Document:

Exhibit 4(b)(x)

                                                This instrument was prepared by

                                                -------------------------------
                                                Ira G. Megdal, Esquire

                                    MORTGAGE

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                            SOUTH JERSEY GAS COMPANY

                                       TO

                              THE BANK OF NEW YORK,
                                       Trustee

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

                       TWENTY-THIRD SUPPLEMENTAL INDENTURE

                          Dated as of September 1, 2002

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

               Providing for the Issuance of First Mortgage Bonds,
                         10% Medium Term Notes Series B

                                       and

                 Further Supplementing the Indenture of Mortgage
                              Dated October 1, 1947

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

          (This Instrument Contains After-Acquired Property Provisions)

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         THIS TWENTY-THIRD SUPPLEMENTAL INDENTURE dated as of September 1, 2002
between SOUTH JERSEY GAS COMPANY, a New Jersey corporation with principal
offices at One South Jersey Plaza, Route 54, Folsom, New Jersey 08037, party of
the first part, hereinafter called the "Company," and The Bank of New York
(successor trustee to Guarantee Bank), a New York banking corporation with a
corporate trust office at 101 Barclay Street, Floor 21 West, New York, New York
10286, party of the second part, hereinafter called "Trustee," as Trustee under
the Indenture of Mortgage hereinafter mentioned, Witnesseth that:

         Whereas, the Company has heretofore duly executed, acknowledged and
delivered to Guarantee Bank and Trust Company (name later changed to Guarantee
Bank), as Trustee, a certain Indenture of Mortgage dated October 1, 1947
(hereinafter called the "Original Indenture") to provide for the issuance of,
and to secure, its First Mortgage Bonds (the "Bonds"), issuable in series and
without limit as to aggregate principal amount (except as provided under Article
III of the Original Indenture), and by the Original Indenture granted and
conveyed unto the Trustee, upon the trusts and for the uses and purposes therein
specifically set forth, certain real estate, franchises and other property
therein described or which might be thereafter acquired by it, to secure the
payment of the principal of and interest on the Bonds from time to time issued
thereunder, and pursuant to which the Company provided for the creation of an
initial series of First Mortgage Bonds designated as "South Jersey Gas Company
First Mortgage Bonds, 4 1/8% Series due 1977" (herein and in the Original
Indenture sometimes called the "Bonds of the Initial Series"); and

         Whereas, the Original Indenture provides that Bonds may be issued
thereunder from time to time and in one or more series, upon conditions therein
fully provided, the Bonds of each series to be substantially in the forms
therein recited for the Bonds of the Initial Series but with such omissions,
variations and insertions as are authorized or permitted by the Original
Indenture and determined and specified by the Board of Directors of the Company;
and

         Whereas, the Company has heretofore duly executed, acknowledged and
delivered to the Trustee a First Supplemental Indenture dated as of October 1,
1952, a Second Supplemental Indenture dated as of February 1, 1961, a Third
Supplemental Indenture dated as of July 1, 1963, a Fourth Supplemental Indenture
dated as of August 1, 1966, a Fifth Supplemental Indenture dated as of September
1, 1968, a Sixth Supplemental Indenture dated as of July 1, 1969, a Seventh
Supplemental Indenture dated as of July 1, 1971, an Eighth Supplemental
Indenture dated as of June 1, 1973, a Ninth Supplemental Indenture dated as of
July 1, 1974, a Tenth Supplemental Indenture dated as of November 10, 1976, an
Eleventh Supplemental Indenture dated as of December 1, 1979, a Twelfth
Supplemental Indenture dated as of June 1, 1980, a Thirteenth Supplemental
Indenture dated as of August 1, 1981, a Fourteenth Supplemental Indenture dated
as of August 1, 1984, a Fifteenth Supplemental Indenture dated as of July 1,
1986, a Sixteenth Supplemental Indenture dated as of April 1, 1988, a
Seventeenth Supplemental Indenture dated of as May 1, 1989, an Eighteenth
Supplemental Indenture dated as of March 1, 1990, a Nineteenth Supplemental
Indenture dated as of April 1, 1992, a Twentieth Supplemental Indenture dated as
of June 1, 1993, a Twenty-First Supplemental Indenture dated as of March 1,
1997, and a Twenty-Second Supplemental Indenture dated as of October 1, 1998
(hereinafter called, respectively, the "First Supplement," the "Second
Supplement," the "Third Supplement," the "Fourth Supplement," the "Fifth
Supplement," the "Sixth Supplement," the "Seventh Supplement," the "Eighth

                                     - 2 -

Supplement," the "Ninth Supplement," the "Tenth Supplement," the "Eleventh
Supplement," the "Twelfth Supplement," the "Thirteenth Supplement," the
"Fourteenth Supplement," the "Fifteenth Supplement," the "Sixteenth Supplement,"
the "Seventeenth Supplement," the "Eighteenth Supplement," the Nineteenth
Supplement," the "Twentieth Supplement," the "Twenty-First Supplement" and the
"Twenty-Second Supplement") (the Original Indenture, all such supplemental
indentures and this Twenty-Third Supplemental Indenture hereinafter collectively
referred to as the "Indenture"), pursuant to which the Company provided for the
creation of a second series of Bonds designated as "South Jersey Gas Company
First Mortgage Bonds, 3 7/8% Series due 1977" (herein and in the First
Supplement sometimes called the "Bonds of the Second Series"), a third series of
Bonds designated as "South Jersey Gas Company First Mortgage Bonds, 5% Series
due 1986" (herein and in the Second Supplement sometimes called the "Bonds of
the Third Series"), a fourth series of Bonds designated as "South Jersey Gas
Company First Mortgage Bonds, 4 1/2% Series due 1988" (herein and in the Third
Supplement sometimes called the "Bonds of the Fourth Series"), a fifth series of
Bonds designated as "South Jersey Gas Company First Mortgage Bonds, 5.70% Series
due 1991" (herein and in the Fourth Supplement sometimes called the "Bonds of
the Fifth Series"), a sixth series of Bonds designated as "South Jersey Gas
Company First Mortgage Bonds, 7% Series due 1993" (herein and in the Fifth
Supplement sometimes called the "Bonds of the Sixth Series"), a seventh series
of Bonds designated as "South Jersey Gas Company First Mortgage Bonds, 7 7/8%
Series due 1994" (herein and in the Sixth Supplement sometimes called the "Bonds
of the Seventh Series"), an eighth series of Bonds designated as "South Jersey
Gas Company First Mortgage Bonds, 8 1/4% Series due 1996" (herein and in the
Seventh Supplement sometimes called the "Bonds of the Eighth Series"), a ninth
series of Bonds designated as "South Jersey Gas Company First Mortgage Bonds, 8
1/4% Series due 1998" (herein and in the Eighth Supplement sometimes called the
"Bonds of the Ninth Series"), a tenth series of Bonds designated as "South
Jersey Gas Company First Mortgage Bonds, 9 1/2% Series due 1989" (herein and in
the Ninth Supplement sometimes called the "Bonds of the Tenth Series"), an
eleventh series of Bonds designated as "South Jersey Gas Company First Mortgage
Bonds, 8% Series due 1995" (herein and in the Twelfth Supplement sometimes
called the "Bonds of the Eleventh Series"), a twelfth series of Bonds designated
as "South Jersey Gas Company First Mortgage Bonds, 15 3/4% Series due 1996"
(herein and in the Thirteenth Supplement sometimes called the "Bonds of the
Twelfth Series"), a thirteenth series of Bonds designated as "South Jersey Gas
Company First Mortgage Bonds, 14 3/8% Series due 1996" (herein and in the
Fourteenth Supplement sometimes called the "Bonds of the Thirteenth Series"), a
fourteenth series of Bonds designated as "South Jersey Gas Company First
Mortgage Bonds, 9.20% Series due 1998" (herein and in the Fifteenth Supplement
sometimes called the "Bonds of the Fourteenth Series"), a fifteenth series of
Bonds designated as "South Jersey Gas Company First Mortgage Bonds, 10 1/4%
Series due 2008" (herein and in the Sixteenth Supplement sometimes called the
"Bonds of the Fifteenth Series"), a sixteenth series of Bonds designated as
"South Jersey Gas Company First Mortgage Bonds, 9% Series due 2010" (herein and
in the Eighteenth Supplement sometimes called the "Bonds of the Sixteenth
Series"), a seventeenth series of Bonds designated as "South Jersey Gas Company
First Mortgage Bonds, 8.19% Series due 2007" (herein and in the Nineteenth
Supplement sometimes called the "Bonds of the Seventeenth Series"), an
eighteenth series of Bonds designated "South Jersey Gas Company First Mortgage
Bonds, 6.95% Series due 2013" (herein and in the Twentieth Supplement sometimes

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called the "Bonds of the Eighteenth Series"), a nineteenth series of Bonds
designated as "South Jersey Gas Company First Mortgage Bonds, 7.70% Series due
2027" (herein and in the Twenty-First Supplement sometimes called the "Bonds of
the Nineteenth Series") and a twentieth series of Bonds designated as "South
Jersey Gas Company First Mortgage Bonds, 10% Series A due October 1, 2043"
(herein and in the Twenty-Second Supplement sometimes called the "Bonds of the
Twentieth Series"); and

         Whereas, pursuant to the Indenture there have been executed,
authenticated and issued, and there are outstanding as of the date of execution
hereof by the Company, First Mortgage Bonds of series and in principal amounts
as follows:

               Series                     Issued          Now Outstanding

     Bonds of the Initial Series         $4,000,000              -0-
     Bonds of the Second Series          $4,500,000              -0-
     Bonds of the Third Series           $4,500,000              -0-
     Bonds of the Fourth Series          $5,000,000              -0-
     Bonds of the Fifth Series           $5,000,000              -0-
     Bonds of the Sixth Series           $6,000,000              -0-
     Bonds of the Seventh Series         $6,000,000              -0-
     Bonds of the Eighth Series          $4,000,000              -0-
     Bonds of the Ninth Series           $6,000,000              -0-
     Bonds of the Tenth Series           $6,000,000              -0-
     Bonds of the Eleventh Series        $1,000,000              -0-
     Bonds of the Twelfth Series        $20,000,000              -0-
     Bonds of the Thirteenth Series     $10,000,000              -0-
     Bonds of the Fourteenth Series     $20,000,000              -0-
     Bonds of the Fifteenth Series      $25,000,000          $7,385,000
     Bonds of the Sixteenth Series      $35,000,000              -0-
     Bonds of the Seventeenth Series    $25,000,000         $11,362,000
     Bonds of the Eighteenth Series     $35,000,000         $35,000,000
     Bonds of the Nineteenth Series     $35,000,000         $35,000,000
     Bonds of the Twentieth Series     $100,000,000        $100,000,000

         ; and

         Whereas, said Bonds of the Fifteenth Series, Bonds of the Seventeenth
Series, Bonds of the Eighteenth Series, Bonds of the Nineteenth Series and Bonds
of the Twentieth Series constitute the only Bonds outstanding under the
Indenture; and

         Whereas, the Company is making provisions for the issuance and sale of
its Medium Term Notes, Series B (the "Notes"), to be issued under an Indenture
of Trust (as amended, the "Note Indenture") between the Company and The Bank of
New York, as trustee (the "Note Trustee") and to be secured by Bonds of the
Twenty-First Series (as defined below); and

         Whereas, in order to secure the Company's obligations to pay principal,
premium, if any, and interest on the Notes prior to the Substitution Date, the
Company desires to provide for the issuance under the Mortgage to the Note
Trustee of a new series of Bonds; and

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         Whereas, the Company, by appropriate resolutions adopted by its Board
of Directors pursuant to the terms of the Original Indenture, has duly
determined to create a new series of Bonds to be issued under the Indenture,
including this Twenty-Third Supplemental Indenture dated as of September 1, 2002
(hereinafter called the "Twenty-Third Supplement"), to be designated as "South
Jersey Gas Company First Mortgage Bonds, 10% Medium Term Notes Series B
(hereinafter sometimes called the "Bonds of the Twenty-First Series"), and has
duly determined that the terms and form of the Bonds of the Twenty-First Series,
which will be fully registered bonds, and the form of the Trustee's Certificate
of Authentication to be set forth on the Bonds of the Twenty-First Series, shall
be substantially as follows respectively:

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                                 [FORM OF BOND]

This Bond is not transferable except as provided in the Indenture (as
hereinafter defined) and in the Indenture of Trust dated as of October 1, 1998,
as supplemented on June 29, 2000, July 5, 2000 and July 9, 2001 ("Note
Indenture") between the Company and The Bank of New York, as Trustee (the "Note
Trustee").

REGISTERED                                                           REGISTERED
NUMBER                                                                   AMOUNT
R                                                                  $150,000,000

                            SOUTH JERSEY GAS COMPANY

               FIRST MORTGAGE BOND, 10% MEDIUM TERM NOTES SERIES B

         South Jersey Gas Company, a New Jersey corporation (hereinafter called
the "Company"), for value received, promises to pay on ________, 20__ to the
Note Trustee or registered assigns, on the surrender hereof, the principal sum
of __________________________ Dollars, and to pay interest thereon from the date
hereof, at the rate of 10% per annum (computed on the basis of a 360 day year of
twelve 30 day months), such interest to be payable May 1 and November 1 in each
year until the obligation of the Company with respect to the payment thereof
shall be discharged; provided, however, that the Company shall receive certain
credits against such obligations as set forth in the Twenty-Third Supplemental
Indenture dated as of September 1, 2002 referred to below.

         All payments of principal hereof and interest hereon shall be paid at
the corporate trust office of The Bank of New York (the "Trustee"), or its
successor as trustee under the Indenture, or at such other places as the Company
may agree, in such coin or currency of the United States of America as at the
time of payment shall constitute legal tender for the payment of public and
private debts; provided, however, that any such payments of principal and
interest shall be subject to receipt of certain credits against such payment
obligations as set forth in the Twenty-Third Supplemental Indenture dated as of
September 1, 2002 referred to below.

         This Bond is one of an authorized issue of Bonds of the Company,
designated as its First Mortgage Bonds, without specified limit as to aggregate
authorized principal amount and issuable in one or more series (each of which is
hereinafter referred to as a "Series"), all issued or to be issued under and
(except in respect of any sinking, replacement, purchase, or other analogous
fund provided in said indenture or in any supplement thereto for any one or more
particular Series of Bonds) equally and ratably secured by an indenture dated
October 1, 1947 (hereinafter called the "Original Indenture") between the
Company and Guarantee Bank and Trust Company, as predecessor trustee, as
supplemented by indentures supplemental thereto, including a Twenty-Third
Supplemental Indenture dated as of September 1, 2002 (hereinafter called the
"Twenty-Third Supplement"), duly executed by the Company to the Trustee, to
which Original Indenture and all indentures supplemental thereto (herein
sometimes collectively called the "Indenture") reference is hereby made for a
description of the property mortgaged and pledged and the respective rights of
the Company, the Trustee and the Bondholders in respect thereof, and for a
specification of the principal amount of said Bonds from time to time issuable

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thereunder and the conditions upon which said Bonds may be issued and shall be
secured.

         The Bonds of the 10% Medium Term Notes Series B, of which this Bond is
one, are of similar tenor hereto, and are limited to the aggregate authorized
principal amount of $150,000,000, except as provided in Section 2.11 of the
Original Indenture (relating to replacement of mutilated, lost, destroyed or
stolen Bonds).

         On certain defaults by the Company, as provided in the Indenture, the
principal of said Bonds may become payable in advance of the expressed maturity
thereof.

         As more fully provided in the Indenture, the Bonds of this Series are
subject to redemption, either as a whole or in part from time to time, on not
more than 60 nor less than 30 days' written notice in advance of the date fixed
for redemption through the application of proceeds from the condemnation of
property subject to the lien of the Indenture, or proceeds of the sale of such
property to a governmental body or agency having the power of eminent domain
made as the result of the threat (evidenced in writing by such body or agency)
of condemnation of such property, but not through the application of funds from
any other source, upon payment of the principal amount thereof together with
accrued interest to the date fixed for redemption. Except as set forth in this
paragraph, the Bonds of this Series are not subject to redemption.

         This Bond is transferable, but only as provided in the Indenture and
the Note Indenture, upon surrender hereof, by the registered owner in person or
by attorney duly authorized in writing, at either of said offices where the
principal hereof and interest hereon are payable. Upon any such transfer, a new
fully registered Bond similar hereto will be issued to the transferee. This Bond
may in like manner be exchanged for one or more new fully registered Bonds of
the same Series of other authorized denominations but of the same aggregate
principal amount. No service charge shall be made for any such transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto. The
Company and the Trustee hereunder and any paying agent may deem and treat the
person in whose name this Bond is registered as the absolute owner hereof for
the purpose of receiving payment of or on account of the principal hereof and
the interest hereon and for all other purposes; and neither the Company nor the
Trustee hereunder nor any paying agent shall be affected by any notice to the
contrary.

         The Bonds of this Series are issuable only in fully registered form, in
any denomination authorized by the Company.

         As more fully provided in the Indenture, any of the provisions of the
Indenture or any Bonds issued pursuant thereto may be altered, amended or
eliminated, or additional provisions added, with the consent of the holders or
registered owners (evidenced as provided in the Indenture) of at least 66 2/3%
in principal amount of the Bonds issued thereunder and then outstanding, or, if
such change pertains only to the Bonds of one or more Series but less than all
Series of Bonds outstanding, the holders or registered owners of at least 66
2/3% in principal amount of the then outstanding Bonds of each Series to which
such change pertains; provided, however, that none of the provisions of any Bond
with respect to the time, terms, manner, or amount of any payment of the
principal thereof or interest thereon shall be changed without the consent of

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the holder or registered owner of such Bond nor shall there be reduced the
percentage of Bonds the holders of which are required to consent to the
execution of any supplemental indenture.

         No recourse under or upon any obligation, covenant or agreement
contained in the Indenture or in any indenture supplemental thereto, or in any
Bond issued under the Indenture or coupon thereby secured or because of any
indebtedness thereby secured, shall be had against any incorporator, or against
any past, present or future stockholder, officer or director, as such, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, under any rule or law, statue or constitutional
provision or by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise, it being expressly agreed and understood that the
Indenture and any indenture supplemental thereto, and the obligations thereby
secured, are solely corporate obligations, and that no personal liability
whatever shall attach to, or be incurred by, such incorporators, stockholders,
officers or directors, as such, of the Company, or of any successor corporation,
or any of them, because of the incurring of the indebtedness thereby authorized,
or under or by reason of any of the obligations, covenants or agreements
contained in the Indenture or in any indenture supplemental thereto, or in any
of the Bonds or coupons thereby secured, or implied therefrom.

         The execution by the Trustee, or by its successor in trust under the
Indenture, of the Trustee's certificate of authentication set forth hereon is
essential to the validity of this Bond.

         IN WITNESS WHEREOF, SOUTH JERSEY GAS COMPANY has caused this Bond to be
duly executed by the manual or facsimile signatures of its proper officers under
its corporate seal or a facsimile thereof

Date:
     __________________
                                   SOUTH JERSEY GAS COMPANY

                                   By:  ________________________________
[CORPORATE SEAL]                                             , President

Attest:

____________________________________
                           Secretary

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                [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

         The within Bond is one of the Bonds of the Series designated therein,
which are described or provided for in the within-mentioned Indenture.

                                        The Bank of New York, Trustee

                                        By ____________________________________
                                           Authorized Signatory

                                        Dated:

                                                                         ; and

         WHEREAS, the Company deems it advisable and has determined pursuant to
the provisions of the Original Indenture, to convey, transfer and assign to the
Trustee and to subject to the lien of the Indenture with the same effect as
though included in the granting clauses of the Original Indenture certain
additional property now owned by the Company; and

         WHEREAS, the execution and delivery of the Twenty-Third Supplement have
been duly authorized by the Board of Directors of the Company at a meeting duly
called and held according to the law; and

         WHEREAS, all acts and things prescribed by law, by the charter and
bylaws of the Company and by the Indenture necessary to make the Bonds of the
Twenty-First Series, when executed by the Company and authenticated by the
Trustee as in the Indenture provided, valid, binding and legal obligations of
the Company, and to make the Twenty-Third Supplement a valid, binding and legal
instrument in accordance with its terms, have been done, performed and
fulfilled, and the execution and delivery hereof have been in all respects duly
authorized.

