              	
                —

              	
                Existing
      Indebtedness

              
	
                Schedule
      5.15(b)

              	
                —

              	
                Liens
      not permitted by Mortgage

              
	
                Schedule
      5.15(c)

              	
                —

              	
                Debt
      Instruments

              
	
                Exhibit
      A

              	
                —

              	
                Form
      of Fourth Supplemental Indenture

              
	
                Exhibit
      4.4(a)(i) 

              	
                —

              	
                Form
      of Opinion of Special Counsel for the Company

              
	
                Exhibit
      4.4(a)(ii) 

              	
                —

              	
                Form
      of Opinion of General Counsel for the
Company

              

      

      
        
          -iv- 

        

        
           

          
            

          

        

        
           

        

      

    South
Jersey Gas Company

    Number
One South Jersey Plaza, Route 54

    Folsom,
New Jersey 08037

     

    $15,000,000
Medium Term Notes, 

     

    Series C,
2010-1, Tranche A

     

    $45,000,000
Medium Term Notes, 

     

    Series C,
2010-1, Tranche B

     

    March 1,
2010

     

    To Each
of The Purchasers Listed in

    Schedule
A Hereto:

     

    Ladies
and Gentlemen:

     

    South
Jersey Gas Company, a corporation organized under the laws of the State of New
Jersey (the “Company”),
agrees with each of the purchasers whose names appear at the end hereof (each, a
“Purchaser” and,
collectively, the “Purchasers”) as
follows:

     

    
      	
              Section
      1.    Authorization
      of Notes.

            

    

     

    Section 1.1. Authorization of
Notes  The Company has authorized and will create an issue of
$15,000,000 principal amount of its Medium Term Notes, Series C, 2010-1,
Tranche A due March 1, 2026 (the “Tranche A Notes”) and an
issue of $45,000,000 principal amount of its Medium Term Notes, Series C,
2010-1, Tranche B due on the Tranche B Maturity Date, as such term is defined
below (the “Tranche B
Notes” and, together with the Tranche A Notes, the “Notes”).  The
Notes will be issued under an Indenture of Trust dated as of October 1,
1998 (the “Original
Indenture”), between the Company and The Bank of New York, as Trustee
(the “Trustee”), as
heretofore supplemented by three Supplemental Indentures and as further
supplemented by a Fourth Supplemental Indenture dated as of February 26, 2010
(the “Fourth Supplemental
Indenture”), which will be substantially in the form attached hereto as
Exhibit A.  The Original Indenture as so amended and supplemented
is herein called the “Indenture.”  Copies
of the Original Indenture and all the supplemental indentures requested by you
have been delivered to you.  The Notes shall be issuable in fully
registered form only.  The Tranche A Notes shall mature on
March 1, 2026, shall bear interest at the rate of 4.84% per annum payable
semiannually on March 1 and September 1 of each year, commencing
September 1, 2010, shall be subject to redemption as provided in the
Indenture, and shall be in the form established pursuant to the Fourth
Supplemental Indenture.  The Tranche B Notes shall mature on the
Tranche B Maturity Date, shall bear interest at rate of 4.84% plus the Increase Margin per
annum payable semiannually on the sixth month anniversary and yearly anniversary
of the Tranche B Reference Date of each year, commencing on the first such date
following the Second Closing Date, shall be subject to redemption as provided in
the Indenture, and shall be in the form established pursuant to the Fourth
Supplemental Indenture.  As permitted by the Fourth Supplemental
Indenture, the Notes originally issued to you thereunder shall be dated, and
bear interest from, the date of their original issue on the applicable Closing
Date.

     

    
      
        
           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    “Increase Margin” means the
number of basis points specified in the table below that corresponds to the
calendar month in which the Second Closing Date shall occur:

     

    
      	
              Month
      in which

              Second
      Closing Date Occurs

            	
              Additional
      Basis Points to

              Benchmark
      Interest Rate

            
	
              March,
      2010

            	
              0
      basis points

            
	
              April,
      2010

            	
              3
      basis points

            
	
              May,
      2010

            	
              6
      basis points

            
	
              June,
      2010

            	
              9
      basis points

            

    

     

    Certain
capitalized and other terms used in this Agreement are defined in
Schedule B; and references to a “Schedule” or an “Exhibit” are, unless
otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.  Terms used herein but not defined herein shall have the
meanings set forth in the Indenture.  

     

    Section 1.2. Pledged Mortgage
Bonds  The Notes will be secured by that certain South Jersey
Gas Company First Mortgage Bond, 10% Medium Term Notes Series C dated September
13, 2005 (the “Pledged
Mortgage Bond”) issued to the Trustee to secure up to $100,000,000
principal amount of medium term notes issued under the Indenture.  The
Pledged Mortgage Bond was issued under the Twenty-Fourth Supplemental Indenture
dated as of September 1, 2005, between the Company and The Bank of New York, as
trustee, as amended by that Amendment to Twenty-Fourth Supplemental Indenture
dated as of March 31, 2006, between the Company and The Bank of New York, as
trustee, (as so amended, the “Twenty-Fourth Supplemental Mortgage
Indenture”), which supplements the First Mortgage dated October 1,
1947 from the Company to The Bank of New York, as trustee (the “Mortgage Trustee”), as
successor trustee to Guarantee Bank and Trust Company, as supplemented to date
and from time to time hereafter (the “Mortgage”).  Excluding
the Notes, the Pledged Mortgage Bond currently secures $35,000,000 in aggregate
principal amount of medium term notes of the Company issued under the
Indenture.    

     

    Section
2.  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
Closings provided for in Section 3, Notes in the principal amount and of
the tranche specified opposite such Purchaser’s name in Schedule A at the
purchase price of 100% of the principal amount thereof.  The
Purchasers’ obligations hereunder are several and not joint obligations and no
Purchaser shall have any liability to any Person for the performance or
non-performance of any obligation by any other Purchaser
hereunder.

     

    
      
        
           

           

        

         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    Section
3.Closing.

     

    (a)Tranche A Notes. The sale and purchase of
the Tranche A Notes to be purchased by each Purchaser shall occur at the offices
of Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603 at
9:00 a.m. Central time, at a closing (the “First Closing”) on March 1,
2010 or on such other Business Day thereafter on or prior to March 31, 2010 as
may be agreed upon by the Company and the Purchasers of the Tranche A
Notes.  On the First Closing Date, the Company will deliver to each
Purchaser the Tranche A Notes to be purchased by such Purchaser in the form of a
single Tranche A Note (or such greater number of Tranche A Notes in
denominations of at least $50,000 as such Purchaser may request) dated the date
of the First Closing Date and registered in such Purchaser’s name (or in the
name of such Purchaser’s 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 to an account specified pursuant to Section 4.10
hereof.  If, on the First Closing Date, the Company shall fail to
tender such Tranche A Notes to any Purchaser as provided above in this
Section 3(a), or any of the conditions specified in Section 4 shall
not have been fulfilled to any Purchaser’s satisfaction, such Purchaser shall,
at such Purchaser’s 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.

     

    (b)Tranche B Notes. The sale and purchase of
the Tranche B Notes to be purchased by each Purchaser shall occur at the offices
of Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603 at
9:00 a.m. Central time, at a closing (the “Second Closing”) on March 1,
2010 or on such other Business Day thereafter on or prior to June 30, 2010 as designated by the
Company in a written notice furnished to the Purchasers of the Tranche B Notes
at least 10 Business Days’ prior to the Second Closing Date.  On the
Second Closing Date, the Company will deliver to each Purchaser the Tranche B
Notes to be purchased by such Purchaser in the form of a single Tranche B Note
(or such greater number of Tranche B Notes in denominations of at least $50,000
as such Purchaser may request) dated the date of the Second Closing Date and
registered in such Purchaser’s name (or in the name of such Purchaser’s
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 to an
account specified pursuant to Section 4.10 hereof.  If, on the
Second Closing Date, the Company shall fail to tender such Tranche B Notes to
any Purchaser as provided above in this Section 3(b), or any of the
conditions specified in Section 4 shall not have been fulfilled to any
Purchaser’s satisfaction, such Purchaser shall, at such Purchaser’s 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.

    
      
        
           

        

         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    Section
4.Conditions to Each
Closing.

     

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

     

    Section 4.1. Representations and Warranties of
the Company. The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of such Closing except that (a) Schedule 5.4 may be amended by the
Company in connection with the Second Closing to update the information required
by Section 5.4(a), and (b) Schedule 5.15 may be amended by the Company in
connection with the Second Closing to update the information required by Section
5.15(a) and Section 5.15(c), in each case based on acts, omissions, facts or
other circumstance which occurred subsequent to the date of this Agreement and
prior to the Second Closing Date, provided that no such
amendment, individually, or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

     

    Section 4.2. Performance; No Default. 
The Company shall have performed and complied with all agreements and conditions
contained in each Financing Agreement required to be performed or complied with
by the Company and prior to or at such Closing, and after giving effect to the
issue and sale of the applicable Notes (and the application of the proceeds
thereof as contemplated by Section 5.14), no Default or Event of Default
shall have occurred and be continuing.  

     

    Section 4.3. Compliance
Certificates.  The Company shall have performed and complied
with all agreements and conditions contained in the Indenture and the Mortgage
which are required to be performed or complied with by the Company for the
issuance of the applicable Notes and the Pledged Mortgage Bond.  In
addition, on the date of such Closing the Company shall have delivered the
following certificates:

     

    (a)Officer’s
Certificates.  The Company shall have delivered to such
Purchaser (i) an Officer’s Certificate, dated the date of the such Closing,
certifying that the conditions specified in Section 4 of this Agreement
have been fulfilled, (ii) copies of all certificates and opinions required
to be delivered to the Trustee under the Indenture in connection with the
issuance of the Notes under the Indenture, in each case, dated the date of the
such Closing, and (iii) copies of all certificates and opinions delivered
to the Mortgage Trustee under the Mortgage in connection with the issuance of
the Pledged Mortgage Bond; and

     

    (b)Secretary’s
Certificate.  The Company shall have delivered to such
Purchaser a certificate of its Secretary or Assistant Secretary, dated the date
of such Closing, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
this Agreement, the applicable Notes, the Pledged
Mortgage Bond and the Fourth Supplemental Indenture.

