EXHIBIT 10(d)
 
Execution Draft
 
 

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SEASONAL CREDIT AGREEMENT
 
DATED AS OF
 
October 20, 2006
 
 
BETWEEN
 
 
PEOPLES ENERGY CORPORATION,
 
and
 
JPMORGAN CHASE BANK, N.A.
as Lender.
 
 

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TABLE OF CONTENTS
 
SECTION 1.  DEFINITIONS; INTERPRETATION.
1
 
 Section 1.1 
Definitions
1
 
 Section 1.2
Interpretation
7

 
 SECTION 2.  THE REVOLVING CREDIT.
7
 
Section 2.1
The Loan Commitment
7
 
Section 2.2
[Reserved]
7
 
Section 2.3
Applicable Interest Rates
7
 
Section 2.5
Minimum Borrowing Amounts
9
 
Section 2.6
Manner of Borrowing Loans and Designating Interest Rates Applicable to Loans
9
 
Section 2.8
Interest Periods
10
 
Section 2.9
Maturity of Loans
11
 
Section 2.10
Prepayments
11
 
Section 2.12
Default Rate
11
 
Section 2.13
Evidence of Debt
12
 
Section 2.14
Funding Indemnity
12
 
Section 2.15
Revolving Credit Commitment Terminations
12
 
Section 2.16
Regulation D Compensation
13
 
Section 2.17
Arbitrage Compensation
13

 
SECTION 3.  FEES.
13 
 
Section 3.1
Fees.
13

 
SECTION 4.  PLACE AND APPLICATION OF PAYMENTS.
14 
 
Section 4.1
Place and Application of Payments
14

 
SECTION 5.  REPRESENTATIONS AND WARRANTIES.
14 
 
Section 5.1
Corporate Organization and Authority
14
 
Section 5.2
Corporate Authority and Validity of Obligations
14
 
Section 5.3
Financial Statements
15
 
Section 5.4
Approvals
15
 
Section 5.5
ERISA
15
 
Section 5.6
Government Regulation
15
 
Section 5.7
Margin Stock; Proceeds
15
 
Section 5.8
Full Disclosure
16

 
SECTION 6.  CONDITIONS PRECEDENT.
16 
 
Section 6.1
Initial Credit Event
16 
 
Section 6.2
All Credit Events
17 

 
SECTION 7.  COVENANTS.
17 
 
Section 7.1
Corporate Existence
17 
 
Section 7.2
ERISA
17 
 
Section 7.3
Financial Reports and Other Information
17 

 

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Section 7.5
Regulation U; Proceeds
18 
 
Section 7.6
Sales of Assets
18 
 
Section 7.7
Capital Ratio
19 
 
Section 7.8
Compliance with Laws
19 
 
Section 7.9
Mergers and Consolidations
19 

 
SECTION 8.  EVENTS OF DEFAULT AND REMEDIES.
19 
 
Section 8.1
Events of Default
19
 
Section 8.2
Non-Bankruptcy Defaults
21
 
Section 8.3
Bankruptcy Defaults
21
 
Section 8.4
Expenses
21

 
SECTION 9.  CHANGE IN CIRCUMSTANCES.
21
 
Section 9.1
Change of Law
21
 
Section 9.2
Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR
22
 
Section 9.3
Increased Cost and Reduced Return
22
 
Section 9.5
Lending Offices
23
 
Section 9.6
Discretion of Lender as to Manner of Funding
24

 
SECTION 10.  RESERVED.
24

 
SECTION 11.  MISCELLANEOUS.
24
 
Section 11.1
Withholding Taxes
24
 
Section 11.2
No Waiver of Rights
24
 
Section 11.3
Non-Business Day
25
 
Section 11.4
Documentary Taxes
25
 
Section 11.5
Survival of Representations
25
 
Section 11.6
Survival of Indemnities
25
 
Section 11.7
Set-Off
25
 
Section 11.8
Notices
25
 
Section 11.9
Counterparts
26
 
Section 11.10
Successors and Assigns
27
 
Section 11.11
[Reserved].
27
 
Section 11.12
Assignments, Participations, Etc
27
 
Section 11.13
Amendments
29
 
Section 11.14
Headings
29
 
Section 11.15
Legal Fees, Other Costs and Indemnification
29
 
Section 11.16
[Reserved].
29
 
Section 11.17
Entire Agreement
29
 
Section 11.18
Construction
29
 
Section 11.19
Governing Law
29
 
Section 11.20
SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
30
 
Section 11.21
Confidentiality
30
 
Section 11.22
Patriot Act
30

 
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CREDIT AGREEMENT
 
This SEASONAL CREDIT AGREEMENT, dated as of October 20, 2006, is by and between
PEOPLES ENERGY CORPORATION, an Illinois corporation (the “Borrower”), and
JPMORGAN CHASE BANK, N.A., as lender (in such capacity, the “Lender”).
 
WITNESSETH THAT:
 
WHEREAS, the Borrower desires to obtain the commitment of the Lender to make
available a seasonal revolving credit facility for loans (the “Revolving
Credit”), as described herein; and
 
WHEREAS, the Lender is willing to extend such commitments subject to all of the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth.
 
NOW, THEREFORE, in consideration of the recitals set forth above and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
 
SECTION 1.  DEFINITIONS; INTERPRETATION.
 
Section 1.1  Definitions.  The following terms when used herein have the
following meanings:
 
“Affiliate” means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, “control” (including “controlled by” and
“under common control with” and other cognates thereof,) means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies of a Person (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event for purposes of this definition: (i) any Person which owns directly or
indirectly 5% or more of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or 5% or more of
the partnership or other ownership interests of any other Person (other than as
a limited partner of such other Person) will be deemed to control such
corporation or other Person; and (ii) each director and executive officer of the
Borrower or any Subsidiary shall be deemed an Affiliate of the Borrower and each
Subsidiary.
 
“Agreement” means this Credit Agreement, including all Exhibits and Schedules
hereto, as it may be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
 
“Applicable Margin” means, at any time (i) with respect to Base Rate Loans, the
Base Rate Margin; and (ii) with respect to LIBOR Loans, the LIBOR Margin.
 
“Applicable Telerate Page” is defined in Section 2.3(b) hereof.
 
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“Assignment and Assumption” means an assignment and assumption entered into by
the Lender and an Eligible Assignee (with the consent of any party whose consent
is required by Section 11.12(b)), in substantially any form approved by the
Lender.
 
“Authorized Representative” means those persons shown on the list of employees
provided by the Borrower pursuant to Section 6.1(e) hereof, or on any such
updated list provided by the Borrower to the Lender, or any further or different
employee of the Borrower so named by any officer of the Borrower in a written
notice to the Lender.
 
“Base Rate” is defined in Section 2.3(a) hereof.
 
“Base Rate Loan” means a Loan bearing interest prior to maturity at a rate
specified in Section 2.3(a) hereof.
 
“Base Rate Margin” means the percentage set forth in Schedule 1A hereto
corresponding to the then applicable Credit Rating.
 
“Borrower” is defined in the preamble of this Agreement.
 
“Borrowing” means the total of Loans of a single type advanced, continued for an
additional Interest Period, or converted from a different type into such type by
the Lender on a single date and for a single Interest Period. A Borrowing is
“advanced” on the day the Lender advances funds comprising such Borrowing to the
Borrower, is “continued” on the date a new Interest Period for the same type of
Loans commences for such Borrowing, and is “converted” when such Borrowing is
changed from one type of Loan to the other, all as requested by the Borrower
pursuant to Section 2.5(a).
 
“Business Day” means any day other than a Saturday or Sunday on which Lender is
not authorized or required to close in Chicago, Illinois and, if the applicable
Business Day relates to the borrowing or payment of a LIBOR Loan, on which banks
are dealing in U.S. Dollars in the interbank market in London, England.
 
“Capital” means, as of any date of determination thereof, without duplication,
the sum of Consolidated Net Worth plus Indebtedness, excluding accumulated other
comprehensive income/loss, as determined in accordance with generally accepted
accounting principles consistently applied.
 
“Capital Lease” means at any date any lease of Property which, in accordance
with GAAP, would be required to be capitalized on the balance sheet of the
lessee.
 
“Capital Ratio” means, for any fiscal quarter of the Borrower, the ratio,
rounded downwards to two decimal points, of the sum of Indebtedness for such
fiscal quarter to the sum of Capital for such fiscal quarter.
 
“Capitalized Lease Obligations” means, for any Person, the amount of such
Person’s liabilities under Capital Leases determined at any date in accordance
with GAAP.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
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“Commitment Fee Rate” means the percentage set forth on Schedule 1A hereto
corresponding to the then applicable Credit Rating.
 
“Compliance Certificate” means a certificate in the form of Exhibit A hereto.
 
“Consolidated EBIT” means, for any period, for the Borrower and its Consolidated
Subsidiaries, (A) the sum of the amounts for such period of (i) consolidated net
income, (ii) net income taxes in respect of such period (such amount to be a
positive number in cases where net cash taxes are payable and zero in cases
where a cash refund in respect of taxes paid is due), (iii) consolidated
interest expense, and (iv) losses on sales of assets (excluding sales in the
ordinary course of business) and other extraordinary losses less (B) the amount
for such period of (i) interest income and (ii) gains on sales of assets
(excluding sales in the ordinary course of business) and other extraordinary
gains, all as determined on a consolidated basis in accordance with GAAP.
 
“Consolidated Net Worth” means, as of the date of any determination thereof, the
amount reflected as shareholders equity upon a consolidated balance sheet of the
Borrower and its Subsidiaries.
 
“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or undertaking to which
such Person is a party or by which it or any of its Property is bound.
 
“Controlled Group” means all members of a controlled group of corporations and
all trades and businesses (whether or not incorporated) under common control
that, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
 
“Credit Documents” means this Agreement, the Note and all other documents,
instrument and agreements executed and delivered by Borrower or any Affiliate
thereof in connection with this Agreement.
 
“Credit Event” means the Borrowing of any Loan.
 
“Credit Rating” means, at any time, the long-term senior un-secured non-credit
enhanced debt rating of the Borrower as determined by Standard & Poors’ Ratings
Services and/or Moody’s Investors Service.
 
“Default” means any event or condition the occurrence of which would, with the
passage of time or the giving of notice, or both, constitute an Event of
Default.
 
“EBIT” means, for any period, for the Borrower or any of its Subsidiaries, (A)
the sum of the amounts for such period of (i) net income, (ii) net income taxes
in respect of such period (such amount to be a positive number in cases where
net cash taxes are payable and zero in cases where a cash refund in respect of
taxes paid is due), (iii) interest expense, and (iv) losses on sales of assets
(excluding sales in the ordinary course of business) and other extraordinary
losses less (B) the amount for such period of (i) interest income and (ii) gains
on sales of assets (excluding sales in the ordinary course of business) and
other extraordinary gains, all as determined in accordance with GAAP.
 
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“Effective Date” means October 20, 2006.
 