         NOW, THEREFORE, THIS TWENTY-THIRD SUPPLEMENT WITNESSETH, that by way of
further assurance and in consideration of the premises and of the acceptance by
the Trustee of the trusts hereby created, and in order to secure further payment
of the principal of, the premium, if any, and the interest on all Bonds at any
time issued and outstanding under the Indenture, according to their tenor and
effect, and the performance and observance by the Company of the covenants and
conditions contained in the Indenture and in said Bonds, the Company has
executed and delivered the Twenty-Third Supplement, and has granted, bargained,
sold, conveyed, aliened, enfeoffed, mortgaged, pledged, released, confirmed,
assigned, transferred and set over, and by these presents does grant, bargain,
sell, convey, alien, enfeoff, mortgage, pledge, release, confirm, assign,
transfer and set over unto the Trustee, its successors in the trust and its and
their assigns, the following described property:

         1. All and singular its lands, real estate and any and every interest
in lands or real estate wheresoever situate.

                                     - 9 -

         2. All buildings, structures, machinery, apparatus and equipment
situate upon the premises referred to above or appurtenant thereto or used in
connection therewith, and all property of the Company used or useful in and
about the business of manufacturing, transmitting and disposing of gas for
light, heat, power or other purposes and consisting of, inter alia, gas works
and plants, engines, furnaces, boilers generators, machinery, shafting, belting,
retorts, tanks, condensers, pumps, steam holders, gas holders, purifiers,
scrubbers, tar extractors, separators, dehydrators, pressure regulators,
blowers, compressors, motors, exhausters, tracks and sidings, oil-gas
generators, expansions tanks, gas mains, pipes, gas transmissions systems, gas
distribution systems, tunnels, service pipes, pipe line fittings, gates, valves,
connections, implements, gas meters, lamps and all other appliances,
instruments, equipment, stores, repair parts and the like, now owned by the
Company, and all other property for similar uses hereafter in any way acquired
by the Company or to which it may hereafter be entitled, it being hereby
expressly agreed that any and all personal property covered by the foregoing
description, whether or not located in or upon the real property of the Company,
shall be considered as fixtures and appurtenances constituting part of the real
property of the Company.

         3. All easements, rights of way, rights, franchises, contracts,
permits, leases, licenses, privileges and appurtenances belonging or in any way
appertaining to the premises and property hereinbefore referred to, or to any
other property now owned by the Company or hereafter acquired by it, and every
part thereof, or derived or acquired by the Company in any manner whatsoever;
and all the reversions, remainders, revenues, rents, issues, and profits of all
property at any time subject hereto and all the estate, right, title, interest,
property, possession, claim, and demand whatsoever, as well at law as in equity,
of the Company, of, in, and to the same and every part thereof.

         4. All other property of whatever kind and description, whether real or
personal, now owned or which may at any time hereafter be acquired by the
Company, and whether or not specifically described or referred to herein,
excepting, however, all materials and supplies consumable in the operation of
the properties of the Company, all merchandise and products acquired,
manufactured, produced, or held for sale in the usual course of business, all
automobiles and motor vehicles, and all cash, accounts receivable, stocks,
bonds, notes, and other securities which are neither specifically pledged with
the Trustee nor required by any provision of the Indenture to be pledged with
the Trustee.

         5. All money, securities, or property of any kind which may at any time
be paid, conveyed, assigned, transferred or delivered to the Trustee by the
Company or any other person, to be held hereunder as additional security for all
the Bonds, which money, securities, or property the Trustee is hereby authorized
to receive and accept.

         UNDER AND SUBJECT to any excepted encumbrances of the character defined
in Subdivision A of Section 3.04 of the Original Indenture.

         TO HAVE AND TO HOLD the same unto the Trustee, its successors and
assigns, forever.

         IN TRUST, NEVERTHELESS, upon the terms, conditions and trusts set forth
in the Indenture as heretofore and hereby amended and supplemented, to the end
that the said property shall be subject to the lien of the Indenture as

                                     - 10 -

heretofore and hereby amended and supplemented, with the same force and effect
as though said property had been included in the Granting Clauses of the
Indenture at the time of the execution and delivery thereof;

         PROVIDED, HOWEVER, and these presents are upon the condition that if
the Company, its successors or assigns shall pay or cause to be paid the
principal of and interest on all said Bonds, or shall provide, as permitted by
the Indenture, for the payment thereof by depositing with the Trustee the entire
amount due or to become due thereon for principal, interest and premium, if any,
and if the Company shall also pay or cause to be paid all other sums payable
under the Indenture by it, then the Indenture, including this Twenty-Third
Supplement, and the estate and rights thereby granted shall cease, determine and
be void, otherwise to be and remain in full force and effect.

         IT IS HEREBY FURTHER COVENANTED, DECLARED AND AGREED by and between the
Company and the Trustee for the benefit of those who shall hold Bonds of the
Twenty-First Series, or any of them, as follows:

                                    ARTICLE I

                 DESCRIPTION OF BONDS OF THE TWENTY-FIRST SERIES

         SECTION 1.1      The Bonds of the Twenty-First Series shall be
designated as "South Jersey Gas Company First Mortgage Bonds, 10% Medium Term
Notes Series B," and shall be issuable as fully registered Bonds, substantially
in the form hereinbefore recited, but they may bear and contain such legends and
modifications as may be required by law or as may be necessary to comply with
requirements of any stock exchange or of any regulatory board, body or official
and shall be issued initially to the Note Trustee. Except as provided in Section
2.11 of the Original Indenture, the aggregate principal amount of Bonds
authorized by the Twenty-Third Supplement is limited to $150,000,000, and except
as aforesaid, and except for exchanges and transfers, the Company shall not
execute and the Trustee shall not authenticate or deliver Bonds of the
Twenty-First Series in excess of such aggregate principal amount.

         SECTION 1.2      Except as otherwise provided in Section 2.11 of the
Original Indenture, Bonds of the Twenty-First Series shall be dated and shall
bear interest from the May 1 or November 1 next preceding the date of
authentication thereof by the Trustee, except that if the authentication date is
an interest payment date, such Bonds shall be dated, and shall bear interest
from, the authentication date; provided, however, that if upon authentication of
any Bonds of the Twenty-First Series upon transfer or in exchange for other such
Bonds, interest on the Bonds of the Twenty-First Series shall be in default, the
date from which such Bond shall bear interest shall be the date to which
interest shall have been paid upon the Bonds transferred or surrendered in
exchange for the Bond so authenticated; and provided further, however, that in
the case of the authentication of Bonds of the Twenty-First Series upon an
original issue hereunder, such Bonds may be dated the date of authentication
thereof and in such case shall bear interest from such date of authentication.

         SECTION 1.3      Bonds of the Twenty-First Series shall mature _______,
20__, and shall bear interest on the unpaid principal amount thereof at the rate

                                     - 11 -

of 10% per annum (computed on the basis of a 360-day year of twelve 30-day
months), payable on May 1 and November 1 in each year, until the obligation of
the Company with respect to the payment thereof shall be discharged; provided,
however, that the Company shall receive certain credits against principal and
interest as set forth in Section 2.1 hereof. Subject to the provisions of
Section 2.1 below, all payments of principal and interest shall be made at the
corporate trust office of the Trustee, or at such other places as the Company
may agree, in such coin or currency of the United States of America as at the
time of payment shall constitute legal tender for the payment of public and
private debts.

         SECTION 1.4      Bonds of the Twenty-First Series shall be issuable
only in the form of fully registered Bonds in any denomination authorized by the
Company.

         SECTION 1.5      Bonds of the Twenty-First Series shall be transferable
and exchangeable, but only as provided in the Indenture and the Note Indenture,
upon surrender thereof for cancellation by the registered owner in person or by
attorney duly authorized in writing at either of said offices. The Company
hereby waives any right to make a charge for any transfer or exchange of Bonds
of the Twenty-First Series, but the Company may require payment of a sum
sufficient to cover any tax or any other governmental charge that may be imposed
in relation thereto.

         SECTION 1.6      On the Substitution Date (as defined below), the
Trustee will deliver to the Company for cancellation all Bonds of the
Twenty-First Series. The Company will cause the Trustee to provide notice to all
holders of Bonds of the Twenty-First Series prior to the occurrence of the
Substitution Date. "Substitution Date" shall mean the date that all Bonds issued
and outstanding under the Indenture, other than any Bonds pledged and delivered
by the Company to the Note Trustee under the Note Indenture, have been retired
through payment, redemption or otherwise (including those Bonds deemed to be
paid within the meaning of the Indenture) at, before or after the maturity
thereof.

         SECTION 1.7      Bonds of the Twenty-First Series shall be subject to
redemption, either as a whole or in part from time to time, upon payment of the
principal amount thereof through the application pursuant to Subdivision C of
Section 6.07 of the Original Indenture of proceeds from the condemnation of
property subject to the lien of the Indenture, or proceeds of sale of such
property to a governmental body or agency having the power of eminent domain
made as a result of the threat (evidenced in writing by such body or agency) or
condemnation of such property, but not through the application of money from any
other source, together with accrued interest to the date fixed for redemption.
Except as set forth in this Section 1.7, the Bonds of the Twenty-First Series
are not subject to redemption.

         The election of the Company to redeem any of the Bonds of the
Twenty-First Series shall be evidenced by a resolution of its Board of Directors
calling all or a stated principal amount thereof for redemption on a stated
date. At least 40 days prior to such redemption date (or at such later time as
shall be satisfactory to the Trustee), the Company shall file with the Trustee a
certified copy of such resolution. The Company shall on or before such
redemption date deposit with the Trustee the total redemption price of all Bonds
so called, with accrued interest thereon to the redemption date.

                                     - 12 -

         If the Company elects to redeem less than all of the Bonds of the
Twenty-First Series, the particular Bonds to be redeemed shall be selected by
the Trustee in the manner set forth in this Section 1.7 of the Twenty-Third
Supplement from the Bonds of the Twenty-First Series then outstanding. The
Trustee shall certify to the Company the numbers of the Bonds selected and the
portion of the principal amount of each Bond that is to be redeemed.

         The Trustee shall, not more than 60 nor less than 30 days in advance of
such redemption date, give, in the name of the Company, written notice that
Bonds of the Twenty-First Series bearing the serial numbers specified have been
called for redemption, that they will be due and payable on such redemption date
at the corporate trust office of the Trustee at a stated amount (which shall be
the applicable redemption price), and that all interest thereon will cease to
accrue after said date (unless the Company shall default in payment of the
amount necessary to effect such redemption). If all the Bonds of the
Twenty-First Series are called, the notice shall so state and may omit the
numbers thereof. The notice shall state that the Bonds will be payable at the
stated redemption price, plus accrued interest to the redemption date. If the
redemption date is an interest payment date, the notice may state that the
interest payment due on such date will be paid in the usual manner. Such notice
of redemption shall be given to the registered owners of Bonds which, or
portions of which, are to be redeemed by mailing the same to such registered
owners, at their respective addresses as the same appear on the aforementioned
registry books.

         Before any money shall be applied by the Trustee to the redemption of
Bonds under this Section, the Company shall deliver to the Trustee a certificate
of the President or a Vice President of the Company stating that all conditions
precedent provided for herein (including compliance with all applicable
covenants) relating to such redemption have been complied with.

         Each Bond so called for redemption shall be due and payable at the
places and price and on the date specified in such notice. Subject to any
agreement as described below, beginning on the date when each Bond shall be due
and payable as aforesaid, the holder thereof may present the same for
redemption, in negotiable form, and the Trustee shall, out of the money
deposited with it under the provisions of this Section, cause the same to be
paid and redeemed; after said date (unless upon such presentation on or after
the due date the Trustee shall have refused or failed to make such payment), all
further interest shall cease to accrue thereon. In any case where the redemption
date is an interest payment date, the interest payment due on such date on Bonds
called for redemption may be paid in the usual manner.

         Whenever less than all of the outstanding Bonds of the Twenty-First
Series are to be redeemed, the principal amount of Bonds of the Twenty-First
Series to be redeemed shall be prorated among the holders of the Bonds of the
Twenty-First Series in the proportion, as nearly as practicable, that their
respective holdings bear to the aggregate principal amount of Bonds of the
Twenty-First Series outstanding on the date of selection. In making any
proration pursuant to this provision, the Trustee may make such adjustment as it
may determine, with the approval of the Company, to the end that the principal
amount prorated to each holder of Bonds shall be in each instance $1,000 or an
integral multiple thereof.

         If only a part of any fully registered Bond shall be selected by the
Trustee in the manner set forth above, the notice of redemption hereinbefore
provided for shall specify the distinctive number of such Bond and the portion
of the principal amount thereof to be redeemed. Upon surrender of such Bond for

                                     - 13 -

partial redemption and upon payment of the portion so called for redemption, a
new Bond or Bonds of the Twenty-First Series, in aggregate principal amount
equal to the unredeemed portion of such surrendered Bond, shall be executed by
the Company, authenticated by the Trustee, and delivered to the registered owner
thereof, without expense to such holder.

         The Company may enter into an agreement with the registered owners of
any Bond of the Twenty-First Series (or prospective registered owner of any such
Bond) providing for the payment without the surrender of such Bond to such
registered owner (or to such prospective registered owner, upon becoming a
registered owner of any such Bond) of the principal of and the premium, if any,
and interest on such Bond or any part thereof at a place other than the offices
or agencies therein specified, and for the making of notation as to principal
payments, if any, on such Bond by such registered owner or by any agent of the
Company or of the Trustee. A copy of any such agreement shall be filed with the
Trustee. The Trustee is authorized to approve any such agreement, and shall
thereafter make all payments on such Bond as provided in such agreement. The
Trustee shall not be liable for any act or omission to act on the part of the
Company, any such registered owner or any agent of the Company in connection
with any such agreement.

         So long as any of the Bonds of the Twenty-First Series shall remain
outstanding, upon any application by the Trustee of funds from sources described
in this Section 1.7 of this Twenty-Third Supplement to the redemption of Bonds
pursuant to Subdivision C of Section 6.07 of the Original Indenture, if less
than all Bonds of all Series then outstanding are to be redeemed, a principal
amount of Bonds of the Twenty-First Series shall be redeemed by the application
of a portion of such funds, such portion to be determined by multiplying the
total amount of such funds so to be applied by a fraction the numerator of which
shall be the aggregate amount required for the redemption, pursuant to
Subdivision C of Section 6.07 (exclusive of accrued interest, if any), of all of
the Bonds of the Twenty-First Series outstanding on the date of the selection
for such redemption and the denominator of which shall be the aggregate amount
required for the redemption, pursuant to such Subdivision C of Section 6.07
(exclusive of accrued interest, if any), of all of the Bonds of all Series
outstanding on such date; provided, however, that nothing in this Section 1.7
shall restrict the manner (pro rata, by lot or otherwise) by which the remaining
balance of such funds shall be applied to the redemption of Bonds of any Series
other than the Twenty-First Series.

                                   ARTICLE II

            CREDITS WITH RESPECT TO BONDS OF THE TWENTY-FIRST SERIES

         SECTION 2.1      In addition to any other credit, payment or
satisfaction to which the Company is entitled with respect to the Bonds of the
Twenty-First Series, the Company shall be entitled to credits against amounts
otherwise payable in respect of the Bonds of the Twenty-First Series in an
amount corresponding to (a) the principal amount of any of the Notes surrendered
to the Note Trustee by the Company, or purchased by the Note Trustee, for
cancellation, (b) the amount of money held by the Note Trustee and available and
designated for the payment of principal of, and/or interest on, the Notes,

                                     - 14 -

regardless of the source of payment to the Note Trustee of such moneys and (c)
the amount by which principal of and interest due on the Bonds of the
Twenty-First Series exceeds principal of and interest due on the Notes.

         SECTION 2.2      A certificate of the Company signed by the President
or any Vice President, and attested to by the Secretary or any Assistant
Secretary, and consented to by the Note Trustee, stating that the Company is
entitled to a credit under Section 2.1 hereof or that Bonds of the Twenty-First
Series have been canceled, and setting forth the basis therefor in reasonable
detail, shall be conclusive evidence of such entitlement, and the Trustee shall
accept such certificate as such evidence without further investigation or
verification of the matters stated therein.

         SECTION 2.3      Notwithstanding anything in this Twenty-Third
Supplemental Indenture to the contrary, the obligation of the Company to make
payment with respect to the principal of and premium, if any, and interest on
the Bonds of the Twenty-First Series shall be deemed satisfied and discharged
(a) on the Substitution Date or (b) if at any time: (i) the Company shall have
paid or caused to be paid the principal of and premium, if any, and interest on
all the outstanding Notes, as and when the same shall have become due and
payable (ii) the Company shall have delivered to the Note Trustee for
cancellation all outstanding Notes; or (iii) the Company shall have irrevocably
deposited or caused to be irrevocably deposited with the Note Trustee as trust
funds the entire amount in (A) cash, (B) U.S. Government obligations maturing
as to principal and interest in such amounts and at such times as will insure
the availability of cash, or (C) a combination of cash and U.S. Government
obligations, in any case 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 Note Trustee shall have been duly
made for the giving of any notice of redemption) all outstanding Notes,
including principal and any premium and interest due or to become due to such
date of maturity, as the case may be.

         When the obligation of the Company to make payment with respect to the
principal of and premium, if any, and interest on the Bonds of the Twenty-First
Series shall be satisfied or deemed satisfied pursuant to this Section 2.3
hereof, the holders of Bonds of the Twenty-First Series shall, upon written
request of the Company, deliver without cost to the Company all of the Bonds of
the Twenty-First Series, together with such appropriate instruments of transfer
or release as may be reasonably requested by the Company. All Bonds of the
Twenty-First Series delivered to the Company in accordance with this Section 2.3
shall be delivered by the Company to the Trustee for cancellation.

                                   ARTICLE III

                       ADDITIONAL COVENANTS OF THE COMPANY

         SECTION 3.1      So long as any Bonds of the Twenty-First Series shall
remain outstanding, the Company will not declare or pay any dividend on any
shares of its Common Stock (other than dividends payable in shares of its Common
Stock) or make any distribution on such shares, or purchase or otherwise acquire
any such shares (except shares acquired without cost to the Company), or advance
any amount to or invest any amount in the property, securities or indebtedness

                                     - 15 -

of, or guarantee any indebtedness of, any subsidiary if, after giving effect to
such action, the sum of the aggregate amounts so declared, paid, distributed,
purchased, acquired, advanced, invested or guaranteed after December 31, 2001
would exceed the aggregate net income of the Company available for dividends on
its Common Stock earned after such date plus the sum of $69,000,000. For the
purposes of this Section 3.1, "subsidiary" shall mean any corporation directly
or indirectly controlled by or under common control with the Company.

         For the purpose of calculating the requirements of this Section 3.1,
the net income of the Company available for dividends on its Common Stock shall
be determined in accordance with such system of accounts as may be prescribed by
any governmental authority having jurisdiction in the premises or in the absence
thereof in accordance with generally accepted accounting principles as in effect
at such time; provided, however, that (a) the deductions for depreciation or
renewal or replacement reserves in respect of each year shall be the amount
taken therefor on the accounts of the Company or the amount required to be
stated in item (1) of the Replacement Fund Certificate to be filed under Section
5.19 of the Original Indenture with respect to the period ending at the close of
such year, whichever be greater, and (b) no deduction or adjustment shall be
made from gross income for or in respect of (i) expenses in connection with the
redemption or retirement of any securities issued by the Company, including any
amount paid in excess of the principal or par or stated value of securities
redeemed or retired, and, if such redemption or retirement is effected with the
proceeds of sale of other securities of the Company, interest on the securities
redeemed or retired from the date on which the funds required for such
redemption or retirement shall be deposited in trust for such purpose to the
date of such -redemption or retirement, (ii) profits or losses from sales of
capital assets or taxes in respect of such profits, (iii) any adjustments to
retained earnings (including tax adjustments) applicable to any period prior to
January 1, 2002, (iv) charges for the write-off of unamortized debt discount and
expense carried on the books of the Company at December 31, 2001, or (v) charges
for the write-off or write-down of the amount at which any property of the
Company was carried on its books at December 31, 2001, to the extent that the
same shall be approved by, or be made pursuant to any rule, regulation, or order
of, any governmental authority having jurisdiction in the premises and shall not
be required by such authority to be charged against earnings accumulated after
December 31, 2001.

         SECTION 3.2      So long as any Bonds of the Twenty-First Series shall
remain outstanding, the Company will satisfy its obligations under the
Replacement Fund provided for in Section 5.19 of the Original Indenture first
through the use of all available property additions and retired Bonds of any
Series and then, if and only to the extent that said property additions and
retired Bonds are not sufficient to satisfy such obligations, through the use of
cash.

         SECTION 3.3      So long as any Bonds of the Twenty-First Series remain
outstanding, in the event that the Company shall consolidate or merge with or
into any corporation or corporations, or the Company shall transfer all of its
property and franchises to any other corporation, the corporation formed by any
such consolidation, or into which the Company shall be so merged, or which shall
acquire such property of the Company, shall be a corporation incorporated under
the laws of the United States, any State or the District of Columbia.