     

    Section
4.4. Opinions of
Counsel.  Such Purchaser shall have received opinions in form
and substance reasonably satisfactory to such Purchaser, dated the date of the
such 

    
      
        
           

        

         

      

      
        -4-

        
          

        

      

      
         

      

    

     Closing (a) from
(i) Cozen O'Connor,counsel for the Company and (ii) Gina Merritt-Epps,
General Counsel to the Company, covering the matters set forth in
Exhibits 4.4(a)(i) and 4.4(a)(ii) and covering such other matters incident
to the transactions contemplated hereby as such Purchaser or its counsel may
reasonably request and (b) from Chapman and Cutler LLP, the Purchasers’
special counsel in connection with such transactions, covering such matters
incident to such transactions as such Purchaser may reasonably
request.  The Company hereby directs its counsel to deliver such
opinions and understands and agrees that each Purchaser will and hereby is
authorized to rely on such opinions.  

     

    Section 4.5. Purchase Permitted by Applicable
Law, Etc.  On the date of such Closing such Purchaser’s
purchase of the applicable 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, which law or regulation
was not in effect on the date hereof.  If requested by such 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 such
Purchaser to determine whether such purchase is so permitted.

     

    Section 4.6. Sale of
Notes.  Contemporaneously with such Closing, the Company shall
sell to each Purchaser and each Purchaser shall purchase the applicable Notes to
be purchased by it at such Closing as specified in Schedule A.

     

    Section 4.7. Payment of Special Counsel
Fees.  Without limiting the provisions of Section 11, the
Company shall have paid on or before such 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 SVO) shall have been
obtained for the applicable Notes.

     

    Section 4.9. Changes in Corporate
Structure.  The Company shall not have changed its jurisdiction
of organization, or been a party to any merger or consolidation or 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 such Closing, each Purchaser shall have received written instructions signed
by a Responsible Officer on letterhead of the Company setting forth wire
instructions for payment of the purchase price of the applicable Notes,
including (a) the name and address of the transferee bank, (b) such
transferee bank’s ABA number and (c) the account name and number into which
the purchase price for the applicable Notes is to be deposited.

    
      
        
           

           

        

         

      

      
        -5-

        
          

        

      

      
         

      

    

      

    Section 4.11. UCC Financing Statements and the
Supplement.  All UCC Financing Statements, the Original
Mortgage, the Twenty-Fourth Supplemental Mortgage Indenture or other instruments
with respect thereto as may be necessary shall have been duly filed or recorded
in such manner and in such places as is reasonably satisfactory to the
Purchasers (and their special counsel) and the Company and as described in
Schedule 4.11 (collectively, the “Collateral Filings”) (and no
other instruments shall be required to be filed) to establish and perfect the
security interests and liens of the Trustee in the Mortgaged Property created by
the Mortgage and which can be perfected by filing the Mortgage or a UCC
Financing Statement under the UCC.

     

    Section 4.12. Possession of Pledged Mortgage
Bond.  Such Purchaser shall have received written confirmation
from the Trustee that it has possession of the Pledged Mortgage Bond in an
aggregate outstanding principal amount of $100,000,000 and that the aggregate
outstanding principal amount of all medium term notes of the Company issued
under the Indenture prior to the issuance of the Notes that are secured by the
Pledged Mortgage Bond is $35,000,000. 

     

    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 reasonably satisfactory to
such Purchaser and its special counsel, and such Purchaser and its special
counsel shall have received all such counterpart originals or certified or other
copies of such documents as such Purchaser or such special counsel may
reasonably request.  Each Purchaser that so requests shall have
received a copy of the Indenture and the Mortgage (together with all amendments
and supplements thereto), certified by the Company as of the date of such
Closing, exclusive of property exhibits, recording information and the
like.  

     

    
      	
              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 and
validly existing under the State of New Jersey and is in good standing under the
laws of the State of New Jersey, 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 each Financing Agreement and to
perform the provisions hereof and thereof.

     

    Section 5.2. Authorization,
Etc.  Each Financing Agreement has been duly authorized by all
necessary corporate action on the part of the Company, and each Financing
Agreement constitutes, and upon execution and delivery thereof each Note will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance 

     

    
      
        
           

        

         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    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, Banc of America Securities, LLC, TD Securities
(USA) LLC and Wells Fargo Securities, LLC, has delivered to you and each Other
Purchaser a copy of an Information Memorandum, dated December 7, 2009 (such
memorandum and the documents incorporated by reference therein, the “Memorandum”), relating to
the Company.  The Memorandum fairly describes, in all material
respects, the general nature of the business and principal properties of the
Company and its Subsidiaries.  This Agreement, the Memorandum, the
documents, certificates or other writings delivered to the Purchasers by or on
behalf of the Company in connection with the transactions contemplated hereby
and the financial statements listed in Schedule 5.5, in each case,
delivered to the Purchasers prior to December 18, 2009 (this Agreement, the
Memorandum and such documents, certificates or other writings and such financial
statements being referred to, collectively, as 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
December 31, 2008, there has been no change in the financial condition,
operations, business or properties of the Company or any of its Subsidiaries
except changes that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.  There is no fact known to
the Company that would reasonably be expected to have a Material Adverse Effect
that has not been set forth herein or in the Disclosure Documents.

     

    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, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each
other Subsidiary.

     

    (b)All of the outstanding shares of capital stock
or similar equity interests of each 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 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 Subsidiary has the
corporate or other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business it transacts
and proposes to transact.

    

    
      
        
           

        

         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    (d)No Subsidiary is a party to, or otherwise
subject to, any legal, regulatory, contractual or other restriction or any
agreement (other than this Agreement, the agreements listed on Schedule 5.4
and customary limitations imposed by corporate law statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of such
Subsidiary.  

     

    Section 5.5. Financial Statements; Material
Liabilities.  The Company has delivered to each Purchaser
copies of the financial statements of the Company 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 financial position of the Company as of the respective dates
specified in such Schedule and the consolidated results of its 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 does not
have any Material liabilities that are not disclosed on such financial
statements or on Schedule 5.15.

     

    Section 5.6. Compliance with Laws, Other
Instruments, Etc.  The execution, delivery and performance by
the Company of each Financing Agreement will not (a) contravene, result in
any breach of, or constitute a default under, or result in the creation of any
Lien, other than the Lien created under the Mortgage, in respect of any property
of the Company or any 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 Subsidiary is
bound or by which the Company or any 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 Subsidiary, including, without limitation, the Public
Order, or (c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
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, delivery or performance by the Company of any
Financing Agreement, except for any approval that has already been obtained,
including without limitation the Public Order, or for certain post-Closing
filing requirements with the Board of Public Utilities, State of New Jersey, as
required by the Public Order.  The period of time for filing an appeal
as of right to the Superior Court of New Jersey, Appellate Division with respect
to the Public Order, has expired. 

     

    Section
5.8. Litigation; Observance of Statutes
and Orders.  

       

      (a) There
are no actions, suits, investigations or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any 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. 

    

    
      
        
           

        

         

      

      
        -8-

        
          

        

      

      
         

      

    

      

    (b)Neither the Company nor any 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 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 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 levied upon them or
their properties, assets, income or franchises, 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 Company knows of no basis for any other tax or assessment
that would reasonably be expected to have a Material Adverse
Effect.  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 finally determined (whether by reason
of completed audits or the statute of limitations having run) for all fiscal
years up to and including the fiscal year ended December 31, 2005.

     

    Section 5.10. Title to Property;
Leases.  The Company and its Subsidiaries have good and
sufficient title to their respective properties that individually or in the
aggregate are Material, 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 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 (other than the Lien created under the Mortgage)
prohibited by this Agreement, the Indenture or the Mortgage.  To the
Company’s knowledge, all Material leases are valid and subsisting and are in
full force and effect in all material respects.  

     

    Section 5.11. Licenses, Permits,
Etc.  The Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, proprietary
software, service marks, trademarks and trade names, or rights thereto, that,
individually or in the aggregate, are Material to its business as now being
conducted, without known conflict with the rights of others, except for those
conflicts that would not be reasonably expected to have a Material Adverse
Effect.

     

    Section
5.12. Compliance with
ERISA.  (a) Each Plan operated and administered by the Company
or any ERISA Affiliate and each Plan with which the Company or any ERISA
Affiliate has a relationship has been operated and administered 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(3) of ERISA), which liability has resulted or would reasonably be
expected to result in a 

    
      
        
           

        

         

      

      
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    Material
Adverse Effect, and no event, transaction or condition has occurred or exists
that could 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 such
penalty or excise tax provisions or to Section 401(a)(29) or 412 of the
Code or Section 4068 of ERISA, other than such liabilities or Liens as
would not be individually or in the aggregate Material.

     

    (b)The present value of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer Plans), determined
as of the end 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 aggregate current value 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 terms “current value” and “present value” have the
meanings specified in Section 3 of ERISA.

     

    (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 expected postretirement benefit obligation
(determined as of the last day of the Company’s most recently ended fiscal year
in accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated by
Section 4980B of the Code) of the Company and its 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 to each Purchaser in the first sentence of this Section 5.12(e) 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 acting on the Company’s behalf has offered the Notes 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-five (25) other
Institutional Investors, each of which has been offered the Notes in connection
with 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 or to the registration requirements of any securities or
blue sky laws of any applicable jurisdiction.

       

      Section 5.14. Use of Proceeds; Margin
Regulations.  The Company will use the proceeds of the sale of
the Notes to repay short-term debt and for general corporate purposes, including
funding capital expenditure requirements.  No part of the proceeds
from the sale of the Notes hereunder will be used, directly or indirectly, for
the purpose of buying or 

    

    
      
        
           

        

         

      

      
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    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 1% 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
1% 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
Indebtedness.  