“Eligible Assignee” means (a) an Affiliate of the Lender, and (b) any other
Person (other than a natural person) approved by (i) the Lender, and (ii) unless
an Event of Default has occurred and is continuing, the Borrower (each such
approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.
 
“ERISA” is defined in Section 5.5 hereof.
 
“Event of Default” means any of the events or circumstances specified in Section
8.1 hereof.
 
“Existing Credit Agreement” means that certain Credit Agreement dated as of June
13, 2006 by and among Borrower, Bank of America, N.A. as “Agent” thereunder, and
the other financial institutions a party thereto (as may be amended,
supplemented or modified from time to time).
 
“Federal Funds Rate” means the fluctuating interest rate per annum described in
part (x) of clause (ii) of the definition of Base Rate set forth in Section
2.3(a) hereof.
 
“GAAP” means generally accepted accounting principles as in effect in the United
States from time to time, applied by the Borrower and its Subsidiaries on a
basis consistent with the preparation of the Borrower’s financial statements
furnished to the Lender as described in Section 5.3 hereof.
 
“Guarantee” means, in respect of any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of another Person, including, without limitation, by means of an agreement to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to maintain financial covenants, or to assure the payment of
such Indebtedness by an agreement to make payments in respect of goods or
services regardless of whether delivered, or otherwise, provided, that the term
“Guarantee” shall not include endorsements for deposit or collection in the
ordinary course of business; and such term when used as a verb shall have a
correlative meaning.
 
“Indebtedness” means, as to any Person, without duplication: (i) all obligations
of such Person for borrowed money or evidenced by bonds, debentures, notes or
similar instruments; (ii) all obligations of such Person for the deferred
purchase price of property or services (other than in respect of trade accounts
payable arising in the ordinary course of business, customer deposits,
provisions for rate refunds (if any), deferred fuel expenses and obligations in
respect of pensions and other post-retirement benefits and employee welfare
plans); (iii) all Capitalized Lease Obligations of such Person; (iv) all
Indebtedness of others secured by a Lien on any properties, assets or revenues
of such Person (other than stock, partnership interests or other equity
interests of the Borrower or any Subsidiaries in other entities) to the extent
of the lesser of the value of the property subject to such Lien or the amount of
such Indebtedness; (v) all Indebtedness of others Guaranteed by such Person; and
(vi) all obligations of such Person, contingent or otherwise, in respect of any
letters or credit (whether commercial or standby) or bankers’ acceptances.
 
“Interest Period” is defined in Section 2.6 hereof.
 
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“Lender” is defined in the preamble of this Agreement and includes any successor
thereto.
 
“Lending Office” is defined in Section 9.4 hereof.
 
“LIBOR” is defined in Section 2.3(b) hereof.
 
“LIBOR Loan” means a Loan bearing interest prior to maturity at the rate
specified in Section 2.3(b) hereof.
 
“LIBOR Margin” means the percentage set forth in Schedule 1A hereto beside the
then applicable Credit Rating.
 
“LIBOR Reserve Percentage” is defined in Section 2.3(b) hereof.
 
“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, including, but not limited to, the
security interest lien arising from a mortgage, encumbrance, pledge, conditional
sale, security agreement or trust receipt, or a lease, consignment or bailment
for security purposes. For the purposes of this definition, a Person shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, Capital Lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security purposes, and such retention of title shall constitute a “Lien.”
 
“Loan” is defined in Section 2.1 hereof and, as so defined, includes a Base Rate
Loan or LIBOR Loan, each of which is a “type” of Loan hereunder.
 
“Material Adverse Effect” means a material adverse effect on (i) the business,
financial position or results of operations of the Borrower, (ii) the ability of
the Borrower to perform its obligations under the Credit Documents, (iii) the
validity or enforceability of the obligations of the Borrower, (iv) the rights
and remedies of the Lender against the Borrower or (v) the timely payment of the
principal of and interest on the Loans or other amounts payable by the Borrower
hereunder.
 
“Non-Recourse Indebtedness” means all Indebtedness of the Borrower that is
non-recourse to the Borrower.
 
“Note” is defined in Section 2.10(a) hereof.
 
“Obligations” means all fees payable hereunder, all obligations of the Borrower
to pay principal or interest on Loans and all other payment obligations of the
Borrower arising under or in relation to any Credit Document.
 
“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or any agency or political subdivision
thereof.
 
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“Plan” means at any time an employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that is either (i) maintained by a member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
 
“PBGC” is defined in Section 5.5 hereof.
 
“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, whether now owned or hereafter
acquired.
 
“Reference Bank” means JPMorgan Chase Bank, N.A.
 
“Revolving Credit Commitment” is defined in Section 2.1 hereof.
 
“SEC” means the Securities and Exchange Commission.
 
“Significant Subsidiary” means a Subsidiary of the Borrower which meets any of
the following conditions:
 
(1) the book value of the Subsidiary’s assets exceeds twenty percent (20%) of
the book value of the assets of the Borrower and its other Subsidiaries
consolidated as of the end of the most recently completed fiscal quarter; or
 
(2) the Subsidiary’s EBIT exceeds twenty percent (20%) of Consolidated EBIT as
of the end of the most recently completed fiscal quarter and the twelve month
period ending therewith.
 
“SPC” is defined in Section 11.12(g) hereof.
 
“Subsidiary” means, as to the Borrower, any corporation or other entity of which
more than fifty percent (50%) of the outstanding stock or comparable equity
interests having ordinary voting power for the election of the Board of
Directors of such corporation or similar governing body in the case of a
non-corporation (irrespective of whether or not, at the time, stock or other
equity interests of any other class or classes of such corporation or other
entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by the Borrower or by
one or more of its Subsidiaries.
 
“Telerate Service” means the Moneyline Telerate.
 
“Termination Date” means the earlier to occur of (i) March 31, 2007 and (ii) the
consummation of the merger between a subsidiary of WPS Resources Corporation and
Borrower as contemplated by that certain merger application filed with the
Illinois Commerce Commission on or about August 2, 2006.
 
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“Unfunded Vested Liabilities” means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all vested non-forfeitable
accrued benefits under such Plan exceeds (ii) the fair market value of all Plan
assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the Controlled Group to the PBGC or the
Plan under Title IV of ERISA.
 
“Upfront Fee” is defined in Section 3.1(d).
 
“U.S. Dollars” and “$” each means the lawful currency of the United States of
America.
 
“Utilization Fee Rate” means the percentage set forth in Schedule 1A hereto
corresponding to the then applicable Credit Rating.
 
“Welfare Plan” means a “welfare plan”, as defined in Section 3(l) of ERISA.
 
Section 1.2  Interpretation.  The foregoing definitions shall be equally
applicable to both the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to Chicago,
Illinois time unless otherwise specifically provided. Where the character or
amount of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the specific provisions of this Agreement.
 
SECTION 2.  THE REVOLVING CREDIT.
 
Section 2.1  The Loan Commitment.  Subject to the terms and conditions hereof
the Lender agrees to make a loan or loans (individually a “Loan” and
collectively “Loans”) to the Borrower from time to time on a revolving basis in
an aggregate outstanding amount up to the TWENTY FIVE MILLION DOLLARS
($25,000,000) (such amount, as increased or reduced pursuant to Section 2.12 or
changed as a result of one or more assignments under Section 11.12, the
“Revolving Credit Commitment”) before the Termination Date, provided that the
sum of the aggregate amount of Loans at any time outstanding shall not exceed
the Revolving Credit Commitment in effect at such time. As provided in Section
2.5(a) hereof, the Borrower may elect that each Borrowing of Loans be either
Base Rate Loans or LIBOR Loans. Loans may be repaid and the principal amount
thereof re-borrowed before the Termination Date, subject to all the terms and
conditions hereof.
 
Section 2.2  [Reserved]. 
 
Section 2.3  Applicable Interest Rates.   Section 2.4   Base Rate Loans.  Each
Base Rate Loan made or maintained by Lender shall bear interest during each
Interest Period it is outstanding (computed (x) at all times the Base Rate is
based on the rate described in clause (i) of the definition thereof, on the
basis of a year of 365 or 366 days, as applicable, and actual days elapsed or
(y) at all times the Base Rate is based on the rate described in clause (ii) of
the definition thereof, on the basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Loan is
advanced, continued or created by conversion from a LIBOR Loan until maturity
(whether by acceleration or otherwise) at a rate per annum equal to the sum of
the Applicable Margin plus the Base Rate from time to time in effect, payable on
the last day of its Interest Period and at maturity (whether by acceleration or
otherwise).
 
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“Base Rate” means for any day the greater of:
 
i  the rate of interest announced by JPMorgan Chase Bank, N.A. from time to time
as its “Prime Commercial Lending Rate,” or equivalent, for U.S. Dollar loans as
in effect on such day, with any change in the Base Rate resulting from a change
in said prime rate to be effective as of the date of the relevant change in said
“Prime Commercial Lending Rate”; and
 
ii  the sum of (x) the rate determined by the Lender to be the prevailing rate
per annum (rounded upwards, if necessary, to the nearest one hundred-thousandth
of a percentage point) at approximately 10:00 a.m. (Chicago time) (or as soon
thereafter as is practicable) on such day (or, if such day is not a Business
Day, on the immediately preceding Business Day) for the purchase at face value
of overnight Federal funds in an amount comparable to the principal amount owed
to JPMorgan Chase Bank, N.A. for which such rate is being determined, plus (y)
one-half of one percent (0.50%).
 
(b)  LIBOR Loans. Each LIBOR Loan made or maintained by Lender shall bear
interest during each Interest Period it is outstanding (computed on the basis of
a year of 360 days and actual days elapsed) on the unpaid principal amount
thereof from the date such Loan is advanced, continued, or created by conversion
from a Base Rate Loan until maturity (whether by acceleration or otherwise) at a
rate per annum equal to the sum of the Applicable Margin plus the LIBOR
applicable for such Interest Period, payable on the last day of the Interest
Period and at maturity (whether by acceleration or otherwise).
 
“LIBOR” means, for an Interest Period for a Borrowing of LIBOR Loans, (a) the
LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if
the LIBOR Index Rate cannot be determined, the arithmetic average of the rates
of interest per annum (rounded upwards, if necessary, to the nearest
one-sixteenth of one percent) at which deposits in U.S. Dollars in immediately
available funds are offered to the Reference Bank at 11:00 a.m. (London, England
time) two (2) Business Days before the beginning of such Interest Period by
major banks in the interbank LIBOR market for delivery on the first day of and
for a Period equal to such Interest Period in an amount equal or comparable to
the principal amount of the LIBOR Loan scheduled to be made by the Reference
Bank as part of such Borrowing.
 
“LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the next higher one-sixteenth of one percent) for
deposits in U.S. Dollars, for delivery on the first day of and for a period
equal to such Interest Period in an amount equal or comparable to the principal
amount of the LIBOR Loan scheduled to be made by JPMorgan Chase Bank, N.A. as
part of such Borrowing, which appears on the Applicable Telerate Page, as
appropriate for such currency, as of 11:00 a.m. (London, England time) on the
day two (2) Business Days before the commencement of such Interest Period.
 