                                     - 16 -

         SECTION 3.4      So long as any Bonds of the Twenty-First Series shall
remain outstanding, no owner of any portion of the mortgaged property will be
entitled to any credit against interest payable on any Bonds by reason of the
payment of any tax on such property.

                                   ARTICLE IV

          ISSUE AND AUTHENTICATION OF BONDS OF THE TWENTY-FIRST SERIES

         Upon compliance by the Company with the requirements of the Indenture,
including this Twenty-Third Supplement, for the issuance of additional Bonds,
Bonds of the Twenty-First Series up to an aggregate principal amount of
$150,000,000 may forthwith, or, at the election of the Company, in stages from
time to time, be executed by the Company and delivered to the Trustee, and the
Trustee shall thereupon authenticate and make available for delivery said Bonds
in accordance with the provisions of Article III of the Original Indenture. The
signature of the officers of the Company on Bonds of the Twenty-First Series may
be by facsimile if so authorized by the Company's Board of Directors.

                                    ARTICLE V

                       AMENDMENT TO THE ORIGINAL INDENTURE

         SECTION 5.1      Section 3.06 of the Original Indenture shall be
amended and restated in its entirety, so that such Section shall thereafter read
in full as follows:

                           "SECTION 3.06. ADDITIONAL BONDS - CONDITIONS FOR
                  AUTHENTICATION - ACQUISITION OR REFUNDING OF BONDS ISSUED
                  HEREUNDER. Whenever any Bonds shall have been acquired, paid,
                  or retired by the Company, or whenever the Company shall have
                  made provision for the payment of any Bonds (as such provision
                  for payment is defined in Article I), or shall surrender any
                  Bonds to the Trustee, thereupon or at any time thereafter
                  additional Bonds shall be authenticated and delivered by the
                  Trustee in a principal amount not exceeding the principal
                  amount of the Bonds so acquired, paid, retired, surrendered,
                  or for the payment of which such provision shall have been
                  made, upon application by the Company and upon compliance with
                  the following conditions, in addition to those specified in
                  Section 3.03:

                           A.     Any Bonds so acquired, paid, retired or
                  surrendered, or for which payment shall have been so provided,
                  may, when deposited with the Trustee as below provided in
                  Subdivision B (to the extent so required to be deposited), be
                  uncancelled or additional Bonds may be issued in an aggregate
                  principal amount not exceeding the aggregate principal amount
                  of any Bonds so acquired, paid, retired or surrendered, or for
                  which payment shall have been so provided; provided, however,
                  that in respect of any Bond which shall have been cancelled
                  prior to or concurrently with the application for such
                  authentication (and, for the purposes of this Subdivision A,
                  in case payment shall have been so provided for such Bonds,
                  the same shall be deemed to have been cancelled upon the date
                  of such provision for payment), no Bonds shall be
                  authenticated in lieu thereof or in exchange therefor in an

                                     - 17 -

                  aggregate principal amount exceeding the aggregate principal
                  amount of such Bonds less the amount of any money withdrawn
                  hereunder in connection with such acquisition, payment,
                  retirement, cancellation, or provision.

                           B.     There shall be delivered to the Trustee the
                  following documents:

                                  (1)   The Bonds so acquired, paid, retired, or
                           surrendered. Any of such Bonds which shall be
                           uncancelled shall be in negotiable form or
                           accompanied by proper instruments of assignment and
                           transfer, and shall be accompanied by all unmatured
                           coupons, if any, appertaining thereto. In the case of
                           any Bonds for which payment shall have been so
                           provided, such Bonds shall not then be required to be
                           deposited, but in lieu thereof the Company shall
                           deliver to the Trustee a statement describing the
                           same; thereafter, upon payment of such Bonds, the
                           same shall forthwith be delivered to the Trustee for
                           cancellation. In the case of any Bonds which shall
                           have been paid or retired or surrendered and which
                           shall have theretofore been cancelled and cremated by
                           the Trustee, such Bonds shall not be required to be
                           deposited, but in lieu thereof the Company shall
                           deliver to the Trustee a statement describing the
                           same and specifying the date upon which the same were
                           paid or retired or surrendered and were cancelled and
                           cremated.

                                  (2)   If the Bonds so deposited shall be
                           cancelled Bonds, or if in lieu of such deposit of
                           Bonds a statement by the Company shall be delivered
                           as provided in subparagraph (1) of this Subdivision
                           B, a certificate by the President or a Vice-President
                           of the Company, stating such facts in connection
                           therewith as may reasonably be required to show
                           compliance with the conditions specified in
                           Subdivision A.

                           C.     If the Bonds so acquired, paid, retired,
                  surrendered, or the payment of which has been so provided for,
                  shall not at any time theretofore have been bona fide issued
                  by the Company, and if they shall bear interest at a lower
                  rate per annum than the new Bonds the authentication of which
                  is then applied for, the net earnings condition specified in
                  Subdivision C of Section 3.04 shall be complied with, and the
                  Company shall deliver to the Trustee (i) a net earnings
                  certificate, conforming to the provision of Subdivision E(3)
                  of Section 3.04, showing the fixed charges and net earnings of
                  the Company in such reasonable detail as may be required to
                  show compliance with said condition, (ii) an opinion of
                  counsel conforming to the provisions of Subdivision E(4)(b) of
                  Section 3.04, and (iii) a certificate by the trustee or
                  mortgagee of each prior lien conforming to the provisions of
                  Subdivision E(5) of Section 3.04."

         SECTION 5.2      The foregoing amendment to Section 3.06 of the
Original Indenture shall become effective upon the earlier to occur of the
following:

                                     - 18 -

                  (a) the date as of which no Bonds remain outstanding that were
part of a series of Bonds initially issued prior to the issuance of Bonds of the
Nineteenth Series;

                  (b) the date as of which a supplemental indenture to the
Indenture is executed by the Company and the Trustee setting forth the foregoing
amendment to Section 3.06 of the Original Indenture, after the holders of at
least 66 2/3% of the Bonds then outstanding have consented to and approved the
execution of such supplemental indenture, all in accordance with Article X and
the other relevant provisions of the Original Indenture.

         SECTION 5.3      Each holder of any Bonds of the Twenty-First Series,
by the acceptance by such holder of such Bonds, (a) consents to and approves the
foregoing amendment to Section 3.06 of the Original Indenture, and consents to
and approves the execution by the Company and the Trustee of a supplemental
indenture to the Indenture setting forth such amendment, and (b) agrees to
execute such instrument or instruments as may be requested by the Company or the
Trustee to evidence such consent and approval in accordance with Section 10.02
of the Original Indenture.

                                   ARTICLE VI

                             CONCERNING THE TRUSTEE

         SECTION 6.1      The Trustee, for itself and its successors in said
trusts, hereby accepts the trust hereby provided and agrees to perform the same
upon the terms and conditions contained in the Indenture, including this
Twenty-Third Supplement. The Trustee shall not be responsible in any manner
whatsoever for the recitals in this Twenty-Third Supplement.

         SECTION 6.2      So long as any Bonds of the Twenty-First Series shall
remain outstanding, any successor trustee to the Trustee shall at all times be a
corporation which shall have at all times a combined capital and surplus of not
less than $100,000,000. If any such successor trustee publishes reports of
condition annually, pursuant to law or to the requirements of a supervising or
examining authority, the combined capital and surplus of such successor trustee
at any time for the purposes of this Section shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.

                                   ARTICLE VII

                          CONCERNING EVENTS OF DEFAULT

         SECTION 7.1      So long as any Bonds of the Twenty-First Series shall
remain outstanding, the following shall constitute events of default within the
meaning of Section 9.02 of the Original Indenture (in addition to the events of
default set forth in Section 9.02 of the Original Indenture):

                  (a)   If the Company shall default in the payment of any
portion of the principal of any Bond of the Twenty-First Series, as and when the
same shall have become due, whether at the stated maturity thereof or upon
proceedings for redemption (pursuant to the provisions of any sinking,
replacement, purchase or other analogous fund established in the Original
Indenture or pursuant to any optional or other redemption) or otherwise;

                                     - 19 -

provided, however, that in the event the Company and the Trustee shall have
taken all action required to be taken so that each such payment of principal by
means of wire transfer could reasonably be expected to be effective on the due
date thereof, but nevertheless, any such transfer shall not have been credited
to the account of a registered owner of Bonds of the Twenty-First Series to whom
such payment is required to be made effective as of the due date, the Company
shall not be deemed to have defaulted upon the obligation to make such payment
until the expiration of five days following said due date;

                  (b)   if the Company shall default in the payment of any
installment of interest due on any Bond of the Twenty-First Series and such
default shall continue for a period of 10 days; or

                  (c)   if the Company shall default in the performance of or
compliance with any other covenant, condition or term contained in the
Indenture, including this Twenty-Third Supplement, and such default shall
continue for 30 days after the Company shall have knowledge thereof.

         SECTION 7.2      So long as any Bonds of the Twenty-First Series shall
remain outstanding, the Company covenants that if at any time or times or from
time to time an event of default referred to in Section 6.1 of this Twenty-Third
Supplement shall occur, the Company will, on demand of the Trustee, forthwith
pay to the Trustee, for the benefit of all holders of Bonds then outstanding
under the Indenture, a sum equal to the total amount then due for principal and
interest on all Bonds then outstanding under the Indenture, with interest
thereon (to the extent that payment of such interest is enforceable under
applicable law) in accordance with the terms of the respective Bonds.

         Should said sum not be so paid to the Trustee, it shall be entitled, at
any time or times and from time to time, in its own name and as Trustee of an
express trust and without the possession or production of any Bonds of any
Series or coupons, to recover judgment for the same against the Company or any
other obligor upon such Bonds.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         SECTION 8.1      As supplemented by this Twenty-Third Supplement, the
Indenture is in all respects ratified and confirmed, and the Indenture,
including the Twenty-Third Supplement, shall be read as one instrument. All
terms used in the Twenty-Third Supplement shall have the same meaning as used
elsewhere in the Indenture except where the context clearly indicates otherwise.

         SECTION 8.2      This Twenty-Third Supplement has been dated as of
September 1, 2002 for convenience. The date of actual execution hereof by each
of the parties is the date shown by the acknowledgment of execution hereof by
its officers.

                                     - 20 -

         SECTION 8.3      This Twenty-Third Supplement may be executed in
several counterparts, each of which shall be considered an original and all
collectively as but one instrument.

         SECTION 8.4      The approval of the New Jersey BPU of the execution
and delivery of these presents, and of the issue of any Bonds of the
Twenty-First Series, shall not be construed as approval of said New Jersey BPU
of any other act, matter or thing which requires approval of said New Jersey BPU
under the laws of the States of New Jersey; nor shall the approval of said New
Jersey BPU of the issue of any such Bonds bind said New Jersey BPU or any other
public body or authority of the State of New Jersey having jurisdiction in the
premises in any future application for the issuance of Bonds under the
Indenture.

         IN WITNESS WHEREOF, the Company and the Trustee have caused these
presents to be duly executed under the respective corporate seals by their
respective proper officers, all duly authorized thereunto, and have caused these
presents to be dated as of the day and year first above written.

                                  SOUTH JERSEY GAS COMPANY

                                  By: _______________________________________
                                      Charles Biscieglia
                                      President

ATTEST:                               [SEAL]

_______________________________
Richard H. Walker
Secretary

                                  THE BANK OF NEW YORK

                                  By: _______________________________________

ATTEST:                               [SEAL]

_______________________________

                                     - 21 -

STATE OF NEW JERSEY                 :
                                    :    ss:
COUNTY OF ATLANTIC                  :

         Be it remembered, that on September 1, 2002, before me, a Notary Public
of New Jersey, personally appeared Charles Biscieglia, who, I am satisfied, is
President of South Jersey Gas Company, one of the corporations named in the
foregoing deed or instrument, and I having first made known to him the contents
thereof, he acknowledged that he had signed the same as such officer for and on
behalf of such corporation, that the same was made by such corporation as its
voluntary act and deed, and sealed with its corporate seal, by virtue of
authority of its board of directors, and that he has received, without charge, a
true copy of said foregoing deed or instrument. All of which is hereby
certified.

                                        _______________________________________
                                        Notary Public of New Jersey

                                        My Commission Expires:

STATE OF NEW YORK                   :
                                    :    ss:
COUNTY OF NEW YORK                  :

         Be it remembered, that September 1, 2002, before me, a Notary Public of
New York, personally appeared _______________________, who, I am satisfied, is
__________________ of The Bank of New York, one of the corporations named in the
foregoing deed or instrument, and I having first made known to him the contents
thereof, he acknowledged that he had signed the same as such officer for and on
behalf of such corporation, that the same was made by such corporation as its
voluntary act and deed, and sealed with its corporate seal, by virtue of
authority of its board of directors. All of which is hereby certified.

                                        ______________________________________
                                        Notary Public of New Jersey

                                        My Commission Expires:

                                     - 22 -

         The within Twenty-Third Supplemental Indenture has been recorded and
filed as follows:

         County            Date of Recordation           Book             Page

New Jersey:

    Atlantic

    Burlington

    Camden

    Cape May

    Cumberland

    Gloucester

    Salem

                                     - 23 -<PAGE>

                                                               EXHIBIT 10.26

=============================================================================

                 SECOND AMENDED AND RESTATED EQUIPMENT LEASE

                         Dated as of August 6, 2002

                                   between

              WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
                      as trustee under MW 1997-1 Trust,
                            as the Lessor Trustee

                                     and

                          MAIL-WELL I CORPORATION,
                                as the Lessee

=============================================================================

<PAGE>
<PAGE>

<TABLE>
                                     TABLE OF CONTENTS

<CAPTION>
                                                                                      Page
<S>                                                                                   <C>
Section 1.  DEFINITIONS                                                                  1
   Section 1.1.   Definitions; Interpretation                                            1

Section 2.  LEASE                                                                        1
   Section 2.1.   Lease of Equipment                                                     1
   Section 2.2.   Lease Supplement                                                       1
   Section 2.3.   Lease Term                                                             2
   Section 2.4.   Title                                                                  2

Section 3.  PAYMENT OF RENT                                                              2
   Section 3.1.   Rent                                                                   2
   Section 3.2.   Payment of Rent                                                        2
   Section 3.3.   Supplemental Rent                                                      2
   Section 3.4.   Method of Payment                                                      3

Section 4.  QUIET ENJOYMENT; RIGHT TO INSPECT; NATURE OF BUSINESS                        3
   Section 4.1.   Quiet Enjoyment                                                        3
   Section 4.2.   Right to Inspect                                                       3
   Section 4.3.   Change in the Nature of Business                                       3
   Section 4.4.   Corporate Changes                                                      3

Section 5.  NET LEASE, ETC.                                                              4
   Section 5.1.   Net Lease                                                              4
   Section 5.2.   No Termination or Abatement                                            5

Section 6.  LESSEE ACKNOWLEDGMENTS                                                       6
   Section 6.1.   Condition of the Equipment                                             6
   Section 6.2.   Risk of Loss                                                           6

Section 7.  MARKING                                                                      7
   Section 7.1.   Marking of Equipment                                                   7

Section 8.  POSSESSION AND USE OF THE EQUIPMENT, ETC.                                    7
   Section 8.1.   Use of the Equipment                                                   7
   Section 8.2.   Possession of the Equipment                                            8
   Section 8.3.   Landlord Waivers                                                       8

Section 9.  MAINTENANCE AND REPAIR; RETURN                                               8
   Section 9.1.   Repairs and Maintenance                                                8
   Section 9.2.   Maintenance Costs and Warranties                                       8
   Section 9.3.   Lessor Trustee Not Obligated to Maintain or Repair                     9
   Section 9.4.   Return                                                                 9

Section 10. MODIFICATIONS, ETC.                                                         12
   Section 10.1.  Replacement of Parts                                                  12

                                    -i-

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<CAPTION>
                                     TABLE OF CONTENTS
                                          (CONT.)
                                                                                      Page
<S>                                                                                   <C>
   Section 10.2.  Required Alterations                                                  13
   Section 10.3.  Optional Alterations                                                  13
   Section 10.4.  Title to Parts                                                        13

Section 11. WARRANTY OF TITLE                                                           13
   Section 11.1.  Warranty of Title                                                     13

Section 12. PERMITTED CONTESTS                                                          14
   Section 12.1.  Permitted Contests in Respect of Applicable Law                       14

Section 13. INSURANCE                                                                   15
   Section 13.1.  Required Insurance Coverages and Limits                               15
   Section 13.2.  Adjustment and Payment of Losses                                      16
   Section 13.3.  Evidence of Insurance                                                 16
   Section 13.4.  Application of Insurance Proceeds                                     16
   Section 13.5.  Deductibles and Self-Insurance                                        17
   Section 13.6.  Insurance for Own Account                                             17

Section 14. CASUALTY OCCURRENCE                                                         17
   Section 14.1.  Casualty Occurrence                                                   17
   Section 14.2.  Conveyance of Replacement Equipment                                   19
   Section 14.3.  Application of Payments                                               20
   Section 14.4.  Certain Government Requisitions                                       20
   Section 14.5.  Application of Payments from Governmental Authorities for
                  Requisition of Title                                                  21
   Section 14.6.  Application of Payments During Existence of Default                   21

Section 15. SUBSTITUTION OF EQUIPMENT                                                   21
   Section 15.1.  Substitution of Equipment                                             21

Section 16. EVENTS OF DEFAULT                                                           22
   Section 16.1.  Events of Default                                                     22
   Section 16.2.  Remedies                                                              24
   Section 16.3.  Waiver of Certain Rights                                              27

Section 17. LESSOR TRUSTEE'S RIGHT TO REMEDY                                            27
   Section 17.1.  The Lessor Trustee's Right to Remedy the Lessee's Defaults            27

Section 18. OPTIONS TO RENEW, PURCHASE AND SELL                                         28
   Section 18.1.  Purchase of the Equipment                                             28
   Section 18.2.  [Intentionally Omitted]                                               28
   Section 18.3.  Option to Sell the Equipment                                          28
   Section 18.4.  End of Term Adjustment                                                30

                                     -ii-

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<CAPTION>
                                     TABLE OF CONTENTS
                                          (CONT.)
                                                                                      Page
<S>                                                                                   <C>
Section 19. PROCEDURES RELATING TO PURCHASE OF EQUIPMENT                                31
   Section 19.1.  Provisions Relating to the Purchase of Equipment; Conveyance
                  upon Certain Other Events                                             31

Section 20. ADDITIONAL GUARANTORS                                                       31
   Section 20.1.  Additional Guarantors                                                 31

Section 21. ASSIGNMENT RESTRICTIONS                                                     32
   Section 21.1.  Restrictions on Assignments by the Lessee                             32

Section 22. NO MERGER OF TITLE                                                          32
   Section 22.1.  No Merger of Title                                                    32

Section 23. INTENT OF THE PARTIES                                                       32
   Section 23.1.  Nature of Transaction                                                 32
   Section 23.2.  Liens and Security Interests                                          33

Section 24. MISCELLANEOUS                                                               35
   Section 24.1.  Severability                                                          35
   Section 24.2.  Amendments and Modifications                                          36
   Section 24.3.  No Waiver                                                             36
   Section 24.4.  Notices                                                               36
   Section 24.5.  Successors and Assigns                                                36
   Section 24.6.  Headings and Table of Contents                                        36
   Section 24.7.  Counterparts                                                          36
   Section 24.8.  Third Party Beneficiaries                                             36
   Section 24.9.  Governing Law                                                         36
   Section 24.10. Time of Essence                                                       36

ATTACHMENTS TO EQUIPMENT LEASE

Exhibit A            Form of Lease Supplement
Exhibit B            Form of Landlord Waiver

Schedule 13.1        Insurance
</TABLE>

                                    -iii-

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<PAGE>

                  SECOND AMENDED AND RESTATED EQUIPMENT LEASE

   THIS SECOND AMENDED AND RESTATED EQUIPMENT LEASE (this "Lease"),
dated as of August 6, 2002 between WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, a national banking association, as trustee under MW 1997-1
Trust (the "Lessor Trustee"), as lessor, and MAIL-WELL I CORPORATION, a
Delaware corporation, as lessee (the "Lessee").

