EXHIBIT 10.4

                                                                 EXECUTION COPY


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                                 $250,000,000

                                    364-DAY
                               CREDIT AGREEMENT

                         Dated as of December 27, 2002

                                     Among

                        ALLIANT ENERGY RESOURCES, INC.
                                  as Borrower

                                      and

                          ALLIANT ENERGY CORPORATION
                          HEARTLAND PROPERTIES, INC.
                                      and
                      ALLIANT ENERGY INTERNATIONAL, INC.
                                 as Guarantors

                                      and

                           THE LENDERS NAMED HEREIN
                                  as Lenders

                                      and

                       MERRILL LYNCH CAPITAL CORPORATION
                            as Administrative Agent


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                              MERRILL LYNCH & CO.
                  MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
                                   Arranger




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

<PAGE>

                                              TABLE OF CONTENTS


<TABLE>
<CAPTION>

<S>                                                                                                              <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS........................................................................1
         SECTION 1.01.       Certain Defined Terms................................................................1
         SECTION 1.02.       Computation of Time Periods.........................................................17
         SECTION 1.03.       Computations of Outstandings........................................................17
         SECTION 1.04.       Accounting Terms....................................................................17

ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES.....................................................................18
         SECTION 2.01.       The Advances........................................................................18
         SECTION 2.02.       Making the Advances.................................................................18
         SECTION 2.03.       Fees................................................................................19
         SECTION 2.04.       Reduction of the Commitments........................................................19
         SECTION 2.05.       Repayment of Advances...............................................................20
         SECTION 2.06.       Interest on Advances................................................................20
         SECTION 2.07.       Additional Interest on Eurodollar Rate Advances.....................................21
         SECTION 2.08.       Interest Rate Determination.........................................................21
         SECTION 2.09.       Voluntary Conversion of Advances....................................................22
         SECTION 2.10.       Optional Prepayments of Advances....................................................22
         SECTION 2.11.       Mandatory Prepayments...............................................................23
         SECTION 2.12.       Increased Costs.....................................................................23
         SECTION 2.13.       Illegality..........................................................................24
         SECTION 2.14.       Payments and Computations...........................................................24
         SECTION 2.15.       Noteless Agreement; Evidence of Indebtedness........................................25
         SECTION 2.16.       Taxes...............................................................................26
         SECTION 2.17.       Sharing of Payments, Etc............................................................27

ARTICLE III CONDITIONS OF LENDING................................................................................28
         SECTION 3.01.       Conditions Precedent to Closing.....................................................28
         SECTION 3.02.       Conditions Precedent to Each Borrowing..............................................29
         SECTION 3.03.       Reliance on Certificates............................................................30

ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................30
         SECTION 4.01.       Representations and Warranties of the Borrower......................................30

ARTICLE V COVENANTS OF THE LOAN PARTIES..........................................................................33
         SECTION 5.01.       Affirmative Covenants...............................................................33
         SECTION 5.02.       Negative Covenants..................................................................37

ARTICLE VI EVENTS OF DEFAULT.....................................................................................41
         SECTION 6.01.       Events of Default...................................................................41

ARTICLE VII GUARANTEE............................................................................................41
         SECTION 7.01.       Guarantee...........................................................................41
         SECTION 7.02.       Right of Contribution...............................................................41
         SECTION 7.03.       No Subrogation......................................................................41
         SECTION 7.04.       Amendments, etc. with respect to the Borrower Obligations...........................41
         SECTION 7.05.       Guarantee Absolute and Unconditional................................................41
         SECTION 7.06.       Reinstatement.......................................................................41
         SECTION 7.07.       Payments............................................................................41

ARTICLE VIII THE AGENT...........................................................................................41
         SECTION 8.01.       Authorization and Action............................................................41
         SECTION 8.02.       Agent's Reliance, Etc...............................................................41
         SECTION 8.03.       Agent and Affiliates................................................................41

<PAGE>

         SECTION 8.04.       Lender Credit Decision..............................................................41
         SECTION 8.05.       Indemnification.....................................................................41
         SECTION 8.06.       Successor Agent.....................................................................41

ARTICLE IX MISCELLANEOUS.........................................................................................41
         SECTION 9.01.       Amendments, Etc.....................................................................41
         SECTION 9.02.       Notices, Etc........................................................................41
         SECTION 9.03.       No Waiver; Remedies.................................................................41
         SECTION 9.04.       Costs, Expenses, Taxes and Indemnification..........................................41
         SECTION 9.05.       Right of Set-off....................................................................41
         SECTION 9.06.       Binding Effect......................................................................41
         SECTION 9.07.       Assignments and Participations......................................................41
         SECTION 9.08.       Confidentiality.....................................................................41
         SECTION 9.09.       WAIVER OF JURY TRIAL................................................................41
         SECTION 9.10.       Governing Law.......................................................................41
         SECTION 9.11.       Relation of the Parties; No Beneficiary.............................................41
         SECTION 9.12.       Execution in Counterparts...........................................................41
         SECTION 9.13.       Entire Agreement....................................................................41

</TABLE>

<TABLE>
<CAPTION>

EXHIBITS AND SCHEDULES

<S>                                            <C>
Exhibit 1.01                   -        Form of Note
Exhibit 2.02(a)                -        Form of Notice of Borrowing
Exhibit 2.09                   -        Form of Notice of Conversion
Exhibit 3.01(a)(viii)-1        -        Form of Opinion of Foley & Lardner
Exhibit 3.01(a)(viii)-2        -        Form of Opinion of General Counsel
Exhibit 3.01(a)(viii)-3        -        Form of Opinion of Thelen Reid & Priest LLP
Exhibit 9.07                   -        Form of Lender Assignment

Schedule I                     -        Commitment Schedule
Schedule II                    -        Existing Liens
Schedule III                   -        List of Indentures

</TABLE>

<PAGE>

                           364-DAY CREDIT AGREEMENT

                         Dated as of December 27, 2002


      THIS 364-DAY CREDIT AGREEMENT (this "Agreement") is made by and among:

(i)   ALLIANT ENERGY RESOURCES, INC., a Wisconsin corporation (the "Borrower"),

(ii)  ALLIANT  ENERGY   CORPORATION,   a  Wisconsin   corporation   ("Parent"),
           HEARTLAND  PROPERTIES,  INC.,  a Wisconsin  corporation  ("HPI") and
           ALLIANT  ENERGY  INTERNATIONAL,  INC., an Iowa  corporation  ("AEI")
           (collectively,  together with Parent, HPI and AEI, the "Guarantors";
           the Guarantors together with the Borrower, the "Loan Parties"),

(iii) the  Lenders  (as  hereinafter  defined)  listed on the  signature  pages
           hereof and the other Lenders from time to time party hereto, and

(iv)  Merrill Lynch Capital Corporation,  as administrative agent (the "Agent")
           for the Lenders hereunder.

                            PRELIMINARY STATEMENTS

           (1)  The  Borrower  has  requested  that the  Lenders  make  certain
      Advances to the Borrower.

           (2)  The Lenders  have agreed to make such  Advances  subject to the
      terms and conditions of this Agreement.

      NOW,  THEREFORE,   in  consideration  of  the  premises  and  the  mutual
covenants herein contained, the parties hereto hereby agree as follows:

                                  ARTICLE I
                       DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01....Certain  Defined  Terms.   As  used  in  this  Agreement,   the
following  terms  shall  have  the  following  meanings  (such  meanings  to be
equally  applicable  to  both  the  singular  and  plural  forms  of the  terms
defined):

           "Advance"  means an advance by a Lender to the Borrower as part of a
      Borrowing  and  refers  to a  Base  Rate  Advance  or a  Eurodollar  Rate
      Advance, each of which shall be a "Type" of Advance.

           "AER Notes"  means the  Borrower's  9.75%  Senior Notes due 2013 and
      issued and  outstanding  on the date of this  Agreement  or, when used in
      the  determination  of the  Applicable  Margin,  if on any  Determination
      Date, no such Notes are outstanding,  the issued and outstanding notes or
      debentures of the Borrower selected by the Agent in its sole discretion.

           "Affected   Lender"  has  the  meaning  assigned  to  that  term  in
      Section 2.13.

           "Affected  Lender Advance" has the meaning  assigned to that term in
      Section 2.13.

           "Affiliate"  means,  with  respect to any Person,  any other  Person
      directly  or  indirectly  controlling  (including  but not limited to all
      directors  and officers of such Person),  controlled  by, or under direct
      or indirect  common  control with such  Person.  A Person shall be deemed
      to  control  another  entity  if  such  Person  possesses,   directly  or
      indirectly,  the power to direct or cause the direction of the management
      and  policies of such  entity,  whether  through the  ownership of voting
      securities, by contract, or otherwise.

<PAGE>

           "Alternate  Base Rate" means a  fluctuating  interest rate per annum
      as shall be in effect  from time to time  which  rate per annum  shall at
      all times be equal to the higher of:

(i)   the rate of interest  announced  publicly by the Agent from time to time,
      as its corporate base rate or prime rate of interest; and

(ii)  1/2 of one percent per annum above the Federal Funds Rate.

      Each change in the  Alternate  Base Rate shall take  effect  concurrently
      with any change in such base or prime rate or the Federal Funds Rate.

           "Applicable  Lending  Office"  means,  with  respect to each Lender,
      such Lender's  Domestic Lending Office in the case of a Base Rate Advance
      and such Lender's  Eurodollar  Lending Office in the case of a Eurodollar
      Rate Advance.

           "Applicable  Margin" means, (a) for any day in any Monthly Period as
      to any Eurodollar Rate Advance,  a rate per annum equal to the sum of (i)
      the Fixed Rate  Treasury  Spread for the  applicable  Determination  Date
      minus  the Buy Side Swap  Spread  for such  Determination  Date plus (ii)
      1.00%,  provided that the  Applicable  Margin as to any  Eurodollar  Rate
      Advance  shall in no event be less than 5.00% per annum and (b) as to any
      Base Rate  Advance at any time,  a rate per annum that is 1.00% less than
      the Applicable  Margin then in effect as to Eurodollar Rate Advances.  As
      used in this  definition,  the  following  terms shall have the following
      meanings:

                "Buy Side Swap  Spread"  for any  Determination  Date means the
           bid  column  ten-year  dollar  swap  spread  between  United  States
           Treasury  securities and London interbank offered rate borrowings as
           quoted on page 18 of the  Bloomberg  Screen IRSB (or such other page
           and place as may replace  such page on such  service for  displaying
           the  information  referred  to  therein)  with  respect  to a United
           States  Treasury  security  listed on such page with a maturity most
           nearly equal to that of the AER Notes,  as  determined  by the Agent
           as of 11:00 A.M. (New York City time) on such Determination Date.

                "Determination  Date" means, for any Monthly Period, the second
           Business Day prior to the first day of such Monthly Period.

                "Fixed Rate Treasury Spread" for any Determination  Date, means
           the excess,  if any, of (a) the average of the yields to maturity on
           the  Determination  Date on the AER Notes received by the Agent from
           each of the  Quoting  Dealers  over (b) the average of the yields to
           maturity on the Determination  Date on a U.S. Treasury security with
           a maturity  comparable to the maturity of the AER Notes  received by
           the Agent from the Quoting Dealers.

                "Monthly  Period" means each of the  successive  periods of one
           month,  the first of which shall commence on the date of the initial
           Advance.

           "Applicable Rate" means:

           (i)  in the case of each Base Rate  Advance,  a rate per annum equal
      at all times to the sum of the  Alternate  Base Rate in effect  from time
      to time plus the  Applicable  Margin  in  effect  from time to time as to
      Base Rate Advances; and

           (ii) in the case of each Eurodollar Rate Advance  comprising part of
      the same  Borrowing,  a rate per annum during each Interest  Period equal
      at all times to the sum of the Eurodollar  Rate for such Interest  Period
      plus the Applicable  Margin as to Eurodollar Rate Advances in effect from
      time to time during such Interest Period.

<PAGE>

           "Arranger"  means  Merrill  Lynch & Co. and Merrill  Lynch,  Pierce,
      Fenner & Smith Inc.

           "Asset  Sale  Event"  means any  Disposition,  or series of  related
      Dispositions,  after  December  15, 2002 of any property of the Parent or
      any of its  Subsidiaries  (excluding  (A) any  Disposition  permitted  by
      Section   5.02(f)(i),   (B)  sales  of  accounts  receivable  by  Cogenex
      Corporation and its Subsidiaries and Energy  Performance  Services,  Inc.
      and (C) sales or other  dispositions of worn out or obsolete equipment no
      longer   used  and  useful  in  the   business  of  the  Parent  and  its
      Subsidiaries,  to the  extent  that the  proceeds  of such sales or other
      dispositions  are used to  acquire  replacement  equipment)  that  yields
      gross  proceeds to the Parent or any of its  Subsidiaries  (valued at the
      initial  principal  amount  thereof  in the  case  of  non-cash  proceeds
      consisting  of notes or other debt  securities  and valued at fair market
      value in the case of other  non-cash  proceeds)  to the  Parent or any of
      its  Subsidiaries in excess of $1,000,000;  provided,  however,  that any
      Disposition  or series of related  Dispositions  by a Utility  that would
      otherwise  constitute  an Asset Sale Event shall not  constitute an Asset
      Sale Event except to the extent that the amount of the  proceeds  thereof
      that are paid to the Parent as a dividend  (as  declared  by the Board of
      Directors of such Utility in its sole  discretion in compliance  with all
      applicable regulatory restrictions) exceeds $1,000,000.

           "Available  Commitment"  means,  for each  Lender at any time on any
      day,  the unused  portion of such  Lender's  Commitment,  computed  after
      giving effect to all Borrowings made prior to such time.

           "Available  Commitments"  means,  at any time,  the aggregate of the
      Lenders' then Available Commitments hereunder.

           "Base  Rate  Advance"  means  an  Advance  that  bears  interest  as
      provided in Section 2.06(a).

           "Borrower  Obligations" means the collective reference to the unpaid
      principal of and  interest on the  Borrowings  and all other  obligations
      and liabilities of the Borrower (including, without limitation,  interest
      accruing at the then  applicable  rate provided in this  Agreement  after
      the  maturity  of the  Borrowings  and  interest  accruing  at  the  then
      applicable  rate  provided  in this  Agreement  after  the  filing of any
      petition  in  bankruptcy,   or  the   commencement   of  any  insolvency,
      reorganization or like proceeding,  relating to the Borrower,  whether or
      not a claim for post-filing or post-petition  interest is allowed in such
      proceeding),  to the Agent or any  Lender,  whether  direct or  indirect,
      absolute  or  contingent,  due  or to  become  due,  or now  existing  or
      hereafter incurred,  which may arise under, out of, or in connection with
      this  Agreement,  the other Loan  Documents or any other  document  made,
      delivered or given in connection with any of the foregoing,  in each case
      whether on account of  principal,  interest,  reimbursement  obligations,
      fees,  indemnities,  costs,  expenses or  otherwise  (including,  without
      limitation,  all fees and disbursements of counsel to the Agent or to the
      Lenders  that are  required  to be paid by the  Borrower  pursuant to the
      terms of any of the foregoing agreements).

           "Borrowing"  means a borrowing  consisting of simultaneous  Advances
      of the same Type,  having the same  Interest  Period and ratably  made or
      Converted   on  the  same  day  by  each  of  the  Lenders   pursuant  to
      Section 2.02  or  2.09,  as the  case may be.  All  Advances  of the same
      Type,  having the same Interest  Period and made or Converted on the same
      day shall be deemed a single  Borrowing  hereunder  until  repaid or next
      Converted.

           "Business  Day"  means a day of the  year  on  which  banks  are not
      required or authorized  to close in New York City and, if the  applicable
      Business Day relates to any  Eurodollar  Rate Advance,  on which dealings
      are carried on in the London interbank market.

           "Capital  Expenditures"  means, for any period,  with respect to any
      Person,  the  aggregate  of all  expenditures  by  such  Person  and  its
      Subsidiaries  for the  acquisition  or  leasing  (pursuant  to a  capital
      lease) of fixed or capital  assets or additions  to equipment  (including
      replacements,  capitalized  repairs and improvements  during such period)
      that should be capitalized under GAAP on a consolidated  balance sheet of
      such Person and its Subsidiaries.

<PAGE>

           "Capitalized  Lease  Obligations"  means  obligations to pay rent or
      other  amounts  under any lease of (or other  arrangement  conveying  the
      right to use) real and/or personal  property which obligation is required
      to be classified  and accounted for as a capital lease on a balance sheet
      prepared in accordance  with GAAP, and for purposes  hereof the amount of
      such  obligations   shall  be  the  capitalized   amount   determined  in
      accordance with such principles.

           "Cash and Cash Equivalents"  means, with respect to any Person,  the
      aggregate  amount of the  following,  to the extent  owned by such Person
      free and clear of all  Liens,  encumbrances  and rights of others and not
      subject to any judicial,  regulatory or other legal constraint:  (i) cash
      on hand;  (ii) Dollar  demand  deposits  maintained  in the United States
      with any  commercial  bank and Dollar  time  deposits  maintained  in the
      United States with, or  certificates  of deposit having a maturity of one
      year or less  issued by, any  commercial  bank which has an office in the
      United  States and which has a combined  capital  and surplus of at least
      $100,000,000;  (iii) eurodollar  time  deposits  maintained in the United
      States with, or eurodollar  certificates  of deposit having a maturity of
      one year or less  issued  by,  any  commercial  bank  having  outstanding
      unsecured  indebtedness  that  is  rated  (on  the  date  of  acquisition
      thereof)  A- or  better  by  S&P  or A3  or  better  by  Moody's  (or  an
      equivalent rating by another  nationally-recognized  credit rating agency
      of  similar  standing  if  neither  of such  corporations  is then in the
      business of rating unsecured bank indebtedness);  (iv) direct obligations
      of, or  unconditionally  guaranteed  by, the  United  States and having a
      maturity of one year or less;  (v) commercial paper rated (on the date of
      acquisition   thereof)   A-1  or  P-1  or  better  by  S&P  or   Moody's,
      respectively  (or an equivalent  rating by another  nationally-recognized
      credit rating agency of similar standing if neither of such  corporations
      is then in the  business  of  rating  commercial  paper),  and  having  a
      maturity  of one year or less;  (vi) obligations  with any  Lender or any
      other  commercial bank in respect of the repurchase of obligations of the
      type  described  in clause (iv),  above,  provided  that such  repurchase
      obligations  shall be fully secured by  obligations of the type described
      in said  clause  (iv) and the  possession  of such  obligations  shall be
      transferred  to, and  segregated  from other  obligations  owned by, such
      Lender or such other  commercial bank; and  (vii) preferred  stock of any
      Person  that is rated A- or better by S&P or A3 or better by Moody's  (or
      an  equivalent  rating by  another  nationally-recognized  credit  rating
      agency of similar  standing  if neither of such  corporations  is then in
      the  business  of rating  preferred  stock of  entities  engaged  in such
      businesses).

           "Certifying  Officer"  has the  meaning  assigned  to  that  term in
      Section 5.01(h)(iv).

           "Closing"   means  the  day  upon  which  each  of  the   applicable
      conditions  precedent  enumerated in  Section 3.01  shall be fulfilled to
      the  satisfaction  of, or waived with the consent  of, the  Lenders,  the
      Agent and the  Borrower.  All  transactions  contemplated  by the Closing
      shall take place on a Business Day on or prior to December  27, 2002,  at
      the offices of Simpson  Thacher & Bartlett,  425  Lexington  Avenue,  New
      York, New York 10010,  at 10:00 a.m.  (New York City time), or such later
      Business Day as the parties hereto may mutually agree.

           "Commitment"  means, for each Lender,  the obligation of such Lender
      to make  Advances to the Borrower in an amount no greater than the amount
      set forth on  Schedule I  hereto or, if such Lender has entered  into one
      or more Lender  Assignments,  set forth for such  Lender in the  Register
      maintained by the Agent  pursuant to  Section 9.07(c),  in each such case
      as such amount may be reduced from time to time pursuant to  Section 2.04
      (a), (b), (c) or (d).

           "Commitment  Fee" has the  meaning  assigned to that term in Section
      2.03(a).

           "Commitments" means the total of the Lenders' Commitments hereunder.

           "Confidential  Information" has the meaning assigned to that term in
      Section 9.08.

<PAGE>

           "Consolidated  Capital"  means,  with respect to any Person,  at any
      date of determination,  the sum of (i) Consolidated  Debt of such Person,
      (ii) consolidated  equity of the common  stockholders  of such Person and
      its   Consolidated   Subsidiaries,   (iii) consolidated   equity  of  the
      preference stockholders of such Person and its Consolidated  Subsidiaries
      and  (iv)  consolidated  equity  of the  preferred  stockholders  of such
      Person and its  Consolidated  Subsidiaries,  in each case  determined  at
      such  date  in  accordance  with  GAAP,  excluding,  however,  from  such
      calculation,  amounts  identified  as  "Accumulated  Other  Comprehensive
      Income  (Loss)" in the  financial  statements  of the Parent set forth in
      the Parent's  Report on Form 10-K or 10-Q, as the case may be, filed most
      recently with the  Securities and Exchange  Commission  prior to the date
      of such determination.