“Applicable Telerate Page” means the display page designated as “Page 3750” on
the Telerate Service (or such other page as may replace such page, as
appropriate, on that service or such other service as may be nominated by the
British Bankers’ Association as the information vendor for the purpose of
displaying British Bankers’ Association Interest Settlement Rates for deposits
in U.S. Dollars).
 
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“LIBOR Reserve Percentage” means for any Borrowing of LIBOR Loans from Lender,
the daily average for the applicable Interest Period of the actual effective
rate, expressed as a decimal, at which reserves (including, without limitation,
any supplemental, marginal and emergency reserves) are maintained by Lender
during such Interest Period pursuant to Regulation D of the Board of Governors
of the Federal Reserve System (or any successor) on “LIBOR liabilities”, as
defined in such Board’s Regulation D (or in respect of any other category of
liabilities that includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets that include loans by non-United States offices of Lender to United
States residents), subject to any amendments of such reserve requirement by such
Board or its successor, taking into account any transitional adjustments
thereto. For purposes of this definition, the LIBOR Loans shall be deemed to be
“LIBOR liabilities” as defined in Regulation D without benefit or credit for any
prorations, exemptions or offsets under Regulation D.
 
(c)  Rate Determinations. The Lender shall determine each interest rate
applicable to Obligations and the amount of all Obligations, and a determination
thereof by the Lender shall be conclusive and binding except in the case of
manifest error.
 
Section 2.5  Minimum Borrowing Amounts.  Each Borrowing of Base Rate Loans shall
be in an amount not less than $1,000,000 and in integral multiples of $500,000.
Each Borrowing of LIBOR Loans shall be in an amount not less than $2,000,000 and
in integral multiples of $1,000,000.
 
Section 2.6  Manner of Borrowing Loans and Designating Interest Rates Applicable
to Loans.   Section 2.7  Notice to the Lender.  The Borrower shall give notice
to the Lender by no later than 10:00 a.m. (Chicago time) (i) at least two (2)
Business Days before the date on which the Borrower requests the Lender to
advance a Borrowing of LIBOR Loans and (ii) at least one (1) Business Day before
the date on which the Borrower requests the Lender to advance a Borrowing of
Base Rate Loans. The Loans included in each Borrowing shall bear interest
initially at the type of rate specified in such notice of a new Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Borrowing or, subject to Section 2.4’s
minimum amount requirement for each outstanding Borrowing, a portion thereof, as
follows: (i) if such Borrowing is of LIBOR Loans, on the last day of the
Interest Period applicable thereto, the Borrower may continue part or all of
such Borrowing as LIBOR Loans for an Interest Period or Interest Periods
specified by the Borrower or convert part or all of such Borrowing into Base
Rate Loans, (ii) if such Borrowing is of Base Rate Loans, on any Business Day,
the Borrower may convert all or part of such Borrowing into LIBOR Loans for an
Interest Period or Interest Periods specified by the Borrower. The Borrower
shall give all such notices requesting the advance, continuation, or conversion
of a Borrowing to the Lender by telephone or facsimile (which notice shall be
irrevocable once given and, if by telephone, shall be promptly confirmed in
writing). Notices of the continuation of a Borrowing of LIBOR Loans for an
additional Interest Period or of the conversion of part or all of a Borrowing of
LIBOR Loans into Base Rate Loans or of Base Rate Loans into LIBOR Loans must be
given by no later than 10:00 a.m. (Chicago time) at least three (3) Business
Days before the date of the requested continuation or conversion. All such
notices concerning the advance, continuation, or conversion of a Borrowing shall
specify the date of the requested advance, continuation or conversion of a
Borrowing (which shall be a
 
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Business Day), the amount of the requested Borrowing to be advanced, continued,
or converted, the type of Loans to comprise such new, continued or converted
Borrowing and, if such Borrowing is to be comprised of LIBOR Loans, the Interest
Period applicable thereto. The Borrower agrees that the Lender may rely on any
such telephonic or facsimile notice given by any person it in good faith
believes is an Authorized Representative without the necessity of independent
investigation, and in the event any such notice by telephone conflicts with any
written confirmation, such telephonic notice shall govern if the Lender has
acted in reliance thereon. There may be no more than five different Interest
Periods in effect at any one time, provided that for purposes of determining the
number of Interest Periods in effect at any one time, all Base Rate Loans shall
be deemed to have one and the same Interest Period.
 
(a)  [Reserved] .
 
(b)  Borrower’s Failure to Notify. Any outstanding Borrowing of Base Rate Loans
shall, subject to Section 6.2 hereof, automatically be continued for an
additional Interest Period on the last day of its then current Interest Period
as a Base Rate Loan unless the Borrower has notified the Lender within the
period required by Section 2.5(a) that it intends to convert such Borrowing into
a Borrowing of LIBOR Loans or notifies the Lender within the period required by
Section 2.8(a) that it intends to prepay such Borrowing. If the Borrower fails
to give notice pursuant to Section 2.5(a) above of the continuation or
conversion of any outstanding principal amount of a Borrowing of LIBOR Loans
before the last day of its then current Interest Period within the period
required by Section 2.5(a) and has not notified the Lender within the period
required by Section 2.8(a) that it intends to prepay such Borrowing, such
Borrowing shall automatically be converted into a Borrowing of Base Rate Loans,
subject to Section 6.2 hereof.
 
Section 2.8  Interest Periods.  As provided in Section 2.5(a) hereof, at the
time of each request to advance, continue, or create by conversion a Borrowing
of LIBOR Loans, the Borrower shall select an Interest Period applicable to such
Loans from among the available options. The term “Interest Period” means the
period commencing on the date a Borrowing of Loans is advanced, continued, or
created by conversion and ending: (a) in the case of Base Rate Loans, on the
last Business Day of the calendar quarter in which such Borrowing is advanced,
continued, or created by conversion (or on the last day of the following
calendar quarter if such Loan is advanced, continued or created by conversion on
the last Business Day of a calendar quarter), and (b) in the case of LIBOR
Loans, 1, 2 or 3 months thereafter; provided, however, that:
 
(a)  any Interest Period for a Borrowing of Base Rate Loans that otherwise would
end after the Termination Date shall end on the Termination Date;
 
(b)  for any Borrowing of LIBOR Loans, the Borrower may not select an Interest
Period that extends beyond the Termination Date;
 
(c)  whenever the last day of any Interest Period would otherwise be a day that
is not a Business Day, the last day of such Interest Period shall be extended to
the next succeeding Business Day, provided that, if such extension would cause
the last day of an Interest Period for a Borrowing of LIBOR Loans to occur in
the following calendar month, the last day of such Interest Period shall be the
immediately preceding Business Day; and
 
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(d)  for purposes of determining an Interest Period for a Borrowing of LIBOR
Loans, a month means a period starting on one day in a calendar month and ending
on the numerically corresponding day in the next calendar month; provided,
however, that if there is no numerically corresponding day in the month in which
such an Interest Period is to end or if such an Interest Period begins on the
last Business Day of a calendar month, then such Interest Period shall end on
the last Business Day of the calendar month in which such Interest Period is to
end.
 
Section 2.9  Maturity of Loans.  Unless an earlier maturity is provided for
hereunder (whether by acceleration or otherwise), each Loan shall mature and
become due and payable by the Borrower on the Termination Date.
 
Section 2.10  Prepayments.   Section 2.11  The Borrower may prepay without
premium or penalty and in whole or in part (but, if in part, then: (i) if such
Borrowing is of Base Rate Loans, in an amount not less than $1,000,000 and
integral multiples of $500,000 in excess thereof, (ii) if such Borrowing is of
LIBOR Loans, in an amount not less than $2,000,000 and integral multiples of
$1,000,000 in excess thereof and (iii) in an amount such that the minimum amount
required for a Borrowing pursuant to Section 2.4 hereof remains outstanding) any
Borrowing of LIBOR Loans upon three Business Days’ prior notice to the Lender
or, in the case of a Borrowing of Base Rate Loans, notice delivered to the
Lender no later than 10:00 a.m. (Chicago time) on the date of prepayment, such
prepayment to be made by the payment of the principal amount to be prepaid and
accrued interest thereon to the date fixed for prepayment. In the case of LIBOR
Loans, any amounts owing under Section 2.11 hereof as a result of such
prepayment shall be paid contemporaneously with such prepayment. Any amount paid
or prepaid before the Termination Date may, subject to the terms and conditions
of this Agreement, be borrowed, repaid and borrowed again.
 
(a)  At any time that the Borrower becomes aware, or should have become aware
(pursuant to Borrower’s ordinary business practices) that the aggregate amount
of outstanding Loans shall at any time for any reason exceed the Revolving
Credit Commitment then in effect, the Borrower shall, immediately notify the
Lender of this determination. Within two (2) Business Days of the delivery of
the notice described in the preceding sentence, the Borrower shall, without
further notice or demand, pay the amount of such excess to the Lender as a
prepayment of the Loans. Each such prepayment shall be accompanied by a payment
of all accrued and unpaid interest on the Loans prepaid and shall be subject to
Section 2.11.
 
Section 2.12  Default Rate.  If any payment of principal on any Loan or other
Obligation is not made when due (whether by acceleration or otherwise), such
Loan shall bear interest (computed on the basis of a year of 360 days and actual
days elapsed or, if based on the rate described in clause (i) of the definition
of Base Rate, on the basis of a year of 365 or 366 days, as applicable, and the
actual number of days elapsed) from the date such payment was due until paid in
full, payable on demand, at a rate per annum equal to:
 
(a)  for any Base Rate Loan or Obligation other than a LIBOR Loan, the sum of
two percent (2%) plus the Applicable Margin plus the Base Rate from time to time
in effect; and
 
(b)  for any LIBOR Loan, the sum of two percent (2%) plus the rate of interest
in effect thereon at the time of such default until the end of the Interest
Period applicable thereto and, thereafter, at a rate per annum equal to the sum
of two percent (2%) plus the Applicable Margin plus the Base Rate from time to
time in effect.
 
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Section 2.13  Evidence of Debt.  (a)  Lender shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Borrower to Lender resulting from each Loan owing to Lender from time to time,
including the amounts of principal and interest payable and paid to Lender from
time to time hereunder in respect of Loans. The Borrower agrees that upon notice
by Lender to the Borrower to the effect that a Note is required or appropriate
in order for Lender to evidence (whether for purposes of pledge, enforcement or
otherwise) the Loans owing to, or to be made by, Lender under the Credit
Documents, the Borrower shall promptly execute and deliver to Lender a
promissory note in the form of Exhibit A hereto (such promissory note is
hereinafter referred to as the “Note”).
 