                                   RECITALS

   A. Pursuant to the Amended and Restated Participation Agreement, the
Existing Certificate Purchasers financed the Equipment leased by the Lessor
Trustee to the Lessee pursuant to the Amended and Restated Equipment Lease;

   B. The Lessor Trustee, the Lessee and the Trust Certificate
Purchasers now desire to refinance the Equipment pursuant to the Second
Amended and Restated Participation Agreement, dated as of August 6, 2002
(the "Participation Agreement"), among the Lessee, the Lessor Trustee and
the Trust Certificate Purchasers;

   C. On the Closing Date, the Trust Certificate Purchasers will
purchase the Trust Certificates, and the Lessor Trustee will prepay in full
the Existing Trust Certificates;

   D. The Lessor Trustee and the Lessee desire to amend and restate the
Amended and Restated Equipment Lease to provide for the lease from the
Lessor Trustee to the Lessee of the Equipment on the terms of this Lease;

   NOW THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties amend and restate the Amended and Restated
Equipment Lease in its entirety to provide as follows.

                                   AGREEMENT

SECTION 1. DEFINITIONS

   Section 1.1. Definitions; Interpretation. Capitalized terms used but
not otherwise defined in this Lease have the meanings specified in Annex I
to the Participation Agreement. The rules of interpretation set forth in
Annex I to the Participation Agreement apply to this Lease.

SECTION 2. LEASE

   Section 2.1. Lease of Equipment. Subject to the conditions set forth
in the Participation Agreement, the Lessor Trustee leases to the Lessee the
Equipment and other property described in Section 23.2 for the Lease Term,
and the Lessee leases the Equipment from the Lessor Trustee for the Lease
Term, such leasing to be further evidenced by the execution by the Lessor
Trustee and the Lessee of Lease Supplement No. 1 covering the Equipment.

   Section 2.2. Lease Supplement. On the Closing Date, the Lessee and
the Lessor Trustee shall enter into Lease Supplement No. 1, substantially
in the form of Exhibit A to this Lease, covering the Equipment, describing
the Items of Equipment leased on the Closing Date,

<PAGE>
<PAGE>

and setting forth the Equipment Cost therefor. The Lessee's execution and
delivery of a Lease Supplement with respect to an Item of Equipment shall
conclusively establish as between the Lessor Trustee and the Lessee that
such Item of Equipment is acceptable to and accepted by the Lessee under
this Lease, notwithstanding any defect with respect to design, manufacture,
condition or in any other respect, and that such Item of Equipment is in
good order and condition and appears to conform to the specifications
applicable thereto and to all governmental standards and requirements
applicable thereto.

   Section 2.3. Lease Term. Subject to the termination provisions of
this Lease, each Item of Equipment shall be leased for the Lease Term.

   Section 2.4. Title. The Equipment is leased to the Lessee AS-IS,
WHERE-IS, without any representation or warranty, express or implied, by
the Lessor Trustee, the Agent or any Certificate Holder and subject to the
existing state of title (including, without limitation, all Liens other
than Lessor's Liens) and all applicable Requirements of Law. The Lessee
shall in no event have any recourse against the Lessor Trustee, the Agent
or any Certificate Holder for any defect in or exception to title to the
Equipment or leasehold interest therein other than resulting from Lessor's
Liens attributable to the Lessor Trustee, the Agent or such Certificate
Holder.

SECTION 3. PAYMENT OF RENT

   Section 3.1. Rent.

           (a) During the Lease Term, the Lessee shall pay Periodic Rent
   for all Items of Equipment subject to this Lease to the Lessor
   Trustee on each Scheduled Payment Date and on any date on which this
   Lease is terminated, provided that any payment of Periodic Rent which
   is due on a date which is not a Business Day shall be payable on the
   next succeeding Business Day, unless the result of the extension
   would be that such payment would be made in another calendar month in
   which event such payment shall be made on the immediately preceding
   Business Day.

           (b) Neither the Lessee's inability or failure to take
   possession of all or any portion of the Equipment when delivered by
   the Lessor Trustee, nor the inability or failure of the Lessor
   Trustee to deliver all or any portion of the Equipment to the Lessee
   on or before the Closing Date, whether or not attributable to any act
   or omission of the Lessee or any act or omission of the Lessor
   Trustee or any Certificate Holder, or for any other reason
   whatsoever, shall delay or otherwise affect the Lessee's obligation
   to pay Rent for all of the Equipment in accordance with the terms of
   this Lease.

   Section 3.2. Payment of Rent. Lessee shall pay Rent absolutely net to
the Lessor Trustee or other Person entitled to it, so that this Lease
yields to that Person the full amount of Rent when due, without setoff,
deduction or reduction.

   Section 3.3. Supplemental Rent. The Lessee shall pay to the Lessor
Trustee or any other Person entitled thereto any and all Supplemental Rent
promptly as the same shall become due and payable, and if the Lessee fails
to pay any Supplemental Rent, the Lessor Trustee and such other Persons
shall have all rights, powers and remedies provided for herein or by law or
equity or otherwise in the case of nonpayment of Periodic Rent. The Lessee
shall pay to the

                                      2

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<PAGE>

Lessor Trustee, as Supplemental Rent, among other things, on demand, to the
extent permitted by applicable Requirements of Law, interest at the
applicable Overdue Rate on any installment of Periodic Rent not paid when
due for the period for which the same shall be overdue and on any payment
of Supplemental Rent not paid when due or demanded by the Lessor Trustee
for the period from the due date or the date of any such demand, as the
case may be, until the same shall be paid. The expiration or other
termination of the Lessee's obligations to pay Periodic Rent hereunder
shall not limit or modify the obligations of the Lessee with respect to
Supplemental Rent. Unless expressly provided otherwise in this Lease, in
the event of any failure on the part of the Lessee to pay and discharge any
Supplemental Rent as and when due, the Lessee shall also promptly pay and
discharge any fine, penalty, interest or cost which may be assessed or
added against the Lessor Trustee by a third party for nonpayment or late
payment of such Supplemental Rent, all of which shall also constitute
Supplemental Rent.

   Section 3.4. Method of Payment. Each payment of Rent payable by the Lessee
to the Lessor Trustee under this Lease or any other Operative Agreement
shall be made by the Lessee to the Lessor Trustee prior to 10:00 a.m. (Salt
Lake City, Utah time) on the date when such payment is due to the Account
by wire transfer of federal or other immediately available funds consisting
of lawful currency of the United States of America.

SECTION 4. QUIET ENJOYMENT; RIGHT TO INSPECT; NATURE OF BUSINESS

   Section 4.1. Quiet Enjoyment. So long as no Event of Default has
occurred and is continuing and subject to other terms of the Operative
Agreements, the Lessee shall peaceably and quietly have, hold and enjoy
each Item of Equipment for the Lease Term, free of any claim or other
action by the Lessor Trustee, the Agent or the Certificate Holders or
anyone claiming through or under the Lessor Trustee, the Agent or the
Certificate Holders (other than the Lessee) with respect to any matters
arising from and after the Closing Date. The Lessee's right of quiet
enjoyment shall in no way affect the rights of the Lessor Trustee, the
Agent or the Certificate Holders (or anyone claiming through or under the
Lessor Trustee, the Agent or the Certificate Holders) to initiate legal
action to enforce the Lessee's obligations under this Lease.

   Section 4.2. Right to Inspect. During the Lease Term, the Lessee
shall upon reasonable notice, and from time to time, permit the Lessor
Trustee, the Agent, any Certificate Holder, and their respective authorized
representatives to inspect the Equipment, to examine the records or books
of account of the Lessee relating to the Equipment and to discuss the
affairs, finances and accounts of the Lessee with appropriate officers,
during normal business hours, provided that if an Event of Default has
occurred and is continuing, no notice shall be required and any inspection
shall be at the Lessee's expense.

   Section 4.3. Change in the Nature of Business. The Lessee shall not
engage in any business or activity if as a result the general nature of the
business of the Lessee would be changed in any material respect from the
general nature of the business engaged in by the Lessee on the date of this
Lease.

   Section 4.4. Corporate Changes. The Lessee shall notify the Lessor
Trustee and the Agent at least 10 Business Days before it changes the
jurisdiction where it is organized, the location of its chief executive
office; or its name. In connection with any such change, the Lessee

                                      3

<PAGE>
<PAGE>

shall deliver to the Lessor Trustee and the Agent any additional UCC
financing statements and other documents reasonably requested by them to
maintain the validity, perfection and priority of the security interests
granted in this Lease or the other Operative Documents.

SECTION 5. NET LEASE, ETC.

   Section 5.1. Net Lease.

           (a) This Lease shall constitute a net lease, and it is intended
   that the Lessee shall pay all costs and expenses of every character,
   whether foreseen or unforeseen, ordinary or extraordinary, or
   structural or non-structural, in connection with the Lessee's
   installation, use, possession, operation, maintenance, repair and
   return of the Equipment, including, without limitation, every cost
   and expense particularly described in this Lease.

           (b) Any present or future law to the contrary notwithstanding,
   this Lease shall not terminate (except as expressly permitted by this
   Lease and upon performance of the obligations in connection
   therewith), nor shall the Lessee be entitled to any abatement,
   suspension, deferment, reduction, setoff, counterclaim, or defense
   with respect to the Rent, nor shall the Lessee's obligations
   hereunder be affected for any reason, cause or circumstance, whether
   or not the Lessee shall have notice or knowledge of it, including,
   without limitation, the following reasons, causes or circumstances:

                     (i) any defect in the condition, merchantability,
           design, construction, quality or fitness for use of the Equipment
           or any part thereof, or the failure of the Equipment to comply
           with all Requirements of Law, including any inability to use the
           Equipment by reason of such defect or failure to comply;

                     (ii) any damage to, removal, abandonment, salvage,
           loss, contamination of, scrapping or destruction of or any
           requisition or taking of the Equipment or any part thereof;

                     (iii) any restriction, prevention or curtailment of or
           interference with any use or possession of the Equipment or any
           part thereof;

                     (iv) any defect in title of or rights to the Equipment
           or any Lien on such title or rights or on the Equipment;

                     (v) any change, waiver, extension, indulgence or other
           action or omission or breach in respect of any obligation or
           liability of or by the Lessor Trustee, the Agent or any
           Certificate Holder;

                     (vi) any bankruptcy, insolvency, reorganization,
           composition, adjustment, dissolution, liquidation or other like
           proceedings relating to the Lessee, any Guarantor, the Lessor
           Trustee, the Agent, any Certificate Holder or any other Person,
           or any action taken with respect to this Lease by any trustee or
           receiver of the Lessee, any Guarantor, the Lessor Trustee, the
           Agent, any Certificate Holder or any other Person, or by any
           court in any such proceeding;

                                     4

<PAGE>
<PAGE>

                     (vii) any claim that the Lessee has or might have
           against any Person, including without limitation the Lessor
           Trustee, the Agent, any Certificate Holder or any vendor,
           manufacturer, contractor of or for the Equipment;

                     (viii) any failure on the part of the Lessor Trustee or
           any other Person to perform or comply with any of the terms of
           this Lease, of any other Operative Agreement or of any other
           agreement or any breach of any representation or warranty of, or
           any act or omission of the Lessee, any Guarantor, the Lessor
           Trustee, the Agent or any Certificate Holder under this Lease or
           any of the other Operative Agreements, or any claims, rights or
           remedies occurring or arising as a result of any other business
           dealings between or among the Lessee or any Guarantor and any of
           the Lessor Trustee, the Agent or any Certificate Holder;

                     (ix) any invalidity or unenforceability or illegality
           or disaffirmance of this Lease against or by the Lessee or any
           provision of any Operative Agreement or any lack of right, power
           or authority of the Lessee, any Guarantor, the Lessor Trustee,
           the Agent or any Certificate Holder to enter into any Operative
           Agreement or any of the transactions contemplated thereby;

                     (x) the impossibility or illegality of performance of
           its obligations under this Lease by the Lessee or the Lessor
           Trustee or both of them;

                     (xi) any action by any Governmental Authority;

                     (xii) the Lessee's acquisition of any Item of Equipment
           (except to the extent this Lease is terminated in accordance with
           its terms); or

                     (xiii) breach of any warranty or representation
           regarding any Item of Equipment.

           (c) The Lessee's agreement in Section 5.1(b) shall not affect
   any claim, action or right the Lessee may have against the Lessor
   Trustee or any Certificate Holder. The parties intend that the
   Lessee's obligations under this Lease shall be obligations that are
   separate and independent from any obligations of the Lessor Trustee
   hereunder or under any other Operative Agreements, and the
   obligations of the Lessee shall continue unchanged, except as they
   may be modified in accordance with Section 24.2. Without affecting
   Lessee's obligation to pay Rent under any Operative Agreement, Lessee
   may seek damages for a breach by the Lessor Trustee or any
   Certificate Holder of its obligations under this Lease (including,
   without limitation, Section 4.1) or any other Operative Agreement.

   Section 5.2. No Termination or Abatement. The Lessee shall remain
obligated under this Lease in accordance with its terms and shall not take
any action to terminate (except as expressly permitted by this Lease and
upon performance of the obligations in connection therewith), rescind or
avoid this Lease, notwithstanding any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution, or other proceeding affecting the
Lessor Trustee or any Certificate Holder, or any action with respect to
this Lease which may be taken by any trustee, receiver or liquidator of the
Lessor Trustee or any Certificate Holder or by any court with respect

                                     5

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<PAGE>

to the Lessor Trustee or any Certificate Holder. The Lessee's obligations
hereunder, including, without limitation, its obligations to pay Periodic
Rent for the Equipment and to pay Supplemental Rent, shall be unconditional
and irrevocable under any and all circumstances and the Lessee hereby
waives, to the extent permitted by law, all right (a) to terminate or
surrender this Lease (except as provided herein) or (b) to avail itself of
any abatement, suspension, deferment, reduction, setoff, counterclaim or
defense with respect to any Rent. Each Rent payment made pursuant to this
Lease by the Lessee shall be final and the Lessee shall not seek to recover
all or any part of such payment from the Lessor Trustee or any Certificate
Holder for any reason whatsoever. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise
except as specifically provided herein or as otherwise agreed, the Lessee
nonetheless agrees to pay to the Lessor Trustee, or to whomever shall be
entitled thereto, an amount equal to each Rent payment at the time such
payment would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part. The Lessee's
obligation in the immediately preceding sentence shall survive the
expiration or termination of this Lease other than in accordance with its
terms. The Lessee shall remain obligated under this Lease in accordance
with its terms and the Lessee hereby waives, to the extent permitted by
law, any and all rights now or hereafter conferred by statute or otherwise
to modify or to avoid strict compliance with its obligations under this
Lease. Notwithstanding any such statute or otherwise, the Lessee shall be
bound by all of the terms and conditions of this Lease.

SECTION 6. LESSEE ACKNOWLEDGMENTS

   Section 6.1. Condition of the Equipment. THE LESSEE ACKNOWLEDGES AND
AGREES THAT IT IS LEASING EACH ITEM OF EQUIPMENT "AS IS" WITHOUT
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR
TRUSTEE, THE AGENT OR ANY CERTIFICATE HOLDER AND SUBJECT TO (A) THE
EXISTING STATE OF TITLE (EXCLUDING LESSOR'S LIENS), (B) THE RIGHTS OF ANY
PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS THAT A PHYSICAL
INSPECTION MIGHT SHOW AND (D) VIOLATIONS OF REQUIREMENTS OF LAW THAT MAY
EXIST ON THE CLOSING DATE. NONE OF THE LESSOR TRUSTEE, THE AGENT, OR ANY
CERTIFICATE HOLDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) OR SHALL BE
DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE, VALUE,
SUITABILITY, USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR ANY USE OF
THE EQUIPMENT (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY
OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT
(OR ANY PART THEREOF). THE LESSOR TRUSTEE, THE AGENT, AND THE CERTIFICATE
HOLDERS SHALL NOT BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT IN THE
EQUIPMENT OR THE FAILURE OF THE EQUIPMENT, OR ANY PART THEREOF, TO COMPLY
WITH ANY REQUIREMENT OF LAW.

   Section 6.2. Risk of Loss. Lessee assumes all risks of loss of,
decreases in the enjoyment and beneficial use of, damage to, and
destruction of each Item of Equipment from any cause, including without
limitation fire, the elements, casualty, condemnation or other

                                     6

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<PAGE>

governmental taking, theft, riot, or war, and neither the Lessor Trustee
nor any Certificate Holder shall in any event be answerable or accountable
therefor.

SECTION 7. MARKING

   Section 7.1. Marking of Equipment. The Lessee shall promptly cause
each Item of Equipment to be plainly, permanently and conspicuously marked
by a metal tag, plate or label affixed thereto, each setting forth the
following legend:

           TITLE TO THIS EQUIPMENT IS HELD BY WELLS FARGO BANK
           NORTHWEST, NATIONAL ASSOCIATION, AS TRUSTEE UNDER
           MW 1997-1 TRUST AND IS SUBJECT TO A LEASE BY TRUSTEE
           TO MAIL-WELL I CORPORATION.

The Lessee shall replace any tag, plate or label that is removed, is
destroyed or becomes illegible and shall indemnify each Indemnified Party
against any liability, loss or expense incurred by such Indemnified Party
as a result of the Lessee's failure to maintain or replace such tags,
plates or labels.

SECTION 8. POSSESSION AND USE OF THE EQUIPMENT, ETC.

   Section 8.1. Use of the Equipment.

           (a) The Lessee shall not use the Equipment except in the
   conduct of its business and shall apply standards of use no lower than
   the standards applied by the Lessee for other comparable property
   owned or leased by the Lessee. The Lessee shall pay, or cause to be
   paid, all charges and costs incurred in connection with the use of
   the Equipment as contemplated by this Lease.

           (b) Subject to the terms of Section 12 relating to permitted
   contests, the Lessee warrants that (i) the Lessee shall at all times
   comply with all Requirements of Law and Insurance Requirements in its
   use, operation, maintenance, repair, restoration, storage and nonuse
   of the Equipment, even if compliance therewith interferes with its
   use and enjoyment of the Equipment, (ii) the Lessee shall procure,
   maintain and comply with all licenses, permits, orders, approvals,
   consents and other authorizations required by Applicable Laws or by
   any Governmental Authority for the use, operation, maintenance,
   repair, restoration, storage and nonuse of the Equipment, and (iii)
   all materials used in the operation of the Equipment shall be
   compatible with those recommended by the manufacturer's operation
   manual.

           (c) The Lessee shall not change the location of any Item of
   Equipment, unless it gives five days' prior written notice to the
   Lessor Trustee and the Agent and before or concurrently with to the
   location change the Lessee files, or causes to be filed, in each
   jurisdiction that the Lessor Trustee in its sole discretion considers
   necessary, Uniform Commercial Code financing statements (including,
   without limitation, fixture filings) with respect to the Equipment in
   form and substance satisfactory to the Lessor Trustee.

                                     7

<PAGE>
<PAGE>

   Section 8.2. Possession of the Equipment. The Lessee shall not, without the
Lessor Trustee's, the Agent's and the Certificate Holders' prior written
consent (which they must not unreasonably withhold), sublease, sub-sublease
or otherwise in any manner deliver, transfer or relinquish possession of
any Item of Equipment, except that, so long as no Default or Event of
Default has occurred and is continuing, the Lessee may, at any time and
without the Lessor Trustee's, the Agent's or the Certificate Holders'
consent, deliver possession of any Part of any Item of Equipment to the
manufacturer, contractor or supplier designated by the Lessee for purposes
of realizing the benefits of any warranty or for testing or other similar
purposes or to any Person for service, repair, maintenance or overhaul work
or for alterations, modifications or additions to an Item of Equipment to
the extent required or permitted by the terms of Section 9 or Section 10.

   Section 8.3. Landlord Waivers. If at any time an Item of Equipment is
located at a Site that is not owned by the Lessee or a Wholly-Owned
Subsidiary of the Lessee, the Lessee shall promptly deliver to the Lessor
Trustee a Landlord Waiver executed by the owner of such Site.

SECTION 9. MAINTENANCE AND REPAIR; RETURN

   Section 9.1. Repairs and Maintenance. The Lessee, at the Lessee's own
cost and expense, shall (a) maintain, service and repair the Equipment in
order to keep the Equipment in as good repair, good operating condition and
working order as when it first became subject to this Lease and in
compliance with all of the manufacturer's specifications, (b) maintain,
service and repair the Equipment in such condition as the Lessee would, in
the prudent management of its owned or leased properties, maintain, service
and repair similar property owned or leased by the Lessee and, in any
event, to the extent required to maintain the Equipment in good repair and
in compliance with all Requirements of Law and Insurance Requirements,
noncompliance with which might result in the imposition of a penalty on any
Indemnified Party or materially and adversely affect the Equipment or its
operation, and (c) have in full force and effect during the Lease Term a
maintenance program to maintain, service and repair the Equipment so as to
keep the Equipment in as good operating condition and working order as it
was when it first become subject to this Lease and in compliance with
manufacturer's specifications.