           "Consolidated  Debt" means,  with respect to any Person, at any date
      of determination,  the aggregate Debt of such Person and its Consolidated
      Subsidiaries  determined on a consolidated basis in accordance with GAAP,
      but shall not include Nonrecourse Debt of any Subsidiary of the Parent.

           "Consolidated Net Worth" means, at any time of  determination,  with
      respect to any Person and its  Consolidated  Subsidiaries,  the net worth
      of such Person and such Person's Consolidated  Subsidiaries as determined
      in accordance with GAAP.

           "Consolidated  Subsidiary"  means,  with respect to any Person,  any
      Subsidiary  of such  Person  whose  accounts  are or are  required  to be
      consolidated with the accounts of such Person in accordance with GAAP.

           "Continuing  Directors"  means the members of the Board of Directors
      of the Parent on the date  hereof and each other  director of the Parent,
      if  such  other  director's  nomination  for  election  to the  Board  of
      Directors  of the  Parent  is  recommended  by a  majority  of  the  then
      Continuing Directors.

           "Contractual  Obligation"  means, as to any Person, any provision of
      any security  issued by such Person or of any  agreement,  instrument  or
      other  undertaking  to which such Person is a party or by which it or any
      of its property is bound.

           "Convert",  "Conversion" and "Converted" each refers to a conversion
      of  Advances  of one  Type  into  Advances  of  another  Type,  or to the
      selection  of a new,  or the  renewal  of the same,  Interest  Period for
      Advances, as the case may be, pursuant to Section 2.08 or 2.19.

           "Debt" means, for any Person, any and all indebtedness,  liabilities
      and other monetary  obligations of such Person (i) for  borrowed money or
      evidenced  by  bonds,  debentures,  notes or other  similar  instruments,
      (ii) to pay the deferred  purchase price of property or services  (except
      trade  accounts  payable  arising  and repaid in the  ordinary  course of
      business),  (iii) Capitalized Lease Obligations, (iv) under reimbursement
      or similar  agreements  with  respect to  letters of credit  (other  than
      trade letters of credit)  issued to support  indebtedness  or obligations
      of such  Person  or of others of the kinds  referred  to in  clauses  (i)
      through  (iii)  above and clause (v) below,  (v) reasonably  quantifiable
      obligations  under direct  guaranties  or  indemnities,  or under support
      agreements,  in  respect  of,  and  reasonably  quantifiable  obligations
      (contingent or otherwise) to purchase or otherwise acquire,  or otherwise
      to assure a creditor  against loss in respect of, or to assure an obligee
      against   failure  to  make  payment  in  respect  of,   indebtedness  or
      obligations  of others of the kinds  referred  to in clauses  (i) through
      (iv)  above,  and  (vi) in  respect of  unfunded  vested  benefits  under
      Plans.  In  determining  Debt for any  Person,  there  shall be  included
      accrued  interest  on the  principal  amount  thereof to the extent  such
      interest has accrued for more than six months.

           "Debt Event" means,  the issuance or incurrence by the Parent or any
      of its  Subsidiaries  after  December  15,  2002 of any  Indebtedness  in
      excess of $10,000,000  other than (A) Indebtedness  hereunder,  under the
      Parent  Facility,  any of the  Utility  Facilities,  the AER  Notes,  the
      Whiting   Financing  or  any  other   revolving   credit   facilities  of
      Subsidiaries  of the Parent (in each case  described  in this  clause (A)
      including  refinancings and extensions  thereof but without giving effect
      to any increases thereto subsequent to the date hereof),  (B) Nonrecourse
      Debt, in an aggregate  principal amount not to exceed  $62,000,000 (up to
      $6,000,000  of which may be  guaranteed  by the Parent and which may also
      include a letter of credit in the amount of  $10,764,000),  in connection
      with the  purchase  by the  Parent  or any of its  Subsidiaries  of a 309

<PAGE>

      megawatt  natural gas fired power plant in Neenah,  Wisconsin from Mirant
      Corporation,  (C)  Indebtedness  issued by any Foreign  Subsidiary of the
      Parent,  so  long  as it  is  not  Indebtedness  of  the  Parent  or  any
      Subsidiary  of the  Parent  that  is not a  Foreign  Subsidiary  and  the
      proceeds of the issuance of such  Indebtedness  is not repatriated to the
      Parent or any Subsidiary of the Parent that is not a Foreign  Subsidiary,
      (D)  the  issuance  of  commercial  paper  by  the  Parent  or any of its
      Subsidiaries,  (E) the  issuance or  incurrence  of any  Indebtedness  by
      either of the  Utilities,  except to the extent that the proceeds of such
      Indebtedness  are paid by such  Utility to the  Parent as a dividend  (as
      declared  by  the  Board  of  Directors  of  such  Utility  in  its  sole
      discretion in compliance  with all  applicable  regulatory  restrictions)
      and (F) any intercompany  Indebtedness issued by the Parent to any of its
      wholly-owned  Subsidiaries or by any such Subsidiary to the Parent or any
      of  its  wholly-owned   Subsidiaries   (including,   without  limitation,
      Indebtedness  incurred  under the Utility Money Pool and the  Non-Utility
      Money Pool);  provided,  that the foregoing  shall not be deemed to imply
      that any such Debt Event is permitted under this Agreement.

           "Default  Rate" means  (i) with  respect to the unpaid  principal of
      any Advance,  the greater of (A) 2% per annum above the  Applicable  Rate
      in effect  from time to time for such  Advance and (B) 2% per annum above
      the  Applicable  Rate in effect from time to time for Base Rate  Advances
      and (ii) with  respect to the unpaid interest on any Advance or any other
      unpaid  amount  hereunder,  2% per  annum  above the  Applicable  Rate in
      effect from time to time for Base Rate Advances.

           "Direct   Subsidiary"   means,  with  respect  to  any  Person,  any
      Subsidiary directly owned by such Person.

           "Disposition" means, with respect to any property,  any sale, lease,
      sale  and   leaseback,   assignment,   conveyance,   transfer   or  other
      disposition  of such  property,  but does not include the creation of any
      Lien.

           "Dollars"  and the sign "$" each  means  lawful  money of the United
      States.

           "Domestic  Lending  Office" means,  with respect to any Lender,  the
      office or affiliate of such Lender  specified  as its  "Domestic  Lending
      Office"  opposite  its  name  on  Schedule I  hereto  or  in  the  Lender
      Assignment  pursuant to which it became a Lender, or such other office or
      affiliate  of such Lender as such Lender may from time to time specify in
      writing to the Borrower and the Agent.

           "Eligible  Assignee"  means (i) a  commercial  bank or trust company
      organized  under the laws of the  United  States,  or any State  thereof;
      (ii) a  commercial  bank  organized  under the laws of any other  country
      that is a member  of the OECD,  or a  political  subdivision  of any such
      country,  provided  that such  bank is acting  through a branch or agency
      located in the United States;  (iii) the central bank of any country that
      is a member of the OECD;  and  (iv) any  other  commercial  bank or other
      financial  institution or other Person engaged  generally in the business
      of extending credit or purchasing debt  instruments;  provided,  however,
      that (A) any  such Person  which is  acquiring  all or any portion of the
      Available  Commitment  of any  Lender  shall  also (1)  have  outstanding
      senior  unsecured  indebtedness  that is rated  BBB- or  better by S&P or
      Baa3  or  better  by  Moody's  (or  an   equivalent   rating  by  another
      nationally-recognized   credit  rating  agency  of  similar  standing  if
      neither of such rating  agencies is then in the business of rating senior
      unsecured  indebtedness  of  entities  engaged  in  such  businesses)  or
      (2) have  combined capital and surplus (as established in its most recent
      report  of  condition  to  its  primary   regulator)  of  not  less  than
      $250,000,000  (or its  equivalent in foreign  currency),  (B) any  Person
      described  in clause  (ii),  (iii) or (iv)  above  shall,  on the date on
      which it is to become a Lender  hereunder,  (x) be  entitled  to  receive
      payments  hereunder without deduction or withholding of any United States
      Federal income taxes (as  contemplated  by  Section 2.16)  and (y) not be
      incurring  any  losses,  costs or  expenses  of the type for  which  such
      Person  could  demand  payment  under  Section 2.12,  and (C) any  Person
      described in clause  (ii),  (iii) or (iv) above  shall,  in addition,  be
      reasonably  acceptable  to the Agent and,  so long as no Event of Default
      shall have occurred and be continuing, the Borrower.

<PAGE>

           "Equity  Event"  means,  on any date after the date  hereof  (a) the
      contribution  in cash of  capital  (x) to  the  Parent  by any  Person or
      (y) to any  Subsidiary  of the Parent by any Person other than the Parent
      or a Subsidiary of the Parent,  or (b) any  issuance of Equity  Interests
      (x) by the  Parent to any Person or (y) by any  Subsidiary  of the Parent
      to any  Person  other  than the  Parent or a  Subsidiary  of the  Parent;
      provided that the foregoing  shall not include (1) the issuance of Equity
      Interests  related  to (A)  the  Alliant  Energy  Corporation  Shareowner
      Direct Plan or (B) existing stock option or other  compensation  plans or
      (2) the  contribution  in cash or  capital to or the  issuance  of Equity
      Interests by either of the Utilities or Peak Pacific Investment  Company,
      Ltd.,  a Singapore  corporation,  except to the extent that the  proceeds
      thereof  are paid to the Parent as a dividend  (as  declared by the Board
      of Directors of such Person in its sole  discretion  in  compliance  with
      all applicable regulatory restrictions).

           "Equity Interests" means, (a) with respect to a corporation,  shares
      of capital stock of such  corporation or any other  interest  convertible
      or  exchangeable  into any such interest,  (b) with  respect to a limited
      liability  company,  a  membership  interest  in such  company,  (c) with
      respect to a  partnership,  a partnership  interest in such  partnership,
      and  (d) with  respect to any other  Person,  an  interest in such Person
      analogous to interests described in clauses (a) through (c).

           "ERISA" means the Employee  Retirement  Income Security Act of 1974,
      as  amended  from  time to  time,  and the  regulations  promulgated  and
      rulings issued thereunder.

           "ERISA Affiliate"  means,  with respect to any Person,  any trade or
      business  (whether or not  incorporated)  which is a member of a group of
      which such Person is a member and which is under  common  control  within
      the  meaning  of  the  regulations  under  Section 414(b)  or  (c) of the
      Internal Revenue Code of 1986, as amended from time to time.

           "ERISA  Event"  means  (i) the  occurrence  of a  reportable  event,
      within the meaning of  Section 4043  of ERISA,  unless the 30-day  notice
      requirement  with respect  thereto has been waived by the PBGC;  (ii) the
      provision  by the  administrator  of any  Plan of  notice  of  intent  to
      terminate such Plan, pursuant to  Section 4041(a)(2)  of ERISA (including
      any  such  notice  with  respect  to a  plan  amendment  referred  to  in
      Section 4041(e)  of  ERISA);  (iii) the  cessation  of  operations  at  a
      facility in the  circumstances  described  in  Section 4062(e)  of ERISA;
      (iv) the  withdrawal  by the Parent,  any of its  Subsidiaries  or any of
      their  respective  ERISA  Affiliates  from a Multiple  Employer Plan or a
      Multiemployer  Plan  during a plan year for  which it was a  "substantial
      employer",  as defined in Section 4001(a)(2) of ERISA; (v) the failure by
      the Parent,  any of its  Subsidiaries  or any of their  respective  ERISA
      Affiliates to make a payment to a Plan required  under  Section 302(f)(1)
      of ERISA,  which failure  results in the imposition of a lien for failure
      to make required  payments;  (vi) the  adoption of an amendment to a Plan
      requiring   the   provision  of  security  to  such  Plan,   pursuant  to
      Section 307   of  ERISA;   or  (vii) the   institution  by  the  PBGC  of
      proceedings to terminate a Plan,  pursuant to  Section 4042  of ERISA, or
      the  occurrence  of any event or  condition  which  might  reasonably  be
      expected  to  constitute  grounds  under  Section 4042  of ERISA  for the
      termination of, or the appointment of a trustee to administer, a Plan.

           "Eurocurrency  Liabilities" has the meaning assigned to that term in
      Regulation D of the Board of Governors of the Federal Reserve System,  as
      in effect from time to time.

           "Eurodollar  Lending Office" means, with respect to any Lender,  the
      office or affiliate of such Lender  specified as its "Eurodollar  Lending
      Office"  opposite  its  name  on  Schedule I  hereto  or  in  the  Lender
      Assignment  pursuant  to which it became a Lender  (or, if no such office
      is  specified,  its  Domestic  Lending  Office),  or such other office or
      affiliate  of such Lender as such Lender may from time to time specify in
      writing to the Borrower and the Agent.

           "Eurodollar   Rate"  means,   for  each  Interest  Period  for  each
      Eurodollar Rate Advance made as part of the same Borrowing,  the rate per
      annum determined by the British Bankers'  Association on the basis of the
      rate for deposits in dollars for a period equal to such  Interest  Period
      commencing  on the first day of such  Interest  Period  appearing on Page
      3750 of the Telerate  screen as of 11:00 A.M.,  London time, two Business
      Days prior to the  beginning of such Interest  Period.  In the event that
      such  rate  does not  appear  on Page  3750 of the  Telerate  screen  (or
      otherwise on such  screen),  the  "Eurodollar  Rate" for purposes of this
      definition  shall be  determined  by reference  to such other  comparable
      publicly  available  service for  displaying  eurodollar  rates as may be
      selected by the Agent after consultation with the Borrower.

           "Eurodollar  Rate Advance" means  an Advance  that bears interest as
      provided in Section 2.06(b).

<PAGE>

           "Eurodollar  Reserve  Percentage"  of any Lender  for each  Interest
      Period for each  Eurodollar  Rate  Advance  means the reserve  percentage
      applicable to such Lender  during such  Interest  Period (or if more than
      one such  percentage  shall be so  applicable,  the daily average of such
      percentages  for those days in such Interest Period during which any such
      percentage   shall  be  so  applicable)   under   Regulation D  or  other
      regulations  issued  from time to time by the Board of  Governors  of the
      Federal  Reserve System (or any successor)  for  determining  the maximum
      reserve  requirement  (including,   without  limitation,  any  emergency,
      supplemental or other marginal  reserve  requirement)  then applicable to
      such  Lender  with  respect to  liabilities  or assets  consisting  of or
      including  Eurocurrency  Liabilities having a term equal to such Interest
      Period.

           "Events  of  Default"  has the  meaning  assigned  to  that  term in
      Section 6.01.

           "Federal Funds Rate" means, for any period,  a fluctuating  interest
      rate per annum  equal for each day  during  such  period to the  weighted
      average  of the  rates  on  overnight  Federal  funds  transactions  with
      members of the Federal  Reserve System arranged by Federal funds brokers,
      as  published  for such day (or, if such day is not a Business  Day,  for
      the next  preceding  Business  Day) by the  Federal  Reserve  Bank of New
      York,  or,  if such  rate is not so  published  for  any day  which  is a
      Business  Day,  the  average  of the  quotations  for  such  day on  such
      transactions  received by the Agent from three  Federal  funds brokers of
      recognized standing selected by it.

           "Fee Letter" means the letter  agreement,  dated  December 15, 2002,
      among the Borrower,  Merrill Lynch & Co, Merrill Lynch, Pierce,  Fenner &
      Smith Inc. and Merrill Lynch Capital Corporation.

           "Foreign  Subsidiary"  means any  Subsidiary of the Borrower that is
      organized under the law of any  jurisdiction  other than any state of the
      United States of America.

           "GAAP" has the meaning assigned to that term in Section 1.04.

           "Governmental Approval" means any authorization,  consent, approval,
      license,  franchise,  lease, ruling,  tariff, rate, permit,  certificate,
      exemption of, or filing or registration with, any governmental  authority
      or other legal or regulatory body.

           "Granting   Lender"  has  the  meaning  assigned  to  that  term  in
      Section 9.07(i).

           "Hazardous  Substance"  means  any  waste,  substance,  or  material
      identified  as  hazardous,  dangerous  or  toxic by any  office,  agency,
      department,  commission,  board, bureau, or instrumentality of the United
      States or of the State or  locality  in which the same is located  having
      or exercising jurisdiction over such waste, substance or material.

           "Hostile  Acquisition"  means  any  acquisition  involving  a tender
      offer or proxy contest that has not been  recommended  or approved by the
      board of directors (or similar  governing body) of the Person that is the
      subject of such  acquisition  prior to the first public  announcement  or
      disclosure relating to such acquisition.

           "Indebtedness" means, for any Person, all indebtedness,  liabilities
      and other  monetary  obligations  of such Person of a type  described  in
      clauses (i), (ii) and (iii) of the definition of the term "Debt".

           "Indemnified  Person"  has the  meaning  assigned  to  that  term in
      Section 9.04(c).

           "Interest  Coverage  Ratio" means,  as of any date, the ratio of (i)
      consolidated  operating income plus  depreciation and amortization of the
      Parent and its  Consolidated  Subsidiaries  for the four fiscal  quarters
      ending on such date to (ii) the  Interest  Expense  payable by the Parent
      and its Consolidated Subsidiaries during such period.

<PAGE>

           "Interest  Expense"  means,  for any  Person  and  its  Consolidated
      Subsidiaries  and for  any  period,  all  consolidated  interest  expense
      (including  all  amortization  of debt discount and expenses and reported
      interest)  on all Debt of such Person and its  Consolidated  Subsidiaries
      during such period.

           "Interest  Period" means,  for each  Eurodollar Rate Advance made as
      part of the same  Borrowing,  the period  commencing  on the date of such
      Eurodollar  Rate Advance  or the date of the  Conversion  of any  Advance
      into such a  Eurodollar  Rate Advance  and  ending on the last day of the
      period  selected by the Borrower  pursuant to the  provisions  below and,
      thereafter,  each  subsequent  period  commencing  on the last day of the
      immediately  preceding  Interest Period and ending on the last day of the
      period  selected by the Borrower  pursuant to the provisions  below.  The
      duration of each such  Interest  Period shall be 1, 2, 3 or 6 months,  as
      the Borrower may, upon notice  received by the Agent not later than 11:00
      a.m. on the third  Business  Day prior to the first day of such  Interest
      Period, select; provided, however, that:

           (i)  the  Borrower  may not select  any  Interest  Period  that ends
                after the Termination Date;

           (ii) Interest  Periods  commencing  on the same  date for   Advances
                comprising  part of the  same   Borrowing  shall be of the same
                duration; and

           (iii)whenever  the last day of any Interest  Period would  otherwise
                occur on a day other than a Business  Day, the last day of such
                Interest  Period  shall  be  extended  to  occur  on  the  next
                succeeding Business Day, provided,  in the case of any Interest
                Period for a Eurodollar  Rate Advance,  that if such  extension
                would  cause the last day of such  Interest  Period to occur in
                the  next  following  calendar  month,  the  last  day of  such
                Interest Period shall occur on the next preceding Business Day.

           "IPL" means Interstate Power and Light Company, an Iowa corporation.

           "Lender  Assignment"  means an assignment and  acceptance  agreement
      entered  into by a Lender and an Eligible  Assignee,  and accepted by the
      Agent, in substantially the form of Exhibit 9.07.

           "Lenders"  means the banks listed on the signature  pages hereof and
      each  Eligible  Assignee  that shall  become a party  hereto  pursuant to
      Section 9.07.

           "Lien" has the meaning assigned to that term in Section 5.02(a).

           "Loan Documents" means (i) this Agreement,  any Note issued pursuant
      to  Section 2.15,  the Fee Letter,  (ii) all  agreements,  documents  and
      instruments  in favor of the Agent or the Lenders (or the Agent on behalf
      of  the  Lenders),  and  (iii)  all  other  agreements,  instruments  and
      documents now or hereafter  executed and/or delivered  pursuant hereto or
      thereto.

           "Majority  Lenders"  means,  on any date of  determination,  Lenders
      that,  collectively,  on such date (i) hold  greater than 50% of the then
      outstanding  Advances and (ii) if  there are no  Outstanding  Borrowings,
      have  Percentages  in the aggregate  greater than 50%. Any  determination
      of those Lenders  constituting  the Majority Lenders shall be made by the
      Agent and shall be conclusive and binding on all parties absent  manifest
      error.

           "Margin  Stock" has the meaning  assigned to that term in Regulation
      U of the Board Governors of the Federal Reserve System.

           "Material   Adverse   Change"  means  any  event,   development   or
      circumstance  that  has had or could  reasonably  be  expected  to have a
      material  adverse  effect on (a) the  operations,  business,  properties,
      liabilities  (actual or contingent),  condition  (financial or otherwise)
      or prospects of the Parent or the Parent and its Subsidiaries  taken as a
      whole; provided,  however, a downgrade by S&P or Moody's of its rating of
      the Parent or any Debt of the  Parent  shall  not,  in and of itself,  be
      deemed to be a Material  Adverse  Change,  but for purposes of clarity in
      interpreting  the  foregoing,  it  is  agreed  that  the  event,  change,

<PAGE>

      circumstance  or condition that causes such downgrade (or an announcement
      of a potential  downgrade or a review for possible ratings change) of any
      such rating,  and the effect or change  caused by such  downgrade  (or an
      announcement  of a potential  downgrade or a review for possible  ratings
      change),  will be considered in whether there has been a Material Adverse
      Change;  provided,  further, the fact that the Parent or any Consolidated
      Subsidiary is unable to issue Debt in the commercial  paper market due to
      market conditions  generally  affecting the commercial paper market shall
      not, in and of itself,  be deemed to be a Material  Adverse  Change;  (b)
      the  ability of any Loan Party to perform  its  obligations  under any of
      the  Loan  Documents  to  which  it is a  party;  or  (c)  the  legality,
      validity,  binding effect or enforceability against any Loan Party or any
      of the Loan Documents to which it is a party.