Section 2.14  Funding Indemnity.  If Lender shall incur any loss, cost or
expense (including, without limitation, any loss, cost or expense (excluding
loss of margin) incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by Lender to fund or maintain any LIBOR Loan or
the relending or reinvesting of such deposits or amounts paid or prepaid to
Lender) as a result of:
 
(a)  any payment (whether by acceleration or otherwise), prepayment or
conversion of a LIBOR Loan on a date other than the last day of its Interest
Period,
 
(b)  any failure (because of a failure to meet the conditions of Section 6 or
otherwise) by the Borrower to borrow or continue a LIBOR Loan, or to convert a
Base Rate Loan into a LIBOR Loan, on the date specified in a notice given
pursuant to Section 2.5(a) or established pursuant to Section 2.5(c) hereof,
 
(c)  any failure by the Borrower to make any payment of principal on any LIBOR
Loan when due (whether by acceleration or otherwise), or
 
(d)  any acceleration of the maturity of a LIBOR Loan as a result of the
occurrence of any Event of Default hereunder,
 
then, upon the demand of Lender, the Borrower shall pay to Lender such amount as
will reimburse Lender for such loss, cost or expense. If Lender makes such a
claim for compensation, it shall provide to the Borrower a certificate executed
by an officer of Lender setting forth the amount of such loss, cost or expense
in reasonable detail (including an explanation of the basis for and the
computation of such loss, cost or expense) and the amounts shown on such
certificate if reasonably calculated shall be conclusive absent manifest error.
 
Section 2.15  Revolving Credit Commitment Terminations.  The Borrower shall have
the right at any time and from time to time, upon five (5) Business Days’ prior
written notice to the Lender, to terminate the Revolving Credit Commitment
without premium or penalty, in whole or in part, any partial termination to be
in an amount not less than $2,000,000 and integral multiples of $1,000,000 in
excess thereof, provided that the Revolving Credit Commitment may not be reduced
to an amount less than the sum of the amount of all Loans then outstanding. Any
termination of Revolving Credit Commitment pursuant to this Section 2.12 may not
be reinstated.
 
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Section 2.16  Regulation D Compensation.  The Lender may require the Borrower to
pay, contemporaneously with each payment of interest on the LIBOR Loans,
additional interest on the related LIBOR Loans of Lender at a rate per annum
equal to the excess of (i)(A) the applicable LIBOR rate (or other base rate
determined pursuant to Section 2.9(b)) divided by (B) one minus the LIBOR
Reserve Percentage over (ii) the rate specified in clause (i)(A). Any
computation by Lender of such additional interest shall be conclusive absent
manifest error. If the Lender requires payment of such additional interest (x)
it shall notify the Borrower that it is subject to LIBOR reserves under
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor regulation), in which case such additional interest on the LIBOR Loans
of Lender shall be payable to Lender at the place indicated in such notice with
respect to each Interest Period commencing at least five (5) Business Days after
the giving of such notice and (y) shall notify the Borrower at least five (5)
Business Days prior to each date on which interest is payable on the LIBOR Loans
of the amount then due under this Section.
 
Section 2.17  Arbitrage Compensation.  If at the time of the making of any Loan
hereunder, the interest rate payable hereunder in respect of such Loan is less
than the rate (as determined by the Lender in consultation with the Borrower) at
which funds of comparable term and amount are generally available to the
Borrower in the commercial paper market (the “CP Rate”) (an “Arbitrage
Condition”), the Borrower agrees to pay to the Lender arbitrage compensation on
such Loan at a rate equal to the difference between the effective interest rate
payable hereunder (inclusive of all fees) in respect of such Loan and the CP
Rate as applied to such Loan. Such payments shall continue, at the time and in
the manner set forth for payments of interest on such Loan, for as long as the
Arbitrage Condition continues. Upon the termination of the Arbitrage Condition
for any reason (as determined by the Lender in consultation with the Borrower),
such payments shall no longer be due with respect to such Loan, even if a future
Arbitrage Condition were to occur prior to repayment in full of such Loan.
 
SECTION 3.  FEES.
 
Section 3.1  Fees.
 
(a)  Commitment Fee. For the period from the Effective Date to and including the
Termination Date, Borrower shall pay to the Lender a commitment fee accruing at
a rate per annum equal to the Commitment Fee Rate on the average daily amount of
the unused Revolving Credit Commitment. Such commitment fee is payable in
arrears on December 31, 2006, on the last Business Day of each calendar quarter
thereafter and on the Termination Date, unless the Revolving Credit Commitment
are terminated in whole on an earlier date, in which event the fee for the
period to but not including the date of such termination shall be paid in whole
on the date of such termination.
 
(b)  [Reserved].
 
(c)  Utilization Fee.  From and after the Effective Date, for any day on which
the aggregate principal amount of Loans then outstanding exceeds fifty percent
(50%) of the Revolving Credit Commitment then in effect, Borrower shall pay to
the Lender a utilization fee accruing at a rate per annum equal to the
Utilization Fee Rate on the aggregate amount of Loans outstanding on such date.
Such fee is payable in arrears on the last Business Day of each calendar quarter
and on the Termination Date, and if the Revolving Credit Commitment is
terminated in whole prior to the Termination Date, the fee for the period to but
not including the date of such termination shall be paid in whole on the date of
such termination.
 
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(d)  Upfront Fee. The Borrower shall pay to the Lender a fee (the “Upfront Fee”)
in an amount equal to $6,250 representing two and one half basis points (0.025%)
of the Revolving Credit Commitment. The Upfront Fee shall be non-refundable and
shall be fully earned, due and payable in full on the Effective Date.
 
(e)  [Reserved].
 
(f)  [Reserved].
 
(g)  Fee Calculations. All fees payable under this Agreement shall be payable in
U.S. Dollars and shall be computed on the basis of a year of 360 days, for the
actual number of days elapsed. All determinations of the amount of fees owing
hereunder (and the components thereof) shall be made by the Lender and shall be
conclusive absent manifest error..
 
SECTION 4.  PLACE AND APPLICATION OF PAYMENTS.
 
Section 4.1  Place and Application of Payments.  All payments of principal of
and interest on the Loans, and of all other Obligations and other amounts
payable by the Borrower under the Credit Documents, shall be made by the
Borrower to the Lender by no later than 12:30 p.m. (Chicago time) on the due
date thereof at the principal office of the Lender in New York, New York,
pursuant to the payment instructions set forth on Part A of Schedule 1 hereof
(or such other location in the United States as the Lender may designate to the
Borrower). Any payments received after such time shall be deemed to have been
received by the Lender on the next Business Day. All such payments shall be made
free and clear of, and without deduction for, any set-off, counterclaim, levy,
or any other deduction of any kind in U.S. Dollars, in immediately available
funds at the place of payment.
 
SECTION 5.  REPRESENTATIONS AND WARRANTIES.
 
The Borrower hereby represents and warrants to the Lender as to itself and,
where the following representations and warranties apply to Subsidiaries, as to
each of its Subsidiaries, as follows:
 
Section 5.1  Corporate Organization and Authority.  The Borrower is duly
organized and existing in good standing under the laws of the State of Illinois;
has all necessary corporate power to carry on its present business; and is duly
licensed or qualified and, in good standing in each jurisdiction in which the
failure to be so licensed, qualified or in good standing would have a Material
Adverse Effect.
 
Section 5.2  Corporate Authority and Validity of Obligations.  The Borrower has
full right and authority to enter into this Agreement and the other Credit
Documents to which it is a party, to make the borrowings herein provided for, to
issue its Notes in evidence thereof, and to perform all of its obligations under
the Credit Documents to which it is a party. Each Credit Document to which it is
a party has been duly authorized, executed and delivered by the Borrower and
constitutes valid and binding obligations of the Borrower enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
 
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affecting the enforceability of creditors’ rights generally and by equitable
principles of general applicability (regardless of whether such enforceability
is considered in a proceeding in equity or at law). No Credit Document, nor the
performance or observance by the Borrower of any of the matters or things
therein provided for, contravenes any provision of law or any charter or by-law
provision of the Borrower or any material Contractual Obligation of or affecting
the Borrower or any of its Properties or results in or requires the creation or
imposition of any Lien on any of the Properties or revenues of the Borrower.
 
Section 5.3  Financial Statements.  All financial statements heretofore
delivered to the Lender showing historical performance of the Borrower for each
of the Borrower’s fiscal quarters and/or years ending on or before June 30,
2006, have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent, except as otherwise noted therein,
with that of the previous fiscal year. Each of such financial statements fairly
presents on a consolidated basis the financial condition of the Borrower and its
Subsidiaries as of the dates thereof and the results of operations for the
periods covered thereby. The Borrower and its Subsidiaries have no material
contingent liabilities other than those disclosed in the financial statements or
in comments or footnotes thereto, or in any report supplementary thereto, most
recently furnished to the Lender as of the time such representation and warranty
is made, including reports of the Borrower filed with the SEC from time to time.
Since June 30, 2006 through the Effective Date, there has been no event or
series of events which has resulted in a Material Adverse Effect.
 
Section 5.4  Approvals.  No authorization, approval, consent, license,
exemption, filing or registration with any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
the Borrower or any Subsidiary or from any other Person, is necessary to the
valid execution, delivery or performance by the Borrower or any Subsidiary of
any Credit Document to which it is a party.
 
Section 5.5  ERISA.  With respect to each Plan, the Borrower and each other
member of the Controlled Group has fulfilled its obligations under the minimum
funding standards of and is in compliance in all material respects with the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and with
the Code to the extent applicable to it and has not incurred any liability to
the Pension Benefit Guaranty Corporation (“PBGC”) or a Plan under Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA. Neither the Borrower nor any Subsidiary has any contingent liabilities
for any post-retirement benefits under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
 
Section 5.6  Government Regulation.  Neither the Borrower nor any Subsidiary is
an “investment company” within the meaning of the Investment Company Act of
1940, as amended.
 
Section 5.7  Margin Stock; Proceeds.  Neither the Borrower nor any Subsidiary is
engaged principally, or as one of its primary activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (“margin
stock” to have the same meaning herein as in Regulation U of the Board of
Governors of the Federal Reserve System). The Borrower will not use the proceeds
of any Loan in a manner that violates any provision of Regulation U or X of the
Board of Governors of the Federal Reserve System. The Borrower is not subject to
regulation under the Investment Company Act of 1940. In addition, the Borrower
is not an “investment company” registered or required to be registered under the
Investment Company Act of 1940. Proceeds of the Loans will only be used to
backstop commercial paper issued by the Borrower and for general corporate
purposes.
 
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Section 5.8  Full Disclosure.  All information heretofore furnished by the
Borrower to the Lender for purposes of or in connection with the Credit
Documents or any transaction contemplated thereby is, and all such information
hereafter furnished by the Borrower to the Lender will be, to the best of the
Borrower’s knowledge, after due inquiry, true and accurate in all material
respects and not misleading on the date as of which such information is stated
or certified.
 