     

    (a)Except as described therein, Schedule 5.15
sets forth a complete and correct list of all outstanding Indebtedness of the
Company and its Subsidiaries as of September 30, 2009 (including a description
of the obligors and obliges, principal amount outstanding and collateral
therefor, if any, and Guaranty thereof, if any), since which date there has been
no Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of the Company or its
Subsidiaries.  Neither the Company nor any Subsidiary is in default
and no waiver of default is currently in effect, in the payment of any principal
or interest on any Indebtedness of the Company or such Subsidiary, and no event
or condition exists with respect to any Indebtedness of the Company or any
Subsidiary, that would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such Indebtedness to become due
and payable before its stated maturity or before its regularly scheduled dates
of payment.

     

    (b)Except as disclosed in Schedule 5.15,
neither the Company nor any Subsidiary has agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
its property, whether now owned or hereafter acquired, to be subject to a Lien
not permitted by the Mortgage or, after the Substitution Date (as defined in the
Indenture), the mortgage contemplated by Section 10.4 hereof.

     

    (c)Neither the Company nor any Subsidiary is a
party to, or otherwise subject to any provision contained in, any instrument
evidencing Indebtedness 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, Indebtedness of the Company,
except as specifically indicated in Schedule 5.15.

     

    Section 5.16. Foreign Assets Control Regulations,
Etc.  

     

    (a)Neither the sale of the Notes by the
Company hereunder nor its use of the proceeds thereof will violate the Trading
with the Enemy Act, as amended, or any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating
thereto.

     

    
      
        
        

      

      
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(b)Neither the Company nor any
Subsidiary (i) is a Person described or designated in the Specially
Designated Nationals and Blocked Persons List of the Office of Foreign Assets
Control or in Section 1 of the Anti-Terrorism Order or (ii) to the
knowledge of the Company engages in any dealings or transactions with any such
Person.  The Company and its Subsidiaries are in compliance, in all
material respects, with the USA Patriot Act.

     

    (c)No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended, assuming in all cases that such Act applies to the
Company.

     

    Section 5.17. Status under Certain
Statutes.  Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 2005, as amended, the ICC Termination Act of
1995, as amended, nor is the Company or any Subsidiary subject to rate
regulation under the Federal Power Act, as amended.

     

    Section 5.18. Environmental
Matters.  

     

    (a)Neither the Company nor any Subsidiary has
knowledge of any liability or has received any notice of any liability, and no
proceeding has been instituted raising any liability against the Company or any
of its 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.

      (b)Neither the Company nor any Subsidiary has
knowledge of any facts which would give rise to any liability, 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.

     

    (c)Neither the Company nor any of its 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
each case in a manner contrary to any Environmental Laws in any manner that
would reasonably be expected to result in a Material Adverse
Effect.

     

    (d)All buildings on all real properties now owned,
leased or operated by the Company or any of its 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. Lien of
Mortgage.  The Mortgage constitutes a direct and valid lien
upon all of the properties and assets of the Company specifically or generally
described or referred to in the Mortgage as being subject to the lien thereof,
subject only to Permitted Encumbrances, and will create a similar lien upon all
properties and assets acquired by the Company 

     

    
      
        
        

      

      
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    after the
date hereof which are required to be subjected to the lien of the Mortgage, when
acquired by the Company, subject only to the exceptions referred to in the
Mortgage and Permitted Encumbrances, and subject, further, as to real property,
to the recordation of a supplement to the Mortgage describing such
after-acquired property; the descriptions of all such properties and assets
contained in the granting clauses of the Mortgage are correct and adequate for
the purposes of the Mortgage; and the Mortgage (including the Twenty-Fourth
Supplemental Mortgage Indenture) has been duly recorded as a mortgage and deed
of trust of real estate, and any required filings with respect to personal
property and fixtures subject to the lien of the Mortgage have been duly made in
each place in which such recording or filing is required to protect, preserve
and perfect the lien of the Mortgage; and all taxes and recording and filing
fees required to be paid with respect to the execution, recording or filing of
the Mortgage (including the Twenty-Fourth Supplemental Mortgage Indenture), the
filing of financing statements related thereto and similar documents and the
issuance of the Notes have been paid.

     

    Section 5.20. Filings under
Indenture.  No action, including any filing, registration,
notice or approval, is necessary or advisable in New Jersey, New York or any
other jurisdiction to establish or protect for the benefit of the Trustee and
the holders of Notes, that the Notes are secured by the Pledged Mortgage
Bond.

     

    Section 5.21. Status of Certain Material
Agreements.  No amendment, modification, supplement or other
change has been made to the Mortgage since the Twenty-Fourth Supplemental
Mortgage Indenture.

     

    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 their property shall at all times be within
such Purchaser’s or their control.  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.  Each Purchaser
understands that the Notes are being offered and sold in reliance upon specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgements and understandings
set forth herein in order to determine the applicability of such exemptions and
the suitability of such Purchaser to acquire 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:

     

    
      
        
        

      

      
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(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

     

    (d)the Source constitutes assets of an “investment
fund” (within the meaning of Part V(b) of PTE 84-14 (the “QPAM
Exemption”)) managed by a “qualified professional asset manager” or “QPAM”
(within the meaning of Part V(a) of the QPAM Exemption); no employee
benefit plan’s assets that are included 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
Section V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM; the conditions of Part I(c) and (g) of the QPAM
Exemption are satisfied; neither the QPAM nor a person controlling or controlled
by the QPAM (applying the definition of “control” in Section V(e) of the
QPAM Exemption) owns a 5% or more interest in the Company; and (i) the
identity of such QPAM and (ii) the names of all employee benefit plans
whose assets are included in 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 Section 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
Section IV(d) of the INHAM Exemption) owns a 5% 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

     

    
      
        
        

      

      
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      (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 “plan assets” of
any employee benefit plan, other than a plan exempt from the coverage of
Title I 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.

     

    Section 6.3. Purchaser Status; Experience.
Each Purchaser separately represents that such Purchaser is, and on the
applicable Closing Date will be, an “accredited investor” as defined in Rule
501(a) under the Securities Act.  Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Notes, and has so
evaluated the merits and risks of such investment.  Such Purchaser is
able to bear the economic risk of an investment in the Notes and is able to
afford a complete loss of such investment.

     

    Section 6.4. Access to
Information.  Each Purchaser separately acknowledges that such
Purchaser has reviewed the Disclosure Documents and has been afforded (a) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Notes and the risks of investing in the Notes; (b) access
to information about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (c) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the investment.

     

    
      	
              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
60 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:

     

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

    
      
        
        

      

      
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    (ii)consolidated statements of income and changes
in 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 year-end
adjustments;  provided that delivery within
the time period specified above of copies of the Company’s Form 10-Q
prepared in compliance with the requirements therefor and filed with the SEC
shall be deemed to satisfy the requirements of this Section 7.1(a), and provided, further, that the
Company shall be deemed to have made such delivery of such Form 10-Q if it
shall have timely made such Form 10-Q available on “EDGAR” or on, or
through a link on, the website of the Company or its parent, South Jersey
Industries, Inc., and shall have given such holder prior notice of such
availability on EDGAR or on or through the website of the Company or its parent
in connection with each delivery (such availability and notice thereof being
referred to as “Electronic
Delivery”);

     

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

     

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

     

    (ii)consolidated statements of income and changes
in cash flows and 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 of independent 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, provided that the delivery
within the time period specified above of the Company’s Annual Report on Form
10-K for such fiscal year (together with the Company’s annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act)
prepared in accordance with the requirements therefor and filed with the SEC
shall be deemed to satisfy the requirements of this Section 7.1(b), and
provided, further, that
the Company shall be deemed to have made such delivery of such Form 10-K if
it shall have timely made Electronic Delivery thereof;

    
      
        
        

      

      
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    (c)SEC and Other Reports —
except for filings referred to in Section 7.1(a) and (b) above, promptly
upon their becoming available and, to the extent applicable, one copy of
(i) each financial statement, report, notice or proxy statement sent by the
Company or any Subsidiary to public securities holders generally, and
(ii) each regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each prospectus and
all amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission and of all press releases and other
statements made available generally by the Company or any Subsidiary to the
public concerning developments that are Material, provided that the Company
shall be deemed to have made such delivery of such information if it shall have
timely made Electronic Delivery thereof;

     

    (d)Notice of Default or Event of
Default — promptly, and in any event within five Business Days after a
Responsible Officer becomes aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any action with respect
to a claimed default hereunder or that any Person has given any notice or taken
any action with respect to a claimed default of the type referred to in
Section 11(f) hereof, 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 — promptly, and
in any event within ten Business Days after a Responsible Officer becomes 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:

     

    (i)with respect to any Plan (other than any
Multiemployer Plan) that is subject to Title IV of ERISA, 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 hereof and on the date of the applicable
Closing; or

     

    (ii)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 such 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

     

    (iii)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;

    
      
        
        

      

      
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    (f)Supplemental Indentures —
promptly, and in any event within five days after the execution and delivery
thereof, a copy of any supplement to the Indenture or the Mortgage that the
Company from time to time may hereafter execute and deliver which amends the
Indenture or the Mortgage in any material respect; 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 Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be reasonably
requested by any such holder of Notes or such information regarding the
Company required to satisfy the requirements of 17 CFR §230.144A, as
amended from time to time, in connection with any contemplated transfer of the
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) shall be
accompanied by a certificate of a Senior Financial Officer setting
forth:

     

    (a)Covenant Compliance — (i) the
information (including detailed calculations) required in order to establish
whether the Company was in compliance with the requirements of the Indenture and
the Mortgage during the quarterly or annual period covered by the statements
then being furnished to the extent required to be provided under the Indenture
or the Mortgage; (ii) to the extent the Company issued Additional Obligations
under the Indenture or the Mortgage during the period covered by the statements
being furnished, any calculations that the Company provided to the Trustee or
the Mortgage Trustee to show compliance with the Indenture or the Mortgage in
connection with the issuance of the Additional Obligations (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).

     

    (b)Event of Default – a
statement that such Senior Financial Officer has reviewed the relevant terms
hereof and of the Indenture and the Mortgage 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 under either the Indenture or the Mortgage or, if any such condition or
event existed or exists, 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. Visitation.  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 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
Subsidiaries with the Company’s officers to the extent they are reasonably
available, 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 Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and

     

    (b)Default – if a Default or
Event of Default then exists and is continuing, at the expense of the Company to
visit and inspect any of the offices or properties of the Company or any
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 Subsidiaries), all at such times and as often as may be reasonably
requested.