           "Moody's"  means Moody's  Investors  Service,  Inc. or any successor
      thereto.

           "Mortgage  Bond   Indentures"   means  the   indentures   listed  on
      Schedule III hereto.

           "Multiemployer  Plan"  means a  multiemployer  plan,  as  defined in
      Section 4001(a)(3)  of ERISA,  which is  subject to Title IV of ERISA and
      to which the  Parent or any ERISA  Affiliate  of the  Parent is making or
      accruing an  obligation to make  contributions,  or has within any of the
      preceding  five  plan  years  made  or  accrued  an  obligation  to  make
      contributions,  such  plan  being  maintained  pursuant  to one  or  more
      collective bargaining agreements.

           "Multiple  Employer  Plan" means a single  employer plan, as defined
      in  Section 4001(a)(15)  of ERISA,  which is subject to Title IV of ERISA
      and which  (i) is  maintained  for  employees  of the  Parent or an ERISA
      Affiliate  of the Parent  and at least one  Person  other than the Parent
      and its ERISA  Affiliates  or  (ii) was so  maintained  and in respect of
      which  the  Parent  or an  ERISA  Affiliate  of  the  Parent  could  have
      liability under  Section 4064 or 4069 of ERISA in the event such plan has
      been or were to be terminated.

           "Net Cash Proceeds" means

           (i)  in connection with any Asset Sale Event,  the proceeds  thereof
                in the form of Cash and Cash  Equivalents  (including  any such
                proceeds  received  by way of  deferred  payment  of  principal
                pursuant to a note or installment  receivable or purchase price
                adjustment  receivable  or  otherwise,  but  only  as and  when
                received) of such Asset Sale Event,  net of (x) (1)  attorneys'
                fees,  accountants'  fees,  investment  banking  fees and other
                customary  fees and expenses  actually  incurred in  connection
                therewith,  (2)  taxes  paid  or  reasonably  estimated  to  be
                payable as a result  thereof  (after  taking  into  account any
                available  tax  credits  or  deductions   and  (3)  Debt  of  a
                Subsidiary of the Borrower that is repaid in connection  with a
                sale of such  Subsidiary  or its  assets,  (y) any tax  sharing
                arrangements  and (z)  amounts  required  to be  applied to the
                repayment of Debt in accordance  with any mandatory  prepayment
                or  redemption  provisions  of any Debt of the Parent or any of
                its  Subsidiaries  outstanding  on the date of this  Agreement;
                and

           (b)  in  connection  with any Debt Event or Equity  Event,  the cash
                proceeds  received  from such  issuance or  incurrence,  net of
                (without  duplication)   attorneys'  fees,  investment  banking
                fees,    accountants'   fees,    underwriting   discounts   and
                commissions  and other  customary  fees and  expenses  actually
                incurred in connection  therewith,  and amounts  required to be
                applied  to the  repayment  of  Debt  in  accordance  with  any
                mandatory  prepayment or  redemption  provisions of any Debt of
                the Parent or any of its  Subsidiaries  outstanding on the date
                of this Agreement.

           "Nonrecourse  Debt" means any Debt that  finances  the  acquisition,
      development,  ownership  or  operation of an asset to the extent that the
      Person  to which  such  Debt is owed has no  recourse  whatsoever  to the
      Parent or any of its Affiliates other than:

<PAGE>

           (i)  recourse to the named  obligor  with  respect to such Debt (the
                "Debtor")  for  amounts  limited  to the cash  flow or net cash
                flow (other than  historic cash flow or historic net cash flow)
                from the asset; and

           (ii) recourse  to the  Debtor  for  the  purpose  only  of  enabling
                amounts   to  be   claimed  in  respect  of  such  Debt  in  an
                enforcement  of any  security  interest  or lien  given  by the
                Debtor  over  the  asset  or the  income,  cash  flow or  other
                proceeds  deriving from the asset (or given by any  shareholder
                or the like in the Debtor  over its shares or like  interest in
                the capital of the Debtor) to secure the Debt,  but only if the
                extent of the  recourse to the Debtor is limited  solely to the
                amount of any recoveries made on any such enforcement; and

           (iii)recourse  to  the  Debtor   generally  or   indirectly  to  any
                Affiliate  of  the  Debtor,   under  any  form  of   assurance,
                undertaking  or support,  which  recourse is limited to a claim
                for  damages  (other  than   liquidated   damages  and  damages
                required to be calculated  in a specified  way) for a breach of
                an   obligation   (other  than  a  payment   obligation  or  an
                obligation  to comply or to procure  compliance by another with
                any financial ratios or other tests of financial  condition) by
                the Person against which such recourse is available.

           "Non-Utility  Money Pool" means the cash  management  program of the
      Borrower and certain of its Subsidiaries  known as the "Non-Utility Money
      Pool" that is described  in the  Post-Effective  Amendment  No. 4 to Form
      U-1 Application or Declaration  (File No.  70-10052)  filed,  pursuant to
      PUHCA, with the Securities and Exchange Commission on December 12, 2002.

           "Note"  means a  promissory  note  issued at the request of a Lender
      pursuant  to  Section 2.15,  in  substantially  the form of  Exhibit 1.01
      hereto,  evidencing  the aggregate  indebtedness  of the Borrower to such
      Lender resulting from the Advances made by such Lender.

           "Notice  of  Borrowing"  has the  meaning  assigned  to that term in
      Section 2.02(a).

           "Notice of  Conversion"  has the  meaning  assigned  to that term in
      Section 2.09.

           "OECD"  means  the   Organization   for  Economic   Cooperation  and
      Development.

           "Other   Taxes"   has  the   meaning   assigned   to  that  term  in
      Section 2.16(b).

           "Outstanding  Borrowings"  means, on any date of  determination,  an
      amount  equal  to  the  aggregate  principal  amount  of  all  Borrowings
      outstanding on such date.

           "Parent  Facility"  means  the  up to  $650,000,000  364-Day  Credit
      Agreement,  dated as of October  11,  2002,  among  Parent,  the  lenders
      parties  thereto and Bank One, NA as  administrative  agent and issuer of
      letters of credit.

           "PBGC"  means  the  Pension  Benefit  Guaranty  Corporation  (or any
      successor entity) established under ERISA.

           "Percentage"  means,  for any  Lender on any date of  determination,
      the  percentage  obtained  by  dividing  (a)  the  sum of  such  Lender's
      Available  Commitment and outstanding Advances on such day by (b) the sum
      of the Available  Commitments and aggregate  outstanding Advances on such
      date, and multiplying the quotient so obtained by 100%.

           "Person" means an individual, partnership,  corporation (including a
      business trust), limited liability company,  joint stock company,  trust,
      unincorporated   association,   joint  venture  or  other  entity,  or  a
      government or any political subdivision or agency thereof.

           "Plan" means a Single Employer Plan or a Multiple Employer Plan.

<PAGE>

           "PUHCA"  means the Public  Utility  Holding  Company Act of 1935, as
      amended from time to time.

           "Quoting Dealers" means collectively,  Merrill Lynch, Pierce, Fenner
      & Smith Inc.  and two other  dealers of  comparable  recognized  standing
      identified by the Agent in consultation with the Borrower.

           "Register" has the meaning assigned to that term in Section 9.07(c).

           "Report"    has   the    meaning    assigned   to   that   term   in
      Section 5.01(h)(iv).

           "Restricted  Payment"  means  any  dividend  or  other  distribution
      (whether  in cash,  securities  or other  property)  with  respect to any
      Equity  Interests  in  the  Parent,  or any  payment  (whether  in  cash,
      securities  or other  property),  including  any sinking  fund or similar
      deposit,   on   account   of  the   purchase,   redemption,   retirement,
      acquisition,   cancellation   or  termination  of  (x)  any  such  Equity
      Interests  in the Parent or (y) any  option,  warrant  or other  right to
      acquire any such Equity Interests in the Parent.

           "S&P" means  Standard & Poor's Ratings  Services,  a division of The
      McGraw-Hill Companies, Inc., or any successor thereto.

           "Senior Financial Officer" means the President,  the Chief Executive
      Officer, the Chief Financial Officer or the Treasurer of the Parent.

           "Significant  Subsidiary"  means any  Subsidiary of the Parent that,
      on a consolidated  basis with any of its  Subsidiaries  as of any date of
      determination,  accounts  for more  than 20% of the  consolidated  assets
      (valued at book value) of the Parent and its Subsidiaries.

           "Single  Employer Plan" means a single  employer plan, as defined in
      Section 4001(a)(15)  of ERISA,  which is subject to Title IV of ERISA and
      which  (i) is  maintained  for  employees  of  the  Parent,  any  of  its
      Subsidiaries or any of their  respective  ERISA  Affiliates and no Person
      other  than  the  Parent,  any  of  its  Subsidiaries  or  any  of  their
      respective ERISA Affiliates,  or (ii) was so maintained and in respect of
      which the  Parent,  any of its  Subsidiaries  or any of their  respective
      ERISA Affiliates could have liability under  Section 4069 of ERISA in the
      event such plan has been or were to be terminated.

           "SPC" has the meaning assigned to that term in Section 9.07(i).

           "Subsidiary"  means, with respect to any Person,  any corporation or
      unincorporated  entity of which more than 50% of the outstanding  capital
      stock   (or   comparable   interest)   having   ordinary   voting   power
      (irrespective  of  whether  at the  time  capital  stock  (or  comparable
      interest)  of any other  class or classes of such  corporation  or entity
      shall or might have voting power upon the occurrence of any  contingency)
      is at the time  directly  or  indirectly  owned by said  Person  (whether
      directly  or through one or more other  Subsidiaries).  In the case of an
      unincorporated  entity, a Person shall be deemed to have more than 50% of
      interests  having  ordinary  voting power only if such  Person's  vote in
      respect of such  interests  comprises  more than 50% of the total  voting
      power of all such interests in the unincorporated entity.

           "Subsidiary  Guarantor"  has the  meaning  assigned  to that term in
      Section 7.02(a).

           "Taxes" has the meaning assigned to that term in Section 2.16(a).

           "Termination  Date" means the earlier to occur of  (i) December  26,
      2003  and  (ii) the  date of  termination  or  reduction  in whole of the
      Commitments pursuant to Section 2.04 or 6.01.

           "Type" has the meaning  assigned to that term (i) in the  definition
      of  "Advance"  when used in such  context and (ii) in the  definition  of
      "Borrowing" when used in such context.

<PAGE>

           "Unmatured  Default" means an event that,  with the giving of notice
      or lapse of time, or both, would constitute an Event of Default.

           "Utilities" means, collectively, WPL and IPL.

           "Utility  Facilities"  means (i) the $200,000,000  Credit Agreement,
      dated as of October 11,  2002,  among IPL,  the banks  named  therein and
      Citibank,  N.A.,  as  administrative  agent;  and (ii)  the  $150,000,000
      Credit  Agreement,  dated as of October 11,  2002,  among WPL,  the banks
      named therein and Citibank, N.A., as administrative agent.

           "Utility  Money  Pool"  means  the cash  management  program  of the
      Parent  and the  Utilities  known as the  "Utility  Money  Pool"  that is
      described in the  Post-Effective  Amendment No. 4 to Form U-1 Application
      or Declaration  (File No.  70-10052) filed,  pursuant to PUHCA,  with the
      Securities and Exchange Commission on December 12, 2002.

           "Whiting Financing" means the $350,000,000  Credit Agreement,  dated
      as  of  December 20,  2002,  among  Whiting  Petroleum  Corporation,  the
      financial  institutions  listed therein,  Bank One, NA, as administrative
      agent and Wachovia Bank, National Association, as syndication agent.

           "WPL"  means  Wisconsin   Power  and  Light  Company,   a  Wisconsin
      corporation.

SECTION 1.02....Computation of Time Periods.  Unless otherwise indicated,  each
reference  in this  Agreement  to a specific  time of day is a reference to New
York,  New  York  time.  In the  computation  of  periods  of time  under  this
Agreement,  any  period  of a  specified  number  of days or  months  shall  be
computed by including the first day or month  occurring  during such period and
excluding  the last such day or month.  In the case of a period of time  "from"
a  specified  date "to" or  "until" a later  specified  date,  the word  "from"
means "from and  including"  and the words "to" and "until"  each means "to but
excluding".

SECTION 1.03....Computations  of  Outstandings.  Whenever  reference is made in
this Agreement to the  "principal  amount  outstanding"  on any date under this
Agreement,  such  reference  shall refer to the aggregate  principal  amount of
all Advances  outstanding  on such date after giving  effect to all Advances to
be made on such date and the application of the proceeds thereof.

SECTION 1.04....Accounting   Terms.   All  accounting  terms  not  specifically
defined  herein  shall be  construed  in  accordance  with  generally  accepted
accounting   principles   ("GAAP")   consistent   with  those  applied  in  the
preparation of the financial statements referred to in Section 4.01(f).

                                  ARTICLE II
                       AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01....The Advances.  Each Lender severally  agrees,  on the terms and
conditions  hereinafter  set forth,  to make Advances to the Borrower from time
to time during the period from and  including  the date  hereof,  to and up to,
but  excluding,  the  Termination  Date, in an amount not to exceed at any time
such  Lender's  then  Available  Commitment.  Each  Borrowing  shall  be  in an
aggregate  amount  not  less  than  $10,000,000  (or,  if  lower  and  if  such
Borrowing  consists  solely of Base Rate Advances,  the amount of the Available
Commitments)  or an  integral  multiple  of  $1,000,000  in excess  thereof and
shall  consist  of  Advances  of the  same  Type  made on the  same  day by the
Lenders ratably  according to their  respective  Percentages.  Amounts borrowed
and repaid by the Borrower hereunder may not be reborrowed.

SECTION 2.02....Making the Advances.

(a)   Each Borrowing  shall be made on notice,  given not later than 11:00 a.m.
(i) on the third Business Day prior to the date of the proposed  Borrowing,  in
the case of a Borrowing  comprised of Eurodollar  Rate Advances and (ii) on the

<PAGE>

date of the proposed  Borrowing,  in the case of a Borrowing  comprised of Base
Rate Advances,  in each case by the Borrower to the Agent,  which shall give to
each Lender  prompt notice  thereof by  telecopier,  telex or cable.  Each such
notice of a Borrowing (a "Notice of Borrowing")  shall be by telecopier,  telex
or cable,  in  substantially  the form of  Exhibit 2.02(a)  hereto,  specifying
therein  the  requested  (A) date  of such  Borrowing,  (B)  Type  of  Advances
comprising  such Borrowing,  (C) aggregate  amount of such Borrowing and (D) in
the case of a Borrowing  comprised of  Eurodollar  Rate  Advances,  the initial
Interest  Period for each such  Advance.  Each Lender shall,  before  (x) 12:00
noon on the date of such  Borrowing,  in the case of a Borrowing  comprised  of
Eurodollar Rate Advances,  and (y) 1:00 p.m. on the date of such Borrowing,  in
the case of a Borrowing  comprised of Base Rate  Advances,  make  available for
the  account  of its  Applicable  Lending  Office to the  Agent at its  address
referred to in Section 9.02,  in same day funds,  such Lender's ratable portion
of  such  Borrowing.   After  the  Agent's  receipt  of  such  funds  and  upon
fulfillment of the applicable  conditions set forth in  Article III,  the Agent
will  promptly  make  such  funds  available  to the  Borrower  at the  Agent's
aforesaid address.

(b)   Each  Notice  of  Borrowing  shall  be  irrevocable  and  binding  on the
Borrower.  In the case of any Borrowing  which the related  Notice of Borrowing
specifies is to be comprised of Eurodollar  Rate  Advances,  the Borrower shall
indemnify  each  Lender  against  any loss,  cost or expense  incurred  by such
Lender as a result of any  failure to  fulfill on or before the date  specified
in such Notice of Borrowing for such  Borrowing the  applicable  conditions set
forth  in  Article III,  including,  without  limitation,  any  loss,  cost  or
expense  incurred by reason of the  liquidation or  reemployment of deposits or
other funds acquired by such Lender to fund the  Eurodollar  Rate Advance to be
made by such Lender as part of such  Borrowing  when such Advance,  as a result
of such failure, is not made on such date.

(c)   Unless the Agent shall have  received  notice from a Lender  prior to the
date of any  Borrowing  that such Lender will not make  available  to the Agent
such  Lender's  Advance as part of such  Borrowing,  the Agent may assume  that
such Lender has made such  Advance  available  to the Agent on the date of such
Borrowing in  accordance  with  subsection  (a) of this  Section 2.02,  and the
Agent may, in reliance  upon such  assumption,  make  available to the Borrower
on such date a  corresponding  amount.  If and to the extent  that such  Lender
shall not have so made such  Advance  available  to the Agent,  such Lender and
the  Borrower  severally  agree to repay to the Agent  forthwith on demand such
corresponding  amount,  together with interest  thereon,  for each day from the
date such amount is made  available to the Borrower  until the date such amount
is repaid to the Agent,  at (i) in the case of the Borrower,  the interest rate
applicable at the time to Advances  comprising  such  Borrowing and (ii) in the
case of such  Lender,  the Federal  Funds Rate.  If such Lender  shall repay to
the Agent such  corresponding  amount,  such amount so repaid shall  constitute
such  Lender's  Advance  as  part  of  such  Borrowing  for  purposes  of  this
Agreement.

(d)   The  failure of any  Lender to make the  Advance to be made by it as part
of any  Borrowing  shall not relieve  any other  Lender of its  obligation,  if
any,  hereunder  to make  its  Advance  on the date of such  Borrowing,  but no
Lender  shall be  responsible  for the failure of any other  Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.

SECTION 2.03....Fees.

(a)   The Borrower  agrees to pay to the Agent for the account of each Lender a
commitment fee (the  "Commitment  Fee") which shall accrue at the rate of 0.50%
per annum on the daily amount of the  Available  Commitment  of such Lenders in
effect  hereunder at any time during the period from and  including the date of
this Agreement to but excluding the  Termination  Date.  Except as provided for
in Section  2.04(a),  the Commitment Fee shall be payable  quarterly in arrears
on the last day of each March, June,  September and December,  commencing March
31, 2003, and on the Termination  Date, in immediately  available funds, to the
Agent for distribution among the Lenders.

(b)   In addition to the  Commitment  Fee, the Borrower shall pay to the Agent,
for the account of the Agent, such fees as are provided for in the Fee Letter.

<PAGE>

SECTION 2.04....Reduction of the Commitments.

(a)   The Borrower  shall have the right,  upon at least three  Business  Days'
written  notice to the Agent,  to terminate in whole or reduce  ratably in part
the respective  Available  Commitments  of the Lenders;  provided that (i) each
partial  reduction  shall be in a minimum  amount of  $10,000,000  or any whole
multiple of  $1,000,000  in excess  thereof and (ii) the Borrower  shall pay to
the Agent for the account of the Lenders,  on the date of each  termination  or
reduction  of the  aggregate  amount of the  Commitments  of the  Lenders,  the
Commitment  Fee on the  amount of the  Commitments  so  terminated  or  reduced
accrued through the date of such termination or reduction.

(b)   On the date of any Debt Event:

          (i) if the sum of (x) the Net Cash  Proceeds  thereof  and (y) the Net
     Cash  Proceeds  of all other Debt  Events  that shall have  occurred  on or
     before such date shall be equal to or less than $300,000,000,  the Net Cash
     Proceeds  of such Debt  Event  shall be applied  to the  prepayment  of the
     Advances  until  all  Advances   outstanding   immediately  prior  to  such
     prepayment, if any, have been repaid in full.

          (ii) if the sum of (x) the Net Cash  Proceeds  thereof and (y) the Net
     Cash  Proceeds  of all other Debt  Events  that shall have  occurred  on or
     before such date exceed  $300,000,000,  (A) such Net Cash Proceeds shall be
     applied to the  prepayment of the Advances  until all Advances  outstanding
     immediately prior to such prepayment,  if any, have been repaid in full and
     (B) an amount equal to such excess over $300,000,000  (after deducting from
     such amount the aggregate of the amounts,  if any, previously so applied in
     accordance with this clause (B)) shall be applied to reduce permanently the
     Available Commitments.

(c)   On the date of any Equity Event,  an amount equal to the excess,  if any,
of the sum of (x) the Net Cash  Proceeds  thereof and (y) the Net Cash Proceeds
of all other Equity  Events that occur after the date of this  Agreement and on
or before such date over  $350,000,000  shall be applied (after  deducting from
such amount the  aggregate of the  amounts,  if any,  previously  so applied in
accordance  with this  paragraph),  first,  to the  prepayment  of the Advances
until all Advances  outstanding  immediately prior to such prepayment,  if any,
have been  repaid in full and,  second,  to reduce  permanently  the  Available
Commitments.