   Section 9.2. Maintenance Costs and Warranties. The Lessee agrees to
pay all costs, expenses, fees and charges incurred in connection with (a)
the use and operation, including but not limited to repairs, maintenance,
storage and servicing as provided in Section 10 and this Section 9, of each
Item of Equipment by the Lessee during the Lease Term and (b) preserving
and protecting each Item of Equipment, and repairing, maintaining and
servicing the Equipment as provided in Section 10 and this Section 9,
during the period after a termination of the Lessee's right of possession
of such Item of Equipment pursuant to Section 16.2 and prior to the
interest of the Lessor Trustee in such Item of Equipment being leased or
sold to a third person by the Lessor Trustee (other than one or more
Certificate Holders or their Affiliates). So long as no Event of Default
has occurred and is continuing, the Lessor Trustee hereby appoints the
Lessee as its agent and attorney-in-fact for the purpose of exercising and
enforcing, and with full right, power and authority to exercise and to
enforce, all of the right, title and interest of the Lessor Trustee in,
under and to the warranties and obligations of any supplier of goods or
services in respect of the Equipment and agrees to execute and deliver such
further instruments as may be necessary to enable the Lessee to obtain
goods or services furnished for the Equipment by said

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suppliers. The Lessor Trustee shall have no obligation or duty with respect
to any of such matters. Any proceeds obtained by the Lessee from the
enforcement of the warranties and obligations of any supplier of goods or
services in respect of the Equipment shall be held by the Lessee and
applied from time to time to the repair and maintenance of the Equipment,
and any balance thereof remaining at the expiration of the Lease Term and
satisfaction of all of the Lessee's obligations shall be paid over to the
Lessee.

   Section 9.3. Lessor Trustee Not Obligated to Maintain or Repair. The
Lessor Trustee shall not under any circumstances be required to make any
repairs, replacements, Alterations of any nature to the Equipment, to make
any expenditure whatsoever in connection with this Lease, or to maintain
the Equipment in any way. The Lessee waives any right to (a) require the
Lessor Trustee to maintain or repair any Item of Equipment or any Part or
(b) make repairs at the expense of the Lessor Trustee pursuant to any
Requirement of Law, contract, agreement, or covenant, condition or
restriction in effect at any time during the Lease Term.

   Section 9.4. Return.

           (a) Prior to the Lessee notifying the Lessor Trustee and the
   Agent of the Lessee's intent to return the Equipment or its election
   to exercise its option to sell the Equipment pursuant to Section
   18.3, the Lessee must demonstrate that each Item of Equipment can
   perform at its original performance specifications under full test
   loads with regard to speed, register control, utility and quality of
   printed matter, and each Item of Equipment must print a Graphic Arts
   Technical Foundation ("GATF") test sheet to an acceptable degree as
   interpreted by GATF. An outside printing expert selected by the
   Lessor Trustee or the Agent and paid for by the Lessee (the "Printing
   Expert") shall perform an Equipment inspection to verify the physical
   condition of the Equipment and shall supervise the demonstration. The
   Printing Expert shall inspect printed material coming off the
   Equipment for its saleability. If the Printing Expert determines that
   improvements are needed to make the equipment perform according to
   the manufacturer's original performance specifications or if the GATF
   test is unacceptable, the Lessee shall make any necessary
   improvements at its sole cost and expense under the supervision of
   the original manufacturer.

           (b) With respect to each Item of Equipment, upon the expiration
   or earlier termination of the Lease Term, the Lessee, at its sole
   expense, shall de-install, crate for shipping and return it to the
   Lessor Trustee by delivering it to such location as the Lessor
   Trustee specifies. The Equipment shall be removed by a licensed and
   insured erector/rigger approved by the Lessor Trustee and the Agent
   and specializing in the crating, removal, transportation and
   reassembly of the Equipment, and deinstallation and reassembly shall
   be performed by a licensed and experienced technician and in a
   prescribed manner, including without limitation proper marking and
   labeling of all electrical wires, hoses, and components. The
   Equipment shall be reassembled on its return and, when returned,
   shall be in the condition required by Section 9.1. Accordingly, if,
   during the Lease Term, any Item of Equipment has not been given all
   scheduled maintenance and overhauls and all repairs that are
   necessary to continue operating it at normal commercial conditions in
   accordance with Section 9.1, then the Lessee shall cause all
   restorative or repair work to be performed on it that is necessary to

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   bring it into the condition that it would have been in, had the
   Lessee complied with Section 9.1 throughout the Lease Term. All
   components of each Item of the Equipment shall have been properly
   serviced, following the manufacturer's written operating and
   servicing procedures, such that each Item of Equipment is eligible
   for a manufacturer's standard, full service maintenance contract
   without the Lessor Trustee's incurring any expense to repair or
   rehabilitate any Item of Equipment. If, during the Lease Term,
   replacement of all parts and components has not been made in
   accordance with Section 10.1 so that the loss in operating
   efficiency, value, utility and remaining useful life of the Items of
   Equipment is more than that expected from normal wear and tear or as
   reflected in the Appraisal completed in accordance with Section
   4.1(l) of the Participation Agreement, then the Lessee, at its
   expense, shall cause all repair and restorative work to be performed
   on the Items of Equipment that is necessary to bring the Items of
   Equipment into the condition that the Items of Equipment would have
   been in had such replacement of parts and components been made. If,
   in the opinion of the Lessor Trustee, any Item of Equipment fails to
   meet the return standards set forth in this Section, the Lessee shall
   pay on demand all costs and expenses incurred in connection with
   repairing and restoring it so as to meet such standards, assembling
   it and delivering it to the Lessor Trustee. If the Lessee fails to
   return any Item of Equipment in the condition required by this Lease,
   then, all of the Lessee's obligations under this Lease (including,
   without limitation, the Lessee's obligation to pay Rent for such Item
   of Equipment (i) at 125% of the rental then applicable under this
   Lease or (ii) if the Lease Term has ended, at 125% of the rental
   applicable on the last Scheduled Payment Date of the Lease Term)
   shall continue in full force and effect until such Item of Equipment
   is returned in the condition required under this Lease.

           (c) One hundred eighty days prior to the Expiration Date, the
   Lessee shall give the Lessor Trustee an inventory and full
   description of each Item of Equipment, including make, model, serial
   number, any other identifying engine or part classification, and its
   location and service records; also, from that notification date
   forward until the Expiration Date the Lessee will be limited to
   5,000,000 impressions per Item of Equipment.

           (d) Thirty days after the Lessor Trustee and the Agent receive
   written notice from the Lessee of its intent to return the Equipment
   or its election to exercise its option to sell the Equipment pursuant
   to Section 18.3, the Lessee shall provide to the Lessor Trustee the
   following documents in English with respect to the Items of
   Equipment: (i) one set per Item of Equipment (or per group of Items
   of Equipment located at the same Site) of installation
   instructions/manuals, service manuals, and operating manuals relating
   to it (including replacements and additions thereto, such that all
   documentation is completely up to date) and (ii) one set per Item of
   Equipment (or per group of Items of Equipment located at the same
   Site) of documents, detailing its equipment configuration, operating
   requirements and maintenance records, including, without limitation,
   all books, operating data logs, inspection and maintenance logs,
   tools and spare parts and modification and overhaul records which
   shall be kept with accurate records of all maintenance (including
   without limitation, lubrication service, parts removal/replacement,
   inspections etc.) and shall indicate the dates and times of service
   and be signed by the appropriate authority.

                                     10

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           (e) Upon the expiration or earlier termination of the Lease
   Term, the Lessee shall ensure that all Items of Equipment are at no
   less than half-time condition between scheduled significant
   maintenance events and that half life remains on every and all life
   limited or time cycle parts and components and will be in such
   condition that such Items of Equipment may be immediately installed
   and placed into use in an operating environment for a minimum of
   twelve months of similar use to that under which they were originally
   designed and used during the Lease Term.

           (f) Upon the expiration or earlier termination of the Lease
   Term, the Lessee shall properly remove all installed markings which
   are removable without damage to the Items of Equipment and not
   necessary for the operation, maintenance or repair of such Items.

           (g) Upon the expiration or earlier termination of the Lease
   Term, the Lessee shall ensure that all Items of Equipment and all
   matters that fall outside the manufacturer-specified operating limits
   of such Items of Equipment have been repaired and conform to all
   Environmental Protection Agency regulations and Requirements of Laws,
   that all certificates are current or require compliance within the
   next twelve months from the date of return and have been complied
   with, and that all Parts are manufactured to the approved maintenance
   program and accepted industry standards for their type and use. The
   Lessee will pay all recertification fees required by the Lessor
   Trustee or any Governmental Authority.

           (h) Upon sale of the Items of Equipment to a third party or
   return to the Lessor Trustee, the Lessee shall provide transportation
   and assume all risks and costs to send to the location(s) of new
   owner(s) and if required by the Lessor Trustee, store the Items of
   Equipment for a period of up to 365 days at the Lessee's sole
   expense. During the storage period, the Lessee will pay for all
   insurance coverage and periodic testing as required by the Lessor
   Trustee and the Agent.

           (i) Not later than the expiration or earlier termination of the
   Lease Term, the Lessee shall cause all Liens (other than Lessor's
   Liens) on the Items of Equipment to be extinguished.

           (j) Upon the expiration or earlier termination of the Lease
   Term, the Lessee shall cause there to be no sublease of the Equipment
   or any Item of Equipment.

           (k) The Lessee shall ensure that any Equipment or Parts in
   storage prior to the return be in a storage configuration, including
   preparation for storage, in conformity with the manufacturer's
   direction, Environmental Protection Agency requirements and other
   Requirements of Law and that no storage environment has been used
   that may cause the value of any Item of Equipment or any Part to
   diminish.

           (l) Upon the expiration or earlier termination of the Lease
   Term, the Lessee shall ensure that all Items of Equipment are free
   from contamination and corrosion and have no untreated or uncorrected
   corrosion.

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           (m) Upon the expiration or earlier termination of the Lease
   Term, the Lessee shall re-paint and clean all Items of Equipment to
   restore them to an as-new appearance.

           (n) The Lessee shall ensure that, (i) within six months prior
   to the expiration or earlier termination of the Lease Term, the drive
   side (gear side) of each Item of Equipment has been inspected and
   serviced to verify the existence of undue wear, (ii) within six
   months prior to the expiration or earlier termination of the Lease
   Term, the sequence startup has been checked and serviced to verify
   that the starting controller is working properly, (iii) within 12
   months prior to the expiration or earlier termination of the lease
   Term, the rollers have been removed, serviced and resurfaced, (iv)
   within one month prior to the expiration or earlier termination of
   the Lease Term, the blankets have been changed, and (v) at least once
   every 12 months during the Lease Term, each printing unit is broken
   down and serviced and has its oil changed.

           (o) In addition to all other rights of the Lessor Trustee under
   this Lease, the Lessor Trustee shall have the right to attempt to
   resell or auction the Equipment from the Lessee's facility with the
   Lessee's full cooperation and assistance, for a period of 180 days
   from the end of the Lease Term. The Lessee shall pay the reasonable
   costs and expenses of any such sale or auction, and agrees that the
   Equipment shall remain capable of operation during this period. The
   Lessee shall provide adequate and sufficient electrical power,
   lighting, heat, water and compressed air to allow for normal
   maintenance and for demonstrations of the Equipment to any potential
   buyer.

   If the Lessor Trustee, pursuant to this Lease or any other Operative
Agreement, rightfully demands possession of the Items of Equipment and
cessation of the Lessee's rights in such Items of Equipment, the Lessee, at
its expense, shall forthwith comply with this Section 9.4 with respect to
all Items of Equipment, and deliver exclusive possession of such Items of
Equipment to the Lessor Trustee, subject to the Lessee's obligations under
Sections 9 and 10.

SECTION 10. MODIFICATIONS, ETC.

   Section 10.1. Replacement of Parts. The Lessee, at its own cost and
expense and within a reasonable period of time, shall replace any part of
any Item of Equipment (a "Part") that becomes worn out, lost, stolen,
destroyed, or otherwise rendered permanently unfit or unavailable for use
(whether or not such replacement is covered by the Lessee's covenants in
Section 9 of this Lease), with a replacement part of the same manufacture,
value, remaining useful life and utility as the replaced part immediately
preceding the replacement (assuming that such replaced part is in the
condition required by this Lease). All replacement parts shall be free and
clear of all Liens. Notwithstanding the foregoing, this paragraph shall not
apply to any Casualty with respect to any Item of Equipment.

   Title to any Parts at any time removed from any Item of Equipment shall
continue to be vested in the Lessor Trustee, no matter where such Parts are
located, until such Parts shall be replaced by Parts which have been
incorporated or installed in or attached to such Item of Equipment and which
meet the requirements for replacement Parts specified in the first paragraph
of this Section 10.1. Immediately upon any such replacement Part becoming
incorporated or installed in or attached to any Item of Equipment as above
provided, without

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further act, title to the removed Part shall thereupon vest in the Lessee
or such person as shall be designated by the Lessee, free and clear of all
rights of the Lessor Trustee.

   Section 10.2. Required Alterations. The Lessee, at its sole cost and
expense, shall, with reasonable promptness, make such alterations,
modifications and additions (collectively, "Alterations") to each Item of
Equipment as may be required from time to time to meet any Requirements of
Law or of any federal, state or local governmental authority having
jurisdiction.

   Section 10.3. Optional Alterations. The Lessee at its own expense may
from time to time make such Alterations to any Item of Equipment as the
Lessee may deem desirable in the proper conduct of its business and which
are consistent with the continuing operation of such Item of Equipment in
accordance with its original functional purpose; provided, that any such
Alteration made by the Lessee pursuant to this paragraph must not diminish
the value or utility of any Item of Equipment to the Lessor Trustee below
the value and utility thereof to the Lessor Trustee immediately prior to
such Alteration. At the Lessor Trustee's request, the Lessee will remove any
readily removable Alterations prior to the end of the Lease Term at the
Lessee's sole cost and expense.

   Section 10.4. Title to Parts.

           (a) Title to all Parts (including Alterations) incorporated or
   installed in or attached to any Item of Equipment shall without
   further act vest in the Lessor Trustee and shall be deemed to
   constitute a part of such Item of Equipment and be subject to this
   Lease in the following cases:

                     (i) such Part is in replacement of or in substitution
           for, and not in addition to, any Part constituting a part of such
           Item of Equipment at the time of the acceptance thereof hereunder
           or any such original part;

                     (ii) such Part is required to be incorporated or
           installed in or attached to the Equipment pursuant to the terms
           of Section 9.1, 10.1 or 10.2; or

                     (iii) such Part cannot be readily removed from such
           Item of Equipment without materially damaging such Item of
           Equipment or diminishing or impairing the value or utility of
           such Item of Equipment.

           (b) Any other Part that is not within the categories set forth in
   clauses (i), (ii) or (iii) above, and that is not removed from any Item
   of Equipment by the Lessee prior to the expiration or termination of this
   Lease as to such Item of Equipment shall become the property of the
   Lessor Trustee.

SECTION 11. WARRANTY OF TITLE

   Section 11.1. Warranty of Title.

           (a) Except as otherwise provided herein and subject to the
   terms of Section 12 relating to permitted contests, the Lessee shall
   not directly or indirectly create or allow to remain, and shall
   promptly discharge at its sole cost and expense, any Lien (other than

                                     13

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   any Lessor's Lien), defect, attachment, levy, title retention
   agreement or claim upon the Equipment or any Lien, attachment, levy
   or claim with respect to the Rent or with respect to any amounts held
   by the Lessor Trustee or any Certificate Holder pursuant to the
   Operative Agreements, other than Permitted Liens.

           (b) Nothing contained in this Lease shall be construed as
   constituting the consent or request of the Lessor Trustee or any
   Certificate Holder, express or implied, to or for the performance by any
   contractor, mechanic, laborer, materialman, supplier or vendor of any
   labor or services or for the furnishing of any materials for any
   alteration, addition, repair or demolition of or to any Item of Equipment
   or any Part. NOTICE IS HEREBY GIVEN THAT THE LESSOR TRUSTEE, THE AGENT
   AND THE CERTIFICATE HOLDER ARE NOT AND SHALL NOT BE LIABLE FOR ANY LABOR,
   SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO
   ANYONE HOLDING THE EQUIPMENT OR ANY ITEM OF EQUIPMENT OR ANY PART THROUGH
   OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH
   LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
   THE LESSOR TRUSTEE OR ANY CERTIFICATE HOLDER IN THE EQUIPMENT OR ANY ITEM
   OF EQUIPMENT OR ANY PART.

SECTION 12. PERMITTED CONTESTS

   Section 12.1. Permitted Contests in Respect of Applicable Law. So
long as no Event of Default has occurred and is continuing, Lessee, on its
own or on Lessor Trustee's behalf and in Lessor Trustee's name but at
Lessee's sole cost and expense and subject to Section 6 of the
Participation Agreement, may contest by appropriate administrative or
judicial proceedings conducted in good faith and with due diligence, the
amount, validity or application, in whole or in part, of any Applicable Law
or third party charges relating to the Equipment, or any Lien, but only if
and so long as any such contest, in the reasonable opinion of the Lessor
Trustee and the Agent, (a) does not involve any risk of criminal liability
being imposed on the Lessor Trustee, the Agent or any Certificate Holder or
(b) does not involve any risk of (i) foreclosure, forfeiture or loss of any
Item of the Equipment, or any material part thereof, or (ii) the nonpayment
of Rent, (c) does not involve any substantial risk of (i) the sale of, or
the creation of, any Lien (other than a Permitted Lien) on any Item of
Equipment or any Part, (ii) civil liability being imposed on the Lessor
Trustee, the Agent, any Certificate Holder, or the Equipment, or (iii)
enjoinment of, or interference with, the use, possession or disposition of
the Equipment in any material respect, (d) will suspend the collection and
enforcement of contested amounts against the Equipment, the Lessor Trustee,
the Agent, and the Certificate Holders and will be concluded before the
Lease Term ends, and (e) Lessee has posted any security reasonably
requested by the Agent.

   None of the Lessor Trustee the Agent and the Certificate Holders will
be required to join in any proceedings pursuant to this Section 12.1 unless
a provision of Applicable Law requires that such proceedings be brought by
or in the name of such Person; and in that event such Person will join in
the proceedings or permit them or any part thereof to be brought in its
name if and so long as the Lessee pays all related expenses and indemnifies
such Person with respect to such proceedings.

                                     14

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SECTION 13. INSURANCE

   Section 13.1. Required Insurance Coverages and Limits.

           (a) The Lessee shall at its own cost and expense at all times
   during the Lease Term:

                     (i) keep each Item of Equipment insured against all
           risks of physical loss or damage and against all such other risks
           as are insured against by the Lessee with respect to property of
           a similar character owned or leased by the Lessee on terms and in
           amounts that are no less favorable than insurance covering other
           similar properties owned by the Lessee and that are in accordance
           with normal industry practices, provided that such insurance
           shall not be less than the Stipulated Loss Value of such Item of
           Equipment as of the immediately preceding Scheduled Payment Date,
           and

                     (ii) maintain comprehensive general public liability
           insurance with respect to the Equipment including liability
           coverage for products liability and contractual liability, which
           coverage shall be against damage because of bodily injury,
           including death, or damage to property of others, such insurance
           to be on terms and in amounts that are no less favorable than
           insurance maintained by the Lessee with respect to similar
           properties that it owns and that is in accordance with normal
           industry practice, provided that such insurance shall not be less
           than $1,000,000 per occurrence and $20,000,000 in the aggregate
           (or $50,000,000 in the aggregate including layered umbrella
           coverage).

           (b) All insurance policies required hereunder shall (i) require
   30 days prior written notice to the Lessor Trustee and the Agent of
   cancellation or material change in coverage; (ii) name the Lessor
   Trustee, the Agent and the Certificate Holders as additional insureds
   and, under the property insurance policies, name the Lessor Trustee
   as sole loss payee; (iii) be considered primary insurance without any
   right of contribution from other policies held by the Lessor Trustee,
   the Agent or the Certificate Holders; (iv) waive any right of
   subrogation against the Lessor Trustee, the Agent and the Certificate
   Holders; (v) waive the right of the insurer to any set-off,
   counterclaim or other deduction, whether by attachment or otherwise,
   in respect of any liability of the Lessor Trustee, the Agent or the
   Certificate Holders; (vi) specify that the Lessor Trustee, the Agent
   and the Certificate Holders shall not be liable for any premiums or
   deductibles; (vii) be in full force and effect throughout any
   geographical areas in which any Item of Equipment is located; and
   (viii) provide that, in respect of the interests of the Lessor
   Trustee, the Agent and the Certificate Holders in such policies,
   subject to the policies' other terms, conditions and exclusions, the
   insurance shall not be invalidated by any action or inaction of any
   Person and shall insure the Lessor Trustee, the Agent, and the
   Certificate Holders regardless of any breach or violation of any
   warranty, declaration or condition contained in such policies by any
   Person.