SECTION 6.  CONDITIONS PRECEDENT.
 
The obligation of Lender to advance any Loan shall be subject to the following
conditions precedent:
 
Section 6.1  Initial Credit Event.  Before or concurrently with the Effective
Date:
 
(a)  The Lender shall have received the favorable written opinion of counsel to
the Borrower in form and substance reasonably acceptable to the Lender;
 
(b)  The Lender shall have received copies of (i) the Articles of Incorporation,
together with all amendments and (ii) the Borrower’s bylaws (or comparable
constituent documents) and any amendments thereto, certified in each instance by
its Secretary or an Assistant Secretary;
 
(c)  The Lender shall have received copies of resolutions of the Borrower’s
Board of Directors authorizing the execution and delivery of the Credit
Documents and the consummation of the transactions contemplated thereby together
with specimen signatures of the persons authorized to execute such documents on
the Borrower’s behalf, all certified in each instance by its Secretary or an
Assistant Secretary;
 
(d)  The Lender shall have received, if requested, an executed Note of the
Borrower dated the date hereof and otherwise in compliance with the provisions
of Section 2.10(a) hereof;
 
(e)  The Lender shall have received a duly executed original of (i) this
Agreement, (ii) a list of the Borrower’s Authorized Representatives and (iii)
such other documents as the Lender may reasonably request;
 
(f)  The Lender shall have received a certificate by the chief financial officer
of the Borrower, stating that on the Effective Date no Default or Event of
Default has occurred and is continuing, and that all representations and
warranties set forth herein are true and correct as of such date;
 
(g)  The Lender shall have received evidence that Borrower is validly existing
and in good standing under the laws of the jurisdiction of incorporation;
 
(h)  The Lender shall have received payment of the Upfront Fee; and
 
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(i)  The Lender shall have received a duly executed Compliance Certificate
containing information as of June 30, 2006.
 
Section 6.2  All Credit Events.  As of the time of each Credit Event hereunder:
 
(a)  The Lender shall have received the notice required by Section 2.5 hereof;
 
(b)  Each of the representations and warranties set forth in Section 5 hereof
(except the last sentence of Section 5.3) shall be and remain true and correct
in all material respects as of said time, taking into account any amendments to
such Section (including without limitation any amendments, modifications and
updates to the Schedules referenced therein) made after the date of this
Agreement in accordance with its provisions, except that if any such
representation or warranty relates solely to an earlier date it need only remain
true as of such date; and
 
(c)  The Borrower shall be in full compliance with all of the terms and
conditions hereof, and no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such Credit Event.
 
Each request for a Borrowing consisting of an advance of a Loan hereunder shall
be deemed to be a representation and warranty by the Borrower on the date of
such Credit Event as to the facts specified in paragraphs (b) and (c) of this
Section 6.2.
 
SECTION 7.  COVENANTS.
 
The Borrower covenants and agrees that, so long as any Loan is outstanding
hereunder, or any Revolving Credit Commitment is available to or in use by the
Borrower hereunder, except to the extent compliance in any case is waived in
writing by the Lender:
 
Section 7.1  Corporate Existence.  Borrower shall preserve and maintain its
corporate existence.
 
Section 7.2  ERISA.  The Borrower will, and will cause each of its Subsidiaries
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its properties or assets and will promptly
notify the Lender of (i) the occurrence of any reportable event (as defined in
ERISA) affecting a Plan, other than any such event of which the PBGC has waived
notice by regulation, (ii) receipt of any notice from PBGC of its intention to
seek termination of any Plan or appointment of a trustee therefor, (iii) its or
any of its Subsidiaries’ intention to terminate or withdraw from any Plan, and
(iv) the occurrence of any event affecting any Plan which could result in the
incurrence by the Borrower or any of its Subsidiaries of any material liability,
fine or penalty, or any material increase in the contingent liability of the
Borrower or any of its Subsidiaries under any post-retirement Welfare Plan
benefit.
 
Section 7.3  Financial Reports and Other Information.  (a)  The Borrower will
maintain a system of accounting in accordance with GAAP and will furnish to the
Lender and its duly authorized representatives such information respecting the
business and financial condition of the Borrower as Lender may reasonably
request; and without any request, the Borrower will furnish each of the
following to the Lender:
 
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i  within one hundred twenty (120) days after the end of its fiscal year ending
September 30, 2006, a copy of the Borrower’s financial statements for such
fiscal year, including the consolidated balance sheet of the Borrower for such
year and the related statement of income and statement of cash flow, as
certified by independent public accountants of recognized national standing
selected by the Borrower in accordance with GAAP with such accountants’ opinion
to the effect that the financial statements have been prepared in accordance
with GAAP and present fairly in all material respects in accordance with GAAP
the consolidated financial position of the Borrower and its Subsidiaries as of
the close of such fiscal year and the results of their operations and cash flows
for the fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such examination
included such tests of the accounting records and such other auditing procedures
as were considered necessary in the circumstances;
 
ii  within sixty (60) days after the end of each of the quarterly fiscal periods
of the Borrower during the term hereof, a consolidated un-audited balance sheet
of the Borrower, and the related statement of income and statement of cash flow,
as of the close of such period, all of the foregoing prepared by the Borrower in
reasonable detail in accordance with GAAP and certified by the Borrower’s chief
financial officer as fairly presenting the financial condition as at the dates
thereof and the results of operations for the periods covered thereby; and
 
iii  within five (5) days after Borrower files a Form 8-K with the SEC, a copy
of said form 8-K.
 
(b)  Each financial statement furnished to the Lender pursuant to subsection (i)
or (ii) of this Section 7.3 shall be accompanied by (A) a written certificate
signed by the Borrower’s chief financial officer to the effect that no Default
or Event of Default has occurred during the period covered by such statements
or, if any such Default or Event of Default has occurred during such period,
setting forth a description of such Default or Event of Default and specifying
the action, if any, taken by the Borrower to remedy the same, and (B) a
Compliance Certificate in the form of Exhibit B hereto showing the Borrower’s
compliance with the covenants set forth in Sections 7.5 and 7.8 hereof.
 
(c)  The Borrower will promptly (and in any event within five Business Days
after an officer of the Borrower has knowledge thereof) give notice to the
Lender of the occurrence of any Default or Event of Default.
 
Section 7.4  Regulation U; Proceeds.  The Borrower will not use any part of the
proceeds of any of the Borrowings, directly or indirectly to purchase or carry
any margin stock (as defined in Section 5.7 hereof) or to extend credit to
others for the purpose of purchasing or carrying any such margin stock. The
Borrower will only use proceeds of the Loans to backstop commercial paper issued
by the Borrower and for general corporate purposes.
 
Section 7.5  Sales of Assets.  The Borrower will not during the term of this
Agreement sell, lease or otherwise dispose of more that (i) thirty-five percent
(35%) of the consolidated fixed assets of the Borrower or (ii) fifteen percent
(15%) of the consolidated "regulated assets" of the Borrower. For purposes of
this Section 7.5(a) the amount of consolidated fixed assets shall be determined
using the net book value of such assets at the time of such sale, lease or
disposition.
 
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(b)  The Borrower will not sell, transfer or otherwise dispose of, or permit any
Subsidiary to issue, sell, transfer or otherwise dispose of, more than twenty
percent (20%) of any of its public utility Subsidiaries’ shares of stock of any
class (including as “stock” for purposes of this Section, any warrants, rights
or options to purchase or otherwise acquire stock or other Securities
exchangeable for or convertible into stock).
 
Section 7.6  Capital Ratio.  The Borrower will not at any time permit the
Capital Ratio to exceed 0.65 to 1.00.
 
Section 7.7  Compliance with Laws.  Without limiting any of the other covenants
of the Borrower in this Section 7, the Borrower will conduct its business, and
otherwise be, in compliance with all applicable laws, regulations, ordinances
and orders of any governmental or judicial authorities; provided, however, that
the Borrower shall not be required to comply with any such law, regulation,
ordinance or order if the failure to comply therewith could not reasonably be
expected to have a Material Adverse Effect.
 
Section 7.8  Mergers and Consolidations.  The Borrower will not, and will not
permit any public utility Subsidiary, to consolidate with or be a party to
merger with any other Person; provided, however, that the Borrower or any public
utility Subsidiary of the Borrower may, upon prior notice to the Lender, enter
into one or more mergers or acquisitions with any other Person so long as (a) in
the case of the Borrower, the Borrower is the surviving entity and (b) in the
case of a public utility Subsidiary of the Borrower, the Borrower will at all
times continue to own at least 80% of the equity securities of such public
utility Subsidiary. The Lender acknowledges that Borrower has entered into an
agreement and plan of merger with a subsidiary of WPS Resources Corporation.
 
SECTION 8.  EVENTS OF DEFAULT AND REMEDIES.
 
Section 8.1  Events of Default.  Any one or more of the following shall
constitute an Event of Default:
 
(a)  non-payment by Borrower (i) when due of the principal of any Loan or (ii)
in the payment of fees, interest or of any other Obligation within five (5) days
of the due date;
 
(b)  default by the Borrower in the observance or performance of any covenant
set forth in Section 7.1 with regard to the Borrower or (ii) Section 7.3(c),
Section 7.4 through 7.6 hereof;
 
(c)  any default by the Borrower in the observance or performance of any
provision hereof, or of any other Credit Document not mentioned in (a) or (b)
above, which is not remedied within thirty (30) days after notice thereof shall
have been given to the Borrower by the Lender, provided that, with respect only
to Section 7.7, if Borrower (or its Subsidiary, as applicable) has made good
faith efforts to cure such default, then the Borrower shall be afforded an
additional period of time to cure such default, such additional cure period not
to exceed thirty (30) days;
 
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(d)  failure to pay when due Indebtedness in an aggregate principal amount of
$15,000,000 or more of the Borrower, or (ii) default shall occur under one or
more indentures, agreements or other instruments under which any Indebtedness of
the Borrower in an aggregate principal amount of $15,000,000 or more and such
default shall continue for a period of time sufficient to permit the holder or
beneficiary of such Indebtedness (including, without limitation the Lender with
respect to loans, credit facilities and other extensions of credit other than
pursuant to this Agreement) or a trustee therefor to cause the acceleration of
the maturity of any such Indebtedness or any mandatory unscheduled prepayment,
purchase or funding;
 
(e)  representation or warranty made herein or in any other Credit Document by
the Borrower, or in any statement or certificate furnished pursuant hereto or
pursuant to any other Credit Document by the Borrower, or in connection with any
Credit Document, proves untrue in any material respect as of the date of the
issuance or making, or deemed making or issuance, thereof;
 