(d)   On the date of any Asset Sale Event,  the Net Cash Proceeds thereof shall
be  applied,  first,  to the  prepayment  of the  Advances  until all  Advances
outstanding  immediately prior to such prepayment,  if any, have been repaid in
full and, second, to reduce permanently the Available Commitments.

(e)   On the Termination  Date, the Commitments of the Lenders shall be reduced
to zero.

(f)   Any termination or reduction of the  Commitments  under this Section 2.04
shall be irrevocable, and the Commitments shall not thereafter be reinstated.

SECTION 2.05....Repayment of Advances.  The Borrower  shall repay the principal
amount of each Advance made by each Lender on the Termination Date.

SECTION 2.06....Interest on Advances.  The  Borrower  shall pay interest on the
unpaid  principal  amount of each Advance owing to each Lender from the date of
such  Advance  until  such  principal  amount  shall  be paid in  full,  at the
Applicable  Rate  for  such  Advance  (except  as  otherwise  provided  in this
Section 2.06), payable as follows:

(a)   Base Rate  Advances.  If such  Advance is a Base Rate  Advance,  interest
thereon  shall be payable  quarterly  in arrears on the last day of each March,
June,  September and  December, on the date of any Conversion of such Base Rate
Advance  and on the date such Base Rate  Advance  shall  become due and payable
or  shall  otherwise  be paid in  full;  provided  that at any time an Event of
Default  shall have  occurred and be  continuing,  each Base Rate Advance shall
bear  interest,  payable on demand,  at a rate per annum  equal at all times to
the Default Rate.

<PAGE>

(b)   Eurodollar  Rate Advances.  If such Advance is a Eurodollar Rate Advance,
interest  thereon  shall be  payable  on the last day of such  Interest  Period
and,  if the  Interest  Period for such  Advance  has a  duration  of more than
three  months,  on that day of each third  month  during such  Interest  Period
that  corresponds  to the first day of such  Interest  Period  (or, if any such
month does not have a  corresponding  day, then on the last day of such month);
provided  that at any time an Event  of  Default  shall  have  occurred  and be
continuing,  each  Eurodollar  Rate  Advance  shall bear  interest,  payable on
demand, at a rate per annum equal at all times to the Default Rate.

SECTION 2.07....Additional  Interest on Eurodollar Rate Advances.  The Borrower
shall pay to Agent for the account of each Lender any costs  actually  incurred
by such Lender with respect to Eurodollar  Rate Advances that are  attributable
to such Lender's  compliance with  regulations of the Board of Governors of the
Federal  Reserve System  requiring the  maintenance of reserves with respect to
liabilities  or assets  consisting  of or including  Eurocurrency  Liabilities.
Such costs  shall be paid to the Agent for the  account  of such  Lender in the
form of additional  interest on the unpaid  principal amount of each Eurodollar
Rate  Advance  of  such  Lender,  from  the  date of such  Advance  until  such
principal  amount is paid in full,  at an interest  rate per annum equal at all
times to the remainder  obtained by  subtracting  (i) the  Eurodollar  Rate for
the Interest  Period for such  Advance from (ii) the rate  obtained by dividing
such  Eurodollar  Rate by a  percentage  equal  to 100%  minus  the  Eurodollar
Reserve  Percentage  of such Lender for such Interest  Period,  payable on each
date on which  interest is payable on such Advance.  Such  additional  interest
shall be  determined  by such Lender and notified to the  Borrower  through the
Agent. A certificate as to the amount of such  additional  interest,  submitted
to the Borrower and the Agent by such Lender,  shall be conclusive  and binding
for all  purposes,  absent  manifest  error,  provided  that the  determination
thereof shall have been made by such Lender in good faith.

SECTION 2.08....Interest Rate Determination.

(a)   If any  one or more of the  Quoting  Dealers  shall  not  furnish  timely
information  to the  Agent  for  the  purpose  of  determining  any  Applicable
Margin,  the  Agent  shall  determine  such  Applicable  Margin on the basis of
timely information furnished by the remaining Quoting Dealers.

(b)   The Agent shall give  prompt  notice to the  Borrower  and the Lenders of
the  applicable   interest  rate  determined  by  the  Agent  for  purposes  of
Section 2.06(a)  or (b), and the  applicable  rate,  if any,  furnished by each
Quoting  Dealer for the purpose of  determining  the  applicable  interest rate
under Section 2.06(b).

(c)   If, with respect to any Eurodollar  Rate Advances,  the Majority  Lenders
notify  the Agent that the  Eurodollar  Rate for any  Interest  Period for such
Advances  will not  adequately  reflect  the cost to such  Majority  Lenders of
making,  funding or maintaining  their respective  Eurodollar Rate Advances for
such  Interest  Period,  the Agent shall  forthwith  so notify the Borrower and
the Lenders, whereupon:

          (i) each Eurodollar Rate Advance will  automatically,  on the last day
     of the then existing  Interest  Period  therefor,  Convert into a Base Rate
     Advance; and

          (ii) the  obligation  of the Lenders to make,  or to Convert  Advances
     into,  Eurodollar  Rate Advances  shall be suspended  until the Agent shall
     notify the  Borrower and the Lenders  that the  circumstances  causing such
     suspension no longer exist.

(d)   If the  Borrower  shall fail to  (i) select  the duration of any Interest
Period for any  Eurodollar  Rate  Advance  in  accordance  with the  provisions
contained  in  the  definition  of  "Interest   Period"  in   Section 1.01   or
(ii) provide  a Notice  of  Conversion  with  respect  to any  Eurodollar  Rate
Advance on or prior to 12:00 noon on the third  Business  Day prior to the last
day of the Interest  Period  applicable  thereto,  the Agent will  forthwith so
notify the Borrower and the Lenders,  and such Advance will  automatically,  on
the last day of the then  existing  Interest  Period  therefor,  Convert into a
Base Rate Advance.

(e)   On the date on which the aggregate  unpaid  principal  amount of Advances
comprising  any  Borrowing  shall be  reduced,  by  payment  or  prepayment  or
otherwise,  to less than the product of  (i) $1,000,000  and (ii) the number of
Lenders on such date,  such  Advances  shall,  if they are  Advances  of a Type

<PAGE>

other than Base Rate Advances,  automatically  Convert into Base Rate Advances,
and on and after such date the right of the Borrower to Convert  such  Advances
into  Advances  of a Type  other  than  Base  Rate  Advances  shall  terminate;
provided,  however,  that if and so long as each such  Advance  shall be of the
same Type and have the same  Interest  Period as  Advances  comprising  another
Borrowing or other  Borrowings,  and the aggregate  unpaid  principal amount of
all such  Advances  shall  equal or exceed the  product of  (i) $1,000,000  and
(ii) the  number of Lenders on such date,  the Borrower shall have the right to
continue all such Advances as, or to Convert all such Advances  into,  Advances
of such Type having such Interest Period.

(f)   Upon the occurrence  and during the  continuance of any Event of Default,
each  outstanding  Eurodollar Rate Advance shall  automatically  Convert into a
Base Rate  Advance at the end of the  Interest  Period  then in effect for such
Eurodollar Rate Advance.

SECTION 2.09....Voluntary  Conversion  of Advances.  Subject to the  conditions
set forth below,  the Borrower may on any Business  Day, by delivering a notice
of  Conversion  (a  "Notice of  Conversion")  to the Agent not later than 12:00
noon  (i) on  the  third  Business  Day  prior  to the  date  of  the  proposed
Conversion,  in the case of a Conversion  to or in respect of  Eurodollar  Rate
Advances  and (ii) on  the date of the  proposed  Conversion,  in the case of a
Conversion  to or in  respect  of  Base  Rate  Advances,  and  subject  to  the
provisions  of  Sections 2.08  and  2.13,  Convert  all  Advances  of one  Type
comprising  the  same  Borrowing  into  Advances  of  another  Type;  provided,
however,  that, in the case of any Conversion of any  Eurodollar  Rate Advances
into  Base  Rate  Advances  on a day  other  than the  last day of an  Interest
Period for such  Eurodollar  Rate Advances,  the Borrower shall be obligated to
reimburse  the Lenders in respect  thereof  pursuant to  Section 9.04(b).  Each
such Notice of Conversion  shall be in  substantially  the form of Exhibit 2.09
and shall,  within the restrictions  specified  above,  specify (A) the date of
such Conversion,  (B) the  Advances to be Converted,  (C) if such Conversion is
into  Eurodollar  Rate Advances,  the duration of the Interest  Period for each
such  Advance,  and  (D) the  aggregate  amount  of  Advances  proposed  to  be
Converted.  Notwithstanding  the  foregoing,  the Borrower may not Convert Base
Rate Advances into  Eurodollar  Rate Advances and may not select a new Interest
Period  for  Eurodollar  Rate  Advances  at any time an Event  of  Default  has
occurred and is continuing.

SECTION 2.10....Optional  Prepayments  of Advances.  The Borrower  may, upon at
least three  Business  Days' notice to the Agent  stating the proposed date and
aggregate  principal amount of the prepayment,  and if such notice is given the
Borrower  shall,  prepay for the ratable account of the Lenders the outstanding
principal  amounts of the  Advances  comprising  part of the same  Borrowing in
whole or ratably in part,  together  with accrued  interest to the date of such
prepayment  on the  principal  amount  prepaid;  provided,  however,  that each
partial  prepayment  shall be in an  aggregate  principal  amount not less than
$10,000,000 (or, if lower, the principal  amount  outstanding  hereunder on the
date of such  prepayment)  or an  integral  multiple  of  $1,000,000  in excess
thereof.  In the case of any such  prepayment  of a  Eurodollar  Rate  Advance,
the Borrower  shall be obligated  to reimburse  the Lenders in respect  thereof
pursuant to  Section 9.04(b).  Except as provided in this  Section 2.10  and in
Section 2.11,  the Borrower shall have no right to prepay any principal  amount
of any Advances.

SECTION 2.11....Mandatory  Prepayments.  (a) On the date of any  termination or
reduction  of  the   Commitments   or  prepayment   of  Advances   pursuant  to
Section 2.04,  the Borrower shall pay (A) accrued  interest to the date of such
prepayment  on the  principal  amount  repaid or prepaid and (B) in the case of
prepayments  of Eurodollar  Rate  Advances,  any amount  payable to the Lenders
pursuant to Section 9.04(b).

(b)   All  prepayments  of  Advances  required  to be made  pursuant to Section
2.04,  2.10 or 2.11  shall be applied  (without  reference  to  minimum  dollar
requirements)  to outstanding  Base Rate Advances up to the full amount thereof
before they are applied to Eurodollar Rate Advances.

(c)   In lieu of prepaying  any  Eurodollar  Rate Advance  under any  provision
(other than  Sections 2.13 and 6.01) of this Agreement,  the Borrower may, upon
notice to the Agent,  deliver such funds to the Agent to be held as  additional
cash  collateral  securing the obligations  hereunder.  The Agent shall deposit
all amounts  delivered  to it in a  non-interest-bearing  special  purpose cash
collateral account,  to be governed by a cash collateral  agreement in form and
substance  satisfactory  to the  Borrower  and the Agent,  and shall  apply all
such  amounts in such  account  against  such  Advances  on the last day of the
Interest  Period  therefor.  The Agent shall promptly notify the Lenders of any
election by the  Borrower to deliver  funds to the Agent under this  subsection
(c).

<PAGE>

SECTION 2.12....Increased Costs.

(a)   If, due to either (i) the  introduction  of or any change (other than any
change by way of  imposition or increase of reserve  requirements,  in the case
of  Eurodollar   Rate  Advances,   included  in  the  Eurodollar  Rate  Reserve
Percentage)  in or to the  interpretation  of any law or regulation or (ii) the
compliance  with  any  guideline  or  request  from any  central  bank or other
governmental  authority  (whether or not having the force of law),  there shall
be any  increase  in the cost to any  Lender  of  agreeing  to make or  making,
funding or maintaining  Eurodollar Rate Advances,  then the Borrower shall from
time to time,  upon  demand by such  Lender  (with a copy of such demand to the
Agent),  pay to the Agent for the  account of such  Lender  additional  amounts
sufficient to  compensate  such Lender for such  increased  cost. A certificate
as to the amount of such  increased  cost,  submitted  to the  Borrower and the
Agent by such  Lender,  shall  be  conclusive  and  binding  for all  purposes,
absent  manifest  error,  provided  that the  determination  thereof shall have
been made by such Lender in good faith.

(b)   If any Lender  determines  that  compliance with any law or regulation or
any  guideline  or  request  from  any  central  bank  or  other   governmental
authority  (whether  or not  having the force of law)  affects or would  affect
the amount of capital  required or expected to be  maintained by such Lender or
any  corporation  controlling  such Lender and that the amount of such  capital
is increased  by or based upon the  existence of such  Lender's  commitment  to
lend hereunder and other  commitments of this type,  then,  upon demand by such
Lender  (with  a  copy  of  such  demand  to the  Agent),  the  Borrower  shall
immediately  pay to the  Agent for the  account  of such  Lender,  from time to
time as specified by such Lender,  additional  amounts sufficient to compensate
such  Lender or such  corporation  in the light of such  circumstances,  to the
extent that such Lender  reasonably  determines  such increase in capital to be
allocable to the existence of such  Lender's  Commitment.  A certificate  as to
such  amounts  submitted  to  the  Borrower  and  the  Agent  by  such  Lender,
describing  in  reasonable  detail the manner in which such  amounts  have been
calculated,  shall be conclusive and binding for all purposes,  absent manifest
error,  provided that the determination and allocation  thereof shall have been
made by such Lender in good faith.

(c)   Notwithstanding  the  provisions of  subsections (a)  or (b) above to the
contrary,   no  Lender  shall  be  entitled  to  demand   compensation   or  be
compensated  thereunder  to the extent  that such  compensation  relates to any
period of time  more than 60 days  prior to the date  upon  which  such  Lender
first  notified  the Borrower of the  occurrence  of the event  entitling  such
Lender  to  such  compensation  (unless,  and  to the  extent,  that  any  such
compensation  so demanded  shall relate to the  retroactive  application of any
event so notified to the Borrower).

SECTION 2.13....Illegality.   Notwithstanding   any  other  provision  of  this
Agreement to the contrary,  if any Lender (the "Affected  Lender") shall notify
the Agent and the  Borrower  that the  introduction  of or any  change in or to
the  interpretation of any law or regulation makes it unlawful,  or any central
bank or other  governmental  authority  asserts  that it is  unlawful,  for the
Affected  Lender or its Eurodollar  Lending  Office to perform its  obligations
hereunder to make  Eurodollar  Rate Advances or to fund or maintain  Eurodollar
Rate Advances  hereunder,  all Eurodollar  Rate Advances of the Affected Lender
shall,  on the fifth  Business  Day  following  such notice  from the  Affected
Lender,  automatically  be Converted  into a like number of Base Rate Advances,
each  in the  amount  of  the  corresponding  Eurodollar  Rate  Advance  of the
Affected Lender being so Converted (each such Advance,  as so Converted,  being
an "Affected  Lender  Advance"),  and the obligation of the Affected  Lender to
make,  maintain,  or Convert  Advances  into  Eurodollar  Rate  Advances  shall
thereupon  be  suspended  until the Agent  shall  notify the  Borrower  and the
Lenders that the  circumstances  causing such  suspension no longer  exist,  or
the  Affected  Lender  has  been  replaced  pursuant  to  Section 9.07(g).  For
purposes of any prepayment  under this Agreement,  each Affected Lender Advance
shall  be  deemed  to  continue  to be  part  of  the  same  Borrowing  as  the
Eurodollar  Rate  Advances  to  which  it  corresponded  at  the  time  of  the
Conversion of such Affected Lender Advance pursuant to this Section 2.13.

SECTION 2.14....Payments and Computations.

(a)   The Borrower  shall make each payment  hereunder not later than 1:00 p.m.
on the day when due in  Dollars  to the  Agent at its  address  referred  to in
Section 9.02  in same day funds.  The Agent will promptly  thereafter  cause to
be  distributed  like funds relating to the payment of principal or interest or
fees ratably  (other than amounts  payable  pursuant to  Section 2.07,  2.16 or
9.04(b))  to the  Lenders  for  the  account  of  their  respective  Applicable

<PAGE>

Lending  Offices,  and like funds  relating to the payment of any other  amount
payable  to any  Lender  to such  Lender  for  the  account  of its  Applicable
Lending  Office,  in each case to be  applied in  accordance  with the terms of
this  Agreement.  Upon its  acceptance of a Lender  Assignment and recording of
the   information    contained    therein   in   the   Register   pursuant   to
Section 9.07(d),  from and after the  effective  date  specified in such Lender
Assignment,  the Agent  shall  make all  payments  hereunder  in respect of the
interest  assigned thereby to the Lender assignee  thereunder,  and the parties
to such  Lender  Assignment  shall  make all  appropriate  adjustments  in such
payments for periods prior to such effective date directly between themselves.

(b)   The Borrower hereby  authorizes each Lender, if and to the extent payment
owed to such  Lender is not made when due  hereunder  held by such  Lender,  to
charge from time to time  against any or all of the  Borrower's  accounts  with
such Lender any amount so due.

(c)   All  computations  of interest  based on clause (i) of the  definition of
"Alternate  Base Rate" and of the  Commitment Fee shall be made by the Agent on
the  basis  of a year  of 365  or  366  days,  as the  case  may  be,  and  all
computations  of interest  based on the  Eurodollar  Rate and the Federal Funds
Rate shall be made by the Agent, and all  computations of interest  pursuant to
Section 2.07  shall be made by a  Lender,  on the  basis of a year of 360 days,
in each  case for the  actual  number  of days  (including  the  first  day but
excluding  the last day)  occurring  in the period for which such  interest  or
fees  are  payable.  Each  determination  by the  Agent  (or,  in the  case  of
Section 2.07,  by a Lender) of an interest rate  hereunder  shall be conclusive
and  binding  for all  purposes,  absent  manifest  error,  provided  that such
determination  shall  have been made by the Agent or such  Lender,  as the case
may be, in good faith.

(d)   Whenever any payment  hereunder  shall be stated to be due on a day other
than a  Business  Day,  such  payment  shall  be  made on the  next  succeeding
Business  Day,  and such  extension  of time shall in such case be  included in
the  computation of payment of interest or fees, as the case may be;  provided,
however,  that  if  such  extension  would  cause  payment  of  interest  on or
principal  of  Eurodollar  Rate  Advances  to be  made  in the  next  following
calendar month, such payment shall be made on the next preceding Business Day.

(e)   Unless the Agent shall have  received  notice from the Borrower  prior to
the  date on  which  any  payment  is due to the  Lenders  hereunder  that  the
Borrower  will not make such  payment in full,  the Agent may  assume  that the
Borrower  has made  such  payment  in full to the Agent on such  date,  and the
Agent may, in reliance upon such  assumption,  cause to be  distributed to each
Lender on such due date an amount  equal to the  amount  then due such  Lender.
If and to the extent that the  Borrower  shall not have so made such payment in
full to the Agent,  each Lender  shall repay to the Agent  forthwith  on demand
such amount  distributed  to such Lender  together with interest  thereon,  for
each day from the date such  amount is  distributed  to such  Lender  until the
date such Lender repays such amount to the Agent, at the Federal Funds Rate.

SECTION 2.15....Noteless Agreement; Evidence of Indebtedness.

(a)   Each Lender  shall  maintain  in  accordance  with its usual  practice an
account  or  accounts  evidencing  the  indebtedness  of the  Borrower  to such
Lender  resulting  from each  Advance  made by such  Lender  from time to time,
including  the  amounts of  principal  and  interest  payable  and paid to such
Lender from time to time hereunder.

(b)   The Agent shall also  maintain  accounts in which it will record  (i) the
amount of each  Advance  made  hereunder,  the Type  thereof  and the  Interest
Period (if any) with  respect  thereto,  (ii) the  amount of any  principal  or
interest  due and  payable or to become due and  payable  from the  Borrower to
each Lender  hereunder,  and (iii) the  amount of any sum received by the Agent
hereunder from the Borrower and each Lender's share thereof.

(c)   The  entries   maintained   in  the  accounts   maintained   pursuant  to
subsections (a)  and (b) above shall be prima facie  evidence of the  existence
and amounts of the obligations therein recorded;  provided,  however,  that the
failure  of the Agent or any  Lender to  maintain  such  accounts  or any error
therein  shall not in any  manner  affect the  obligation  of the  Borrower  to
repay such obligations in accordance with their terms.

<PAGE>

(d)   Any Lender may request  that its  Advances  be  evidenced  by a Note.  In
such event,  the Borrower shall  prepare,  execute and deliver to such Lender a
Note payable to the order of such Lender.  Thereafter,  the Advances  evidenced
by such  Note and  interest  thereon  shall at all times  (including  after any
assignment  pursuant  to  Section 9.07)  be  represented  by one or more  Notes
payable to the order of the payee  named  therein or any  assignee  pursuant to
Section 9.07,   except  to  the  extent   that  any  such  Lender  or  assignee
subsequently  returns any such Note for  cancellation  and  requests  that such
Advances  once again be  evidenced  as  described  in  subsections (a)  and (b)
above.