           (c) The Lessee agrees to maintain all insurance required by
   this Section 13 with financially sound and reputable insurance
   companies that have a rating of at least

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   A+ or better by Best Rating Guide (except that the companies listed
   on Schedule 13.1 as having a lesser rating may, during the Lease
   Term, provide the Lessee with the type of insurance they are
   providing as of the Closing Date). No policy shall contain a
   provision (i) under which the Lessee is a co-insurer, or (ii)
   relieving the insurer of liability for any loss by reason of the
   existence of other policies of insurance covering the Equipment
   against the peril involved, whether collectible or not, or by reason
   of the breach or violation by the Lessee of any warranties,
   declarations or conditions contained in such policies. Any such
   insurance may be carried under blanket policies maintained by the
   Lessee so long as such policies otherwise comply with the provisions
   of this Section 13.1. If general public liability insurance is
   carried under any blanket policy which is subject to aggregate annual
   claim limitations, the Lessee shall keep the Lessor Trustee and the
   Agent apprised of the amount of any such limitations and the amounts
   of claims that may reduce the available policy limits.

   Section 13.2. Adjustment and Payment of Losses. The Lessee shall
adjust with the insurance companies or otherwise collect (including,
without limitation, the filing of proceedings that the Lessee considers
advisable) any loss under any casualty insurance required to be carried by
Section 13.1(a)(i), but must obtain the Agent's approval of any amount
adjusted or collected if the loss exceeds $1,000,000. The loss so adjusted
shall be paid to the Lessor Trustee. All such policies shall provide that
the loss, if any, under such insurance shall be adjusted and paid as
provided in this Lease. Losses covered by liability insurance shall be
adjusted by and paid to the Person suffering such loss.

   Section 13.3. Evidence of Insurance. On or prior to the Closing Date
with respect to each Item of Equipment, and thereafter not less than 15
days prior to the expiration dates of the expiring policies, the Lessee
shall deliver to the Lessor Trustee, the Agent and the Certificate Holders
certificates of insurance for the insurance maintained pursuant to this
Section 13, together with a report from the Lessee's insurance broker
certifying that such insurance complies with the terms hereof. Each such
certificate or other evidence of insurance shall identify the insurance
carrier, the type of insurance, the coverage limits, annual aggregate
limits, if any, and the policy term.

   Section 13.4. Application of Insurance Proceeds. All insurance
proceeds from policies required to be maintained hereunder that are
received by or payable to the Lessor Trustee (less the Lessor Trustee's and
the Agent's actual costs, fees and expenses (including their attorneys'
fees) incurred in the collection thereof) shall be applied as follows:

           (a) All such proceeds actually received on account of any
   damage or destruction (other than a Casualty) of an Item of Equipment
   shall be paid over to the Lessee, or as it may direct from time to
   time, as the restoration or repair ("Restoration"), of the Item of
   Equipment progresses, to pay (or reimburse the Lessee for) the cost
   of Restoration, if the following two conditions are satisfied:

                     (i) the amount of such proceeds received by the Lessor
           Trustee, together with such additional amounts, if any,
           theretofore expended by the Lessee out of its own funds for
           Restoration must be sufficient to pay the estimated cost of
           completing Restoration, and

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                     (ii) the Lessee must submit a written application to
           the Lessor Trustee and the Agent, accompanied by an Officer's
           Certificate, showing in reasonable detail the nature of
           Restoration, that Restoration is intended to restore the Item of
           Equipment to its value and utility prior to the damage or
           destruction (assuming that the Item of Equipment was of the value
           and utility and in the condition and repair required by this
           Lease), the actual cash expenditures made to date for
           Restoration, the estimated cost to complete Restoration and
           stating that no Default or Event of Default has occurred and is
           continuing under this Lease.

           Upon the written request of the Lessee, accompanied by evidence
   satisfactory to the Lessor Trustee and the Agent that Restoration has
   been completed and the costs thereof paid in full, that the Item of
   Equipment has been restored to its value and utility prior to such
   damage or destruction (assuming that such Item of Equipment was of
   the value and utility and in the condition and repair required by the
   terms of this Lease) and that there are no mechanic's or similar
   Liens for labor or materials supplied in connection therewith, the
   balance, if any, of such proceeds shall be paid over or assigned to
   the Lessee or as it may direct.

           (b) All such proceeds received or payable on account of a
   Casualty with respect to an Item of Equipment shall be paid over or
   assigned to the Lessee or as it may direct upon termination of this
   Lease with respect to such Item of Equipment and, if the Lessee
   elects to perform the option set forth in Section 14.1(a), receipt by
   the Lessor Trustee of the Stipulated Loss Value of such Item of
   Equipment and all other payments due hereunder.

   Section 13.5. Deductibles and Self-Insurance. So long as no Event of
Default has occurred and is continuing, the Lessee may from time to time
self-insure or maintain deductible provisions for the risks required to be
insured against pursuant to clauses (a)(i) and (a)(ii) of Section 13.1, in
such reasonable amounts as are then applicable to similar equipment owned
or leased by the Lessee, but in no case shall such self-insurance and
deductibles with respect to Section 13.1(a)(i) or Section 13.1(a)(ii)
exceed the first $250,000 or $500,000, respectively, of the coverage
required therein.

   Section 13.6. Insurance for Own Account. Nothing in this Section 13
shall limit or prohibit the Lessor Trustee, the Agent, any Certificate
Holder or the Lessee from obtaining additional insurance for its own
account, and any proceeds payable thereunder shall be payable in accordance
with the insurance policy relating thereto, provided that no such insurance
may be obtained which would limit or otherwise adversely affect the
coverage of any insurance required to be maintained pursuant to this
Section 13.

SECTION 14. CASUALTY OCCURRENCE

   Section 14.1. Casualty Occurrence. If an Item of Equipment is damaged
to such an extent that the Lessee believes a Casualty has occurred, the
Lessee shall forthwith (and in any event within 10 days after such
occurrence) give the Lessor Trustee and the Agent written notice of such
Casualty, the Agent in its sole discretion shall determine whether the
damage to the Item of Equipment constitutes a Casualty, and within 20 days
after the Casualty occurred the Lessee

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shall give the Lessor Trustee and the Agent written notice of its election,
subject to the terms hereof, to perform one of the following options (and
if the Lessee fails to timely notify the Lessor Trustee and the Agent of
its election, the Lessee shall be deemed to have elected to perform the
option set forth in the following clause (a)), provided that the Lessee
shall not have the right to select the option set forth in clause (b) if a
Default or Event of Default has occurred and is continuing when the
Casualty occurs, or when the Lessee gives notice of its election, or when
the Lessee is to convey the Replacement Equipment to the Lessor Trustee:

           (a) Except as otherwise provided in the immediately succeeding
   sentence, on the next Scheduled Payment Date which is at least 30
   days after the occurrence of such Casualty (the "Loss Payment Date"),
   during which time the Lessee's obligation to pay Rent shall continue,
   the Lessee shall pay to the Lessor Trustee in immediately available
   funds an amount equal to the Stipulated Loss Value of such Item of
   Equipment as of such Loss Payment Date together with any Rent due and
   payable on or prior to the Loss Payment Date with respect to such
   Item of Equipment.

           (b) Within 30 days after the Casualty occurs, during which time
   the Lessee's obligation to pay Rent shall continue, the Lessee shall
   convey or cause to be conveyed to the Lessor Trustee in accordance
   with Section 14.2 hereof, to be leased by the Lessor Trustee to the
   Lessee hereunder in replacement of such Item of Equipment, title to
   Replacement Equipment, which must be free and clear of all Liens
   other than Permitted Liens and (as determined by the Agent in its
   sole discretion) must have a value, utility and remaining economic
   useful life at least equal to, and be in as good operating condition
   as, the replaced Item of Equipment (assuming it was of the value,
   remaining economic useful life and utility and in the condition and
   repair required by the terms of this Lease and had suffered no
   Casualty). The Lessee shall pay on the next Scheduled Payment Date an
   amount computed in the manner specified in clause (a) of this Section
   14.1 if no such replacement occurs by the end of the 30-day period.

The Lessee's obligation to pay Rent due and payable on or prior to a Loss
Payment Date shall continue as to any Item of Equipment that has suffered a
Casualty.

   In the event of a payment in full of the Stipulated Loss Value for an
Item of Equipment and other Rent payable on or prior to the Loss Payment
Date all as provided for in the clause (a) of this Section, (x) this Lease
with respect to such Item of Equipment and the obligations of the Lessee
with respect to such Item of Equipment to pay Periodic Rent and
Supplemental Rent (except for Supplemental Rent obligations surviving
pursuant to Section 6 of the Participation Agreement or which have
otherwise accrued but not been paid as of the date of such payment) shall
terminate; (y) if no Event of Default has occurred and is continuing, any
insurance proceeds remaining in the Lessor Trustee's possession (other than
proceeds of policies maintained by the Lessor Trustee for its own account),
including any investment interest thereon, shall be promptly paid over to
the Lessee; and (z) the Lessor Trustee shall convey to the Lessee, at the
Lessee's cost and expense, all of the Lessor Trustee's right, title and
interest, AS-IS, WHERE-IS, without recourse or warranty, express or implied
except for a warranty against the Lessor's Liens in and to such Item of
Equipment, including all claims for damage to such Item of Equipment
against third persons arising from the subject Casualty (unless any
insurance carrier requires that such claims be assigned to it).

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   Section 14.2. Conveyance of Replacement Equipment. Prior to or at the
time of any conveyance of any Replacement Equipment pursuant to Section
14.1(b) or Section 15.1, the Lessee, at its own expense, shall furnish the
Lessor Trustee and the Agent, or cause each of them to be furnished, with
the following documents, which shall have been duly authorized, executed
and delivered by the parties thereto and shall be in full force and effect
on the date of such conveyance:

                     (i) a full warranty bill of sale, in form and substance
           satisfactory to the Lessor Trustee and the Agent, covering such
           Replacement Equipment and executed by the owner thereof in favor
           of the Lessor Trustee;

                     (ii) a Lease Supplement covering the Replacement
           Equipment;

                     (iii) such evidence of compliance with the insurance
           provisions of Section 13 with respect to such Replacement
           Equipment as the Lessor Trustee or the Agent may reasonably
           request, including an independent insurance broker's report
           (stating the opinion of such insurance broker that such insurance
           complies with the terms of this Lease) with certificates of
           insurance;

                     (iv) an Officer's Certificate of the Lessee certifying
           that such Replacement Equipment complies with this Section 14.2,
           that, upon such conveyance, the Lessor Trustee will acquire good
           title to such Replacement Equipment, free and clear of all Liens
           other than Permitted Liens, that such Replacement Equipment will
           be leased hereunder to the same extent as the replaced or
           substituted Item of Equipment, as the case may be, and that, upon
           consummation of such replacement or substitution, no Default or
           Event of Default will exist hereunder,

                     (v) an opinion of the Lessee's counsel (and such other
           opinions or evidence of title as the Lessor Trustee, the Agent or
           their counsel may reasonably request), to the effect that, upon
           such conveyance, the Lessor Trustee will acquire good title to
           such Replacement Equipment, free and clear of all Liens other
           than Permitted Liens, and that such Replacement Equipment will be
           leased hereunder to the same extent as the replaced or
           substituted Item of Equipment, as the case may be;

                     (vi) copies of Uniform Commercial Code financing
           statements (including, without limitation, fixture filings) with
           respect to such Replacement Equipment naming the Lessee as Debtor
           and the Lessor Trustee as Secured Party filed on or before the
           date of conveyance in each jurisdiction that the Lessor Trustee
           or the Agent, each in its sole discretion, considers necessary;

                     (vii) Landlord Waivers, if required under Section 8.3,
           with respect to the Site or Sites on which the Replacement
           Equipment is located; and

                     (viii) such documents, opinions and evidence with
           respect to the Lessee as the Lessor Trustee, the Agent, or their
           counsel, may reasonably request in order to establish the
           consummation of the transactions contemplated by this

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           Section 14.2, the taking of all corporate proceedings in
           connection with and compliance with the conditions set forth in
           this Section 14.2, in each case in form and substance
           satisfactory to the Lessor Trustee and the Agent.

   The Lessee further agrees to take such further action as the Lessor
Trustee or the Agent may reasonably request with respect to such
Replacement Equipment including, without limitation, any actions required
to establish, perfect and protect the interest of Lessor Trustee in such
Replacement Equipment (including, without limitation, the filing of
additional Uniform Commercial Code financing statements).

   Upon full compliance by the Lessee with the terms of this Section
14.2, the Lessor Trustee shall convey to the Lessee, at the Lessee's cost
and expense, all of the Lessor Trustee's right, title and interest, as-is,
where-is, without recourse or warranty, express or implied except for
warranty against Lessor's Liens, in and to such Item of Equipment with
respect to which the subject Casualty occurred, including all claims for
damage to such Item of Equipment against third persons arising from any
Casualty (unless any insurance carrier requires that such claims be
assigned to it), or the substituted Item of Equipment, as the case may be.
No Casualty or substitution with respect to an Item of Equipment under the
circumstances contemplated by the terms of this Section 14.2 shall result
in any reduction in Rent or the Lessee's obligation to pay Rent hereunder.

   Section 14.3. Application of Payments. Any payments on account of a
Casualty of an Item of Equipment (other than insurance proceeds or other
payments the application of which is provided for in this Section 14 or
elsewhere in this Lease, as the case may be) received at any time by the
Lessor Trustee or by the Lessee from any Person will be applied as follows:

           (a) if the Lessee has elected (or is deemed to have elected)
   the option set forth in Section 14.1(a), so much of such payments as
   do not exceed the Stipulated Loss Value required to be paid by the
   Lessee pursuant to Section 14.1(a) shall be applied in reduction of
   the Lessee's obligation to pay such Stipulated Loss Value to the
   extent not already paid by the Lessee, and, to the extent already
   paid by the Lessee and if no Default or Event of Default exists,
   shall be applied to reimburse the Lessee for its payment of such
   Stipulated Loss Value. Subject to Section 14.6, the balance, if any,
   of such payment remaining thereafter shall be paid to the Lessee; and

           (b) if the Lessee has elected the option set forth in Section
   14.1(b), such payments shall be paid over to, or retained by, the
   Lessor Trustee for payment to the Lessee when the Lessee has fully
   performed the terms of Section 14.2 with respect to the Casualty for
   which such payments are made.

   Section 14.4. Certain Government Requisitions. If during the Lease
Term the use of any Item of Equipment is requisitioned or taken by any
Governmental Authority under the power of eminent domain or otherwise under
circumstances which do not constitute a Casualty, the Lessee's duty to pay
Periodic Rent and Supplemental Rent for such Item of Equipment shall
continue for the duration of such requisition or taking. Unless a Default
or Event of Default has occurred and is continuing, the Lessee shall be
entitled to receive and to retain for its own account all sums payable for
any such period by such Governmental Authority as compensation

                                     20

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<PAGE>

for such requisition or taking of possession. If a Default or Event of
Default has occurred and is continuing, the Lessee shall be deemed to the
extent of any such compensation so received to be the agent of the Lessor
Trustee in collecting and receiving the such sums and shall segregate and
hold in trust and promptly remit any such compensation so received to the
Lessor Trustee for crediting against any sums then due and owing hereunder
to the Lessor Trustee, its successors and assigns.

   Section 14.5. Application of Payments from Governmental Authorities
for Requisition of Title. The Lessor Trustee shall receive the entire
amount payable by any governmental authority or instrumentality or agency
thereof with respect to a Casualty resulting from the condemnation,
confiscation or seizure of, or requisition of title to or use of any Item
of Equipment. Such amount, after deducting all expenses, including
attorneys' fees, incurred by the Lessor Trustee in or as a result of such
condemnation proceedings (the "Net Condemnation Award") shall be applied
promptly as follows: so much of such payments as do not exceed the
Stipulated Loss Value of such Item of Equipment required to be paid by the
Lessee pursuant to Section 14.1(a) shall be applied in reduction of the
Lessee's obligation to pay such Stipulated Loss Value to the extent not
already paid by the Lessee, and, to the extent already paid by the Lessee
and if no Default or Event of Default exists, shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value. Subject to
Section 14.6, the balance, if any, of such payments shall be paid to the
Lessee.

   Section 14.6. Application of Payments During Existence of Default.
Any amount referred to in this Section 14 or in Section 13 which is payable
to the Lessee shall not be paid to the Lessee, or, if it has been
previously paid directly to the Lessee, shall be held in trust by the
Lessee and shall be promptly paid over to the Lessor Trustee, if at the
time of such payment a Default or Event of Default has occurred and is
continuing, and held by the Lessor Trustee as security for the obligations
of the Lessee under this Lease and applied against the Lessee's obligations
hereunder as and when due. Once no Default or Event of Default is
continuing, such amount, to the extent not theretofore applied to the
Lessee's obligations hereunder, shall be paid to the Lessee.

SECTION 15. SUBSTITUTION OF EQUIPMENT

   Section 15.1. Substitution of Equipment. So long as no Default or
Event of Default has occurred and is continuing, on any Scheduled Payment
Date, the Lessee may, at its option, upon at least 30 days' advance written
notice to the Lessor Trustee, convey or cause to be conveyed to Lessor
Trustee in accordance with Section 14.2 hereof, to be leased by the Lessor
Trustee to Lessee hereunder in substitution for any Item of Equipment,
title to Replacement Equipment, which must be free and clear of all Liens
other than Permitted Liens and (as determined by the Agent in its sole
discretion) must have a value, utility and remaining economic useful life
at least equal to, and to be in as good operating condition as, the
substituted Item of Equipment (assuming the substituted Item of Equipment
was of the value, remaining economic useful life and utility and in the
condition and repair required by the terms of this Lease and had suffered
no Casualty).