     

    
      	
              Section 8.Payment
      of the Series 2010-1 Notes.

            

    

     

    Section 8.1. Required
Prepayments.   (a) On March 1, 2021 and
on each March 1 thereafter to and including March 1, 2025, the Company
will prepay $2,500,000 principal amount (or such lesser principal amount as
shall then be outstanding) of the Tranche A Notes at par and without payment of
the Make-Whole Amount or any premium.  The entire unpaid principal
amount of the Tranche A Notes shall become due and payable on March 1,
2026.  Upon any partial prepayment or purchase of the Tranche A Notes
pursuant to Section 8.2, Section 8.5 or Section 8.7, the principal
amount of each required prepayment of the Tranche A Notes becoming due under
this Section 8.1 on and after the date of such prepayment or purchase shall be
reduced in the same proportion as the aggregate unpaid principal amount of the
Tranche A Notes is reduced as a result of such prepayment or
purchase.

     

    (b)On the eleventh anniversary of the Second
Closing Date and on each anniversary of the Second Closing Date thereafter to
and including the fifteenth anniversary of the Second Closing Date, the Company
will prepay $7,500,000 principal amount (or such lesser principal amount as
shall then be outstanding) of the Tranche B Notes at par and without payment of
the Make-Whole Amount or any premium.  The entire unpaid principal
amount of the Tranche B Notes shall become due and payable on the Tranche B
Maturity Date.  Upon any partial prepayment or purchase of the Tranche
B Notes pursuant to Section 8.2, Section 8.5 or Section 8.7, the
principal amount of each required prepayment of the Tranche B Notes becoming due
under this Section 8.1 on and after the date of such prepayment or purchase
shall be reduced in the same proportion as the aggregate unpaid principal amount
of the Tranche B Notes is reduced as a result of such prepayment or
purchase.

    
      
        
        

      

      
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    Section 8.2. Optional Prepayments with 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 5% of the aggregate principal amount of the
Notes then outstanding in the case of a partial prepayment, at 100% of the
principal amount so prepaid, together with interest accrued thereon to the date
of such prepayment, plus the Make-Whole Amount determined for the prepayment
date with respect to such principal amount of each Note then
outstanding.  The Company will give each holder of Notes written
notice of each optional prepayment under this Section 8.2 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
8.3), and any other information required to be delivered under the terms of the
Indenture or the Mortgage, 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 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 as of the specified
prepayment date.

     

    Section 8.3. Allocation of Partial
Prepayments.  In the case of each partial prepayment of the
Tranche A Notes or the Tranche B Notes, as applicable, pursuant to the
provisions of Section 8.1(a) or Section 8.1(b), the principal amount of the
Notes to be prepaid shall be allocated among all of the Notes of the applicable
Tranche, at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof.  In the case of each
partial prepayment of the Notes pursuant to the provisions of Section 8.2, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes, at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof. 

     

    Section 8.4. 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 (which shall be a
Business Day), 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 8.5. 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 a
written offer to purchase any outstanding Notes made by the Company or an
Affiliate pro rata to the holders of the Notes upon the same terms and
conditions.  The Company will promptly cancel all Notes 

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    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.

     

    Section 8.6. Make-Whole Amount for the
Notes.  The term “Make-Whole Amount” means
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, minus 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 with respect to the Called Principal of such Note:

     

    “Called Principal” means, the
principal of the Note that is to be prepaid pursuant to Section 8.2 or has
become or is declared to be immediately due and payable pursuant to
Section 12.1 or any other Financing Agreement, as the context
requires.

     

    “Discounted Value” means, the
amount obtained by discounting all Remaining Scheduled Payments 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
such Note is payable) equal to the Reinvestment Yield.

     

    “Reinvestment Yield” means,
0.50% plus the yield to maturity calculated by using (a) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date on screen “PX-1” on the Bloomberg Financial
Market Service (or such other display as may replace Page PX-1) on Bloomberg 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, in
Federal Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded 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 (i) converting U.S. Treasury bill quotations to
Note-equivalent yields in accordance with accepted financial practice and
(ii) interpolating linearly between (1) the applicable U.S. Treasury
security actively traded on the run with the maturity closest to and greater
than such Remaining Average Life and (2) the applicable U.S. Treasury
security actively traded on the run 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. 

     

    “Remaining Average Life”
means the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (a) such Called Principal into (b) the sum of

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        
the
products obtained by multiplying (i) the principal component of each
Remaining Scheduled Payment by ii) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date and the
scheduled due date of such Remaining Scheduled Payment.

    

     

    “Remaining Scheduled
Payments” means, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date 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
such Note, 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 8.2 or
12.1.

     

    “Settlement Date” means, the
date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1 hereof or any other Financing Agreement, as the
context requires.

     

    Section 8.7. Change in
Control.   

     

    (a)Notice of Change in Control.
The Company will, within 15 Business Days after any Responsible
Officer has knowledge of the occurrence of any Change in Control, give written
notice of such Change in Control to each holder of Notes.  If a Change
in Control has occurred, such notice shall contain and constitute an offer to
prepay the Notes as described in subparagraph (b) of this Section 8.7 and
shall be accompanied by the certificate described in subparagraph (e) of this
Section 8.7.  

     

    (b)Offer to Prepay
Notes.  The offer to prepay Notes contemplated by
subparagraph (a) of this Section 8.7 shall be an offer to prepay, in
accordance with and subject to this Section 8.7, all, but not less than
all, 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) on a date specified in such offer (the “Proposed Prepayment
Date”).  If such Proposed Prepayment Date is in connection with
an offer contemplated by subparagraph (a) of this Section 8.7, such
date shall be not less than 20 days and not more than 45 days after the
date of such offer (if the Proposed Prepayment Date shall not be specified in
such offer, the Proposed Prepayment Date shall be the 30th day after the date of
such offer).

     

    (c)Acceptance;
Rejection.  A holder of Notes may accept the offer to prepay
made pursuant to this Section 8.7 by causing a notice of such acceptance or
rejection to be delivered to the Company at least five (5) Business Days prior
to the Proposed Prepayment Date.  A failure by a holder of Notes to respond
to an offer to prepay made pursuant to this Section 8.7 shall be deemed to
constitute a rejection of such offer by such holder.

     

    (d)Prepayment.  Prepayment
of the Notes to be prepaid pursuant to this Section 8.7 shall be at 100% of
the principal amount of such Notes, together with interest on such Notes accrued
to the date of prepayment.  The prepayment shall be made on the
Proposed Prepayment Date.

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    (e)Officer’s Certificate. Each
offer to prepay the Notes pursuant to this Section 8.7 shall be accompanied
by a certificate, executed by a Senior Financial Officer of the Company and
dated the date of such offer, specifying: (i) the Proposed Prepayment Date;
(ii) that such offer is made pursuant to this Section 8.7;
(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 Proposed Prepayment Date; (v) that the conditions of this
Section 8.7 have been fulfilled; and (vi) in reasonable detail, the
nature and date or proposed date of the Change in Control.

     

    (f)Effect on Required
Payments.  The amount of each payment of the principal of the
Notes made pursuant to this Section 8.7 shall be applied against and reduce
each of the then

    remaining
principal payments due pursuant to Section 8.1 by a percentage equal to the
aggregate principal amount of the Notes so paid divided by the aggregate
principal amount of the Notes outstanding immediately prior to such
payment.

     

    (g)“Change in Control”
Defined.  “Change in Control” means the
occurrence of one or more of the following events: 

     

     (a) any sale, lease, exchange or other transfer (in
a single transaction or a series of related transactions) of all or
substantially all of the assets of the Company to any Person or “group” (within
the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder in effect on the First Closing
Date), or 

     

    (b) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or “group” (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the First Closing Date) of
fifty percent (50%) or more of the outstanding ownership interests of the
Company.

     

    
      	
              Section
      9.Affirmative Covenants.

            

    

     

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

     

    Section 9.1. Compliance with
Law.  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, the USA
Patriot Act and Environmental Laws, 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.

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    Section 9.2. Insurance.  The
Company will cause each of its 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 similarly situated.

     

    Section 9.3. Maintenance of
Properties.  The Company will cause each of its 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 any 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 and such Subsidiary has concluded that
such discontinuance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

     

    Section 9.4. Payment of
Taxes.  The Company 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 any Subsidiary does not need to pay any such
tax, assessment, charge or levy if (a) 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 Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
such Subsidiary or (b) the nonpayment of all such taxes, assessments,
charges and levies in the aggregate would not reasonably be expected to have a
Material Adverse Effect.

     

    Section 9.5. Corporate Existence,
Etc.  The Company will at all times preserve and keep in full
force and effect the corporate existence of each of its Subsidiaries (unless
merged into the Company or a wholly-owned Subsidiary) and all rights and
franchises of its Subsidiaries unless, in the good faith judgment of the Company
or such Subsidiary, the termination of or failure to preserve and keep in full
force and effect such corporate existence, right or franchise would not,
individually or in the aggregate, have a Material Adverse Effect.

     

    Section 9.6. Books and
Records.  The Company will, and will cause each of its
Subsidiaries to, maintain proper books of record and account in conformity with
GAAP and all applicable requirements of any Governmental Authority having legal
or regulatory jurisdiction over such Subsidiary, except where any such
nonconformity would not reasonably be expected to have a Material Adverse
Effect.

     

    Section 9.7. Compliance with Material
Agreements.  The Company will comply in all material respects
with the material terms, conditions and provisions of the all Material
agreements, except where such non compliance would not reasonably be expected to
have a Material Adverse Effect.

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
      10.  Negative Covenants.

            

    

     

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

     

    Section 10.1. Transactions with
Affiliates.  The Company will not and will not permit any
Subsidiary to enter into directly or indirectly any Material transaction or
Material 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 another Subsidiary),
except pursuant to the reasonable requirements of the Company’s or such
Subsidiary’s business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an Affiliate.