SECTION 2.16....Taxes.

(a)   Any and all payments by the Borrower  hereunder  and under the other Loan
Documents  shall be made, in accordance  with  Section 2.14,  free and clear of
and  without  deduction  for any and  all  present  or  future  taxes,  levies,
imposts,  deductions,   charges  or  withholdings,  and  all  liabilities  with
respect  thereto,  excluding,  in the case of each Lender and the Agent,  taxes
imposed on its  overall  net income and  franchise  taxes  imposed on it by any
jurisdiction,  unless  such  Lender or the Agent (as the case may be) would not
have had such taxes  imposed on it by such  jurisdiction  but for such Lender's
or the  Agent's  (as the case  may be)  having  entered  into  this  Agreement,
having  consummated  the  transactions  contemplated  hereby or having received
payments  by the  Borrower  hereunder  or under the other Loan  Documents  (all
such non-excluded taxes, levies,  imposts,  deductions,  charges,  withholdings
and  liabilities  being  hereinafter  referred to as "Taxes").  If the Borrower
shall be  required  by law to deduct  any Taxes  from or in  respect of any sum
payable  hereunder  or under  any  other  Loan  Document  to any  Lender or the
Agent,  (i) the sum payable  shall be  increased  as may be  necessary  so that
after  making all  required  deductions  (including  deductions  applicable  to
additional sums payable under this  Section 2.16)  such Lender or the Agent (as
the case may be)  receives  an amount  equal to the sum it would have  received
had  no  such  deductions  been  made,   (ii) the   Borrower  shall  make  such
deductions  and (iii) the  Borrower  shall pay the full amount  deducted to the
relevant  taxation  authority or other  authority in accordance with applicable
law.

(b)   In addition,  the  Borrower  agrees to pay any present or future stamp or
documentary  taxes or any other  excise or property  taxes,  charges or similar
levies  which arise from any  payment  made  hereunder  or under any other Loan
Document or from the  execution,  delivery  or  registration  of, or  otherwise
with  respect  to,  this  Agreement  or any other  Loan  Document  (hereinafter
referred to as "Other Taxes").

(c)   The  Borrower  will  indemnify  each  Lender  and the  Agent for the full
amount of Taxes or Other Taxes  (including,  without  limitation,  any Taxes or
Other  Taxes  imposed  by  any  jurisdiction  on  amounts  payable  under  this
Section 2.16)  paid by such  Lender  or the  Agent (as the case may be) and any
liability  (including  penalties,  interest and expenses)  arising therefrom or
with respect  thereto,  whether or not such Taxes or Other Taxes were correctly
or legally  asserted.  This  indemnification  shall be made within 30 days from
the date such  Lender or the  Agent (as the case may be) makes  written  demand
therefor.  Nothing  herein shall  preclude the right of the Borrower to contest
any such  Taxes or Other  Taxes so paid,  and the  Lenders in  question  or the
Agent (as the case may be) will,  following  notice  from,  and at the  expense
of, the  Borrower,  reasonably  cooperate  with the  Borrower to  preserve  the
Borrower's rights to contest such Taxes or Other Taxes.

(d)   Within 30 days after the date of any payment of Taxes,  the Borrower will
furnish  to  the  Agent,  at  its  address  referred  to in  Section 9.02,  the
original or a certified copy of a receipt evidencing payment thereof.

(e)   Each  Lender  agrees  that,  on or prior to the date upon  which it shall
become a party  hereto,  and upon the  reasonable  request from time to time of
the  Borrower or the Agent or such Lender will  deliver to the Borrower and the
Agent  either  (i) a  statement  that  it is  organized  under  the  laws  of a
jurisdiction  within the United  States or (ii) duly  completed  copies of such
form or forms as may  from  time to time be  prescribed  by the  United  States
Internal  Revenue  Service  indicating  that such Lender is entitled to receive
payments  without  deduction or withholding of any United States federal income
taxes,  as  permitted by the  Internal  Revenue  Code of 1986,  as amended from
time to time.  Each Lender  that  delivers  to the  Borrower  and the Agent the
form or forms  referred to in the  preceding  sentence  further  undertakes  to
deliver to the  Borrower  and the Agent  further  copies of such form or forms,
or  successor  applicable  form or  forms,  as the case may be, as and when any
previous  form filed by it hereunder  shall  expire or shall become  incomplete
or inaccurate  in any respect.  Each Lender  represents  and warrants that each
such  form  supplied  by it to the  Agent  and the  Borrower  pursuant  to this
subsection  (e), and not  superseded by another form supplied by it, is or will
be, as the case may be, complete and accurate.

<PAGE>

(f)   Any Lender  claiming  any  additional  amounts  payable  pursuant to this
Section 2.16  shall use its best efforts  (consistent  with its internal policy
and legal  and  regulatory  restrictions)  to change  the  jurisdiction  of its
Applicable  Lending  Office if the making of such a change would avoid the need
for, or reduce the amount of, any such  additional  amounts that may thereafter
accrue and would not, in the reasonable  judgment of such Lender,  be otherwise
disadvantageous to such Lender.

(g)   Without  prejudice to the survival of any other agreement of the Borrower
hereunder,  the  agreements and  obligations of the Borrower  contained in this
Section 2.16  shall  survive  the  payment in full of  principal  and  interest
hereunder.

SECTION 2.17....Sharing  of  Payments,  Etc.  If any  Lender  shall  obtain any
payment (whether voluntary,  involuntary,  through the exercise of any right of
set-off,  or  otherwise)  on account  of the  Advances  made by it (other  than
pursuant  to  Section 2.07,  2.12,  2.16 or  9.04(b))  in excess of its ratable
share of  payments  obtained  by all the  Lenders on  account of the  Advances,
such  Lender   shall   forthwith   purchase   from  the  other   Lenders   such
participations  in the  Advances  made by them as shall be  necessary  to cause
such  purchasing  Lender to share the excess payment ratably with each of them;
provided,  however,  that if all or any  portion  of  such  excess  payment  is
thereafter  recovered  from such  purchasing  Lender,  such  purchase from each
Lender  shall  be  rescinded  and such  Lender  shall  repay to the  purchasing
Lender the  purchase  price to the extent of such  recovery,  together  with an
amount equal to such  Lender's  ratable share  (according to the  proportion of
(i) the  amount of such Lender's  required  repayment to (ii) the  total amount
so recovered from the  purchasing  Lender) of any interest or other amount paid
or  payable  by the  purchasing  Lender  in  respect  of the  total  amount  so
recovered.  The Borrower  agrees that any Lender so purchasing a  participation
from another Lender  pursuant to this  Section 2.17  may, to the fullest extent
permitted by law,  exercise all its rights of payment  (including  the right of
set-off)  with  respect to such  participation  as fully as if such Lender were
the direct creditor of the Borrower in the amount of such participation.

                                  ARTICLE III
                             CONDITIONS OF LENDING

SECTION 3.01....Conditions   Precedent  to  Closing.  The  Commitments  of  the
Lenders shall not become  effective unless the following  conditions  precedent
shall have been fulfilled:

(a)   The Agent shall have received the  following,  each dated the date of the
Closing,  in form and substance  satisfactory  to the Lenders and in sufficient
copies for each Lender:

          (i) this  Agreement,  duly executed by the Borrower,  each  Guarantor,
     each Lender and the Agent;

          (ii) each Note requested by a Lender pursuant to Section 2.15  payable
     to the  order of each such  Lender,  duly  completed  and  executed  by the
     Borrower;

          (iii) copies of (A) the  resolutions of the Board of Directors of each
     of the Loan Parties  approving  this Agreement and the other Loan Documents
     to which such Loan Party is, or is to be, a party,  and  (B) all  documents
     evidencing other necessary  corporate action on the part of such Loan Party
     with respect to this  Agreement and the other Loan  Documents to which such
     Loan  Party  is, or is to be, a party,  certified  by the  Secretary  or an
     Assistant Secretary of the applicable Loan Party;

          (iv) a certificate of the Secretary or an Assistant  Secretary of each
     of the Loan Parties certifying the names, true signatures and incumbency of
     the officers of such Loan Party  authorized to sign this  Agreement and the
     other Loan Documents to which such Loan Party is, or is to be, a party;

<PAGE>

          (v) copies of the Certificate of Incorporation (or comparable  charter
     document)  and  by-laws  of each of the  Loan  Parties,  together  with all
     amendments thereto, certified by the Secretary or an Assistant Secretary of
     the applicable Loan Party;

          (vi)  copies  of all  Governmental  Approvals,  if  any,  required  in
     connection with the execution, delivery and performance by each of the Loan
     Parties of this  Agreement and the other Loan  Documents,  certified by the
     Secretary or an Assistant Secretary of the applicable Loan Party;

          (vii)   copies   of   the   financial   statements   referred   to  in
     Section 4.01(f),  certified by the  Secretary or an Assistant  Secretary of
     the Parent;

          (viii) favorable opinions of:

          (A) Foley & Lardner,  special counsel for each of the Loan Parties, in
     substantially  the  form of  Exhibit 3.01(a)(viii)-1  and as to such  other
     matters as the Majority Lenders, through the Agent, may reasonably request;

          (B) Barbara J. Swan,  Executive Vice President and General  Counsel of
     the Parent and General Counsel of the Borrower,  in substantially  the form
     of  Exhibit 3.01(a)(viii)-2  and as to such other  matters as the  Majority
     Lenders, through the Agent, may reasonably request; and

          (C) Thelen Reid & Priest LLP,  special  PUHCA  counsel for each of the
     Loan Parties, in substantially the form of  Exhibit 3.01(a)(viii)-3  and as
     to such other  matters as the  Majority  Lenders,  through  the Agent,  may
     reasonably request; and

          (ix) such other  approvals,  opinions  and  documents  as any  Lender,
     through the Agent, may reasonably request.

(b)   The following  statements shall be true and correct,  and the Agent shall
have received a certificate of a duly authorized  officer of the Parent,  dated
the date of the  Closing  and in  sufficient  copies for each  Lender,  stating
that:

          (i) the  representations  and warranties set forth in  Section 4.01 of
     this Agreement are true and correct on and as of the date of the Closing as
     though made on and as of such date, and

          (ii) no event has  occurred  and is  continuing  that  constitutes  an
     Unmatured Default or an Event of Default.

(c)   The Borrower  shall have paid  (i) all fees payable  hereunder or payable
pursuant to the Fee Letter to the extent  then due and  payable,  and  (ii) all
costs and  expenses of the Agent  (including  counsel  fees and  disbursements)
incurred  through (and for which  statements  have been provided  prior to) the
Closing.

SECTION 3.02....Conditions  Precedent  to Each  Borrowing.  The  obligation  of
each  Lender to make an Advance on the  occasion of each  Borrowing  (including
the initial  Borrowing)  shall be subject to the conditions  precedent that, on
the date of such Advance:

(a)   the  following  statements  shall be true and correct  (and the giving of
the  applicable  Notice of Borrowing and the  acceptance by the Borrower of the
proceeds of such Borrowing shall  constitute a  representation  and warranty by
the Parent that, on the date of such  Borrowing,  such  statements are true and
correct):

<PAGE>

          (i) the representations  and warranties  contained in Section 4.01 are
     true and correct on and as of the date of such Borrowing,  before and after
     giving effect to the  application  of the proceeds of any Borrowing made in
     connection therewith as though made on and as of such date; and

          (ii) no event has  occurred  and is  continuing,  or would result from
     such Borrowing or from the  application of any Borrowing made in connection
     therewith that constitutes an Event of Default or an Unmatured Default;

(b)   the  Agent  shall  have  received  such  other  approvals,  opinions,  or
documents  as the  Agent,  or the  Majority  Lenders  through  the  Agent,  may
reasonably  request,  and such  approvals,  opinions,  and  documents  shall be
satisfactory in form and substance to the Agent;

(c)   the Arranger shall not have  presented to Parent,  the Borrower or any of
their  respective  Subsidiaries  a then  available  alternative  debt financing
(other than a debt  financing  to either of the  Utilities)  the terms of which
are  reasonable  and prudent and the proceeds of which would be  available  for
the purposes to which the proceeds of such Advances  then  requested to be made
would otherwise be put; and

(d)   the trading  level,  for the ten trading  sessions  preceding the date of
such  Borrowing,  of the AER  Notes  (which  shall be  determined  by the Agent
taking an average  trading  spread  from the  Quoting  Dealers)  shall not have
been  greater  than 650  basis  points  above the  yield on the  relevant  U.S.
Treasury security with a final maturity comparable to that of the AER Notes.

SECTION 3.03....Reliance  on  Certificates.  The Lenders and the Agent shall be
entitled to rely  conclusively  upon the  certificates  delivered  from time to
time by  officers  of any of the  Loan  Parties  as to the  names,  incumbency,
authority  and  signatures of the  respective  Persons named therein until such
time as the Agent may receive a  replacement  certificate,  in form  acceptable
to the  Agent,  from an  officer  of such  Person  identified  to the  Agent as
having  authority  to deliver  such  certificate,  setting  forth the names and
true  signatures  of the  officers  and other  representatives  of such  Person
thereafter authorized to act on behalf of such Person.

                                  ARTICLE IV
                        REPRESENTATIONS AND WARRANTIES

SECTION 4.01....Representations  and  Warranties  of the  Borrower.  The Parent
represents and warrants as follows:

(a)   The Parent and each of its  Subsidiaries is a corporation duly organized,
      validly  existing and in good standing under the laws of the jurisdiction
      of its  incorporation  and is duly qualified to do business in, and is in
      good  standing  in,  all  other  jurisdictions  where  the  nature of its
      business  or the  nature  of  property  owned  or used by it  makes  such
      qualification  necessary  (except  where the failure to so qualify  would
      not constitute a Material Adverse Change).

(b)   The  execution,  delivery and  performance by each of the Loan Parties of
      this  Agreement and the other Loan  Documents to which such Loan Party is
      or will be a party are within such Loan Party's  corporate  powers,  have
      been duly authorized by all necessary  corporate  action,  and do not and
      will not contravene  (i) such Loan Party's  charter or by-laws,  (ii) any
      law,  or  (iii) any  legal  or  contractual  restriction  binding  on  or
      affecting such Loan Party;  and such execution,  delivery and performance
      do not and will not result in or require the  creation of any Lien (other
      than pursuant to the Loan  Documents)  upon or with respect to any of its
      properties.

(c)   No  Governmental  Approval is required in connection  with the execution,
      delivery or  performance  by any of the Loan Parties of any Loan Document
      except for (a) Release No.  35-27448;  70-9891,  issued by the Securities
      and Exchange Commission on October 3,  2001, as supplemented by the order
      dated  December 17,  2002  (Release  No.  35-27620),  and (b) Release No.
      35-27542;  70-10052  issued by the Securities and Exchange  Commission on
      June 21,  2002,  as  supplemented  by the orders dated  October 10,  2002
      (Release No.  35-27575) and  December 13,  2002  (Release No.  35-27615),
      each of which is final and in full force and  effect  and not  subject to
      appeal, rehearing, review or reconsideration.

<PAGE>

(d)   This  Agreement is, and each other Loan Document to which any of the Loan
      Parties will be a party when  executed and delivered  hereunder  will be,
      legal,  valid and  binding  obligations  of such Loan  Party  enforceable
      against  such Loan  Party in  accordance  with  their  respective  terms,
      subject  to the  qualifications,  however,  that the  enforcement  of the
      rights and  remedies  herein and  therein  is subject to  bankruptcy  and
      other similar laws of general  application  affecting rights and remedies
      of  creditors  and  that  the  remedy  of  specific   performance  or  of
      injunctive  relief is subject to the discretion of the court before which
      any proceedings therefor may be brought.

(e)   Since September 30, 2002, there has been no Material Adverse Change.

(f)   The  audited   consolidated   balance   sheets  of  the  Parent  and  its
      Subsidiaries   as  at   December 31,   2001,  and  the  related   audited
      consolidated, and, with respect to the Parent, consolidating,  statements
      of income of the Parent  and its  Subsidiaries  for the fiscal  year then
      ended,  and the unaudited  consolidated  balance sheets of the Parent and
      its  Subsidiaries  as at  September  30, 2002 and the  related  unaudited
      consolidated  statements  of income for the  nine-month  period  ended on
      such date,  copies of each of which have been  furnished  to each Lender,
      fairly  present  (subject,  in  the  case  of  such  balance  sheets  and
      statements  of income for the  nine-month  period ended on September  30,
      2002, to year-end  adjustments) the consolidated  financial  condition of
      the Parent  and its  Subsidiaries  as at such dates and the  consolidated
      results of operations of the Parent and its  Subsidiaries for the periods
      ended on such dates, all in accordance,  in all material  respects,  with
      GAAP.

(g)   Except  as  disclosed  in the  Parent's  Report on Form 10-K for the year
      ended  December 31,  2001 and  Report on Form 10-Q for the  period  ended
      September  30,  2002,  there  is  no  pending  or  threatened  action  or
      proceeding  affecting the Parent or any of its Subsidiaries or properties
      before  any  court,   governmental  agency  or  arbitrator,   that  might
      reasonably  be expected to  constitute  a Material  Adverse  Change;  and
      since December 31,  2001 there have been no material adverse developments
      in any action or proceeding so disclosed.

(h)   No ERISA  Event has  occurred  or is  reasonably  expected  to occur with
      respect  to any Plan of the Parent or any of its  Subsidiaries  or any of
      their  respective  ERISA  Affiliates  which  would  result in a  material
      liability  to the  Parent  or any of  its  Subsidiaries.  No  "prohibited
      transaction"  has occurred  with respect to any Plan of the Parent or any
      of its Subsidiaries  that is reasonably  expected to result in a material
      liability to the Parent or any of its  Subsidiaries.  None of the Parent,
      any of its  Subsidiaries or any of their  respective ERISA Affiliates has
      incurred  nor  reasonably  expects  to  incur  any  material   withdrawal
      liability under ERISA to any Multiemployer Plan.

(i)   The  Parent  and  each of its  Subsidiaries  has  filed  all tax  returns
      (Federal,  state and local) required to be filed and paid all taxes shown
      thereon to be due,  including  interest and penalties,  or, to the extent
      the Parent or its Subsidiary,  as applicable, is contesting in good faith
      an assertion of liability  based on such returns,  has provided  adequate
      reserves for payment thereof in accordance with GAAP.

(j)   Neither the Parent nor any of its  Subsidiaries  is engaged  principally,
      or as one of its important  activities,  in the business of purchasing or
      carrying Margin Stock, or extending  credit for the purpose of purchasing
      or carrying  Margin  Stock.  After the making of each  Borrowing,  Margin
      Stock will  constitute  less than 25 percent of the assets (as determined
      by any  reasonable  method)  of the  Parent  and  its  Subsidiaries  on a
      consolidated basis.

<PAGE>

(k)   Neither  the  Parent  nor  any  of  its  Subsidiaries  is an  "investment
      company" or a company  "controlled"  by an "investment  company",  within
      the meaning of the Investment Company Act of 1940, as amended.

(l)   None  of  the  Loan  Parties  is a  "holding  company"  or a  "subsidiary
      company" or an "affiliate" of a "holding  company"  within the meaning of
      PUHCA,  except that the Parent is a "registered holding company" and each
      of  the  Borrower  and  the  Guarantors  (other  than  the  Parent)  is a
      "subsidiary  company"  of the  Parent  within the  meaning of PUHCA.  The
      execution,   delivery  and  performance  by  the  Loan  Parties  of  this
      Agreement and each other Loan  Documents to which any of the Loan Parties
      is or will be a party,  and their  respective  obligations  hereunder and
      thereunder,  do not and will not  violate any  provision  of PUHCA or any
      rule or regulation under PUHCA.

(m)   Neither the Parent nor any  Subsidiary is in default in any respect under
      any Contractual  Obligation which default could reasonably be expected to
      result in a Material  Adverse  Change.  No Unmatured  Default or Event of
      Default has occurred or exists or would result from the  consummation  of
      the  transactions  contemplated  by this  Agreement  and the  other  Loan
      Documents.

(n)   No report,  financial statement or other written information furnished by
      or on behalf of the  Parent  or any of the Loan  Parties  to the Agent or
      any Lender  pursuant to or in connection with this Agreement or any other
      Loan  Documents  contains or will  contain any material  misstatement  of
      fact or omits or will omit to state any material  fact  necessary to make
      the statements  therein,  in the light of the  circumstances  under which
      they were or will be made, not misleading.