                                     21

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SECTION 16. EVENTS OF DEFAULT

   Section 16.1. Events of Default. The occurrence of any one or more of
the following events (whether such event is voluntary or involuntary or
comes about or is effected by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) shall
constitute an "Event of Default":

           (a) the Lessee fails to make payment of any Periodic Rent when
   due and such failure continues unremedied for a period of five days;
   or the Lessee fails to make payment when due of any amounts due
   pursuant to Section 18.4, the Lease Balance, the Purchase Price,
   including, without limitation, amounts due pursuant to Section 18.1
   hereof, or Stipulated Loss Value; or

           (b) the Lessee fails to make payment of any Supplemental Rent
   (other than Supplemental Rent specified in clause (a) above) within
   five (5) days after it becomes due; or

           (c) the Lessee fails to maintain insurance as required by
   Section 13 of this Lease; or

           (d) the Lessee fails to observe or perform any term, covenant
   or condition applicable to it under Sections 4.2, Section 4.3 or
   Section 5 of the Guaranty Agreement; or

           (e) the Lessee or any Guarantor fails to observe or perform any
   term, covenant or condition applicable to it under any Operative
   Agreement (other than those described in Section 16.1(a), (b), (c) or
   (d) hereof) and such failure continues unremedied for 30 days after
   written notice thereof has been given to the Lessee or such Guarantor
   by the Lessor Trustee, the Agent or any Certificate Holder; or

           (f) any representation or warranty made or deemed made by the
   Lessee or any Guarantor in any Operative Agreement or in any
   certificate, document or financial or other statement furnished at
   any time under or in connection with any Operative Agreement was
   incorrect, false or misleading in any material respect on or as of
   the date made or deemed made; or

           (g) (i) any Guarantor or the Lessee commences any case,
   proceeding or other action (A) under any existing or future law of
   any jurisdiction, domestic or foreign, relating to bankruptcy,
   insolvency, reorganization or relief of debtors, seeking to have an
   order for relief entered with respect to it, or seeking to adjudicate
   it bankrupt or insolvent, or seeking reorganization, arrangement,
   adjustment, winding-up, liquidation, dissolution, composition or
   other relief with respect to it or its debts, or (B) seeking
   appointment of a receiver, trustee, custodian, conservator or other
   similar official for it or for all or any substantial part of its
   assets, or any Guarantor or the Lessee makes a general assignment for
   the benefit of its creditors; or (ii) there is commenced against any
   Guarantor or the Lessee any case, proceeding or other action of a
   nature referred to in clause (i) above which (A) results in the entry
   of an order for relief or any such adjudication or

                                     22

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<PAGE>

   appointment or (B) remains undismissed, undischarged or unbonded for
   a period of 60 days; or (iii) there is commenced against any
   Guarantor or the Lessee any case, proceeding or other action seeking
   issuance of a warrant of attachment, execution, restraint or similar
   process against all or any substantial part of its assets which
   results in the entry of an order for any such relief which shall not
   have been vacated, discharged, or stayed or bonded pending appeal
   within 60 days from the entry thereof; or (iv) any Guarantor or the
   Lessee takes any action in furtherance of, or indicating its consent
   to, approval of, or acquiescence in, any of the acts set forth in
   clause s (i), (ii) or (iii) above; or (v) any Guarantor or the Lessee
   generally does not, or is unable to, or admits in writing its
   inability to, pay its debts as they become due; or

           (h) any Operative Agreement or any Lien granted under any
   Operative Agreement, in whole or in part, terminates, ceases to be
   effective against, or (other than as expressly provided therein)
   ceases to be the legal, valid, binding and enforceable obligation of
   either the Lessee or any Guarantor; or

           (i) the Lessee or any Guarantor directly or indirectly contests
   the effectiveness, validity, binding nature or enforceability of any
   Operative Agreement or any Lien granted under any Operative
   Agreement; or the Lessee or any Guarantor repudiates, or purports to
   discontinue or terminate, the Guaranty Agreement, or the Guaranty
   Agreement ceases to be a legal, valid and binding obligation of the
   Lessee or any Guarantor or ceases to be in full force and effect; or

           (j) (i) any Guarantor or the Lessee fails to make any payment
   in respect of any of its obligations for Debt when due or, if later,
   within any applicable grace period, or (ii) any event or condition
   occurs which results in the default after the expiration of any
   applicable grace period under, or requires the early redemption or
   prepayment of, any of any Guarantor's or the Lessee's obligations for
   Debt, or any event or condition occurs and is continuing which
   enables (or, with the giving of notice or lapse of time or both,
   would enable) the holders of any of any Guarantor's or the Lessee's
   obligations under obligations for Debt of any Guarantor or the Lessee
   or any Person acting on such holders' behalf to accelerate the
   maturity, or require the early redemption or prepayment, of any of
   any Guarantor's or the Lessee's obligations for Debt; or

           (k) (i) any member of the ERISA Group fails to pay when due an
   amount or amounts aggregating in excess of $1,000,000 that it has
   become liable to pay under Title IV of ERISA; or (ii) notice of
   intent to terminate a Material Plan is filed under Title IV of ERISA
   by any member of the ERISA Group, any plan administrator or any
   combination of them; or (iii) any member of the ERISA Group has been
   notified in writing that the PBGC has instituted proceedings under
   Title IV of ERISA to terminate, to impose liability (other than for
   premiums under Section 4007 of ERISA) in respect of, or to cause a
   trustee to be appointed to administer any Material Plan; or (iv) a
   condition exists by reason of which the PBGC would be entitled to
   obtain a decree adjudicating that any Material Plan must be
   terminated; or (v) any events described in clause (iii) above occur
   with respect to any Other Pension Plan or Other Pension Plans (other
   than a multiemployer plan within the meaning of Section 4001(a)(3) of
   ERISA) (A) that have aggregate Unfunded Current Liabilities in excess
   of $1,000,000 and (B) with respect to

                                     23

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<PAGE>

   which either (1) one or more members of the ERISA Group have engaged
   in a transaction or transactions described in Section 4069 of ERISA
   or (2) one or more members of the ERISA Group is a member of the
   "controlled group" under Section 412(c)(11) of the Code or Section
   4001(a)(14) of ERISA; or (vi) a complete or partial withdrawal from,
   or a default, within the meaning of Section 4219(c)(5) of ERISA,
   occurs with respect to, one or more (A) multiemployer plans, within
   the meaning of Section 4001(a)(3) of ERISA (which plans are not
   Multiemployer Plans), with respect to which a member of the ERISA
   Group has engaged, within the previous five plan years, in a
   transaction described in Section 4212(c) of ERISA, or (B)
   Multiemployer Plans, which could reasonably be expected to result in
   the incurrence by one or more members of the ERISA Group of a current
   payment obligation in excess of $1,000,000; provided that no Event of
   Default shall occur under clause (v) or (vi) if (A) Unfunded Current
   Liabilities of the Other Pension Plans in respect of which events
   described in clause (v) have occurred, together with the current
   payment obligations that could reasonably be expected to result from
   complete or partial withdrawals or defaults described in clause (vi),
   do not exceed $10,000,000 and (B) each member of the ERISA Group that
   could reasonably be expected to be liable for such Unfunded Current
   Liabilities or current payment obligations is diligently contesting
   in accordance with Section 12 the imposition of such liabilities or
   obligations; or

           (l) (i) one or more judgments or orders for the payment, in the
   aggregate, of money in excess of $10,000,000 are rendered against any
   Guarantor or the Lessee and such judgments or orders continue
   unsatisfied and unstayed for a period of 30 days or (ii) one or more
   judgments or orders are rendered against any Guarantor or the Lessee,
   which judgments or orders are stayed on condition that a bond or
   collateral equal to or greater than, in the aggregate, $10,000,000 be
   posted or provided, and such judgments or orders are not overturned
   or lifted within a period of 10 days; or

           (m) Mail-Well ceases to be a party to the Credit Agreement and is
   not the borrower under another revolving credit facility of at least
   $150,000,000.

   Section 16.2. Remedies. Upon the occurrence of any Event of Default
and so long as such Event of Default is continuing, the Lessor Trustee may,
do one or more of the following (and in whatever order) as the Lessor
Trustee in its sole discretion determines, without limiting any other right
or remedy the Lessor Trustee may have on account of such Event of Default:

           (a) The Lessor Trustee may declare the entire outstanding Lease
   Balance to be immediately due and payable together with accrued
   unpaid Rent and any other amounts payable under the Operative
   Agreements, or make demand upon the Guarantors under the Guaranty
   Agreement, or both;

           (b) The Lessor Trustee may, by notice to the Lessee, rescind or
   terminate this Lease as of the date specified in such notice;
   provided, however, (i) no reletting, reentry or taking of possession
   of the Equipment (or any Item of Equipment) by the Lessor Trustee
   will be construed as an election on the Lessor Trustee's part to
   terminate this Lease unless a written notice of such intention is
   given to the Lessee, (ii) notwithstanding any reletting, reentry or
   taking of possession, the Lessor Trustee may at any time

                                     24

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<PAGE>

   thereafter elect to terminate this Lease for a continuing Event of
   Default, and (iii) no act or thing done by the Lessor Trustee or any
   of its agents, representatives or employees and no agreement
   accepting a surrender of the Equipment shall be valid unless it is in
   writing and executed by the Lessor Trustee;

           (c) The Lessor Trustee may (i) demand that the Lessee, and the
   Lessee shall upon the written demand of the Lessor Trustee, return
   the Equipment promptly to the Lessor Trustee in the manner and
   condition required by, and otherwise in accordance with all of the
   provisions of, Sections 6 and 9 and Section 8.1(b) hereof as if the
   Equipment were being returned at the end of the Lease Term, and none
   of the Lessor Trustee, the Agent, or any Certificate Holder shall be
   liable for the reimbursement of the Lessee for any costs and expenses
   incurred by the Lessee in connection therewith, and (ii) without
   prejudice to any other remedy the Lessor Trustee may have, including
   without limitation other remedies for possession of the Equipment,
   and to the extent and in the manner permitted by Applicable Law,
   enter upon the premises of the Lessee and any Site and take immediate
   possession (to the exclusion of the Lessee) of the Equipment or any
   Item of Equipment and remove the Equipment, by summary proceedings or
   otherwise (and if a Site is owned by a Wholly-Owned Subsidiary of the
   Lessee, the Lessee shall take all necessary action to ensure that
   such Wholly-Owned Subsidiary permits the Lessor Trustee to enter upon
   such premises, take possession of and remove such Equipment), all
   without liability to the Lessor Trustee for or by reason of such
   entry or taking of possession, whether for the restoration of damage
   to property caused by such taking or otherwise and, in addition to
   the other damages of the Lessor Trustee, the Lessee shall be
   responsible for all costs and expenses incurred by the Lessor
   Trustee, the Agent and the Certificate Holders in connection with any
   reletting, including, without limitation, reasonable brokers' fees
   and all costs of any alterations or repairs made by any of them;

           (d) The Lessor Trustee may, at its option, elect not to
   terminate this Lease and continue to collect all Periodic Rent,
   Supplemental Rent, and all other amounts due to the Lessor Trustee
   (together with all costs of collection) and enforce the Lessee's
   obligations under this Lease as and when they become due or are to be
   performed, and at the option of the Lessor Trustee, upon any
   abandonment of the Equipment by the Lessee or repossession of it by
   the Lessor Trustee, the Lessor Trustee may, in its sole and absolute
   discretion, elect not to terminate this Lease, make the necessary
   repairs in order to relet the Equipment, and relet the Equipment or
   any part thereof for such term or terms (which may be for a term
   extending beyond the Lease Term) and at such rental or rentals and
   upon such other terms and conditions as the Lessor Trustee in its
   reasonable discretion considers advisable; and upon each such
   reletting all rentals actually received by the Lessor Trustee from
   such reletting shall be applied to the Lessee's obligations hereunder
   and the other Operative Agreements. If rentals received from such
   reletting during any Interest Period are less than the Rent with
   respect to the Equipment to be paid during that period by the Lessee
   hereunder, the Lessee shall pay any deficiency, as calculated by the
   Lessor Trustee, to the Lessor Trustee on the next Scheduled Payment
   Date;

           (e) Unless the Equipment has been sold in its entirety, the
   Lessor Trustee may, whether or not the Lessor Trustee has exercised
   or thereafter at any time exercises

                                     25

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<PAGE>

   any of its rights under clause (c) or (d) of this Section 16.2 with
   respect to the Equipment or any Item of Equipment, demand, by written
   notice to the Lessee specifying a date not earlier than 10 days after
   the date of such notice, that the Lessee purchase, on the date
   specified in such notice, the Equipment in accordance with the
   provisions of Sections 18.1 and 19;

           (f) The Lessor Trustee may sell the Equipment or any Item of
   Equipment at public or private sale, free and clear of any rights of
   the Lessee, and without any duty to account to the Lessee with
   respect to such sale or for the proceeds thereof (provided that the
   application of the proceeds of any such sale shall be subject to the
   final paragraph of this Section 16.2), and the Lessee shall pay to
   the Lessor Trustee, as liquidated damages for loss of a bargain and
   not as a penalty (in lieu of the Periodic Rent due for the Items of
   Equipment so sold for any period commencing after the date on which
   such sale occurs), the sum of (i) all unpaid Periodic Rent payable
   for each Item of Equipment for all periods preceding the Scheduled
   Payment Date coincident with or immediately preceding the date of
   such sale, plus (ii) an amount equal to the excess, if any, of (x)
   the Stipulated Loss Value of the Equipment or Item of Equipment so
   sold, computed as of the Scheduled Payment Date coincident with or
   immediately preceding the date of such sale, over (y) the net
   proceeds of such sale, plus (iii) interest at the Overdue Rate on the
   Stipulated Loss Value from the Scheduled Payment Date as of which
   such Stipulated Loss Value is computed until the date of actual
   payment, plus (iv) all unpaid Supplemental Rent due with respect to
   each Item of Equipment so sold;

           (g) The Lessor Trustee may exercise any other right or remedy
   available to it under Applicable Law or proceed by appropriate court
   action (legal or equitable) to enforce the terms hereof or to recover
   damages for the breach hereof. Separate suits may be brought to
   collect damages for any period of time, and no suit shall in any
   manner prejudice the Lessor Trustee's right to collect damages for
   any subsequent period, or the Lessor Trustee may defer any suit until
   after the expiration of the Lease Term, in which event the cause of
   action underlying such suit shall be deemed not to have accrued until
   the expiration of the Lease Term;

           (h) The Lessor Trustee may retain and apply against the Lease
   Balance all sums which the Lessor Trustee would, absent such Event of
   Default, be required to pay to, or turn over to, the Lessee pursuant
   to the terms of this Lease; or

           (i) The Lessor Trustee, to the extent permitted by Applicable
   Law, as a matter of right and with notice to the Lessee, shall have
   the right to apply to any court having jurisdiction to appoint a
   receiver or receivers of the Equipment, and the Lessee hereby
   irrevocably consents to any such appointment. Any receivers shall
   have all of the usual powers and duties of receivers in like or
   similar cases and all of the powers and duties of the Lessor Trustee
   in case of entry, and shall continue as such and exercise such powers
   until the date of confirmation of the sale of the Equipment unless
   such receivership is sooner terminated.

   The Lessor Trustee shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby and to
exercise all rights and powers under this

                                     26

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<PAGE>

Lease or under any other Operative Agreement or other agreement or any laws
now or hereafter in force, notwithstanding that some or all of the
obligations secured hereby may now or hereafter be otherwise secured,
whether by mortgage, security agreement, pledge, lien, assignment or
otherwise. Neither the acceptance of this Lease nor its enforcement shall
prejudice or in any manner affect the Lessor Trustee's right to realize
upon or enforce any other security now or hereafter held by the Lessor
Trustee, it being agreed that the Lessor Trustee shall be entitled to
enforce this Lease and any other security now or hereafter held by the
Lessor Trustee in any order and manner as it determines in its absolute
discretion. No remedy herein conferred upon or reserved to the Lessor
Trustee is intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute. Every power or remedy given by any
Operative Agreement to the Lessor Trustee or to which it may otherwise be
entitled, may be exercised, concurrently or independently, from time to
time and as often as the Lessor Trustee desires.

   If, pursuant to the Lessor Trustee's exercise of remedies pursuant to
this Section 16.2, the Lease Balance and all other amounts due and owing
from the Lessee under this Lease and the other Operative Agreements have
been paid in full, then the Lessor Trustee shall remit to the Lessee any
excess amounts received by the Lessor Trustee.

   Section 16.3. Waiver of Certain Rights. (a) To the maximum extent
permitted by law, the Lessee hereby waives the benefit of any appraisement,
valuation, stay, extension, reinstatement and redemption laws now or
hereafter in force and all rights of marshalling in the event of any sale
of the Equipment or any interest therein, and (b) if this Lease is
terminated pursuant to Section 16.2, the Lessee waives, to the fullest
extent permitted by law, (i) any notice of entry on the Lessee's premises
or the institution of legal proceedings to obtain possession; (ii) any
right of redemption or repossession; (iii) the benefit of any laws now or
hereafter in force exempting property from liability for rent or for debt
or limiting the Lessor Trustee with respect to the election of remedies;
and (iv) any other rights which might otherwise limit or modify any of the
Lessor Trustee's rights or remedies under this Section 16.

SECTION 17. LESSOR TRUSTEE'S RIGHT TO REMEDY

   Section 17.1. The Lessor Trustee's Right to Remedy the Lessee's Defaults.
The Lessor Trustee, without waiving or releasing any obligation of the
Lessee or Event of Default, may (but shall be under no obligation to)
remedy any Event of Default, including without limitation the failure by
the Lessee to maintain the insurance required by Section 13, for the
account and at the sole cost and expense of the Lessee and may, to the
fullest extent permitted by law, and notwithstanding any right of quiet
enjoyment in favor of the Lessee, take possession of the Equipment for such
purpose and take all such action on the Event of Default as may be
necessary or appropriate for it, but no such possession shall be deemed a
termination of this Lease. All reasonable out-of-pocket costs and expenses
(including fees and expenses of counsel) incurred by the Lessor Trustee,
together with interest thereon at the Overdue Rate from the date on which
such costs and expenses are paid by the Lessor Trustee, shall be paid by
the Lessee to the Lessor Trustee as Supplemental Rent.

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SECTION 18. OPTIONS TO RENEW, PURCHASE AND SELL

   Section 18.1. Purchase of the Equipment.

           (a) The Lessee shall have (i) the right to purchase all, but
   not less than all, of the Equipment on the Expiration Date for the
   Purchase Price, plus all other amounts then due under this Lease,
   unless the Lessee has exercised its option to sell all, but not less
   than all, of the Equipment pursuant to Section 18.3 and (ii) the
   obligation to purchase all, but not less than all, of the Equipment
   on the Expiration Date if a Default or Event of Default has occurred
   and is continuing. The Lessee shall give to the Lessor Trustee and
   the Agent written notice at least 180 days prior to the Expiration
   Date of its election to exercise its option to purchase set forth in
   the preceding sentence. Payment of the Purchase Price for the
   Equipment, together with all other amounts then due under this Lease,
   shall be made on the Expiration Date at the place of payment
   specified in Section 3.4 hereof in immediately available funds, and
   transfer of title to the Equipment shall be in accordance with the
   procedures set forth in Section 19.

           (b) In addition to its rights under Section 18.1(a), so long as
   no Default or Event of Default has occurred and is continuing, the
   Lessee shall have the right on any Scheduled Payment Date to purchase
   all but not less than all of the Equipment for the Purchase Price,
   plus, if applicable, the Make-Whole Amount (as defined below), plus
   all other amounts then due under this Lease. The Lessee shall give to
   the Lessor Trustee written notice at least 180 days prior to such
   Scheduled Payment Date of its election to exercise its option to
   purchase the Equipment. Payment of the Purchase Price for the
   Equipment, plus the Make-Whole Amount, plus all other amounts then
   due under this Lease, shall be made on such Scheduled Payment Date at
   the place of payment specified in Section 3.4 hereof in immediately
   available funds, and transfer of title to the Equipment shall be in
   accordance with the procedures set forth in Section 19. For purposes
   of this Lease, "Make-Whole Amount" means (i) if the prepayment occurs
   on or before the first anniversary of the Closing Date, an amount
   equal to 1% of the Purchase Price or (ii) if the prepayment occurs
   after the first anniversary and on or before the second anniversary
   of the Closing Date, an amount equal to 0.5% of the Purchase Price.

   Section 18.2. [Intentionally Omitted]

   Section 18.3. Option to Sell the Equipment.

           (a) So long as no Default or Event of Default has occurred and
   is continuing, the Lessee shall have the right on the Expiration Date
   to arrange for the sale of all, but not less than all the Equipment.
   The Lessee shall give to the Lessor Trustee and the Agent written
   notice at least 180 days prior to the Expiration Date of its election
   to exercise its option to sell the Equipment provided for in the
   preceding sentence and, after delivery of such notice, the Lessee
   shall have the obligation during the remainder of the Lease Term to
   use its best efforts to obtain bona fide bids for the Equipment from
   prospective purchasers who are financially capable of purchasing all
   of the Equipment for cash on an as-is, where-is basis, without
   recourse or warranty. No such purchaser shall be the Lessee or any
   Guarantor or any of their Affiliates. The Lessee will be responsible

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<PAGE>

   for hiring qualified brokers and making the Equipment available for
   inspection by prospective purchasers. The Lessee shall promptly upon
   the request of the Lessor Trustee, the Agent, the Certificate Holders
   or any potential purchaser permit inspection of the Equipment and any
   maintenance records relating to the Equipment, and the Lessee shall
   comply with the requirements set forth in Section 9.4 and otherwise
   do all things necessary to sell and deliver possession of the
   Equipment to any purchaser. All marketing of the Equipment shall be
   at the Lessee's sole expense. The Lessor Trustee, the Agent and the
   Certificate Holders shall have the right, but shall be under no duty,
   to solicit bids, to inquire into the Lessee's efforts to obtain bids,
   or to take any other action in connection with any sale.

           (b) All bids received by the Lessee prior to the end of the
   Lease Term shall be immediately certified and provided to the Lessor
   Trustee and the Agent in writing, setting forth the amount of such
   bid and the name and address of the Person submitting such bid. The
   Lessor Trustee or the Agent may, by giving written notice to the
   Lessee, reject any bid that is less than the sum of (i) the
   difference between the Lease Balance and the Maximum Lessee Risk
   Amount and (ii) all costs and expenses incurred by the Lessor Trustee
   or the Agent, or both. If every bid is rejected in accordance with
   the foregoing sentence, the Lessor Trustee may elect to retain the
   Equipment by written notice to the Lessee from the Lessor Trustee or
   the Agent, and the Lessee shall return the Equipment to the Lessor
   Trustee on the Expiration Date in accordance with Section 9. If the
   Lessor Trustee does not elect to retain the Equipment, then no later
   than the Expiration Date, the Lessee shall deliver the Equipment to
   the bidder, if any, who has submitted the highest bid, and the Lessor
   Trustee shall on the Expiration Date sell all of its right, title and
   interest in and to the Equipment, AS-IS, WHERE-IS, without recourse
   or warranty (express or implied) except for a warranty against
   Lessor's Liens. The excess of the total selling price realized from
   the sale of the Lessor Trustee's interest in the Equipment over the
   Purchase Price thereof shall be paid to the Lessee as provided in
   Section 18.4.