     

    Section 10.2. Line of
Business.  The Company will not engage in any business if, as a
result, the general nature of the business in which the Company and its
Subsidiaries, taken as a

    whole,
would then be engaged would be substantially changed from the general nature of
the business in which the Company and its Subsidiaries, taken as whole, is
engaged on the date of this Agreement.

     

      Section 10.3. Terrorism Sanctions
Regulations.  The Company will not and will not permit any
Subsidiary to (a) become a Person described or designated in the Specially
Designated Nationals and Blocked Persons List of the Office of Foreign Assets
Control or in Section 1 of the Anti-Terrorism Order or (b) knowingly
engage in any dealings or transactions with any such Person.

     

    Section 10.4. Release of Lien of the
Mortgage.  The Company will not cause or permit the lien of the
Mortgage that secures any collateral thereunder to be released without the prior
written consent of each holder of a Note, other than as permitted under Sections
3.04(D)(3), 3.08, 5.16, 5.20, 6.03, 6.04, 6.07, 6.08, 6.09, 6.10 (to the extent
related to a release of liens permitted under Section 6.11), 6.11, 6.12, 7.02
and 12.01 of the Mortgage.  Notwithstanding the foregoing, the Trustee
may release the Pledged Mortgage Bond and the Mortgage Trustee may release the
lien of the Mortgage,  provided that, on the same date that such liens
are released, the Trustee receives a substituted pledged bond or bonds that are
secured by the same collateral that secured the Pledged Mortgage Bond
immediately prior to its release and the release of the Mortgage pursuant to a
mortgage that is acceptable in scope, form and substance to the Required
Holders, such acceptance not to be unreasonably withheld or delayed, and the
holders of Notes shall have received such opinions of counsel, certificates,
uniform commercial code searches and title searches that provide evidence that
the substituted pledged bonds are secured by a first priority lien on the
collateral purported to be pledged as collateral to secure the substituted
pledged bond or bonds as the Required Holders shall reasonably request.

     

    
      	
              Section 11.Events
      of Default; Acceleration.

            

    

     

    Section 11. Events of Default. An “Event of Default” shall
exist if any of the following conditions or events shall occur and be
continuing:

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

    (a)the Company defaults in the payment of any
principal or Make-Whole Amount, if any, 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 Business Days after the same becomes due
and payable; or

     

    (c)the occurrence of any “Event of Default” under
Section 8.1(a) of the Indenture (other than defaults described in Sections
8.1(a)(1) or 8.1(a)(2)) or the occurrence of any “Event of Default” under
Section 9.02 of the Mortgage (other than defaults described in Section 9.02(1)
or 9.02(2)); or

     

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

     

    (e)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) or in the Indenture or the
Mortgage and such default is not remedied, in the case of defaults hereunder,
within 30 days after the earlier of (i) a Responsible Officer obtaining
actual knowledge of such default and (ii) 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 (e) of Section 11),
and in the case of defaults under either the Indenture or the Mortgage, within
the grace period specified for such defaults respectively in the Indenture and
the Mortgage; or

     

    (f)(i) the Company or any 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 Indebtedness
(other than the Notes and any other notes or other debt instruments
authenticated under the Indenture) that is outstanding in an aggregate principal
amount of at least $50,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any instrument, mortgage,
indenture or other agreement relating to any Indebtedness (other than the Notes
and any other notes or debt instruments authenticated under the Indenture) in an
aggregate principal amount of at least $50,000,000 or any other condition
exists, and as a consequence of such default or condition such Indebtedness has
become, or has been declared, due and payable, or (iii) 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 Indebtedness to convert such Indebtedness
into equity interests), the Company or any Subsidiary has become obligated to
purchase or repay Indebtedness (other than the Notes and any other notes
authenticated under the Indenture) before its regular maturity or before its
regularly scheduled dates of payment in an aggregate outstanding principal
amount of at least $50,000,000; or

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

     

    (g)a final judgment or judgments at any one time
outstanding for the payment of money aggregating in excess of $50,000,000
(except to the extent covered by independent third-party insurance as to which
the insurer acknowledges in writing that such judgment or judgments are covered
by such insurance) are rendered against one or more of the Company or any
Subsidiary and which judgments are not, within 30 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 30
days after the expiration of such stay; or

     

    (h)if (i) any Plan shall fail to satisfy the
minimum funding standards of ERISA or the Code for any plan year or part thereof
or a waiver of such standards or extension of any amortization period is sought
or granted under Section 412 of the Code, (ii) a notice of intent to
terminate any Plan 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, (iii) the aggregate “amount of unfunded
benefit liabilities” (within the meaning of Section 4001(a)(18) of ERISA)
for which the Company
or any ERISA Affiliate is obligated under all Plans, determined in accordance
with Title IV of ERISA, shall exceed $50,000,000, (iv) the Company or
any ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability (other than for premium payments due to the PBGC) pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any ERISA Affiliate withdraws
from any Multiemployer Plan, or (vi) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that could increase the liability
of the Company or any Subsidiary thereunder; provided that any such event
or events described in clauses (i) through (vi) 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(h), 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 12.1. Acceleration.  (a) If
an Event of Default has occurred with respect to the Company in connection with
an “Event of Default” under Sections 8.1(a)(6) or 8.1(a)(7) of the Indenture or
an “Event of Default” under Sections 9.02(5) or 9.02(6) of the Mortgage, all of
the Notes then outstanding shall automatically become immediately due and
payable.

     

    (b)If any other Event of Default has occurred and
is continuing, any holder or holders of more than 50% in aggregate principal
amount of the Notes at the time outstanding may at any time during the
continuation of such Event of Default, at its or their option, by notice or
notices to the Company, declare all of 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 with respect to any
Notes, any holder or holders of Notes at the time outstanding affected by such
Event of Default may at any time during the continuation of such Event of
Default, at its or their option, by notice or notices to the Company, declare
all of the Notes held by such holder or holders to be immediately due and
payable.

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

     

    Upon any
Note’s 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 (i) all accrued and unpaid interest
thereon (including, but not limited to, interest accrued thereon at the Default
Rate) and (ii) the Make-Whole Amount 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 a 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.  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.

     

    Section 12.3. Rescission.  At any
time after the Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 12.1, the holders of more than 50% in
aggregate principal amount of the Notes then outstanding, 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 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 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 any 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.

     

    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
reasonable 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.

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
      13.Payments on Notes.

            

    

     

    Section 13.1. Home Office
Payment.  So long as any Purchaser or its nominee shall be the
holder of any Note, and notwithstanding anything contained in the Indenture or
in such Note to the contrary, the Company will pay all sums becoming due on such
Note for principal, Make-Whole Amount or premium, if any, and interest 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
Trustee at its principal executive office or at the place of payment most
recently designated by the Trustee pursuant to the Indenture.  Prior
to any sale or other disposition of any Note held by a 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 2.6 of the Indenture.  The Company will
afford the benefits of this Section 13.1 to any Institutional Investor that
is the direct or indirect transferee of any Note purchased by a Purchaser under
this Agreement and that has made the same agreement relating to such Note as the
Purchasers have made in this Section 13.1.  

     

    
      	
              Section
      14. Registration; Exchange; Expenses,
Etc.

            

    

     

    Section 14.1. Registration of
Notes.  The Company shall cause the Trustee to keep a register
for the registration and registration of transfers of Notes in accordance with
Section 2.6 of the Indenture.  

     

    Section  14.2. Transaction
Expenses.  Whether or not the transactions contemplated hereby
are consummated, the Company will pay all reasonable costs and expenses
(including reasonable attorneys’ fees of a one special counsel and, if
reasonably required by the Required Holders, one local or other counsel)
incurred (a) by the Purchasers in connection with such transactions, and (b) by
the holders of the Notes in connection with any amendments, waivers or consents
under or in respect of any Financing Agreement (whether or not such amendment,
waiver or consent becomes effective), including, without
limitation:  (i) the reasonable costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend) any
rights under any Financing Agreement or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with any
Financing Agreement, or by reason of being a holder of Notes, (ii) the
reasonable 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  by any Financing Agreement and 

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

     

    (iii) the
reasonable costs and expenses incurred in connection with the initial filing of
any Financing Agreement and all related documents and financial information with
the SVO, provided that such costs and expenses under this clause (iii)
shall not exceed $5,000 for the Notes.  The Company will pay, and will
save each Purchaser 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, if any, retained by a Purchaser or other holder in connection with
its purchase of the Notes).

     

    Section 14.2. Survival.  The
obligations of the Company under this Section 14 will survive the payment
or transfer of any Note, the enforcement, amendment or waiver of any provision
of any Financing Agreement, and the termination of any Financing
Agreement.

     

    Section
15Survival of Representations
and Warranties; Entire Agreement.

     

    All
representations and warranties contained herein shall survive the execution and
delivery of the Financing Agreements, 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 such 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, the Financing
Agreements embody the entire agreement and understanding between each Purchaser
and the Company and supersede all prior agreements and understandings relating
to the subject matter hereof.

     

    
      	
              Section
      16.Amendment and Waiver.

            

    

     

    Section 16.1. Requirements.  The
Company will not cause or permit the Indenture to 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 as set forth in the Fourth Supplemental Indenture and the Notes,
without the written consent of the holder of each Note at the time outstanding
affected thereby.  The Company will not cause or permit the Mortgage
or the Pledged Mortgage Bond to be amended to 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
Pledged Mortgage Bond as set forth in the Twenty-Fourth Supplemental Mortgage
Indenture and the Pledged Mortgage Bond, without the written consent of the
holder of each Note.   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 (i) no
amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or
21 hereof, or any defined term, will be effective as to any holder of Notes
unless consented to by such holder of Notes in writing, and (ii) no such
amendment or waiver may, without the written consent of all of the holders of
Notes at the time outstanding affected thereby, (A) 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 (if such
change results in a decrease in the interest rate) or of the Make-Whole Amount
on, the Notes, (B) 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 (C) amend any of Sections 8, 10.4, 11(a), 11(b), 12, 16 or
20.  

    
      
        
           

           

        

         

      

      
        -30-

        
          

        

      

      
         

      

    

     

    Section 16.2. 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 16 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 (other than legal fees or other related expenses), or grant any
security or provide other credit support, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or 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 16.2 by
the holder of any Note that has transferred or has agreed to transfer such Note
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 or 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 would not 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 transferring holder.