(f)  Borrower shall (i) have entered involuntarily against it an order for
relief under the United States Bankruptcy Code, as amended, or any analogous
action is taken under any other applicable law relating to bankruptcy or
insolvency and such action continues un-discharged or is not dismissed or stayed
for a period of sixty (60) days, (ii) fail to pay its debts generally as they
become due and such failure to pay would constitute an Event of Default under
Section 8.1(d) or admit in writing its inability to pay its debts generally as
they become due, (iii) make an assignment for the benefit of creditors, (iv)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
substantial part of its Property, (v) institute any proceeding seeking to have
entered against it an order for relief under the United States Bankruptcy Code,
as amended, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) take any
corporate action (such as the passage by its board of directors of a resolution)
in furtherance of any matter described in parts (i)-(v) above, or (vii) fail to
contest in good faith any appointment or proceeding described in Section 8.1(g)
hereof;
 
(g)  Custodian, receiver, trustee, examiner, liquidator or similar official
shall be appointed for the Borrower or any of its Significant Subsidiaries, or
any substantial part of any of their Property, or a proceeding described in
Section 8.1(f)(v) shall be instituted against the Borrower, and such appointment
continues un-discharged or such proceeding continues un-dismissed or un-stayed
for a period of sixty (60) days;
 
(h)  the Borrower shall fail within thirty (30) days to pay, bond or otherwise
discharge any judgment or order for the payment of money in excess of
$15,000,000 which is not stayed on appeal or otherwise being appropriately
contested in good faith in a manner that stays execution thereon;
 
(i)  the Borrower or any other member of the Controlled Group shall fail to pay
when due an amount or amounts which it shall have become liable, to pay to the
PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans having aggregate Unfunded Vested Liabilities in excess of
$5,000,000 (collectively, a “Material Plan”) shall be filed under Title IV of
ERISA by the Borrower or
 
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any other member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a fiduciary
of any Material Plan against the Borrower or any other member of the Controlled
Group to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall
not have been dismissed within thirty (30) days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or
 
(j)  any Event of Default under the Existing Credit Agreement, it being the
express intent of the parties hereto that this Agreement shall benefit from the
covenants and agreements contained in the Existing Credit Agreement.
 
Section 8.2  Non-Bankruptcy Defaults.  When any Event of Default other than
those described in subsections (f) or (g) of Section 8.1 hereof has occurred and
is continuing, the Lender may: (a) terminate the remaining Revolving Credit
Commitment and all other obligations of the Lender hereunder (other than the
obligations of the Lender under section 11.21 hereof) on the date stated in such
notice (which may be the date thereof); and (b) declare the principal of and the
accrued interest on the outstanding Note to be forthwith due and payable and
thereupon the Note, including both principal and interest thereon, and all other
Obligations, shall be and become immediately due and payable together with all
other amounts payable under the Credit Documents without further demand,
presentment, protest or notice of any kind.
 
Section 8.3  Bankruptcy Defaults.  When any Event of Default described in
subsections (f) or (g) of Section 8.1 hereof has occurred and is continuing,
then the Note shall immediately become due and payable together with all other
amounts payable under the Credit Documents without presentment, demand, protest
or notice of any kind and the obligation of the Lender to extend further credit
pursuant to any of the terms hereof shall immediately terminate.
 
Section 8.4  Expenses.  The Borrower agrees to pay to the Lender and any other
holder of the Note, all costs and expenses incurred or paid by the Lender or any
such holder, including reasonable attorneys’ fees (including reasonable
allocable fees of in-house counsel) and court costs, in connection with any
Default or Event of Default by the Borrower hereunder or in connection with the
enforcement of any of the Credit Documents.
 
SECTION 9.  CHANGE IN CIRCUMSTANCES.
 
Section 9.1  Change of Law.  Notwithstanding any other provisions of this
Agreement or the Note, if at any time after the date hereof any change in
applicable law or regulation or in the interpretation thereof makes it unlawful
for Lender to make or continue to maintain LIBOR Loans or to perform its
obligations as contemplated hereby, Lender shall promptly give notice thereof to
the Borrower and Lender’s obligations to make or maintain LIBOR Loans under this
Agreement shall terminate until it is no longer unlawful for Lender to make or
maintain LIBOR Loans. The Borrower shall prepay on demand the outstanding
principal amount of any such affected LIBOR Loans, together with all interest
accrued thereon at a rate per annum equal to the interest rate applicable to
such Loan; provided, however, subject to all of the terms and conditions of this
Agreement, the Borrower may then elect to borrow the principal amount of the
affected LIBOR Loans from Lender by means of Base Rate Loans from Lender.
 
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Section 9.2  Unavailability of Deposits or Inability to Ascertain, or Inadequacy
of, LIBOR.  If on or prior to the first day of any Interest Period for any
Borrowing of LIBOR Loans:
 
(a)  the Lender determines that deposits in U.S. Dollars (in the applicable
amounts) are not being offered to major banks in the LIBOR interbank market for
such Interest Period, or that by reason of circumstances affecting the interbank
LIBOR market adequate and reasonable means do not exist for ascertaining the
applicable LIBOR, or
 
(b)  Lender reasonably determines that LIBOR as reasonably determined by the
Lender will not adequately and fairly reflect the cost to Lender of funding its
LIBOR Loans or Loan for such Interest Period, then the Lender shall forthwith
give notice thereof to the Borrower, whereupon until the Lender notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligations of the Lender to make LIBOR Loans shall be suspended.
 
Section 9.3  Increased Cost and Reduced Return.   Section 9.4    If, on or after
the date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender (or its
Lending Office) with any request or directive (whether or not having the force
of law but, if not having the force of law, compliance with which is customary
in the relevant jurisdiction) of any such authority, central bank or comparable
agency:
 
i  shall subject Lender (or its Lending Office) to any tax, duty or other charge
with respect to its LIBOR Loans, its Notes or its participation in any thereof
or its obligation to make Eurodollar Loans, or to participate therein, or shall
change the basis of taxation of payments to Lender (or its Lending Office) of
the principal of or interest on its LIBOR Loans, Letter(s) of Credit, or
participations therein or any other amounts due under this Agreement in respect
of its LIBOR Loans or its obligation to make LIBOR Loans, (except for changes in
the rate of tax on the overall net income or profits of Lender or its Lending
Office imposed by the jurisdiction in which Lender or its lending office is
incorporated in which Lender’s principal executive office or Lending Office is
located); or
 
ii  shall impose, modify or deem applicable any reserve, special deposit or
similar requirement (including, without limitation, any such requirement imposed
by the Board of Governors of the Federal Reserve System, but excluding with
respect to any LIBOR Loans any such requirement included in an applicable LIBOR
Reserve Percentage) against assets of, deposits with or for the account of, or
credit extended by, Lender (or its Lending Office) or shall impose on Lender (or
its Lending Office) or on the interbank market any other condition affecting its
LIBOR Loans, its Note, or its obligation to make Eurodollar Loans;
 
and the result of any of the foregoing is to increase the cost to Lender (or its
Lending Office) of making or maintaining any LIBOR Loan, or to reduce the amount
of any sum received or receivable by Lender (or its Lending Office) under this
Agreement or under its Note with respect thereto, by an amount deemed by Lender
to be material, then, within fifteen (15) days after demand by Lender, the
Borrower shall be obligated
 
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to pay to Lender such additional amount or amounts as will compensate Lender for
such increased cost or reduction. In the event any law, rule, regulation or
interpretation described above is revoked, declared invalid or inapplicable or
is otherwise rescinded, and as a result thereof Lender is determined to be
entitled to a refund from the applicable authority for any amount or amounts
which were paid or reimbursed by Borrower to Lender hereunder, Lender shall
refund such amount or amounts to Borrower without interest.
 
(b)  If, after the date hereof, Lender shall have determined that the adoption
of any applicable law, rule or regulation regarding capital adequacy, or any
change therein (including, without limitation, any revision in the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A) or of the
Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any
other applicable capital rules heretofore adopted and issued by any governmental
authority), or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender (or its
Lending Office) with any request or directive regarding capital adequacy
(whether or not having the force of law but, if not having the force of law,
compliance with which is customary in the applicable jurisdiction) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on Lender’s capital, or on the capital of any
corporation controlling Lender, as a consequence of its obligations hereunder to
a level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration Lender’s policies with respect
to capital adequacy) by an amount deemed by Lender to be material, then from
time to time, within fifteen (15) days after demand by Lender, the Borrower
shall pay to Lender such additional amount or amounts as will compensate Lender
for such reduction.
 
(c)  If Lender determines to seek compensation under this Section 9.3, it shall
notify the Borrower of the circumstances that entitle it to such compensation
pursuant to this Section 9.3 and will designate a different Lending Office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole judgment of Lender, be otherwise
disadvantageous to Lender. A certificate of Lender claiming compensation under
this Section 9.3 and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, Lender may use any reasonable averaging and attribution
methods. Lender shall not be entitled to demand compensation under this Section
9.3 for any period more than 90 days prior to the day on which such demand is
made; provided however, that the foregoing shall in no way limit the right of
Lender to demand or receive such compensation to the extent that such
compensation relates to the retroactive application of any law, regulation,
guideline or request if such demand is made within 90 days after the
implementation of such retroactive law, interpretation, guideline or request. A
certificate as to the nature and amount of such increased cost, submitted to the
Borrower and the Lender in good faith, shall be conclusive and binding for all
purposes, absent manifest error.
 
Section 9.5  Lending Offices.  The Lender may, at its option, elect to make
Loans hereunder at the branch, office or affiliate specified on the appropriate
signature page hereof or in the assignment agreement which any assignee bank
executes pursuant to Section 11.12 hereof (each a “Lending Office”) for each
type of Loan available hereunder or at such other of its branches, offices or
affiliates as it may from time to time elect and designate in a written notice
to the Borrower.
 
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Section 9.6  Discretion of Lender as to Manner of Funding.  Notwithstanding any
other provision of this Agreement, the Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if the Lender had actually funded and
maintained each LIBOR Loan through the purchase of deposits in the LIBOR
interbank market having a maturity corresponding to such Loan’s Interest Period
and bearing an interest rate equal to LIBOR for such Interest Period.
 
SECTION 10.  RESERVED.
 
SECTION 11.  MISCELLANEOUS.
 
Section 11.1  Withholding Taxes.  Subject to this Section 11.1, each payment by
the Borrower under this Agreement or the other Credit Documents shall be made
without withholding for or on account of any present or future taxes (other than
overall net income taxes on the recipient). If any such withholding is so
required, the Borrower shall make the withholding, pay the amount withheld to
the appropriate governmental authority before penalties attach thereto or
interest accrues thereon and forthwith pay such additional amount as may be
necessary to ensure that the net amount actually received by the Lender free and
clear of such taxes (including such taxes on such additional amount) is equal to
the amount which the Lender would have received had such withholding not been
made. If the Lender pays any amount in respect of any such taxes, penalties or
interest the Borrower shall reimburse the Lender for that payment on demand. If
the Borrower pays any such taxes, penalties or interest, it shall deliver
official tax receipts evidencing that payment or certified copies thereof to the
Lender on or before the thirtieth day after payment. If the Lender determines it
has received or been granted a credit against or relief or remission for, or
repayment of, any taxes paid or payable by it because of any taxes, penalties or
interest paid by the Borrower and evidenced by such a tax receipt, Lender shall,
to the extent it can do so without prejudice to the retention of the amount of
such credit, relief, remission or repayment, pay to the Borrower such amount as
Lender determines is attributable to such deduction or withholding and which
will leave Lender (after such payment) in no better or worse position than it
would have been in if the Borrower had not been required to make such deduction
or withholding. Nothing in this Agreement shall interfere with the right of the
Lender to arrange its tax affairs in whatever manner it thinks fit nor oblige
the Lender to disclose any information relating to its tax affairs or any
computations in connection with such taxes.
 