(o)   The Parent and each of its  Subsidiaries  has  complied  in all  material
      respects with all Federal,  state, local and other statutes,  ordinances,
      orders,  judgments,  rulings and  regulations  relating to  environmental
      pollution or to  environmental or nuclear  regulation or control,  except
      to the extent that failure to so comply could not  reasonably be expected
      to result in a Material  Adverse  Change.  Neither  the Parent nor any of
      its Subsidiaries has received notice of any failure so to comply,  except
      where  such  failure  could not  reasonably  be  expected  to result in a
      Material  Adverse  Change.  Except as set forth in or contemplated by the
      financial  statements  referred to in Section 4.01(f),  the facilities of
      the Parent or any of its  Subsidiaries,  as the case may be, are not used
      to  manage  any  hazardous  wastes,   hazardous   substances,   hazardous
      materials,  toxic  substances,  toxic pollutants or substances  similarly
      denominated,  as those  terms or similar  terms are used in the  Resource
      Conservation and Recovery Act, the Comprehensive  Environmental  Response
      Compensation  and Liability Act, the Hazardous  Materials  Transportation
      Act, the Toxic Substance  Control Act, the Clean Air Act, the Clean Water
      Act or any other applicable law relating to environmental  pollution,  or
      any nuclear  fuel or other  radioactive  materials,  in  violation in any
      material  respect  of any  law or any  regulations  promulgated  pursuant
      thereto,  except to the extent that such violations  could not reasonably
      be expected to result in a Material  Adverse Change.  Except as set forth
      in or contemplated by such financial  statements,  the Parent is aware of
      no events,  conditions or circumstances involving environmental pollution
      or  contamination  that  could  reasonably  be  expected  to  result in a
      Material Adverse Change.

                                   ARTICLE V
                         COVENANTS OF THE LOAN PARTIES

SECTION 5.01....Affirmative  Covenants.  So long as any  amount in  respect  of
this  Agreement  shall remain  unpaid or any Lender shall have any  Commitment,
the Parent  will,  unless  the  Majority  Lenders  shall  otherwise  consent in
writing:

(a)   Payment  of  Taxes,  Etc.  Pay  and  discharge,  and  cause  each  of its
      Subsidiaries  to  pay  and  discharge,   before  the  same  shall  become
      delinquent,  all taxes,  assessments and governmental charges,  royalties
      or levies  imposed  upon it or upon its property  except,  in the case of
      taxes,  to the extent the Parent or such  Subsidiary  is  contesting  the
      same in good  faith  and by  appropriate  proceedings  and has set  aside
      adequate reserves for the payment thereof in accordance with GAAP.

<PAGE>

(b)   Maintenance   of  Insurance.   Maintain,   or  cause  to  be  maintained,
      insurance or other risk management  program  covering the Parent and each
      of its  Subsidiaries  and their  respective  properties  in effect at all
      times in such  amounts  and  covering  such risks and using such means as
      are usual and  customary  for  companies  of a similar size (based on the
      aggregate  book  value  of  the  Parent's  assets,  as  determined  on  a
      consolidated   basis  in  accordance  with  GAAP),   engaged  in  similar
      businesses   and  owning  similar   properties,   either  with  reputable
      insurance companies or, in whole or in part, by establishing  reserves of
      one or more insurance funds or other risk management  mechanisms,  either
      alone or with other corporations or associations.

(c)   Preservation  of Existence,  Etc.  Preserve and maintain,  and cause each
      of its  Subsidiaries to preserve and maintain,  its corporate  existence,
      material  rights  (statutory  and otherwise)  and  franchises;  provided,
      however,  that  neither the Parent nor any of its  Subsidiaries  shall be
      required to preserve  and maintain  any such right or  franchise,  and no
      such Subsidiary  shall be required to preserve and maintain its corporate
      existence,  unless  the  failure  to do so would  constitute  a  Material
      Adverse Change.

(d)   Compliance with Laws,  Etc.  Comply,  and cause each of its  Subsidiaries
      to  comply,   with  the  requirements  of  all  applicable  laws,  rules,
      regulations and orders of any governmental  authority,  including without
      limitation  any such laws,  rules,  regulations  and orders  relating  to
      zoning,   environmental   protection,   use  and  disposal  of  Hazardous
      Substances, land use, ERISA, construction and building restrictions,  and
      employee safety and health matters relating to business  operations,  the
      non-compliance with which would constitute a Material Adverse Change.

(e)   Inspection  Rights. At the reasonable  expense of the Parent, at any time
      and from time to time, upon reasonable notice,  permit or arrange for the
      Agent, the Lenders and their  respective  agents and  representatives  to
      examine  and make copies of and  abstracts  from the records and books of
      account  of,  and  the   properties  of,  the  Parent  and  each  of  its
      Subsidiaries,  and to discuss the  affairs,  finances and accounts of the
      Parent and its  Subsidiaries  with the Parent  and its  Subsidiaries  and
      their respective officers, directors and accountants.

(f)   Keeping  of  Books.  Keep,  and cause its  Subsidiaries  to keep,  proper
      records and books of account,  in which full and correct entries shall be
      made of all  financial  transactions  of the Parent and its  Subsidiaries
      and the  assets and  business  of the  Parent  and its  Subsidiaries,  in
      accordance with GAAP.

(g)   Maintenance  of  Properties,   Etc.  Maintain,  and  cause  each  of  its
      Subsidiaries  to maintain,  good and  marketable  title to, and preserve,
      maintain,  develop,  and operate in substantial  conformity with all laws
      and material  Contractual  Obligations,  all of its properties  which are
      used or useful in the conduct of its business in good  working  order and
      condition,  ordinary wear and tear excepted,  except where the failure to
      do so would not constitute a Material Adverse Change.

(h)   Reporting Requirements.  Furnish to each Lender:

          (i) as soon as possible  and in any event  within five  Business  Days
     after  the  occurrence  of each  Unmatured  Default  or  Event  of  Default
     continuing on the date of such statement, a statement of a Senior Financial
     Officer setting forth details of such Unmatured Default or Event of Default
     and the action that the Parent proposes to take with respect thereto;

          (ii) as soon as  available  and in any event  within 60 days after the
     end of each of the first three  quarters of each fiscal year of the Parent,
     a consolidated  balance sheet of the Parent and its  Subsidiaries as at the
     end of such  quarter and  consolidated,  and,  with  respect to the Parent,
     consolidating,  statements of income,  retained  earnings and cash flows of
     the Parent and its Subsidiaries for the period commencing at the end of the

<PAGE>

     previous  fiscal  year  and  ending  with the end of such  quarter,  all in
     reasonable   detail  and  duly   certified   (subject  to  year-end   audit
     adjustments)  by a Senior  Financial  Officer as having  been  prepared  in
     accordance  (in  all  material   respects)  with  GAAP,   together  with  a
     certificate of said Officer  stating that no Unmatured  Default or Event of
     Default has occurred and is continuing or, if an Unmatured Default or Event
     of Default has  occurred  and is  continuing,  a statement as to the nature
     thereof  and the  action  that the  Parent  proposes  to take with  respect
     thereto;

          (iii) as soon as available  and in any event within 120 days after the
     end of each fiscal year of the Parent,  a copy of the audited  consolidated
     balance  sheet of the  Parent  and its  Subsidiaries  as at the end of such
     fiscal  year  and   consolidated,   and,   with   respect  to  the  Parent,
     consolidating,  statements of income,  retained  earnings and cash flows of
     the Parent and its  Subsidiaries  for such  fiscal  year,  together  with a
     certificate of a Senior Financial Officer stating that no Unmatured Default
     or Event of Default has  occurred  and is  continuing  or, if an  Unmatured
     Default or Event of Default has occurred and is continuing,  a statement as
     to the nature thereof and the action that the Parent  proposes to take with
     respect thereto;

          (iv)  concurrently  with  the  delivery  of the  financial  statements
     referred  to  in  clauses  (ii)  and  (iii)  above  (each  a  "Report"),  a
     certificate  signed by the  principal  executive  officer and the principal
     financial officer of the Parent (each, a "Certifying  Officer")  certifying
     that (i) each  Certifying  Officer has reviewed  the Report;  (ii) based on
     such Certifying Officer's knowledge, the Report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary in
     order to make the  statements  made,  in light of the  circumstances  under
     which  such  statements  were made,  not  misleading;  (iii)  based on such
     Certifying  Officer's  knowledge,  the  financial  statements,   and  other
     financial  information  included in the  Report,  fairly  represent  in all
     material respects the financial  condition and results of operations of the
     Parent and its  Subsidiaries  as of, and for,  the period  presented in the
     Report;  (iv) such Certifying  Officer and the other Certifying Officer (A)
     are responsible for establishing  and maintaining  internal  controls;  (B)
     have designed such  internal  controls to ensure that material  information
     relating to the Parent and its  Subsidiaries is made known to such officers
     by others within the entities,  particularly during the period in which the
     periodic reports are being prepared;  (C) have evaluated the  effectiveness
     of the internal  controls of the Borrower as of a date within 90 days prior
     to the Report; and (D) have presented in the Report their conclusions about
     the  effectiveness of their internal  controls based on their evaluation as
     of that date; (v) such Certifying  Officer and the other Certifying Officer
     have  disclosed  to the  auditors  and the audit  committee of the Board of
     Directors of the Parent (A) all  significant  deficiencies in the design or
     operation of internal  controls which could adversely affect the ability of
     the Parent to record,  process,  summarize,  and report  financial data and
     have identified for the Parent's auditors any material weakness in internal
     controls;  and  (B) any  fraud,  whether  or not  material,  that  involves
     management or other  employees who have a significant  role in the internal
     controls  of the  Parent;  and (vi) such  Certifying  Officer and the other
     Certifying  Officer have  indicated in the Report whether or not there were
     significant  changes  in  internal  controls  or other  factors  that could
     significantly  affect  internal  controls  or in other  factors  that could
     significantly  affect  internal  controls  subsequent  to the date of their
     evaluation,  including any  corrective  actions with regard to  significant
     deficiencies and material weaknesses.  Furthermore, such certificate signed
     by the  Certifying  Officers  shall (i) certify as to whether an  Unmatured
     Default or Event of Default has occurred and is  continuing  on the date of
     such  certificate,  and if an Unmatured  Default or an Event of Default has
     then occurred and is  continuing,  specifying  the details  thereof and the
     action that the Parent has taken or proposes to take with respect  thereto,
     (ii) set forth in reasonable detail calculations  demonstrating  compliance
     with  Sections  5.02(h),  (i) and (j) and (iii) state whether any change in
     GAAP or the application  thereof has occurred since the date of the audited
     financial  statements  referred  to in Section  4.01 and, if any change has
     occurred,  specifying the effect of such change on the financial statements
     accompanying such certificate;

<PAGE>

          (v) as soon as possible  and in any event (A) within 30 days after any
     ERISA Event  described in clause (i) of the  definition of ERISA Event with
     respect  to any Plan of the  Parent  or any of its  Subsidiaries  or any of
     their respective ERISA Affiliates has occurred and (B) within 10 days after
     any other ERISA Event with  respect to any Plan of the Parent or any of its
     Subsidiaries or any of their respective  ERISA  Affiliates has occurred,  a
     statement of a Senior Financial Officer describing such ERISA Event and the
     action,  if any, which the Parent or such ERISA Affiliate  proposes to take
     with respect thereto;

          (vi) promptly after receipt  thereof by the Parent or any of its ERISA
     Affiliates  from the PBGC copies of each  notice  received by the Parent or
     such ERISA  Affiliate of the PBGC's  intention to terminate any Plan of the
     Parent or such ERISA Affiliate or to have a trustee appointed to administer
     any such Plan;

          (vii)  promptly  after  receipt  thereof  by the  Parent or any of its
     Subsidiaries  or  any  of  their   respective   ERISA   Affiliates  from  a
     Multiemployer Plan sponsor, a copy of each notice received by the Parent or
     any  of  its  Subsidiaries  or any of  their  respective  ERISA  Affiliates
     concerning the imposition or amount of withdrawal liability in an aggregate
     principal amount of at least $250,000  pursuant to Section 4202 of ERISA in
     respect  of which  the  Parent or any of its  Subsidiaries  or any of their
     respective ERISA  Affiliate,  as applicable,  is reasonably  expected to be
     liable;

          (viii)  promptly  after the  Parent  becomes  aware of the  occurrence
     thereof, notice of all actions,  suits,  proceedings or other events (A) of
     the type  described in  Section 4.01(g)  or (B) for which the Agent and the
     Lenders will be entitled to indemnity under Section 9.04(c);

          (ix) promptly after the sending or filing thereof,  copies of all such
     proxy statements,  financial statements, and reports which the Parent sends
     to its  public  security  holders  (if any),  and  copies  of all  regular,
     periodic and special reports, and all registration  statements and periodic
     or  special  reports,  if any,  which the Parent or any  Subsidiary  of the
     Parent  files  with  the   Securities   and  Exchange   Commission  or  any
     governmental  authority  which  may be  substituted  therefor,  or with any
     national securities exchange; and

          (x) promptly after requested,  such other  information  respecting the
     business, properties, results of operations, prospects, revenues, condition
     or  operations,  financial  or  otherwise,  of  the  Parent  or  any of its
     Subsidiaries  as the Agent or any Lender through the Agent may from time to
     time reasonably request.

(i)   Use of  Proceeds.  Use, and cause its  Subsidiaries  to use, the proceeds
      of the  Advances  hereunder  solely to  refinance  maturing  Debt and for
      general  corporate  purposes,  in  each  case,  of  the  Parent  and  its
      Subsidiaries  other than the  Utilities,  and not to finance  any Hostile
      Acquisition.

(j)   Further  Assurances.  At the expense of the Parent,  promptly execute and
      deliver,  or cause to be promptly  executed  and  delivered,  all further
      instruments  and  documents,  and take and cause to be taken all  further
      actions,  that may be necessary or that the Majority  Lenders through the
      Agent may  reasonably  request  to enable  the  Lenders  and the Agent to
      enforce the terms and  provisions of this Agreement and to exercise their
      rights  and  remedies  hereunder  or under any other  Loan  Document.  In
      addition,  the Parent will, and will cause its  Subsidiaries  to, use all
      reasonable  efforts to duly  obtain  Governmental  Approvals  required in
      connection  with the Loan Documents from time to time on or prior to such
      date as the same may become legally required,  and thereafter to maintain
      all such Governmental Approvals in full force and effect.

SECTION 5.02....Negative  Covenants.  So long as any  amount in respect of this
Agreement  shall  remain  unpaid  or  any  Lender  shall  have  any  Commitment
outstanding,  the Parent will not,  without the written consent of the Majority
Lenders:

<PAGE>

(a)   Liens, Etc. Create,  incur,  assume, or suffer to exist, or permit any of
      its Subsidiaries to create,  incur, assume, or suffer to exist, any lien,
      security interest, or other charge or encumbrance  (including the lien or
      retained  security  title of a  conditional  vendor) of any kind,  or any
      other type of  arrangement  intended  or having the effect of  conferring
      upon a creditor a  preferential  interest  upon or with respect to any of
      its  properties  of  any  character   (including,   without   limitation,
      accounts)  (any of the foregoing  being  referred to herein as a "Lien"),
      excluding,  however, from the operation of the foregoing restrictions any
      Liens created under the Loan Documents and the following:

          (i) Liens for taxes,  assessments or governmental charges or levies to
     the extent not past due;

          (ii)  Liens  imposed  by  law,  such  as  materialmen's,   mechanics',
     carriers',  workmen's and repairmen's liens and other similar Liens arising
     in the  ordinary  course of  business  securing  obligations  which are not
     overdue or which are being contested in good faith,  provided that any such
     contested Lien securing an amount claimed in excess of $1,000,000  shall be
     fully bonded within 90 days after the imposition of such Lien;

          (iii)  pledges  or  deposits  to secure  obligations  under  workmen's
     compensation  laws or similar  legislation,  to secure  public or statutory
     obligations  of the Parent or such  Subsidiary,  or to secure  the  utility
     obligations  of any such  Subsidiary  incurred  in the  ordinary  course of
     business;

          (iv)  (A)  purchase  money  Liens  upon or in  property  now  owned or
     hereafter acquired by the Parent or any of its Subsidiaries in the ordinary
     course of business (consistent with present practices,  it being understood
     that  for  purposes  of  this  paragraph,  the  purchase,  construction  or
     maintenance of generating facilities by the Utilities shall be deemed to be
     in the ordinary course of business and consistent  with present  practices)
     to secure  (1) the  purchase  price of such  property or (2) Debt  incurred
     solely for the  purpose  of  financing  the  acquisition,  construction  or
     improvement of any such property to be subject to such Liens,  or (B) Liens
     existing on any such property at the time of  acquisition,  or  extensions,
     renewals or  replacements  of any of the foregoing for the same or a lesser
     amount,  provided  that no such Lien shall  extend to or cover any property
     other  than  the  property  being  acquired, constructed  or  improved  and
     replacements,  modifications  and  proceeds of such  property,  and no such
     extension, renewal or replacement shall extend to or cover any property not
     theretofore subject to the Lien being extended, renewed or replaced;

          (v) Liens on the capital  stock of any of the Parent's  single-purpose
     Subsidiaries  or any such  Subsidiary's  assets to secure the  repayment of
     project financing or Nonrecourse Debt for such Subsidiary;

          (vi) attachment, judgment or other similar Liens arising in connection
     with court proceedings, provided that the execution or other enforcement of
     such Liens is effectively  stayed and the claims secured  thereby are being
     actively contested in good faith by appropriate  proceedings or the payment
     of which is covered in full  (subject to customary  deductible  amounts) by
     insurance maintained with responsible insurance companies;

          (vii)  Liens  securing   obligations  under  agreements  entered  into
     pursuant to the Iowa  Industrial  New Jobs  Training  Act or any similar or
     successor  legislation,  provided  that  such  obligations  do  not  exceed
     $1,000,000 in the aggregate at any one time outstanding;

          (viii) Liens created pursuant to the Mortgage Bond Indentures;

          (ix)  Liens on the  ownership  interests  in,  and the  assets of, any
     Foreign Subsidiary to secure not more than $250 million aggregate principal
     amount of Debt of any Foreign  Subsidiary;  provided  that in the event any
     such Debt is not  denominated  in Dollars,  the  calculation  of the Dollar
     equivalent  amount  of  such  Debt  shall  be  made  as of the  date of the
     incurrence of such Lien securing such Debt;

<PAGE>

          (x) Liens in favor of Citibank,  N.A., as  administrative  agent under
     the  Utility  Facilities  to  secure  the  obligations  of  the  respective
     Utilities  under such  agreements,  and Liens in favor of Bank One,  NA, as
     administrative  agent,  for the benefit of the  Lenders,  under the Whiting
     Financing to secure the obligations of Whiting Petroleum  Corporation under
     the Whiting Financing; and

          (xi) other Liens set forth in Schedule II  hereto,  and any extensions
     or  renewals  of any such  Liens upon or in the same  property  theretofore
     subject thereto.

(b)   Debt.  Create,  incur,  assume, or suffer to exist or permit the Borrower
      to create, incur, assume, or suffer to exist, any Debt other than:

          (A) Debt hereunder and under the other Loan Documents;

          (B)  unsecured  Debt owing by the Parent to the  Utilities;  provided,
     however, that the aggregate amount of all such Debt owing to any Utility at
     any  time  shall  not  exceed  the  amount  that  such  Utility  could,  in
     conformance  with  applicable  law,  dividend  to the  Parent at such time;
     further  provided,  however,  that the  foregoing  shall not  restrict  the
     Parent's ability to incur unsecured Debt owing to any Utility in connection
     with the Utility Money Pool;

          (C)  unsecured  Debt  owing  by  the  Borrower  to  its  Subsidiaries,
     including, without limitation,  unsecured Debt owing to any such Subsidiary
     in connection with the Non-Utility Money Pool; and

          (D) other Debt of the Parent  and/or the  Borrower  that is pari passu
     with, or subordinate to, the Debt hereunder, provided that the Parent is in
     compliance with Sections 2.04 and 5.02(h).

(c)   Compliance with ERISA.  (i) Permit,  or permit any of its Subsidiaries to
      permit to exist any  "accumulated  funding  deficiency"  (as  defined  in
      Section 412(a)  of the  Internal  Revenue  Code of 1986,  as amended from
      time to time) (unless such  deficiency  exists with respect to a Multiple
      Employer Plan or Multiemployer Plan and the Parent or its Subsidiary,  as
      applicable,  has no control  over the  reduction or  elimination  of such
      deficiency),  (ii) terminate,  or permit any of its  Subsidiaries  or any
      ERISA Affiliate of the Parent or its Subsidiaries to terminate,  any Plan
      of the Parent,  such Subsidiary or such ERISA  Affiliate,  as applicable,
      so as to result in any material (in the opinion of the Majority  Lenders)
      liability  of the  Parent  or any of its  Subsidiaries  to the  PBGC,  or
      (iii) permit,  or permit any of its  Subsidiaries  to permit to exist any
      occurrence of any Reportable Event (as defined in Title IV of ERISA),  or
      any other event or condition,  which  presents a material (in the opinion
      of the Majority  Lenders) risk of such a  termination  by the PBGC of any
      Plan of the Parent,  such  Subsidiary or such ERISA  Affiliate and such a
      material liability to the Parent.

(d)   Transactions   with  Affiliates.   Enter  into,  or  permit  any  of  its
      Subsidiaries  to enter into,  any  transaction  with an  Affiliate of the
      Parent,  unless such  transaction  is on terms no less  favorable  to the
      Parent or such  Subsidiary,  as the case may be, than if the  transaction
      had been  negotiated in good faith on an arm's length basis with a Person
      that was not an Affiliate  of the Parent,  or such  transaction  has been
      approved by the Securities and Exchange Commission pursuant to PUHCA.

<PAGE>

(e)   Mergers, Etc.