     

    Section 16.3. Binding Effect,
Etc.  Any amendment or waiver consented to as provided in this
Section 16 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 the 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.

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

     

    Section 16.4. 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
17.Notices.

     

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

     

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

     

    (ii)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

     

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

     

    (iv)if to the Trustee, to The Bank of New York, as
Trustee, Attention, Corporate Trust Services, 101 Barclay Street, New
York, New York 10286 or at such other address as the Trustee shall have
specified to the Company and each other party hereto in writing.

     

    Notices
under this Section 17 will be deemed given only when actually
received.

     

    
      	
              Section
      18.Indemnification.

            

    

     

    The
Company hereby agrees to indemnify and hold the Purchasers harmless from,
against and in respect of any and all loss, liability and reasonable expense
(including reasonable attorneys’ fees) arising from any misrepresentation or
nonfulfillment of any undertaking on the part of the Company under this
Agreement.  The indemnification obligations of the Company under this
Section 18 shall survive the execution and delivery of this Agreement, the
delivery of the Notes to the Purchasers and the consummation of the transactions
contemplated herein.

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
      19.Reproduction of Documents.

            

    

     

    This
Agreement and all documents relating thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed,
(b) documents received by any Purchaser at any Closing (except the Notes
themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, electronic,
digital, or other similar process and such Purchaser 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 such Purchaser 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”
means information delivered to any Purchaser or holder of a Note by or on behalf
of the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement or the Notes that is
proprietary in nature and that was clearly marked or labeled or otherwise
adequately identified when received by such Purchaser or holder 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 or holder prior to the time of such disclosure without
an obligation of confidentiality, (b) subsequently becomes publicly known
through no act or omission by such Purchaser or holder or any person acting on
such Purchaser’s or holder’s behalf, (c) otherwise becomes known to such
Purchaser or holder other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to such
Purchaser or holder under Section 7.1 of this Agreement that are otherwise
publicly available.  Each Purchaser and holder  will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by such Purchaser or holder in good faith to protect
confidential information of third parties delivered to such Purchaser or holder
and shall use such information only for purposes of monitoring their investment
in Notes, provided that such Purchaser or holder may deliver or disclose
Confidential Information to (i) its directors, trustees, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by the
Notes and who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 20),
(ii) 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, (iii) any other holder of any Note,
(iv) any Institutional Investor to which it 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), (v) any Person from which it
offers to purchase any security of the Company (if such Person has agreed in
writing prior to its receipt of such Confidential 

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        
Information
to be bound by the provisions of this Section 20), (vi) any federal or
state or provincial regulatory authority having jurisdiction over such Purchaser
or holder, (vii) the NAIC or the SVO or, in each case, any similar
organization, or any nationally recognized rating agency that requires access to
information about such Purchaser’s or holder’s investment portfolio, or
(viii) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to such Purchaser or holder, (x) in response
to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser or holder is a party or (z) if an Event
of Default has occurred and is continuing, to the extent such Purchaser or
holder 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 or holder’s Notes and this Agreement.  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.

    

     

    
      	
              Section
      21.  Miscellaneous.

            

    

     

    Section 21.1. 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;
provided, however, the provisions of Section 7 hereof shall only apply to
Institutional Investors.

     

    Section 21.2. 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, (a) all computations made pursuant to this Agreement shall be made
in accordance with GAAP, and (b) all financial statements shall be prepared
in accordance with GAAP.  For purposes of determining compliance with
the covenants set out in any Financing Agreement, any election by the Company to
measure an item of Indebtedness using fair value (as permitted by Statement of
Financial Accounting Standards No. 159) shall be disregarded and such
determination shall be made by valuing indebtedness at 100% of the outstanding
principal thereof, unless otherwise provided in such Financing
Agreement.

     

    Section 21.3. 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 21.4. Construction,
Etc.  Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other covenant

     

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

    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 21.5. 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.

     

    Section 21.6. 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 permit the application of the laws of a jurisdiction other than
such State.

     

    Section 21.7. Jurisdiction and Process; Waiver of
Jury Trial.  (a) The Company irrevocably submits to the
non-exclusive jurisdiction of any New York State or federal court sitting in the
Borough of Manhattan, The City of New York, over any suit, action or proceeding
arising out of or relating to this Agreement or the Notes.  To the
fullest extent permitted by applicable law, the Company irrevocably waives and
agrees not to assert, by way of motion, as a defense or otherwise, any claim
that it is not subject to the jurisdiction of any such court, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.

     

    (b)The Company consents to process being served by
or on behalf of any holder of Notes in any suit, action or proceeding of the
nature referred to in Section 21.7(a) by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid,
return receipt requested, to it at its address specified in Section 17 or
at such other address of which such holder shall then have been notified
pursuant to said Section.  The Company agrees that such service upon
receipt (i) shall be deemed in every respect effective service of process
upon it in any such suit, action or proceeding and (ii) shall, to the
fullest extent permitted by applicable law, be taken and held to be valid
personal service upon and personal delivery to it.  Notices hereunder
shall be conclusively presumed to be received as evidenced by a delivery receipt
furnished by the United States Postal Service or any reputable commercial
delivery service.

     

    (c)Nothing in this Section 21.7 shall affect the
right of any holder of a Note to serve process in any manner permitted by law,
or limit any right that the holders of any of the Notes may have to bring
proceedings against the Company in the courts of any appropriate jurisdiction or
to enforce in any lawful manner a judgment obtained in one jurisdiction in any
other jurisdiction.

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

     

    (d)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 21.8. Payments Due on Non-Business
Days.  Anything in this Agreement or the Notes to the contrary
notwithstanding (but without limiting the requirement in Section 8.4 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 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.

     

    *   *   *   *   *

    
      
        
           

        

         

      

      
        -36-

        
          

        

      

      
         

      

    

     

    If you
are in agreement with the foregoing, please sign the form of agreement on a
counterpart of this Note Purchase Agreement and return it to the Company,
whereupon this Agreement shall become a binding agreement between you and the
Company.

    

    
      	
               
      

            	
              Very
      truly yours,

            

    

    

    
      	
               
      

            	
              South
      Jersey Gas Company

            

    

    

    

    
      	
               
      

            	
              By
       /s/ David
      A. Kindlick

            

    

    
      	
               
      

            	
               Name:
      David A. Kindlick

            

    

    
      	
               
      

            	
               Its:
      Senior Vice President and 

            

    

    
      	
               
      

            	
                  Chief
      Financial Officer

            

    

    

    

    

    
      	
              [Corporate
      Seal]

            

    

    

    

    

    

    

    
      	
              Attest

            

    

    

    

    
      	
              By
       /s/ Gina
      Merritt-Epps                      

            

    

    
      	
              Name:
      Gina Merritt-Epps

            

    

    
      	
               Its:
      Secretary

            

    

    

    
      
        
           

           

        

         

      

      
        -37-

        
          

        

      

      
         

      

    

     

    This Note
Purchase Agreement is hereby accepted and agreed to as of the date
thereof.

    

    
      	
               
      

            	
              METROPOLITAN
      LIFE INSURANCE COMPANY

            

    

    

    

    

    By:   /s/ John A.
Tanyeri 

    
      	
               
      

            	
              Name:
      John A. Tanyeri

            

    

    
      	
               
      

            	
              Title:
      Director

            

    

    
      
        
           

           

        

         

      

      
        -38-

        
          

        

      

      
         

      

    

     

    This Note
Purchase Agreement is hereby accepted and agreed to as of the date
thereof.

    

    
      	
               
      

            	
              MASSACHUSETTS
      MUTUAL LIFE INSURANCE COMPANY

            

    

    

    
      	
               
      

            	
              By:
      Babson Capital Management LLC, as Investment
  Adviser

            

    

    

    

    By:   /s/ Elisabeth A.
Perenick 

    
      	
               
      

            	
              Name:
      Elisabeth A. Perenick

            

    

    
      	
               
      

            	
              Title:
      Managing Director

            

    

    

    
      	
               
      

            	
              C.M.
      LIFE INSURANCE COMPANY

            

    

    

    
      	
               
      

            	
              By:
      Babson Capital Management LLC, as Investment
  Adviser

            

    

    

    

    By:   /s/ Elisabeth A.
Perenick 

    
      	
               
      

            	
              Name:
      Elisabeth A. Perenick

            

    

    
      	
               
      

            	
              Title:
      Managing Director

            

    

    

    
      	
               
      

            	
              MASSMUTUAL
      ASIA LIMITED

            

    

    

    
      	
               
      

            	
              By:
      Babson Capital Management LLC, as Investment
  Adviser

            

    

    

    

    By:   /s/ Elisabeth A.
Perenick 

    
      	
               
      

            	
              Name:
      Elisabeth A. Perenick

            

    

    
      	
               
      

            	
              Title:
      Managing Director

            

    

    

    

    
      
        
           

        

         

      

      
        -39-

        
          

        

      

      
         

      

    

     

    This Note
Purchase Agreement is hereby accepted and agreed to as of the date
thereof.

    

    
      	
               
      

            	
              UNITED
      OF OMAHA LIFE INSURANCE COMPANY

            

    

    

    

    

    By:   /s/ Justin P.
Kavan  

    
      	
               
      

            	
              Name:
      Justin P. Kavan

            

    

    
      	
               
      

            	
              Title:
      Vice President

            

    

    

    

    
      	
               
      

            	
              MUTUAL
      OF OMAHA INSURANCE COMPANY

            

    

    

    

    

    By:   /s/ Justin P.
Kavan  

    
      	
               
      

            	
              Name:
      Justin P. Kavan

            

    

    
      	
               
      

            	
              Title:
      Vice President

            

    

    

    

    

    
      
        
           

        

         

      

      
        -40-

        
          

        

      

      
         

      

    

     

    This Note
Purchase Agreement is hereby accepted and agreed to as of the date
thereof.