           (c) In connection with any such sale of the Equipment, the
   Lessee will provide to the purchaser all customary "seller's"
   indemnities and representations and warranties regarding title,
   absence of Liens (except Lessor's Liens) and the condition of the
   Equipment. The Lessee shall have obtained, at its cost and expense,
   all required governmental and regulatory consents, recertifications,
   licenses and approvals and shall have made all filings as required by
   Applicable Law in order to carry out and complete the transfer of the
   Equipment.

           (d) The Lessee shall pay directly, and not from the sale
   proceeds, all costs and expenses of the sale of the Equipment,
   whether incurred by the Lessor Trustee, the Agent, or the Lessee,
   including, without limitation, the cost of all transfer taxes, the
   reasonable attorneys' fees of the Lessor Trustee, the Agent, and the
   Lessee, appraiser fees, commissions, filing fees, and all applicable
   transfer taxes, including without limitation sales, documentary and
   documentary stamp taxes.

           (e) If the Lessee exercises its option to sell the Equipment
   pursuant to Section 18.3(a), the Lessee shall have completed all
   Alterations and Restoration of the Equipment pursuant to Sections
   9.1, 10.1, 10.2 and 10.3 and shall have fulfilled all of the

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<PAGE>

   conditions and requirements in connection therewith pursuant to such
   Sections, in each case at least 180 days prior to the Expiration Date
   regardless of whether they are within the Lessee's control. The
   Lessee shall have also paid the cost of all such Alterations
   commenced prior to the Expiration Date. The Lessee shall not have
   been excused pursuant to Section 12.1 from complying with any
   Applicable Law that involved the extension of the ultimate imposition
   of such Applicable Law beyond the Expiration Date. Any Permitted
   Liens (other than Lessor's Liens) on the Equipment that were
   contested by the Lessee shall have been removed and the Lessor
   Trustee shall have received evidence satisfactory to it that all
   Liens (other than Lessor's Liens and uncontested Permitted Liens of
   the type described in clauses (i) and (v) of the definition thereof)
   have been removed. The Equipment shall be in good operating
   condition.

   Section 18.4. End of Term Adjustment. If the aggregate Net Proceeds of
Sale (hereinafter defined) of the Equipment sold pursuant to Section 18.3
are less than what the Purchase Price of the Equipment determined as of the
Expiration Date would have been, the Lessee shall, on the Expiration Date,
pay to the Lessor Trustee, in immediately available funds, an amount equal
to the deficiency as an adjustment to the Rent payable under this Lease for
the Equipment; provided, however, that so long as no Default or Event of
Default has occurred and is continuing, such amount shall not be more than
the Maximum Lessee Risk Amount. If the aggregate Net Proceeds of Sale of the
Equipment on the Expiration Date are more than what the Purchase Price of
the Equipment would have been on that date, the Lessor Trustee shall pay to
the Lessee an amount equal to such excess as an adjustment to the Rent
payable under this Lease for the Equipment, provided, that the Lessor
Trustee shall have the right to offset against such adjustment payable by
the Lessor Trustee, any amounts then due and payable from Lessee to the
Lessor Trustee hereunder.

   As used in this Section 18.4, the term "Net Proceeds of Sale" means,
with respect to the Equipment sold by the Lessor Trustee to a third party
under Section 18.3, the net amount of the proceeds of sale of the Equipment
received by the Lessor Trustee on or prior to the Expiration Date, after
deducting from the gross proceeds of such sale (i) all sales Taxes and
other Taxes as may be applicable to the sale or transfer of the Equipment,
(ii) all fees, costs and expenses of such sale incurred by the Lessor
Trustee and the Agent, and (iii) any other amounts for which, if not paid,
the Lessor Trustee or the Agent would be liable or which, if not paid,
would constitute a Lien on the Equipment. The Lessor Trustee's obligation
to sell its interest in the Equipment to a third party under Section 18.3
is contingent upon the receipt by the Lessor Trustee of the sum of (i) the
amounts, if any, payable by the Lessee with respect thereto pursuant to the
first sentence of this Section 18.4 and pursuant to the last paragraph of
this Section 18.4, (ii) all unpaid Periodic Rent payable for the Equipment
for all Scheduled Payment Dates through the Expiration Date, and (iii) all
unpaid Supplemental Rent due with respect to the Equipment as of the
Expiration Date.

   If no bona fide bid is received under (or if all bids received are
rejected in accordance with) Section 18.3 hereof for all of the Equipment
prior to the Expiration Date, then the Lessee and the Lessor Trustee agree
that, in view of the uncertainties of market conditions and the parties'
inability to predict what the actual sale price of the Equipment would be,
the Net Proceeds of Sale for the Equipment shall be deemed to be zero
solely for purposes of the payment adjustment set forth in the first
paragraph of this Section 18.4, and the Lessee shall, on

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<PAGE>

the Expiration Date, pay to the Lessor Trustee in immediately available
funds, an amount equal to the Purchase Price, but so long as no Default or
Event of Default has occurred and is continuing hereunder, no more than the
Maximum Lessee Risk Amount for the Equipment as an adjustment to the Rent
payable under this Lease, and the Lessee shall return the Equipment to the
Lessor Trustee on the Expiration Date in accordance with the provisions of
Section 9.4 hereof. Any proceeds from the sale of the Equipment subsequent
to the return of the Equipment to the Lessor Trustee shall be retained by
the Lessor Trustee and distributed pursuant to the Trust Agreement.

SECTION 19. PROCEDURES RELATING TO PURCHASE OF EQUIPMENT

   Section 19.1. Provisions Relating to the Purchase of Equipment;
Conveyance upon Certain Other Events. In connection with the Lessee's
purchase of the Equipment in accordance with Section 18.1 or in connection
with the Lessee's obligations under Section 16.2(e), on the date on which
this Lease is to expire or terminate and upon tender by the Lessee of the
amounts set forth in Sections 16 or 18, as applicable, to the Lessor
Trustee, the Lessor Trustee shall convey to the Lessee (or to the Lessee's
designee) at the Lessee's cost and expense all of the Lessor Trustee's
right, title and interest in and to the Equipment, AS-IS, WHERE-IS, without
recourse or warranty, express or implied except for a warranty against
Lessor's Liens.

SECTION 20. ADDITIONAL GUARANTORS

   Section 20.1. Additional Guarantors. The Lessee will cause each
Person which becomes a U.S. Subsidiary to promptly enter into a guarantee
of the Obligations and concurrently therewith shall deliver to the Lessor
Trustee, the Agent and each Certificate Holder the following items:

           (a) an executed counterpart of the Guaranty Agreement or a
   joinder to the Guaranty Agreement (in either case, a "New Guaranty
   Agreement"), in form and substance satisfactory to the Certificate
   Holders and the Agent;

           (b) a certificate signed by an authorized Responsible Officer
   of such U.S. Subsidiary making representations and warranties to the
   effect of those contained in Section 5 of the Guaranty Agreement, but
   with respect to such U.S. Subsidiary and such New Guaranty Agreement;

           (c) such documents and evidence with respect to such U.S.
   Subsidiary as the Certificate Holders or the Agent may reasonably
   request in order to establish the existence and good standing of such
   U.S. Subsidiary and the authorization of the transactions
   contemplated by such New Guaranty Agreement; and

           (d) an opinion of counsel (which may be internal counsel to the
   Lessee) satisfactory to the Certificate Holders and the Agent to the
   effect that such New Guaranty Agreement has been duly authorized,
   executed, and delivered and that it constitutes the legal, valid and
   binding contract and agreement of such U.S. Subsidiary enforceable in
   accordance with its terms, except as such terms may be limited by
   bankruptcy, insolvency, moratorium or other similar laws affecting
   the rights of creditors generally

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   and except as equitable remedies such as specific performance may be
   in the discretion of the courts.

SECTION 21. ASSIGNMENT RESTRICTIONS

   Section 21.1. Restrictions on Assignments by the Lessee. The Lessee
may not assign, in whole or in part, this Lease or any of its rights or
obligations under hereunder or with respect to any Item of Equipment to any
Person without the prior written consent of the Lessor Trustee, the Agent,
and the Certificate Holders, each of which may withhold its consent in its
absolute discretion. No assignment by the Lessee of this Lease or other
relinquishment of possession to any Item of Equipment shall in any way
discharge or diminish any of the obligations of the Lessee to the Lessor
Trustee hereunder, and the Lessee shall remain directly and primarily
liable under the Operative Agreements as to any rights or obligations
assigned by the Lessee or regarding any Item of Equipment in which rights
or obligations have been assigned or otherwise transferred. The
restrictions in this Section 21.1 shall not affect the Lessee's subleasing
rights under Section 8.2.

SECTION 22. NO MERGER OF TITLE

   Section 22.1. No Merger of Title . There shall be no merger of this
Lease or of the leasehold estate created hereby by reason of the fact that
the same Person may acquire, own or hold, directly or indirectly, in whole
or in part, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or such leasehold estate, (b) the fee estate in the
Equipment, except as may expressly be stated in a written instrument duly
executed and delivered by the appropriate Person or (c) an ownership
interest in the Lessor Trust.

SECTION 23. INTENT OF THE PARTIES

   Section 23.1. Nature of Transaction.

           (a) The parties intend that

                     (i) for financial accounting purposes with respect to
           the Lessee, the Lessor Trust be treated as the owner and the
           lessor of the Equipment and the Lessee be treated as the lessee
           of the Equipment and

                     (ii) for all other purposes, including federal and all
           state and local income tax purposes, state real estate and
           commercial law purposes, and bankruptcy purposes,

                               (A) this Lease be treated as a financing
                     arrangement,

                               (B) the Certificate Holders be deemed lenders
                     making loans to the Lessee in an amount equal to the
                     principal amount of their Trust Certificates from time
                     to time outstanding, which amounts are secured by the
                     Equipment, and

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<PAGE>

                               (C) the Lessee be treated as the owner of the
                     Equipment and be entitled to all tax benefits
                     ordinarily available to an owner of equipment like the
                     Equipment for such tax purposes.

           (b) Nevertheless, the Lessee acknowledges and agrees that the
   Trust Certificate Purchasers, the Certificate Holders, the Agent, and
   the Lessor Trustee have made no representations or warranties to the
   Lessee concerning the tax, accounting or legal characteristics of the
   Operative Agreements and that the Lessee has obtained and relied upon
   its own tax, accounting and legal advisors concerning the Operative
   Agreements as it has deemed appropriate. In addition, if any Person,
   including without limitation, a trustee in bankruptcy, receiver, or
   similar official, or any Governmental Authority, determines, contrary
   to the parties' intent, that this Lease is a true lease for state
   real estate, commercial law or bankruptcy purposes, then this Lease
   meets the requirements of and shall be deemed a "finance lease" under
   UCC Article 2A, and the Lessee shall not assert, and hereby waives,
   any defenses or arguments to the contrary.

           (c) It is the intent of the parties hereto that this Lease
   grant a security interest in and mortgage on the Equipment and all
   proceeds thereof to the Lessor Trustee for the benefit of the
   Certificate Holders to secure the Lessee's performance and payment of
   all amounts under this Lease and the other Operative Agreements.

   Section 23.2. Liens and Security Interests.

           (a) Specifically, without limiting the generality of Section
   23.1, the Lessor Trustee and the Lessee intend and agree that in any
   insolvency or receivership proceedings, or in a petition under the
   United States bankruptcy laws or any other applicable insolvency laws
   or statute of the United States of America or any state or
   commonwealth thereof affecting the Lessee, any Guarantor, the Lessor
   Trust, the Lessor Trustee, the Agent or the Certificate Holders, or
   in any collection actions, the transactions evidenced by the
   Operative Agreements shall be regarded as loans made by the
   Certificate Holders as unrelated third party lenders to the Lessee
   secured by all of the Equipment (it being understood that the Lessee
   has GRANTED and hereby GRANTS a security interest in all of the
   Equipment to the Lessor Trustee and its successors and assigns (for
   the benefit of the Certificate Holders) to secure all such loans and
   the other Obligations).

           (b) Specifically, but without limiting the generality of
   Section 23.1, the Lessor Trustee and the Lessee further intend and
   agree that, for the purpose of securing the obligation of the Lessee
   for the repayment of the above-described loans from the Certificate
   Holders to the Lessee, (i) this Lease shall also be deemed to be a
   security agreement within the meaning of Article 9 of the Uniform
   Commercial Code; (ii) the lease provided for hereby and in Section 2
   of this Lease shall be deemed to be a grant by the Lessee to the
   Lessor Trustee and its successors and assigns (for the benefit of the
   Certificate Holders) of a lien and security interest in all of the
   right, title and interest of the Lessee in and to the Equipment
   (including any Replacement Equipment hereafter acquired) and all
   proceeds of the conversion, voluntary or involuntary, of the
   foregoing into cash, investments, securities or other property (it
   being understood that the Lessee

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<PAGE>

   hereby grants a security interest in the Equipment and all proceeds
   thereof to the Lessor Trustee and its successors and assigns (for the
   benefit of the Certificate Holders) to secure the loans described in
   Section 23.2(a); (iii) the possession by the Lessor Trustee or any of
   its agents of notes and such other items of property as constitute
   instruments, money, negotiable documents or chattel paper shall be
   deemed to be "possession" by the secured party for purposes of
   perfecting the security interest pursuant to Section 9-313 of the
   Uniform Commercial Code or corresponding state law; and (iv)
   notifications to Persons holding such property, and acknowledgments,
   receipts or confirmations from financial intermediaries, bankers or
   agents (as applicable) of the Lessee shall be deemed to have been
   given for the purpose of perfecting such security interest under all
   Applicable Laws. The Lessor Trustee and the Lessee shall, to the
   extent consistent with this Lease, take such actions and execute,
   deliver, file and record such other documents and financing
   statements as may be necessary to ensure that, if this Lease is
   deemed to create a security interest in the Equipment in accordance
   with this Section 23.2, such security interest would be a perfected
   security interest (subject only to Permitted Liens) and will be
   perfected throughout the Lease Term.

           (c) Specifically, but without limiting the foregoing or the
   generality of Section 23.1, the Lessee hereby grants, to the Lessor
   Trustee and its successors and assigns a security interest in all of
   the Lessee's right, title, and interest in and to the following
   (collectively, the "Additional Collateral"), all of which are hereby
   declared and shall be deemed to be a portion of the security for the
   indebtedness and Obligations described in this Lease:

                     (i) all proceeds, both cash and noncash, of the
           Equipment;

                     (ii) all right, title and interest of the Lessee (A) in
           all warranties, chattel paper, documents, general intangibles,
           trade names, trademarks, service marks, logos (including any
           names or symbols by which the Equipment is known) and goodwill
           related to the Equipment and (B) in all other articles of
           personal property of every kind and nature whatsoever (other than
           inventory and accounts), tangible or intangible, now, heretofore
           or hereafter acquired with any proceeds of the Advances
           (including the advances made by the Original Trust Certificate
           Purchasers or the Existing Trust Certificate Purchasers), that
           arise out of or are related to the ownership of the Equipment or
           are located on or become accessions to the Equipment;

                     (iii) all right, title and interest of the Lessee in
           any and all leases, rental agreements and arrangements of any
           sort now or hereafter affecting the Equipment or any portion of
           it and providing for or resulting in the payment of money to the
           Lessee for the use of the Equipment or any portion of it,
           irrespective of whether such leases, rental agreements and
           arrangements be oral or written, and including any and all
           extensions, renewals and modifications thereof (the "Subject
           Leases") and guaranties of the performance or obligations of any
           lessees thereunder, together with all income, rents, issues,
           profits and revenues from the Subject Leases (including all
           security deposits and all other deposits, whether held by the
           Lessee or in a trust account, and all other deposits and escrow
           funds

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<PAGE>

           relating to any Subject Leases), and all the estate, right,
           title, interest, property, possession, claim and demand
           whatsoever at law, as well as in equity, of the Lessee of, in and
           to the same; provided, however, that although this Lease contains
           (and it is hereby agreed that this Lease contains) a present,
           current, unconditional and absolute assignment of all of said
           income, rents, issues, profits and revenues, the Lessee shall
           collect and apply such rental payments and revenues as provided
           in this Lease and the other Operative Agreements;

                     (iv) all right, title and interest of the Lessee in, to
           and under all franchise agreements, management contracts,
           consents, authorizations, certificates and other rights of every
           kind and character of any Governmental Authority affecting the
           Equipment and all other contracts, licenses and permits now or
           hereafter affecting the Equipment or any Item of Equipment or
           Part and all guaranties and warranties with respect to any of the
           foregoing (the "Subject Contracts");

                     (v) all right, title and interest of the Lessee in any
           insurance policies or binders now or hereafter relating to the
           Equipment, including any unearned premiums thereon, as further
           provided in this Lease;

                     (vi) all right, title and interest of the Lessee in any
           and all awards, payments, proceeds and the right to receive the
           same, either before or after any foreclosure hereunder, as a
           result of any temporary or permanent injury or damage to, taking
           of or decrease in the value of the Equipment by reason of
           casualty, condemnation or otherwise as further provided in this
           Lease;

                     (vii) all right, title and interest of the Lessee in
           all escrow and all other deposits (and all letters of credit,
           certificates of deposit, negotiable instruments and other rights
           and evidence of rights to cash) now or hereafter relating to the
           Equipment or the purchase or operation thereof;

                     (viii) all claims and causes of action arising from or
           otherwise related to any of the foregoing, and all rights and
           judgments related to any legal actions in connection with such
           claims or causes of action; and

                     (ix) all Alterations, extensions, additions,
           improvements, betterments, renewals and replacements,
           substitutions, or proceeds of any of the foregoing, and all
           chattel paper, documents, instruments general intangibles and
           other property of any nature constituting proceeds acquired with
           proceeds of any of the property described hereinabove.

SECTION 24. MISCELLANEOUS

   Section 24.1. Severability. If any term of this Lease or any
application of any term shall be declared invalid or unenforceable, the
remainder of this Lease and any other application of the offending term
shall not be affected thereby.

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   Section 24.2. Amendments and Modifications. Subject to the
requirements, restrictions and conditions set forth in the Participation
Agreement, neither this Lease nor any provision hereof may be amended,
waived, discharged or terminated except by an instrument in writing signed
by the parties hereto.

   Section 24.3. No Waiver. No failure by the Lessor Trustee, the Agent
or any Certificate Holder to insist upon the strict performance of any term
hereof or to exercise any right, power or remedy upon a default hereunder,
and no acceptance of full or partial payment of Rent during the continuance
of any such default, shall constitute a waiver of any such default or of
any such term. To the fullest extent permitted by law, no waiver of any
default shall affect or alter this Lease, and this Lease shall continue in
full force and effect with respect to any other then-existing or subsequent
default.

   Section 24.4. Notices. All notices, demands, requests, consents,
approvals and other communications hereunder shall be in writing and
directed to the address described in, and deemed received in accordance
with the provisions of, Section 10.2 of the Participation Agreement.

   Section 24.5. Successors and Assigns. All the terms and provisions of
this Lease shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

   Section 24.6. Headings and Table of Contents. The headings and table
of contents in this Lease are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof

   Section 24.7. Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.

   Section 24.8. Third Party Beneficiaries. The Lessee and the Lessor
Trustee intend that the Agent and each Certificate Holder be third party
beneficiaries of the Lessee's obligations under this Lease.

   Section 24.9. Governing Law. This Lease shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
(excluding its choice-of-law principles of the law that would require the
application of the laws of another jurisdiction).

   Section 24.10. Time of Essence. With respect to each of the Lessee's
obligations hereunder, time is of the essence, and each party hereby
acknowledges and confirms the foregoing.

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   IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed and delivered as of the date first above written.

                              WELLS FARGO BANK NORTHWEST, NATIONAL
                              ASSOCIATION, as trustee under MW 1997-1 Trust, as
                              Lessor Trustee

                              By ________________________________
                                        C. SCOTT NIELSEN
                                 Its:   VICE PRESIDENT

                [Second Amended and Restated Equipment Lease]

<PAGE>
<PAGE>

                              MAIL-WELL I CORPORATION

                              By ________________________________
                                         ROBERT MEYER
                                 Its:    VICE PRESIDENT-TREASURER & TAX

                [Second Amended and Restated Equipment Lease]

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