          (i) merge with or into or  consolidate  with or into any other Person,
     except the Parent may merge with or into or consolidate with or into any of
     its  Subsidiaries,  provided that immediately  after giving effect thereto,
     (A) no event shall occur and be continuing  that  constitutes  an Unmatured
     Default or an Event of Default, (B) the Parent is the surviving corporation
     and (C) the  Parent  shall not be liable with  respect to any Debt or allow
     its  property  to be subject  to any Lien which it could not become  liable
     with  respect  to or allow its  property  to become  subject  to under this
     Agreement or any other Loan Document on the date of such transaction; or

          (ii)  permit  any of  its  Subsidiaries  to  merge  with  or  into  or
     consolidate with or into any other Person,  except that any such Subsidiary
     may merge with or into any other Person,  provided that  immediately  after
     giving effect thereto, (A) the surviving corporation is a Subsidiary of the
     Parent,  (B) no event shall occur and be  continuing  that  constitutes  an
     Unmatured  Default or an Event of Default and (C) the  Parent or any of its
     Subsidiaries  shall not be  liable  with  respect  to any Debt or allow its
     property  to be subject to any Lien which it could not become  liable  with
     respect to or allow its property to become  subject to under this Agreement
     or any other Loan Document on the date of such transaction.

(f)   Sales,  Etc.,  of Assets.  Sell,  lease,  transfer,  assign or  otherwise
      dispose of any of its assets,  or permit any of its Subsidiaries to sell,
      lease,  transfer,  assign  or  otherwise  dispose  of any of its  assets,
      except (i) sales,  leases,  transfers and assignments from one Subsidiary
      of the Parent to another such Subsidiary,  (ii) in connection with a sale
      and leaseback  transaction  entered into by any Subsidiary of the Parent,
      (iii) sales,   leases,   transfers  and   assignments   of  other  assets
      representing  not in excess of 5% of the  consolidated  assets (valued at
      book value) of the Parent and its  Subsidiaries  in the aggregate  during
      any  12-calendar-month  period in any  single or series of  transactions,
      whether or not related  and sales,  leases,  transfers and assignments of
      worn out or obsolete  equipment no longer used and useful in the business
      of  the  Parent  and  its   Subsidiaries,   (iv)   dispositions   of  the
      transmission   assets   of  IPL  and  its   Subsidiaries   to   TRANSlink
      Transmission Company or to any other Regional  Transmission  Organization
      authorized  by the  Federal  Energy  Regulatory  Commission,  (v) sale or
      capital  contribution of nuclear  generation assets to Nuclear Management
      Company LLC,  (vi) sales of accounts  receivable  by Cogenex  Corporation
      and its  Subsidiaries  and Energy  Performance  Services,  Inc. and (vii)
      sales  of  accounts   receivable  by  the  Utilities  pursuant  to  asset
      securitization  transactions  to which one or both of the  Utilities  may
      now or hereafter be a party;  provided in each case  described in clauses
      (i) to (vii) above,  that no Unmatured  Default or Event of Default shall
      have occurred and be continuing  after giving  effect  thereto;  provided
      further  that the  Parent or any of its  Subsidiaries  may,  pursuant  to
      Section  5.02(a)(ix),  pledge its ownership  interests in, and the assets
      of,  any  Foreign  Subsidiary  to  secure  not  more  than  $250  million
      aggregate  principal  amount of Debt incurred by any Foreign  Subsidiary;
      provided  further that in the event any such Debt is not  denominated  in
      Dollars,  the  calculation of the Dollar  equivalent  amount of such Debt
      shall  be made as of the  date  of the  pledge  of  assets  or  ownership
      interests, as the case may be, securing such Debt.

(g)   Maintenance  of  Ownership of  Significant  Subsidiaries.  Sell,  assign,
      transfer,  pledge or otherwise  dispose of any shares of capital stock of
      any of its Significant  Subsidiaries  or any warrants,  rights or options
      to  acquire  such  capital  stock,  or  permit  any  of  its  Significant
      Subsidiaries  to issue,  sell or  otherwise  dispose of any shares of its
      capital  stock or the capital stock of any other of its  Subsidiaries  or
      any  warrants,  rights or options to acquire such capital  stock,  except
      (and  only  to the  extent)  as may be  necessary  to  give  effect  to a
      transaction  permitted  by  subsection  (e)  above.  Notwithstanding  the
      foregoing,  the  Parent  or any  of its  Subsidiaries  may,  pursuant  to
      Section  5.02(a)(ix),  pledge its ownership  interests in, and the assets
      of,  any  Foreign  Subsidiary  to  secure  not  more  than  $250  million
      aggregate  principal  amount of Debt incurred by any Foreign  Subsidiary;
      provided that in the event any such Debt is not  denominated  in Dollars,
      the  calculation  of the Dollar  equivalent  amount of such Debt shall be
      made as of the date of the pledge of assets or  ownership  interests,  as
      the case may be, securing such Debt.

(h)   Capitalization  Ratio.  Permit  the  ratio  of  Consolidated  Debt of the
      Parent to Consolidated Capital of the Parent to exceed .65 to 1.00.

(i)   Consolidated Net Worth.  Permit,  at any time, its Consolidated Net Worth
      to be less than $1,400,000,000.

<PAGE>

(j)   Interest  Coverage  Ratio.  Permit,  as of the  last  day of each  fiscal
      quarter of the Parent,  the Interest  Coverage Ratio to be less than 2.50
      to 1.00.

(k)   Restrictive Agreements.  Directly or indirectly,  enter into or permit to
      exist,  or permit any of its  Significant  Subsidiaries  to enter into or
      permit to exist,  any  agreement  or other  arrangement  that  prohibits,
      restricts  or  imposes  any  condition  upon  the  ability  of any of the
      Significant  Subsidiaries  of the  Parent to  declare  or pay  dividends;
      provided  that the  foregoing  limitations  do not apply to (i) financial
      covenants  that  require  the  maintenance  of a  minimum  net  worth  or
      compliance  with  financial  tests as  conditions  to the  ability to pay
      dividends or make other  distributions  with respect to capital  stock or
      otherwise;  (ii)  restrictions  that arise only if dividends on preferred
      stock have not been paid;  (iii)  limitations or restrictions  imposed by
      law or in regulatory  proceedings and (iv)  limitations  imposed pursuant
      to  agreements  and  instruments  in effect on the date  hereof  (without
      giving effect to any  amendments or  modifications  to such  limitations)
      relating to Debt or Debt facilities.

(l)   Synthetic  Lease  Restrictions.  Enter into or permit any  Subsidiary  to
      enter into a synthetic lease transaction.

(m)   Capital  Expenditures.  Make or  commit  to make,  or  permit  any of its
      Subsidiaries to make or commit to make, any Capital Expenditures,  except
      for  Capital   Expenditures  (when  added  to  the  aggregate  amount  of
      investments  permitted by Section  5.02(n)(v)) in an aggregate amount not
      to  exceed  $600,000,000,  provided  that the  amount  permitted  by this
                                 --------
      paragraph   shall  be  increased  by  the  aggregate  Net  Cash  Proceeds
      available  for Capital  Expenditures  received  by the Parent  and/or its
      Subsidiaries  from the  issuance  subsequent  to the date  hereof of Debt
      and/or Equity Interests  (after  deducting  therefrom the amount thereof,
      if any,  that is required to be applied to prepay any Debt and/or  reduce
      any credit  facility  in  accordance  with any  mandatory  prepayment  or
      redemption  provisions of Section 2.04 or of any other Debt of the Parent
      or any of its  Subsidiaries  in existence  on the date of this  Agreement
      that are  applicable);  it is agreed that for  purposes  of this  Section
      5.02(m),  borrowings  under any credit  facility in existence on the date
      hereof shall not  constitute  an issuance of Debt  subsequent to the date
      hereof  except to the  extent,  if any,  that  such  credit  facility  is
      increased subsequent to the date hereof.

(n)   Investments,  Loans,  Advances,  Guarantees and  Acquisitions.  Purchase,
      hold or acquire,  or permit any of its Subsidiaries to purchase,  hold or
      acquire,  (including  pursuant to any merger with any Person that was not
      a wholly owned  Subsidiary  prior to such  merger) any Equity  Interests,
      evidences of Debt or other securities  (including any option,  warrant or
      other right to acquire any of the  foregoing) of, make or permit to exist
      any  loans or  advances  to,  guarantee  any  obligations  of, or make or
      permit  to exist  any  investment  or any other  interest  in,  any other
      Person,  or purchase or otherwise acquire (in one transaction or a series
      of transactions)  any assets of any other Person  constituting a business
      unit, except:

          (i) Cash and Cash Equivalents;

          (ii)  investments  by the Parent  existing  on the date  hereof in the
     Equity Interests of its Subsidiaries;

          (iii) loans or advances made by the Parent to any  Subsidiary and made
     by any Subsidiary to the Parent or any other Subsidiary (including, without
     limitation,  loans  and  advances  under  the  Utility  Money  Pool  or the
     Non-Utility Money Pool);

          (iv) guarantees constituting Debt permitted by Section 5.02(b);

          (v)  investment  in  an  aggregate  principal  amount  not  to  exceed
     $109,000,000  in  connection  with the purchase by the Parent or any of its
     Subsidiaries  of a 309  megawatt  natural-gas-fired  power plant in Neenah,
     Wisconsin from Mirant Corporation; and

          (vi) in connection with a transaction permitted by Section 5.2(e).

<PAGE>

(o)   Restricted  Payments.  At any time after the Parent  Facility  shall have
      expired (in accordance  with the terms and  conditions  thereof in effect
      on the date hereof,  without  giving effect to any extensions or renewals
      thereof) or been  terminated  and all amounts  payable  thereunder  shall
      have  been  paid in  full,  declare  or  make,  or  agree to pay or make,
      directly or  indirectly,  any Restricted  Payment,  except (i) the Parent
      may declare and pay regular  quarterly  dividends on shares of its issued
      and  outstanding  common  stock,  (ii) the  Parent  may  declare  and pay
      dividends  with  respect  to  its  Equity  Interests  payable  solely  in
      additional  shares of its  common  stock and  (iii) the  Parent  may make
      Restricted  Payments  pursuant  to and in  accordance  with stock  option
      plans or other  benefit  plans for  management or employees of the Parent
      and its Subsidiaries.

(p)   Lines of Business.  Engage,  or permit any of its Subsidiaries to engage,
      to any material  extent in any business other than businesses of the type
      conducted  by the  Parent  and  its  Subsidiaries  on the  date  of  this
      Agreement and businesses reasonably related thereto.

                                   ARTICLE VI
                               EVENTS OF DEFAULT

SECTION 6.01....Events of  Default.  If any of the  following  events  (each an
"Event of Default")  shall occur and be continuing  after the applicable  grace
period and notice requirement (if any):

(a)   The Borrower  shall fail to pay any principal of any Borrowing  when such
principal becomes due and payable; or

(b)   The  Borrower  shall fail to pay any  interest  on any  Borrowing  or any
other  amount due under  this  Agreement  for two days  after the same  becomes
due; or

(c)   Any  representation or warranty made by or on behalf of the Parent in any
Loan  Document  or in any  certificate  or  other  writing  delivered  pursuant
thereto  shall prove to have been  incorrect in any material  respect when made
or deemed made; or

(d)   The Parent  shall fail to perform or observe  any term or covenant on its
part to be performed or observed  contained in  Section 5.01(c),  5.01(h)(i) or
5.02 (other than subsection (c) or (d) thereof); or

(e)   The Parent  shall fail to perform or observe  any other term or  covenant
on its part to be performed or observed  contained in this  Agreement or in any
other Loan Document,  and any such failure shall remain  unremedied,  after the
earlier  of (i)  actual  knowledge  by the  Parent  thereof,  and  (ii) written
notice  thereof  shall have been  given to the  Borrower  by the  Agent,  for a
period of 30 days; or

(f)   The Parent or any of its Subsidiaries  shall fail to pay any of its Debt,
including  any  interest  or  premium  thereon  but  excluding  Debt  hereunder
aggregating  $25,000,000  or more  when due  (whether  by  scheduled  maturity,
required  prepayment,  acceleration,  demand  or  otherwise)  and such  failure
shall  continue  after the applicable  grace period,  if any,  specified in any
agreement or  instrument  relating to such Debt; or any other default under any
agreement or instrument  relating to any such Debt,  or any other event,  shall
occur and shall continue after the applicable grace period,  if any,  specified
in such agreement or  instrument,  if the effect of such default or event is to
accelerate,  or to permit the  acceleration  of, the maturity of such Debt;  or
any such Debt  shall be  declared  to be due and  payable,  or  required  to be
prepaid  (other than by a regularly  scheduled  required  prepayment)  prior to
the stated  maturity  thereof as a result of a default or other similar adverse
event; or

(g)   The Parent or any of its  Significant  Subsidiaries  shall  generally not
pay its  debts as such  debts  become  due,  or  shall  admit  in  writing  its
inability  to pay its debts  generally,  or shall  make an  assignment  for the
benefit of creditors;  or any proceeding  shall be instituted by or against the
Parent  or any of its  Significant  Subsidiaries  seeking  to  adjudicate  it a
bankrupt or  insolvent,  or seeking  liquidation,  winding up,  reorganization,

<PAGE>

arrangement,  adjustment,  protection,  relief,  or  composition  of its  debts
under any law relating to bankruptcy,  insolvency,  or reorganization or relief
of debtors,  or seeking the entry of an order for relief or the  appointment of
a receiver,  trustee,  or other similar  official for it or for any substantial
part of its property  and, in the case of a proceeding  instituted  against the
Parent or any of its Significant  Subsidiaries,  either such  proceeding  shall
remain  undismissed  or unstayed  for a period of 60 days or any of the actions
sought in such proceeding  (including  without limitation the entry of an order
for  relief  against  the  Parent  or  such   Significant   Subsidiary  or  the
appointment  of a receiver,  trustee,  custodian or other similar  official for
the  Parent  or  such  Significant  Subsidiary  or any of its  property)  shall
occur;  or the  Parent or any of its  Significant  Subsidiaries  shall take any
corporate or other  action to  authorize  any of the actions set forth above in
this subsection (g); or

(h)   Any  judgment  or order for the payment of money equal to or in excess of
$25,000,000  shall be  rendered  against  the Parent or any of its  Significant
Subsidiaries   (including,   without   limitation,   the  Utilities)  or  their
respective  properties and either  (i) enforcement  proceedings shall have been
commenced by any creditor upon such  judgment or order or  (ii) there  shall be
any period of  30 consecutive  days during which a stay of  enforcement of such
judgment or order,  by reason of a pending  appeal or  otherwise,  shall not be
in effect; or

(i)   Any  material  provision  of any Loan  Document  to which any of the Loan
Parties is a party  shall for any reason  cease to be valid and binding on such
Loan Party or such Loan Party shall so assert in writing; or

(j)   Any  Governmental  Approval  required in connection  with the  execution,
delivery and  performance  of the Loan Documents  shall be rescinded,  revoked,
otherwise   terminated,   or  amended  or  modified  in  any  manner  which  is
materially adverse to the interests of the Lenders and the Agent; or

(k)   Any ERISA Event shall have  occurred  with  respect to a Plan which could
reasonably  be expected to result in a material  liability to the Parent or any
of its Significant  Subsidiaries,  and, 30 days after notice thereof shall have
been given to the  Borrower by the Agent or any Lender,  such ERISA Event shall
still exist; or

(l)   (i) The Parent shall cease to own 100% of the common equity  interests of
either of the  Utilities;  (ii) any  Person or "group"  (within  the meaning of
Section 13(d)  or 14(d) of the  Securities  Exchange Act  of 1934,  as amended)
shall  either  (A) acquire  beneficial  ownership  of  more  than  50%  of  any
outstanding  class of common stock of the Parent having  ordinary  voting power
in the  election of directors of the Parent or  (B) obtain  the power  (whether
or not  exercised)  to elect a majority of the Parent's  directors or (iii) the
Board  of  Directors  of  the  Parent  shall  not  consist  of  a  majority  of
Continuing Directors;

then, and in any such event,  the Agent  (i) shall at the request,  or may with
the  consent,  of the holders of greater  than 50% of the  principal  amount of
the  Advances  then  outstanding  or,  if no  Advances  are  then  outstanding,
Lenders  having  greater  than  50%  of  the  Commitments,  by  notice  to  the
Borrower,  declare the  obligation of each Lender to make  Advances,  whereupon
the same  shall  forthwith  terminate,  and (ii) shall at the  request,  or may
with the consent,  of the holders of greater  than 50% in  principal  amount of
the  Advances  then  outstanding  or,  if no  Advances  are  then  outstanding,
Lenders  having  greater  than  50%  of  the  Commitments,  by  notice  to  the
Borrower,  declare the  Advances (if any),  all interest  thereon and all other
amounts  payable  under  this  Agreement  to  be  forthwith  due  and  payable,
whereupon  the  Advances,  all such  interest and all such amounts shall become
and be  forthwith  due and payable,  without  presentment,  demand,  protest or
further  notice of any kind,  all of which are hereby  expressly  waived by the
Borrower;  provided,  however,  that in the event of an actual or deemed  entry
of an  order  for  relief  with  respect  to the  Borrower  under  the  Federal
Bankruptcy  Code,  (A) the  Commitments  and the  obligation  of each Lender to
make  Advances  shall  automatically  be terminated  and (B) the Advances,  all
such  interest and all such amounts shall  automatically  become and be due and
payable,  without presentment,  demand,  protest or any notice of any kind, all
of which are hereby expressly waived by the Borrower.

<PAGE>

                                  ARTICLE VII
                                   GUARANTEE

SECTION 7.01....Guarantee.

(a)   Each of the Guarantors  hereby,  jointly and  severally,  unconditionally
and  irrevocably,  guarantees  to the  Agent,  for the  ratable  benefit of the
Lenders and their respective  successors,  indorsees,  transferees and assigns,
the prompt and  complete  payment  and  performance  by the  Borrower  when due
(whether  at  the  stated  maturity,  by  acceleration  or  otherwise)  of  the
Borrower Obligations.

(b)   Anything   herein  or  in  any  other  Loan   Document  to  the  contrary
notwithstanding,  the maximum  liability of each Guarantor  hereunder and under
the other Loan  Documents  shall in no event  exceed  the  amount  which can be
guaranteed by such Guarantor under  applicable  federal and state laws relating
to  the   insolvency   of  debtors   (after  giving  effect  to  the  right  of
contribution established in Section 7.02).

(c)   Each Guarantor  agrees that the Borrower  Obligations may at any time and
from  time to  time  exceed  the  amount  of the  liability  of such  Guarantor
hereunder  without  impairing  the  guarantee  contained in this Article VII or
affecting the rights and remedies of the Agent or any Lender hereunder.

(d)   The  guarantee  contained  in this Article VII shall remain in full force
and effect  until all the  Borrower  Obligations  and the  obligations  of each
Guarantor  under the  guarantee  contained  in this Article VII shall have been
satisfied  by  payment  in  full  and  the  Commitments  shall  be  terminated,
notwithstanding  that from time to time during the term of this  Agreement  the
Borrower may be free from any  Borrower  Obligations;  provided  that if at any
time  hereafter all the Equity  Interests of HPI or AEI are sold to a Person or
Persons  other than the  Parent or any of its  Subsidiaries,  such  Guarantor's
obligations under this Agreement shall automatically be terminated.

(e)   No  payment  made  by the  Borrower,  any of the  Guarantors,  any  other
guarantor  or any other  Person or  received or  collected  by the Agent or any
Lender from the Borrower,  any of the  Guarantors,  any other  guarantor or any
other  Person  by  virtue  of  any  action  or  proceeding  or any  set-off  or
appropriation  or  application at any time or from time to time in reduction of
or in payment of the Borrower  Obligations  shall be deemed to modify,  reduce,
release or otherwise  affect the  liability of any  Guarantor  hereunder  which
shall,  notwithstanding  any such payment  (other than any payment made by such
Guarantor in respect of the  Borrower  Obligations  or any payment  received or
collected from such Guarantor in respect of the Borrower  Obligations),  remain
liable  for  the  Borrower  Obligations  up to the  maximum  liability  of such
Guarantor  hereunder  until the Borrower  Obligations  are paid in full and the
Commitments are terminated.

SECTION 7.02....Right of  Contribution.  Each of the Guarantors  other than the
Parent (each, a "Subsidiary  Guarantor")  hereby agrees that to the extent that
a Subsidiary  Guarantor  shall have paid more than its  proportionate  share of
any payment made  hereunder,  such  Subsidiary  Guarantor  shall be entitled to
seek and receive  contribution from and against any other Subsidiary  Guarantor
hereunder  which has not paid its  proportionate  share of such  payment.  Each
Subsidiary  Guarantor's  right of  contribution  shall be  subject to the terms
and  conditions of Section 7.03.  The  provisions of this Section 7.02 shall in
no respect limit the obligations  and  liabilities of any Subsidiary  Guarantor
to the  Agent and the  Lenders,  and each  Subsidiary  Guarantor  shall  remain
liable to the Agent and the  Lenders  for the full  amount  guaranteed  by such
Subsidiary Guarantor hereunder.