    

    
      	
               
      

            	
              MODERN
      WOODMEN OF AMERICA

            

    

    

    

    

    By:   /s/ Nick S.
Coin  

    
      	
               
      

            	
              Name:
      Nick S. Coin

            

    

    
      	
               
      

            	
              Title:
      Treasurer and Investment Manager

            

    

    

    
      
        
           

        

         

      

      
        -41-

        
          

        

      

      
         

      

    

    

     

    This Note
Purchase Agreement is hereby accepted and agreed to as of the date
thereof.

    

    
      	
               
      

            	
              COUNTRY
      LIFE INSURANCE COMPANY

            

    

    

    

    

    By:   /s/ John
Jacobs   

    
      	
               
      

            	
              Name:
      John Jacobs

            

    

    
      	
               
      

            	
              Title:
      Director—Fixed Income

            

    

    

    
      	
               
      

            	
              COTTON
      STATES LIFE INSURANCE COMPANY

            

    

    

    

    

    By:   /s/ John
Jacobs   

    
      	
               
      

            	
              Name:
      John Jacobs

            

    

    
      	
               
      

            	
              Title:
      Director—Fixed Income

            

    

    

    

    

    

    
      
        
           

        

         

      

      
        -42-

        
          

        

      

      
         

      

    

    
      
        SCHEDULE A

        (to Note Purchase
Agreement)

      

    

     

     

    Purchaser
Schedule

    South
Jersey Gas Company

    Notes

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      A

              Notes
      to be Purchased

            
	
              United
      of Omaha Life Insurance Company

              Mutual
      of Omaha Plaza

              Omaha,
      Nebraska  68175-1011

              Attention:  4-Investment
      Accounting

            	
              $5,000,000

            

    

     

    Payments

    All
principal and interest payments on or in respect of the Notes shall be made by
wire transfer of immediately available funds to:

    

    _________________________

    _________________________

    _________________________

    

    for
credit to:  United of Omaha Life Insurance Company

    Account
Number _________________________

    

    PPN 838515
F*0

    Interest
Amount:                                                          

    Principal
Amount:                                                 
       

     

    Notices

    All
notices of payments of principal and interest, on or in respect of the Notes and
written confirmation of each such payment, corporate actions and reorganization
notifications to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

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

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

     

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

    Taxpayer
I.D. Number:  _________________

     

    

      
        
          
            A-1

             

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      A

              Notes
      to be Purchased

            
	
              Mutual
      of Omaha Insurance Company

              Mutual
      of Omaha Plaza

              Omaha,
      Nebraska  68175-1011

              Attention:  4-Investment
      Accounting

            	
              $2,000,000

            

    

     

    Payments

    All
principal and interest payments on or in respect of the Notes shall be made by
wire transfer of immediately available funds to:

    

    _________________________

    _________________________

    _________________________

    _________________________

    

    for
credit to:  Mutual of Omaha Life Insurance Company

    Account
Number _____________

    

    PPN 838515
F*0

    Interest
Amount:                              

    Principal
Amount:                           

     

    Notices

    All
notices of payments of principal and interest, on or in respect of the Notes and
written confirmation of each such payment, corporate actions and reorganization
notifications to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

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

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

     

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

    Taxpayer
I.D. Number:  _________________

    
      
        
          A-2

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      A

              Notes
      to be Purchased

            
	
              Modern
      Woodmen of America

              1701
      First Avenue

              Rock
      Island, Illinois  61201

              Attention:  Investment
      Department

              Email:
      investments@modern-woodmen.org

              Fax:  (309)
      793-5574

            	
              $5,000,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying each payment as “South Jersey Gas
Corporation, $15,000,000 Medium Term Notes, Series C, 2010-1, Tranche A,
PPN 838515 F*0, principal, premium or interest”) to:

    

    _________________________

    _________________________

    _________________________

    _________________________

    

    Each such
wire transfer shall set forth the name of the Company, the full title (including
the applicable coupon rate and final maturity date) of the Notes, a reference to
PPN 838515 F*0 and the due date and application (as among principal,
premium and interest) of the payment being made.

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment,
to be addressed:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

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

    Taxpayer
I.D. Number:  _________________

    
      
        
          A-3

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      A

              Notes
      to be Purchased

            
	
              Country
      Life Insurance Company

              1705
      N Towanda Avenue 

              Bloomington,
      Illinois  61702

              Attention:  Investments

              Telephone:  (309)
      821-6260

              Fax:  (309)
      821-6301

            	
              $2,000,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds to:

    

    _________________________

    _________________________

    _________________________

    _________________________

    

    Accompanying
Information: South Jersey Gas Corporation, $15,000,000 Medium Term Notes, Series
C, 2010-1, Tranche A, PPN 838515 F*0, due date and application (as among
principal, premium  and interest) of the payment being
made.

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment,
to be addressed:  

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

     

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

    Taxpayer
I.D. Number:  ___________________

    
      
        
          A-4

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      A

              Notes
      to be Purchased

            
	
              Cotton
      States Life Insurance Company

              1705
      N Towanda Avenue 

              Bloomington,
      Illinois  61702

              Attention:  Investments

              Telephone:  (309)
      821-6260

              Fax:  (309)
      821-6301

            	
              $1,000,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment,
to be addressed:  

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

     

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

    Taxpayer
I.D. Number:  _______________

    
      
        
          A-5

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      B

              Notes
      to be Purchased

            
	
              Metropolitan
      Life Insurance Company

              1095
      Avenue of the Americas

              New
      York, NY 10036-6796

            	
              $35,000,000

            

    

     

    Payments

    All
scheduled payments of principal and interest by wire transfer of immediately
available funds to:

    _________________________

    _________________________

    _________________________

    _________________________

    

    with
sufficient information to identify the source and application of such funds,
including issuer, PPN#, interest rate, maturity and whether payment is of
principal, interest, make whole amount or otherwise.  For all payments
other than scheduled payments of principal and interest, the Company shall seek
instructions from the holder, and in the absence of instructions to the
contrary, will make such payments to the account and in the manner set forth
above.

     

    Notices

    
      	
              All
      notices and communications:

               

              _________________________

              _________________________

              _________________________

              _________________________

            	
              With
      a copy (OTHER than with respect to
      deliveries of financial statements) to:

               

              _________________________

              _________________________

              _________________________

                     
      _________________________

            

    

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

     

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

    Taxpayer
I.D. Number:  ___________________

    
      
        
          A-6

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      B

              Notes
      to be Purchased

            
	
              Massachusetts
      Mutual Life Insurance Company

              c/o
      Babson Capital Management LLC

              1500
      Main Street, Suite 2200

              P.O.
      Box 15189

              Springfield,
      Massachusetts 01115-5189

              Attention:  Securities
      Investment Division

            	
              $3,000,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying each payment as “South Jersey Gas
Corporation, $45,000,000 Medium Term Notes, Series C, 2010-1, Tranche B,
PPN _______, principal, premium or interest”) to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    With
telephone advice of payment to the Securities Custody and Collection Department
of Babson Capital Management LLC at (413) 226-1803 or (413)
226-1819.

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed
____________________________________

     

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

    Taxpayer
I.D. Number:  _________________

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

    
      
        
          A-7

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      B

              Notes
      to be Purchased

            
	
              Massachusetts
      Mutual Life Insurance Company

              c/o
      Babson Capital Management LLC

              1500
      Main Street, Suite 2200

              P.O.
      Box 15189

              Springfield,
      Massachusetts 01115-5189

              Attention:  Securities
      Investment Division

            	
              $2,200,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying each payment as “South Jersey Gas
Corporation, $45,000,000 Medium Term Notes, Series C, 2010-1, Tranche B,
PPN _______, principal, premium or interest”) to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    With
telephone advice of payment to the Securities Custody and Collection Department
of Babson Capital Management LLC at (413) 226-1754 or (413)
226-1803.

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed
___________________________________.

     

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

    Taxpayer
I.D. Number:  __________________

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

    
      
        
          A-8

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      B

              Notes
      to be Purchased

            
	
              Massachusetts
      Mutual Life Insurance Company

              c/o
      Babson Capital Management LLC

              1500
      Main Street, Suite 2200

              P.O.
      Box 15189

              Springfield,
      Massachusetts 01115-5189

              Attention:  Securities
      Investment Division

            	
              $1,450,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying each payment as “South Jersey Gas
Corporation, $45,000,000 Medium Term Notes, Series C, 2010-1, Tranche B,
PPN _______, principal, premium or interest”) to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    With
telephone advice of payment to the Securities Custody and Collection Department
of Babson Capital Management LLC at (413) 226-1754 or (413)
226-1803.

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed
__________________________________.

     

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

    Taxpayer
I.D. Number: ________________

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

    
      
        
          A-9

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      B

              Notes
      to be Purchased

            
	
              Massachusetts
      Mutual Life Insurance Company

              c/o
      Babson Capital Management LLC

              1500
      Main Street, Suite 2200

              P.O.
      Box 15189

              Springfield,
      Massachusetts 01115-5189

              Attention:  Securities
      Investment Division

            	
              $1,050,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying each payment as “South Jersey Gas
Corporation, $45,000,000 Medium Term Notes, Series C, 2010-1, Tranche B,
PPN _______, principal, premium or interest”) to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    With
telephone advice of payment to the Securities Custody and Collection Department
of Babson Capital Management LLC at (413) 226-1754 or (413)
226-1803.

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed
__________________________________.

     

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

    Taxpayer
I.D. Number:  _________________

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

    
      
        
          A-10

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      B

              Notes
      to be Purchased

            
	
              Massachusetts
      Mutual Life Insurance Company

              c/o
      Babson Capital Management LLC

              1500
      Main Street, Suite 2200

              P.O.
      Box 15189

              Springfield,
      Massachusetts 01115-5189

              Attention:  Securities
      Investment Division

            	
              $850,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying each payment as “South Jersey Gas
Corporation, $45,000,000 Medium Term Notes, Series C, 2010-1, Tranche B,
PPN _______, principal, premium or interest”) to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    With
telephone advice of payment to the Securities Custody and Collection Department
of Babson Capital Management LLC at (413) 226-1803 or (413)
226-1754.

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed
___________________________.