Section 11.2  No Waiver of Rights.  No delay or failure on the part of the
Lender or on the part of the holder or holders of the Note in the exercise of
any power or right under any Credit Document shall operate as a waiver thereof,
nor as an acquiescence in any default, nor shall any single or partial exercise
thereof preclude any other or further exercise of any other power or right, and
the rights and remedies hereunder of the Lender and/or the holder or holders of
the Note are cumulative to, and not exclusive of, any rights or remedies which
any of them would otherwise have.
 
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Section 11.3  Non-Business Day.  If any payment of principal or interest on any
Loan or of any other Obligation shall fall due on a day which is not a Business
Day, interest or fees (as applicable) at the rate, if any, such Loan or other
Obligation bears for the period prior to maturity shall continue to accrue on
such Obligation from the stated due date thereof to and including the next
succeeding Business Day, on which the same shall be payable.
 
Section 11.4  Documentary Taxes.  The Borrower agrees that it will pay any
documentary, stamp or similar taxes payable in respect to any Credit Document,
including interest and penalties, in the event any such taxes are assessed,
irrespective of when such assessment is made and whether or not any credit is
then in use or available hereunder.
 
Section 11.5  Survival of Representations.  All representations and warranties
made herein or in certificates given pursuant hereto shall survive the execution
and delivery of this Agreement and the other Credit Documents, and shall
continue in full force and effect with respect to the date as of which they were
made as long as any credit is in use or available hereunder.
 
Section 11.6  Survival of Indemnities.  All indemnities and all other provisions
relative to reimbursement to the Lender of amounts sufficient to protect the
yield of the Lender with respect to the Loans, including, but not limited to,
Section 2.11, Section 9.3 and Section 11.15 hereof, shall survive the
termination of this Agreement and the other Credit Documents and the payment of
the Loans and all other Obligations.
 
Section 11.7  Set-Off.  In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, Lender and each subsequent holder of the
Note is hereby authorized by the Borrower at any time or from time to time,
without notice to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, and in
whatever currency denominated) and any other Indebtedness at any time held or
owing by the Lender or that subsequent holder to or for the credit or the
account of the Borrower, whether or not matured, against and on account of the
obligations and liabilities of the Borrower to the Lender or that subsequent
holder under the Credit Documents, including, but not limited to, all claims of
any nature or description arising out of or connected with the Credit Documents,
irrespective of whether or not (a) the Lender or that subsequent holder shall
have made any demand hereunder or (b) the principal of or the interest on the
Loans or the Note and other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured.
 
Section 11.8  Notices.  Except as otherwise specified herein, all notices under
the Credit Documents shall be in writing (including facsimile or other
electronic communication) and shall be given to a party hereunder at its address
or facsimile number set forth below or such other address or facsimile number as
such party may hereafter specify by notice to the Lender and the Borrower, given
by courier, by United States certified or registered mail, or by other
telecommunication device capable of creating a written record of such notice and
its receipt. Notices under the Credit Documents to the Lender and the Borrower
shall be addressed to:
 
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If to the Borrower:
 
Peoples Energy Corporation
130 East Randolph Drive
Chicago, Illinois 60601
Attention: Vice President, Finance
Facsimile: 312.373.4213
Telephone: 312.240.3818
 
If to the Lender: (Notices related to commitments, covenants or extensions of
expiry/termination dates)
 
JPMorgan Chase Bank, N.A.
227 West Monroe Street, 28th Floor
Mail Code IL1-0530
Chicago, IL 60606
Attn: Gabe Simon
E-Mail: gabriel.j.simon@chase.com
FAX: 312-541-3376
 
Borrowing Requests and notices relating to Loans, Interest and Fees:
 
JPMorgan Chase Bank, N.A.
10 S. Dearborn St., 19th Flr.
Mail Code IL1-0010
Chicago, IL 60603
Attn: Kerry Sroczynski
Facsimile: (312) 385-7096
E-mail: kerry.j.sroczynski@jpmchase.com
 

Each such notice, request or other communication shall be effective (i) if given
by facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section 11.8 or on the signature pages hereof and a
confirmation of receipt of such facsimile has been received by the sender, (ii)
if given by courier, when delivered, (iii) if given by mail, three business days
after such communication is deposited in the mail, registered with return
receipt requested, addressed as aforesaid or (iv) if given by any other means,
when delivered at the addresses specified in this Section 11.8; provided that
any notice given pursuant to Section 2 hereof shall be effective only upon
receipt.
 
Section 11.9  Counterparts.  This Agreement may be executed in any number of
counterpart signature pages, and by the different parties on different
counterparts, each of which when executed shall be deemed an original but all
such counterparts taken together shall constitute one and the same instrument.
Delivery of an executed counterpart via facsimile or other electronic means
shall for all purposes be deemed as effective as delivery of an original
counterpart.
 
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Section 11.10  Successors and Assigns.  This Agreement shall be binding upon the
Borrower and its successors and assigns, and shall inure to the benefit of each
of the Lender and the benefit of their respective successors, and assigns,
including any subsequent holder of any Note. The Borrower may not assign any of
its rights or obligations under any Credit Document without the written consent
of all of the Lender.
 
Section 11.11  [Reserved].
 
Section 11.12  Assignments, Participations, Etc.  Successors and Assigns
Generally  The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Lender and Lender may not assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of paragraph (b) of this Section, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section or (iii) by way
of pledge or assignment of a security interest subject to the restrictions of
paragraph (f) of this Section (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in paragraph (d) of this Section and, to the extent
expressly contemplated hereby, the affiliates of each of the Lender and the
Lender) any legal or equitable right, remedy or claim under or by reason of this
Agreement.
 
(a)  Assignments by Lender. The Lender may at any time assign to one or more
Eligible Assignees its rights and obligations under this Agreement (including
its Revolving Credit Commitment and the Loans at the time owing to it); provided
that so long as no Event of Default has occurred and is continuing, any
assignment of a Revolving Credit Commitment must be approved by the Borrower,
which approval shall not be unreasonably withheld, unless the Person that is the
proposed assignee is itself an Eligible Assignee. Subject to acceptance and
recording thereof by the Lender pursuant to paragraph (c) of this Section, from
and after the effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of Lender under this Agreement shall to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the Lender’s rights and obligations under this
Agreement, Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of Sections 9.3 and 11.1 with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any
assignment or transfer by Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by Lender of a participation in such rights and obligations
in accordance with paragraph (d) of this Section.
 
(b)  Participations. Lender and/or any holder of the Note may at any time,
without the consent of, or notice to, the Borrower, sell participations to any
Person (other than a natural person or a Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of
Lender’s or such holder’s rights and/or obligations under this Agreement
(including all or a portion of its Revolving Credit Commitment and/or the Loans
owing to it); provided that (i) Lender’s obligations under this Agreement shall
remain unchanged, (ii) Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower
shall continue to deal solely and directly with Lender in connection with
Lender’s rights and obligations under this Agreement.
 
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Any agreement or instrument pursuant to which Lender sells such a participation
shall provide that Lender shall retain the sole right to enforce this Agreement
and to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that Lender
will not, without the consent of the Participant, agree to any amendment,
modification or waiver of the type described in Section 11.13(i) that directly
affects such Participant. Subject to paragraph (e) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Section 2.11,
Section 9.3 and Section 11.7 to the same extent as if it were Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
Lender shall keep a register, meeting the requirements of Treasury Regulation
Section 5f.103-1(c), of each participant, specifying such participant’s
entitlement to payments of principal and interest with respect to such
participation.
 
(c)  Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 2.11, Section 9.3 or Section 11.7 than
the Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent.
 
(d)  Certain Pledges. The Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of the Lender, including without limitation any pledge or assignment
to secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for Lender as a party hereto.  Certain
Funding Arrangements.  Notwithstanding anything to the contrary contained
herein, Lender may grant to a special purpose funding vehicle (a “SPC”),
identified as such in writing from time to time by the Lender and the Borrower,
the option to provide to the Borrower all or any part of any Loan that the
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan, (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Lender shall be
obligated to make such Loan pursuant to the terms hereof. The making of a Loan
by an SPC hereunder shall utilize the Revolving Credit Commitment of the Lender
to the same extent, and as if, such Loan were made by the Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Lender). In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this Agreement) that,
prior to the date that is one year and one day after the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPC, it will
not institute against, or join any other person in instituting against, such SPC
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof arising out
of any claim relating to the Credit Documents. In addition, notwithstanding
 
28

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anything to the contrary contained in this Section 11.12(b), any SPC may (i)
with notice to, but without the prior written consent of, the Borrower, assign
all or a portion of its interests in any Loan to the Lender or to any financial
institutions (consented to by the Borrower and Lender) providing liquidity
and/or credit support to or for the account of such SPC to support the funding
or maintenance of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPC. This section may not be amended without the written consent of the SPC.
 
Section 11.13  Amendments.  Any provision of the Credit Documents may be amended
or waived if, but only if, such amendment or waiver is in writing and is signed
by the Borrower and the Lender.
 
Section 11.14  Headings.  Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
 
Section 11.15  Legal Fees, Other Costs and Indemnification.  The Borrower agrees
to pay all reasonable costs and expenses of the Lender in connection with the
preparation and negotiation of the Credit Documents, including without
limitation, the reasonable fees and disbursements of counsel to the Lender in
connection with the preparation and execution of the Credit Documents, and any
amendment, waiver or consent related hereto, whether or not the transactions
contemplated herein are consummated. The Borrower further agrees to indemnify
the Lender and its directors, agents, officers and employees, against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all reasonable expenses of litigation or
preparation therefor, whether or not the indemnified Person is a party thereto)
which any of them may incur or reasonably pay arising out of or relating to any
Credit Document or any of the transactions contemplated thereby or the direct or
indirect application or proposed application of the proceeds of any Loan, other
than those which arise from the gross negligence or willful misconduct of the
party claiming indemnification. The Borrower, upon demand by the Lender at any
time, shall reimburse the Lender for any reasonable legal or other expenses
(including reasonable allocable fees and expenses of in-house counsel) incurred
in connection with investigating or defending against any of the foregoing
except if the same is directly due to the gross negligence or willful misconduct
of the party to be indemnified.
 
Section 11.16  [Reserved]. 
 
Section 11.17  Entire Agreement.  The Credit Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior or contemporaneous agreements, whether written or oral, with
respect thereto are superseded thereby.
 