     

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

    Taxpayer
I.D. Number:  _______________

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

    
      
        
          A-11

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      B

              Notes
      to be Purchased

            
	
              C.M.
      Life Insurance Company

              c/o
      Babson Capital Management LLC

              1500
      Main Street, Suite 2200

              P.O.
      Box 15189

              Springfield,
      Massachusetts 01115-5189

              Attention:  Securities
      Investment Division

            	
              $750,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying each payment as “South Jersey Gas
Corporation, $45,000,000 Medium Term Notes, Series C, 2010-1, Tranche B,
PPN _______, principal, premium or interest”) to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    With
telephone advice of payment to the Securities Custody and Collection Department
of Babson Capital Management LLC at (413) 226-1819 or (413)
226-1803.

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed
________________________________.

     

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

    Taxpayer
I.D. Number:  _________________

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

    

    
      
        
          A-12

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Name
      of and Address

              of
      Purchaser

            	
              Principal
      Amount of 

              Tranche
      B

              Notes
      to be Purchased

            
	
              MassMutual
      Asia Limited

              c/o
      Babson Capital Management LLC

              1500
      Main Street, Suite 2200

              P.O.
      Box 15189

              Springfield,
      Massachusetts 01115-5189

              Attention:  Securities
      Investment Division

            	
              $700,000

            

    

     

    Payments

    All
payments on or in respect of the Notes to be by bank wire transfer of Federal or
other immediately available funds (identifying each payment as “South Jersey Gas
Corporation, $45,000,000 Medium Term Notes, Series C, 2010-1, Tranche B,
PPN _______, principal, premium or interest”) to:

    

    _________________________

    _________________________

    _________________________

    _________________________

     

    With
telephone advice of payment to the Securities Custody and Collection Department
of Babson Capital Management LLC at (413) 226-1803 or (413)
226-1754.

     

    Notices

    All
notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed
_____________________________.

     

    Name of
Nominee in which Notes are to be issued:  

    Taxpayer
I.D. Number: _________________

     

    Physical
Delivery

    

    _________________________

    _________________________

    _________________________

    _________________________

    

    

    

    
      
        
          A-13

           

        

         

      

      
         

        
          

        

      

      
         

        
           

        

      

    

    
      
        SCHEDULE
B

        (to Note Purchase
Agreement)

     

    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:

     

    “Additional Obligations”
means notes issued under the Indenture (other than the Notes) after the First
Closing Date or mortgage bonds issued under the Mortgage (other than the Pledged
Mortgage Bond) after the First Closing Date. 

     

    “Affiliate” means, at any
time, and with respect to any Person, (a) 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 voting or equity interests 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 voting or equity interests.  As used in this definition, “Control” means 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.  Unless the
context otherwise clearly requires, any reference to an “Affiliate” is a reference to
an Affiliate of the Company.

     

    “Anti-Terrorism Order” means
Executive Order No. 13224 of September 24, 2001, Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.

     

    “Business Day” means for the
purposes of any provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in New York, New York or
Folsom, New Jersey are required or authorized to be closed.

     

    “Called Principal” is defined
in Section 8.6.

     

    “Capital Lease” means, 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 in Control” is
defined in Section 8.7(g).

     

    “Closing” means each of the
First Closing and the Second Closing.

     

    “Closing Date” is the date of
any Closing.  

     

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

     

    “Collateral Filings” is
defined in Section 4.11.

    
      
        
          B-1

        

         

      

      
         

        
          

        

      

      
         

      

    

     

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

     

    “Confidential Information” is
defined in Section 20.

     

    “Default” means 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” means that
rate of interest that is the greater of (i) 2% per annum above the rate of
interest stated in clause (a) of the first paragraph of the Notes or
(ii) 2% over the rate of interest publicly announced by Bank of America,
N.A. in New York, New York as its “base” or “prime” rate.

     

    “Discounted Value” is defined
in Section 8.6.

     

    “Disclosure Documents” is
defined in Section 5.3.  

     

    “Electronic Delivery” is
defined in Section 7.1(a).

     

    “Environmental Laws” means
any and all Federal, state, local, and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or 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” means 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” means 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” means the
Securities Exchange Act of 1934, as amended.

     

    “Financing Agreements” means
this Agreement, the Indenture (including without limitation the Fourth
Supplemental Indenture), the Notes, the Pledged Mortgage Bond, and the Mortgage
(including without limitation the Twenty-Fourth Supplemental Mortgage
Indenture).

     

    “First Closing” is defined in
Section 3.

     

    “First Closing Date” is the
date of the First Closing.

     

    “Fourth Supplemental
Indenture” is defined in Section 1.1.

    
      
        
          B-2

           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

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

     

    “Governmental Authority”
means:

     

    (a)the government of

     

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

     

    (ii)any other 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.

     

    “Hazardous Material” means
any and all pollutants, toxic or hazardous wastes that might pose a hazard to
health and 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 Environmental Law including, but not limited to, asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum
products, lead based paint, radon gas or similar restricted, prohibited or
penalized substances.  

     

    “Holder” is defined in the
Indenture.  

     

    “Indebtedness” with respect
to any Person means, at any time, without duplication,

     

    (a)its liabilities for borrowed money and its
redemption obligations in respect of mandatorily redeemable Preferred
Stock;

     

    (b)its liabilities for the deferred purchase price
of property acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
any such property);

     

    (c)(i) all liabilities appearing on its balance
sheet in accordance with GAAP in respect of capital leases and (ii) all
liabilities which would appear on its balance sheet in accordance with GAAP in
respect of synthetic leases assuming such synthetic leases were accounted for as
capital leases;

     

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

    
      
        
        

      

      
        B-3

        
          

        

      

      
        
        

      

    

     

    (e)all liabilities in respect of letters of credit
or instruments serving a similar function issued or accepted for such Person’s
account by banks and other financial institutions (whether or not representing
obligations for borrowed money);

     

    (f)the aggregate swap termination value of all
swap contracts of such Person, and

     

    (g)any guaranty of such Person with respect to
liabilities of a type described in any of clauses (a) through (f)
hereof.  

     

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

     

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

     

    “Indenture” is defined in
Section 1.1.

     

    “Institutional Investor”
means (a) any 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 holder of a Note
that is a bank, trust company, savings and loan association or other financial
institution, a pension plan, an investment company, an insurance company, a
broker or dealer, or a other similar financial institution or entity, regardless
of legal form, and (d) any Related Fund of any holder of any
Note.  

     

    “Lien” means, 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 other
secured party to or of such Person under any conditional sale or other title
retention agreement or Capital 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 8.6.

     

    “Material” means material in
relation to the business, operations, affairs, financial condition, assets or
properties of the Company and its Subsidiaries taken as a whole.

     

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

     

    
      “Memorandum” is defined in
Section 5.3.

       

      “Mortgage” is defined in
Section 1.2.  

    

    
      
        
          B-4

           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    “Mortgaged Property” shall
have the meaning of “mortgaged property” as defined in the Mortgage. 

     

    “Mortgage Trustee” is defined
in Section 1.2.  

     

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

     

    “NAIC” means the National
Association of Insurance Commissioners or any successor thereto.

     

    “Notes” is defined in
Section 1.1.

     

    “Officer’s Certificate” means
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.

     

    “Original Indenture” is
defined in Section 1.1.

     

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

     

    “Permitted Encumbrances” is
defined in the Indenture.  

     

    “Person” means an individual,
partnership, corporation, limited liability company, association, trust,
unincorporated organization, business entity or Governmental
Authority.

     

    “Plan” means 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.

     

    “Pledged Mortgage Bond” is
defined in Section 1.2.

     

    “Preferred Stock” means any
class of capital stock of a Person that is preferred over any other class of
capital stock (or similar equity interests) of such Person as to the payment of
dividends or the payment of any amount upon liquidation or dissolution of such
Person.

     

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

     

    
      “Proposed Prepayment Date” is
defined in Section 8.7(b).

       

      “PTE” is defined in
Section 6.2(a).

    

    
      
        
          B-5

           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    “Public Order” means order of
the Board of Public Utilities, State of New Jersey,  Docket No.
GF09070557, dated September 16, 2009.  

     

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

     

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

     

    “Reinvestment Yield” is
defined in Section 8.6.

     

    “Related Fund” means, 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.

     

    “Remaining Average Life” is
defined in Section 8.6.

     

    “Remaining Scheduled
Payments” is defined in Section 8.6.

     

    “Required Holders” means, 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).

     

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

     

    “SEC” means the Securities
and Exchange Commission of the United States, or any successor
thereto.

     

    “Second Closing” is defined
in Section 3.

     

    “Second Closing Date” is the
date of the Second Closing.

     

    “Securities” or “Security” shall have the
meaning specified in Section 2(1) of the Securities Act.

     

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

     

    “Senior Financial Officer”
means the chief financial officer or the treasurer of the Company.

     

    “Settlement Date” is defined
in Section 8.6.

     

    “Source” is defined in
Section 6.2. 

     

    “Subsidiary” means, as to any
Person, any other Person in which such first Person or one or more of its
Subsidiaries or such first Person and one or more of its Subsidiaries

     

    
      
        B-6

      

      
        
        

        
          

        

      

      
        
        

      

       

      owns
sufficient equity or voting interests 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 second Person, and
any partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such first Person or one or more of its Subsidiaries
or such first 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.

    

     

    “SVO” means the Securities
Valuation Office of the NAIC or any successor to such Office.

     

    “Tranche A Notes” is defined
in Section 1.1.

     

    “Tranche B Maturity Date”
means the sixteenth (16th) anniversary of the Second Closing
Date.

     

    “Tranche B Notes” is defined
in Section 1.1.

     

    “Tranche B Reference Date”
means the first fifteenth calendar day to occur following the Second
Closing Date.

     

    “Trustee” is defined in
Section 1.1.  

     

    “Twenty-Fourth Supplemental Mortgage
Indenture” is defined in Section 1.2.

     

    “UCC” means, the Uniform
Commercial Code as enacted and in effect from time to time in the state whose
laws are treated as applying to the Mortgaged Property.

     

    “UCC
Financing Statements” shall mean any financing statements required or permitted
to be filed in accordance with the UCC.  

     

    “USA Patriot Act” means
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, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.

     

     

     

    
      
        B-7

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