Section 11.18  Construction.  The parties hereto acknowledge and agree that
neither this Agreement nor the other Credit Documents shall be construed more
favorably in favor of one than the other based upon which party drafted the
same, it being acknowledged that all parties hereto contributed substantially to
the negotiation of this Agreement and the other Credit Documents.
 
Section 11.19  Governing Law.  This Agreement and the other Credit Documents,
and the rights and duties of the parties hereto, shall be construed and
determined in accordance with the internal laws of the State of Illinois.
 
29

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Section 11.20  SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.   THE BORROWER
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF ILLINOIS AND OF ANY ILLINOIS STATE COURT
SITTING IN THE CITY OF CHICAGO FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. THE BORROWER IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.
 
Section 11.21  Confidentiality.  The Lender shall hold all non-public
information provided to it by Borrower pursuant to or in connection with this
Agreement in accordance with its customary procedures for handling confidential
information of this nature, but may make disclosure to any of its examiners,
regulators, Affiliates, outside auditors, counsel and other professional
advisors in connection with this Agreement or any other Credit Document or as
reasonably required by any potential bona fide transferee, participant or
assignee, or in connection with the exercise of remedies under a Credit
Document, or to any nationally recognized rating agency that requires access to
information about Lender’s investment portfolio in connection with ratings
issued with respect to Lender, or as requested by any governmental agency or
representative thereof or pursuant to legal process; provided, however, that
unless specifically prohibited by applicable law or court order, the Lender
shall use reasonable efforts to promptly notify Borrower of any request by any
governmental agency or representative thereof (other than any such request in
connection with an examination of the financial condition of the Lender by such
governmental agency) for disclosure of any such non-public information and,
where practicable, prior to disclosure of such information. Prior to any such
disclosure pursuant to this Section 11.21, the Lender shall require any such
bona fide transferee, participant and assignee receiving a disclosure of
non-public information to agree, for the benefit of Borrower, in writing to be
bound by this Section 11.21; and to require such Person to require any other
Person to whom such Person discloses such non-public information to be similarly
bound by this Section 11.21. The Lender shall not be required to hold
confidential any information that becomes public by any means other than as a
result of a breach by it of its obligations under this Section 11.21.
 
Section 11.22  Patriot Act.  As required by federal law or the Lender or
Lender’s polices and practices, the Lender may need to collect certain customer
identification information and documentation in connection with opening or
maintaining accounts or establishing or continuing to provide services.
 

Balance of Page Intentionally Left Blank
- Signature Page Follows -

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In Witness Whereof, the parties hereto have caused this Seasonal Credit
Agreement to be duly executed and delivered in Chicago, Illinois by their duly
authorized officers as of the day and year first above written.

 
PEOPLES ENERGY CORPORATION, an Illinois corporation, as Borrower
     
By:   /s/ Douglas M. Ruschau
 
Its:   Vice President & Treasurer
       

 
JPMORGAN CHASE BANK, N.A., as Lender
     
By:   /s/ Gabriel J. Simon
 
Its:   Assistant Vice President
 
Title:  ________________________
   

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EXHIBIT A
REVOLVING NOTE

 $25,000,000
 October 20, 2006

 
FOR VALUE RECEIVED, the undersigned, PEOPLES ENERGY CORPORATION, an Illinois
corporation (the “Borrower”), promises to pay to the order of JPMORGAN CHASE
BANK, N.A. (the “Bank”) on the Termination Date of the hereinafter defined
Credit Agreement, or such earlier date as provided in the Credit Agreement or
this Note, at the principal office of the Bank in Chicago, Illinois, in U.S.
Dollars in accordance with Section 4.1 of the Credit Agreement, the aggregate
unpaid principal of all Loans made by the Bank to the Borrower pursuant to the
Credit Agreement, together with interest on the principal amount of each Loan
from time to time outstanding hereunder at the rates, and payable in the manner
and on the dates, specified in the Credit Agreement.
 
The Bank shall record on its books or records or on a schedule attached to this
Note, which is a part hereof, each Loan made by it pursuant to the Credit
Agreement, together with all payments of principal and interest and the
principal balances from time to time outstanding hereon, whether the Loan is a
Base Rate Loan or a LIBOR Loan and the interest rate and Interest Period
applicable thereto, provided that prior to the transfer of this Note all such
amounts shall be recorded on a schedule attached to this Note. The record
thereof, whether shown on such books or records or on a schedule to this Note,
shall be prima facie evidence of the same, provided, however, that the failure
of the Bank to record any of the foregoing or any error in any such record shall
not limit or otherwise affect the obligation of the Borrower to repay all Loans
made to it pursuant to the Credit Agreement together with accrued interest
thereon.
 
This Note is the “Note” referred to in that certain Seasonal Credit Agreement
dated as of October 20, 2006, by and between the Borrower and JPMorgan Chase
Bank, N.A. (the “Credit Agreement”), and this Note and the holder hereof are
entitled to all the benefits provided for thereby or referred to therein, to
which Credit Agreement reference is hereby made for a statement thereof. This
Note may only be conveyed, transferred, assigned or otherwise negotiated to a
holder in accordance with the terms of the Credit Agreement. All defined terms
used in this Note, except terms otherwise defined herein, shall have the same
meaning as in the Credit Agreement. This Note shall be governed by and construed
in accordance with the internal laws of the State of Illinois.
 
Prepayments may be made hereon and this Note may be declared due prior to the
expressed maturity hereof, all in the events, on the terms and in the manner as
provided for in the Credit Agreement.
 
The Borrower hereby waives demand, presentment, protest or notice of any kind
hereunder.
 

 
PEOPLES ENERGY CORPORATION, an Illinois corporation
     
By:  _________________________________
 
Its:  _________________________________

A - 1
Credit Agreement

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EXHIBIT B
 
COMPLIANCE CERTIFICATE
 
This Compliance Certificate is furnished to JPMorgan Chase Bank, N.A., as Lender
pursuant to the Credit Agreement (the “Credit Agreement”) dated as of October
20, 2006, by and between Peoples Energy Corporation and JPMorgan Chase Bank,
N.A. Unless otherwise defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in the Credit Agreement.
 
THE UNDERSIGNED HEREBY CERTIFIES THAT:
 
1.  I am the duly elected or appointed ___________________of Peoples Energy
Corporation;
 
2.  I have reviewed the terms of the Credit Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of Peoples Energy Corporation and its Subsidiaries during the
accounting period covered by the attached financial statements;
 
3.  The examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes a
Default or an Event of Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below. Without limitation to the foregoing,
except as noted below the Borrower is in compliance with 7.5 and Section 7.6 of
the Credit Agreement; and
 
4.  Schedule 1 attached hereto sets forth (i) financial data and computations
evidencing compliance with certain covenants of the Credit Agreement, all of
which data and computations are true, complete and correct, and are made in
accordance with the terms of the Credit Agreement, and (ii) the list of
Subsidiaries in existence as of the date hereof.
 
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
 

       

The foregoing certifications, together with the list set forth in Schedule 1
hereto and the financial statements delivered with this Certificate in support
hereof, are made and delivered this ___________day of __________, 20 __.
 

   

B - 1
Credit Agreement

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SCHEDULE 1 TO COMPLIANCE CERTIFICATE
 
Compliance Calculations for Credit Agreement
 
CALCULATION AS OF ________ __,200_
 

Capital Ratio (Sec. 7.6)
   
1. (a) consolidated Indebtedness
$  
 
(b) less accumulated other comprehensive income/loss
 
$__________
 
(c) net consolidated Indebtedness
$__________
 
2. Consolidated Net Worth
$  
 
3. Sum of Line 1(c) plus Line 2
$  
 
4. Capital Ratio
 ____:1.00
(ratio of (A) Line 1(c) to (B) Line 3 not to exceed 0.65 to 1.00)

 
List of Subsidiaries
 
The Peoples Gas Light and Coke Company
Peoples Gas Light Exploration Company
Peoples Gas Neighborhood Development Corporation
North Shore Gas Company
North Shore Exploration Company
Peoples District Energy Corporation
Peoples NGV Corp.  
Peoples Energy Production Company
PEP Holding, LLC 
Peoples Energy Canadian Holdings, Inc.
Peoples Energy Production Company of Canada
Peoples Energy Production Operating Company
Peoples Energy Production Partners, L.P.
Peoples Energy Production - Texas, L.P.
EnerVest Energy, L.P.
Sierra 1996-I Limited Partnership
Peoples Energy Resources Company, LLC
Peoples Energy Wholesale Marketing, LLC
PERC Canada, Inc.
Peoples Natural Gas Liquids, LLC
PERC Holdings, LLC 
PV Midstream Ventures, LLC
PERC Power, LLC
COB Energy Facility, LLC
Peoples Calumet, LLC
Calumet Power, LLC
Peoples Elwood, LLC
Elwood Energy, LLC
Peoples Elwood Expansion, LLC
Elwood Expansion, LLC
Valencia Energy, LLC
Peoples MW, LLC 
Peoples Energy Services Corporation
Peoples Energy Ventures, LLC
Peoples Energy Business Services, LLC
Peoples Energy Home Services, LLC
Peoples Energy Neighborhood Development, LLC
Peoples Technology, LLC

 
Credit Agreement

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SCHEDULE 1
 
LENDER’S PAYMENT INFORMATION
 

Loan Repayments, Interest, Fees:

JPMorgan Chase Bank, N.A.
Chicago, IL
ABA # 021000021
Account Name: Loan Processing DP
Account # 9008109962
Reference: Peoples Energy Corporation
Attn: Kerry Scroczynski
 
 
 

 

Schedule 1
Credit Agreement

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SCHEDULE 1A
 
PRICING GRID
 
(Basis Points)
 
 
S & P/ Moody’s Senior Un-Secured Rating
A/ A2 or higher
A-/ A3
BBB+/ Baa1
BBB/ Baa2
BBB-/ Baa3
lower than BBB-/ Baa3
Commitment Fee
6.0
7.0
8.0
10.0
12.5
20.0
Base Rate Margin
0.0
0.0
0.0
0.0
0.0
0.0
LIBOR Margin
25.0
30.0
40.0
50.0
62.5
87.5
Utilization Fee (>50%)
10.0
10.0
12.5
12.5
12.5
12.5

Any change in a Credit Rating of the Borrower (and if applicable, any change in
fees or interest payable hereunder based on such Credit Rating), shall be
effective as of the date such change is announced by the applicable rating
agency.
 
* If the Borrower is split-rated and the ratings differential is one level, the
higher rating will apply. If the Borrower is split-rated and the ratings
differential is two levels or more, the rating level one below the higher level
will apply. If at any time the Borrower has no Moody’s rating or no Standard &
Poors’ rating, the “Lower than BBB-/Baa3” level will apply; provided, however,
that in such event the Borrower may propose an alternative rating agency or
mechanism in replacement thereof.

Schedule 1 - A
Credit Agreement

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