SECTION 7.03....No  Subrogation.   Notwithstanding  any  payment  made  by  any
Guarantor  hereunder or any set-off or  application  of funds of any  Guarantor
by the Agent or any Lender,  no  Guarantor  shall be entitled to be  subrogated
to any of the rights of the Agent or any Lender  against  the  Borrower  or any
other  Guarantor  or any  collateral  security or  guarantee or right of offset
held by the Agent or any Lender for the  payment of the  Borrower  Obligations,
nor  shall  any  Guarantor  seek or be  entitled  to seek any  contribution  or
reimbursement  from the Borrower or any other  Guarantor in respect of payments
made by such  Guarantor  hereunder,  until all  amounts  owing to the Agent and
the Lenders by the  Borrower on account of the  Borrower  Obligations  are paid
in full and the  Commitments  are  terminated.  If any amount  shall be paid to
any  Guarantor  on account of such  subrogation  rights at any time when all of
the Borrower  Obligations  shall not have been paid in full,  such amount shall
be held by such  Guarantor in trust for the Agent and the  Lenders,  segregated
from other funds of such Guarantor,  and shall,  forthwith upon receipt by such
Guarantor,  be  turned  over to the Agent in the exact  form  received  by such
Guarantor  (duly indorsed by such Guarantor to the Agent,  if required),  to be
applied  against the Borrower  Obligations,  whether  matured or unmatured,  in
such order as the Agent may determine.

<PAGE>

SECTION 7.04....Amendments,  etc.  with  respect to the  Borrower  Obligations.
Each Guarantor shall remain obligated hereunder  notwithstanding  that, without
any  reservation  of rights  against any  Guarantor  and  without  notice to or
further  assent  by  any  Guarantor,  any  demand  for  payment  of  any of the
Borrower  Obligations  made by the Agent or any Lender may be  rescinded by the
Agent or such Lender and any of the  Borrower  Obligations  continued,  and the
Borrower  Obligations,  or the  liability  of any other  Person upon or for any
part  thereof,  or any  collateral  security or guarantee  therefor or right of
offset with respect  thereto,  may,  from time to time, in whole or in part, be
renewed,  extended,  amended,  modified,  accelerated,   compromised,   waived,
surrendered  or released by the Agent or any Lender in accordance  with Section
9.01, and this  Agreement and the other Loan Documents and any other  documents
executed  and  delivered  in  connection  therewith  may be amended,  modified,
supplemented  or  terminated,  in whole or in part in  accordance  with Section
9.01,  as the Agent (or the Majority  Lenders or all  Lenders,  as the case may
be) may  deem  advisable  from  time to  time,  and  any  collateral  security,
guarantee  or right of offset at any time held by the Agent or any  Lender  for
the  payment  of the  Borrower  Obligations  may be  sold,  exchanged,  waived,
surrendered  or  released.  Neither  the Agent nor any  Lender  shall  have any
obligation to protect,  secure,  perfect or insure any Lien at any time held by
it as security for the Borrower  Obligations or for the guarantee  contained in
this Article VII or any property subject thereto.

SECTION 7.05....Guarantee  Absolute and  Unconditional.  Each Guarantor  waives
any and all notice of the  creation,  renewal,  extension  or accrual of any of
the  Borrower  Obligations  and notice of or proof of  reliance by the Agent or
any Lender upon the  guarantee  contained in this Article VII or  acceptance of
the  guarantee  contained in this Article  VII; the Borrower  Obligations,  and
any of them, shall  conclusively be deemed to have been created,  contracted or
incurred,  or  renewed,  extended,  amended or  waived,  in  reliance  upon the
guarantee  contained  in  this  Article  VII;  and  all  dealings  between  the
Borrower  and any of the  Guarantors,  on the one  hand,  and the Agent and the
Lenders,  on the other hand,  likewise shall be  conclusively  presumed to have
been had or  consummated  in  reliance  upon the  guarantee  contained  in this
Article VII. Each Guarantor  waives  diligence,  presentment,  protest,  demand
for  payment  and notice of default or  nonpayment  to or upon the  Borrower or
any  of  the  Guarantors  with  respect  to  the  Borrower  Obligations.   Each
Guarantor  understands and agrees that the guarantee  contained in this Article
VII shall be construed as a continuing,  absolute and  unconditional  guarantee
of  payment  without  regard  to (a) the  validity  or  enforceability  of this
Agreement or any other Loan  Document,  any of the Borrower  Obligations or any
other  collateral  security  therefor  or  guarantee  or right of  offset  with
respect  thereto  at any  time or from  time to time  held by the  Agent or any
Lender,  (b) any  defense,  set-off or  counterclaim  (other  than a defense of
payment or  performance)  which may at any time be  available to or be asserted
by the  Borrower or any other  Person  against the Agent or any Lender,  or (c)
any other  circumstance  whatsoever  (with or without notice to or knowledge of
the Borrower or such  Guarantor)  which  constitutes,  or might be construed to
constitute,  an equitable  or legal  discharge of the Borrower for the Borrower
Obligations,  or of  such  Guarantor  under  the  guarantee  contained  in this
Article VII, in  bankruptcy  or in any other  instance.  When making any demand
hereunder or otherwise  pursuing its rights and remedies  hereunder against any
Guarantor,  the Agent or any Lender may, but shall be under no  obligation  to,
make a similar  demand on or  otherwise  pursue such rights and  remedies as it
may have  against the  Borrower,  any other  Guarantor  or any other  Person or
against any  collateral  security or guarantee for the Borrower  Obligations or
any right of offset with respect  thereto,  and any failure by the Agent or any
Lender to make any such  demand,  to pursue such other rights or remedies or to
collect  any  payments  from the  Borrower,  any other  Guarantor  or any other
Person or to realize  upon any such  collateral  security  or  guarantee  or to
exercise any such right of offset,  or any release of the  Borrower,  any other
Guarantor or any other  Person or any such  collateral  security,  guarantee or
right  of  offset,  shall  not  relieve  any  Guarantor  of any  obligation  or
liability  hereunder,  and shall not impair or affect the rights and  remedies,
whether  express,  implied or available as a matter of law, of the Agent or any
Lender against any Guarantor.  For the purposes  hereof  "demand" shall include
the commencement and continuance of any legal proceedings.

SECTION 7.06....Reinstatement.  The  guarantee  contained  in this  Article VII
shall  continue to be effective,  or be  reinstated,  as the case may be, if at
any time payment,  or any part thereof,  of any of the Borrower  Obligations is
rescinded  or must  otherwise  be  restored  or  returned  by the  Agent or any
Lender  upon  the   insolvency,   bankruptcy,   dissolution,   liquidation   or
reorganization  of the  Borrower  or any  Guarantor,  or upon or as a result of
the  appointment  of a receiver,  intervenor or  conservator  of, or trustee or
similar officer for, the Borrower or any Guarantor or any  substantial  part of
its property, or otherwise, all as though such payments had not been made.

<PAGE>

SECTION 7.07....Payments.   Each  Guarantor  hereby  guarantees  that  payments
hereunder  will  be  paid to the  Agent  without  set-off  or  counterclaim  in
Dollars.

                                 ARTICLE VIII
                                   THE AGENT

SECTION 8.01....Authorization  and Action.  Each  Lender  hereby  appoints  and
authorizes  the  Agent  to take  such  action  as agent  on its  behalf  and to
exercise  such powers  under this  Agreement  as are  delegated to the Agent by
the terms  hereof,  together  with such  powers  as are  reasonably  incidental
thereto.  As to any matters not  expressly  provided  for by this  Agreement or
any  other  Loan  Document  (including,  without  limitation,   enforcement  or
collection  of the  Borrowings),  the Agent  shall not be  required to exercise
any  discretion or take any action,  but shall be required to act or to refrain
from  acting  (and shall be fully  protected  in so acting or  refraining  from
acting) upon the instructions of the Majority  Lenders,  and such  instructions
shall  be  binding  upon  all  Lenders  and all  holders  of  Notes  (if  any);
provided,  however,  that the Agent  shall not be  required  to take any action
which  exposes  the Agent to  personal  liability  or which is contrary to this
Agreement or  applicable  law.  The Agent agrees to give to each Lender  prompt
notice of each  notice  given to it by the  Borrower  pursuant  to the terms of
this  Agreement.  The Agent shall be deemed to have exercised  reasonable  care
in the  administration  and  enforcement  of this  Agreement and the other Loan
Documents if it undertakes  such  administration  and  enforcement  in a manner
substantially  equal to that which Merrill Lynch  Capital  Corporation  accords
credit  facilities  similar to the credit  facility  hereunder  for which it is
the sole lender.

SECTION 8.02....Agent's  Reliance,  Etc.  Neither  the  Agent  nor  any  of its
directors,  officers,  agents or employees shall be liable for any action taken
or  omitted  to be  taken  by it or  them  under  or in  connection  with  this
Agreement  or any  other  Loan  Document,  except  for its or their  own  gross
negligence or willful  misconduct.  Without limitation of the generality of the
foregoing,  the  Agent:  (i) may  treat  the  payee of any  Note as the  holder
thereof until the Agent receives and accepts a Lender  Assignment  entered into
by the Lender  which is the payee of such Note,  as  assignor,  and an Eligible
Assignee,  as  assignee,  as provided in  Section 9.07;  (ii) may  consult with
legal counsel  (including  counsel for the Parent, the Borrower or any of their
Subsidiaries),  independent  public  accountants and other experts  selected by
it and shall not be  liable  for any  action  taken or  omitted  to be taken in
good faith by it in  accordance  with the advice of such  counsel,  accountants
or experts;  (iii) makes no warranty or  representation to any Lender and shall
not  be   responsible  to  any  Lender  for  any   statements,   warranties  or
representations  (whether  written or oral) made in or in connection  with this
Agreement  or any  other  Loan  Document;  (iv)  shall  not  have  any  duty to
ascertain  or to  inquire as to the  performance  or  observance  of any of the
terms,  covenants or  conditions  of this  Agreement or any other Loan Document
on the part of the  Parent,  the  Borrower or any of their  Subsidiaries  or to
inspect the  property  (including  the books and  records)  of the Parent,  the
Borrower  or any of their  Subsidiaries;  (v) shall not be  responsible  to any
Lender   for   the   due   execution,   legality,   validity,   enforceability,
genuineness,  sufficiency or value of this  Agreement,  any other Loan Document
or any other instrument or document furnished  pursuant hereto or thereto;  and
(vi) shall  incur no  liability  under or in respect of this  Agreement  or any
other Loan Document by acting upon any notice,  consent,  certificate  or other
instrument or writing  (which may be by telecopier,  telegram,  cable or telex)
believed  by it to be  genuine  and  signed  or sent  by the  proper  party  or
parties.

SECTION 8.03....Agent and  Affiliates.  With respect to its  Commitment and the
Advances  made by it,  Merrill Lynch  Capital  Corporation  shall have the same
rights and powers  under this  Agreement  as any other  Lender and may exercise
the  same as  though  it were not the  Agent;  and the  term  the  "Lender"  or
"Lenders" shall,  unless otherwise  expressly  indicated,  include the Agent in
its   individual   capacity.   Merrill  Lynch  Capital   Corporation   and  its
Affiliates  may accept  deposits  from,  lend  money to,  act as trustee  under
indentures  of,  and  generally  engage  in any  kind  of  business  with,  the
Borrower,  any of its  Subsidiaries  and any Person who may do business with or
own  securities  of the  Borrower  or any such  Subsidiary,  all as if  Merrill
Lynch  Capital  Corporation  were not the Agent and without any duty to account
therefor to the Lenders.

<PAGE>

SECTION 8.04....Lender Credit Decision.  Each Lender  acknowledges that it has,
independently  and  without  reliance  upon the Agent or any other  Lender  and
based on the  financial  statements  referred  to in  Section 4.01(f)  and such
other  documents and  information  as it has deemed  appropriate,  made its own
credit  analysis  and decision to enter into this  Agreement.  Each Lender also
acknowledges  that it will,  independently  and without reliance upon the Agent
or any other Lender and based on such  documents  and  information  as it shall
deem  appropriate  at the time,  continue to make its own credit  decisions  in
taking or not taking action under this Agreement.

SECTION 8.05....Indemnification.  The Lenders  agree to indemnify the Agent (to
the extent not  reimbursed  by the  Borrower),  ratably  according to (i) on or
before the  Termination  Date,  the respective  Percentages of the Lenders,  or
(ii) after the Termination Date, the respective  outstanding  principal amounts
of the  Advances,  from  and  against  any  and all  liabilities,  obligations,
losses,  damages,  penalties,  actions,  judgments,  suits, costs,  expenses or
disbursements  of any  kind or  nature  whatsoever  which  may be  imposed  on,
incurred  by, or asserted  against the Agent in any way  relating to or arising
out of this  Agreement  or any action  taken or omitted by the Agent under this
Agreement,  provided  that no Lender  shall be liable  for any  portion of such
liabilities,  obligations,  losses,  damages,  penalties,  actions,  judgments,
suits,  costs,  expenses or  disbursements  resulting  from the  Agent's  gross
negligence or willful  misconduct.  Without  limitation of the foregoing,  each
Lender  agrees to  reimburse  the Agent  promptly  upon  demand for its ratable
share of any out-of-pocket  expenses  (including  counsel fees) incurred by the
Agent   in   connection   with   the    preparation,    execution,    delivery,
administration,   modification,   amendment  or  enforcement  (whether  through
negotiations,  legal  proceedings  or otherwise) of, or legal advice in respect
of rights or  responsibilities  under,  this Agreement,  to the extent that the
Agent is not reimbursed for such expenses by the Borrower.

SECTION 8.06....Successor  Agent.  The Agent  may  resign at any time by giving
written  notice  thereof to the Lenders and the  Borrower and may be removed at
any  time  with or  without  cause  by the  Majority  Lenders,  with  any  such
resignation  or  removal to become  effective  only upon the  appointment  of a
successor  Agent pursuant to this  Section 8.06.  Upon any such  resignation or
removal,  the  Majority  Lenders  shall have the right to  appoint a  successor
Agent,  which  shall be a Lender or shall be another  commercial  bank or trust
company  (and  reasonably  acceptable  to the  Borrower  so long as no Event of
Default  exists)  organized under the laws of the United States or of any State
thereof.  If no  successor  Agent shall have been so  appointed by the Majority
Lenders,  and shall have  accepted such  appointment,  within 30 days after the
retiring  Agent's  giving of notice of  resignation  or the  Majority  Lenders'
removal of the retiring  Agent,  then the retiring  Agent may, on behalf of the
Lenders,  appoint  a  successor  Agent,  which  shall be a  Lender  or shall be
another  commercial  bank or  trust  company  organized  under  the laws of the
United  States of any State  thereof  reasonably  acceptable  to the  Borrower.
Upon the  acceptance  of any  appointment  as Agent  hereunder  by a  successor
Agent,  such successor Agent shall thereupon  succeed to and become vested with
all the rights,  powers,  privileges and duties of the retiring Agent,  and the
retiring Agent shall be discharged from its duties and  obligations  under this
Agreement.  After any  retiring  Agent's  resignation  or removal  hereunder as
Agent,  the  provisions of this  Article VIII  shall inure to its benefit as to
any  actions  taken or omitted to be taken by it while it was Agent  under this
Agreement.

                                  ARTICLE IX
                                 MISCELLANEOUS

SECTION 9.01....Amendments,  Etc. No  amendment  or waiver of any  provision of
any Loan  Document,  nor consent to any  departure by the  Borrower  therefrom,
shall in any  event  be  effective  unless  the same  shall be in  writing  and
signed  by the  Majority  Lenders  and,  in the  case  of  any  amendment,  the
Borrower,  and then  such  waiver or  consent  shall be  effective  only in the
specific  instance  and for the  specific  purpose for which  given;  provided,
however,  that no  amendment,  waiver or consent  shall,  unless in writing and
signed  by all the  Lenders,  do any of the  following:  (a) waive,  modify  or
eliminate  any  of  the   conditions   specified  in   Section 3.01   or  3.02,
(b) increase  or extend the  Commitments  of the Lenders or subject the Lenders
to any  additional  obligations,  (c) reduce  the principal of, or interest on,
the  Advances,  any  Applicable  Margin  or any fees or other  amounts  payable
hereunder,  (d) postpone  any date fixed for any  payment of  principal  of, or
interest  on, the  Advances  or any fees or other  amounts  payable  hereunder,
(e) change  the  percentage  of  the  Commitments  or of the  aggregate  unpaid
principal  amount of the  Advances,  or the number of  Lenders,  which shall be
required  for  the  Lenders  or any of  them  to  take  any  action  hereunder,
(f) amend  this  Section 9.01  or  (g) release  any collateral for the Borrower

<PAGE>

Obligations or the  obligations of the Guarantors  under Article VII or release
any of the  Guarantors  from its  obligations  under Article VII; and provided,
further,  that no  amendment,  waiver or consent  shall,  unless in writing and
signed by the Agent in  addition  to the  Lenders  required  above to take such
action,  affect the rights or duties of the Agent under this  Agreement  or any
Note;  and  provided,  further that this  Agreement may be amended and restated
without the  consent of any Lender or the Agent if, upon giving  effect to such
amendment  and  restatement,  such  Lender  or the  Agent,  as the case may be,
shall no longer be a party to this  Agreement  (as so amended and  restated) or
have any Commitment or other  obligation  hereunder and shall have been paid in
full all amounts  payable  hereunder  to such Lender or the Agent,  as the case
may be.

SECTION 9.02....Notices,  Etc.  All notices and other  communications  provided
for  hereunder  and  under  the  other  Loan  Documents  shall  be  in  writing
(including telecopier,  telegraphic,  telex or cable communication) and mailed,
telecopied,  telegraphed,  telexed, cabled or delivered, if to the Borrower, at
its address at 4902 North Biltmore Lane,  Madison,  Wisconsin  53718-2132 Attn:
Treasurer,  or  P.O.  Box  77007,  Madison,  Wisconsin  53707-1007;  if to  the
Parent,  at its  address  at  4902  North  Biltmore  Lane,  Madison,  Wisconsin
53718-2132 Attn: Treasurer,  or P.O. Box 77007,  Madison,  Wisconsin 53707-1007
Attn:  Treasurer;  if to HPI or AEI, to it in care of the Parent at the address
of the Parent set forth  above;  if to any Lender  listed on Schedule I hereto,
at its Domestic  Lending Office  specified  opposite its name on said Schedule;
if to any  other  Lender,  at its  Domestic  Lending  Office  specified  in the
Lender  Assignment  pursuant to which it became a Lender;  and if to the Agent,
at its address at 4 World  Financial  Center - 16th Floor,  New York, NY 10080,
Attention:  Eve  Lam / Mark  Campbell;  or,  as to each  party,  at such  other
address as shall be designated  by such party in a written  notice to the other
parties.  All such notices and communications  shall, when mailed,  telecopied,
telegraphed,  telexed or cabled,  be effective five days after being  deposited
in  the  mails,  or  when  delivered  to  the  telegraph  company,  telecopied,
confirmed   by  telex   answerback   or   delivered   to  the  cable   company,
respectively,  except that notices and  communications to the Agent pursuant to
Article II or VIII shall not be effective until received by the Agent.

SECTION 9.03....No  Waiver;  Remedies.  No failure on the part of any Lender or
the Agent to  exercise,  and no delay in  exercising,  any right  hereunder  or
under any Note  shall  operate  as a waiver  thereof;  nor shall any  single or
partial  exercise  of any such right  preclude  any other or  further  exercise
thereof or the exercise of any other right.  The remedies  herein  provided are
cumulative and not exclusive of any remedies provided by law.

SECTION 9.04....Costs, Expenses, Taxes and Indemnification.

(a)   The Borrower  agrees to pay on demand all costs and expenses of the Agent
and the  Arranger  in  connection  with  the  preparation  (including,  without
limitation,  printing costs), negotiation,  execution,  delivery,  modification
and  amendment of this  Agreement and the other Loan  Documents,  and the other
documents  and   instruments   to  be  delivered   hereunder  and   thereunder,
including,  without limitation,  the reasonable fees and out-of-pocket expenses
of counsel  for each of the Agent and the  Arranger  with  respect  thereto and
with  respect  to the  administration  of,  and  advising  the  Agent  and  the
Arranger as to its rights and  responsibilities  under,  this Agreement and the
other Loan  Documents.  The Borrower  further agrees to pay on demand all costs
and expenses,  if any (including,  without limitation,  reasonable counsel fees
and expenses of the Agent,  the Arranger and each Lender),  in connection  with
the enforcement and workout (whether through  negotiations,  legal  proceedings
or  otherwise)  of this  Agreement  and the other Loan  Documents and the other
documents  and   instruments   to  be  delivered   hereunder  and   thereunder,
including,  without  limitation,   reasonable  counsel  fees  and  expenses  in
connection  with the  enforcement  of rights  under  this  Section 9.04(a).  In
addition,  the Borrower  shall pay any and all stamp and other taxes payable or
determined  to be payable in  connection  with the  execution  and  delivery of
this  Agreement  and the other  Loan  Documents,  and the other  documents  and
instruments to be delivered  hereunder and  thereunder,  and agrees to save the
Agent,  the  Arranger  and each  Lender  harmless  from and against any and all
liabilities  with respect to or resulting  from any delay in paying or omission
to pay such taxes.

(b)   If any payment of principal of, or  Conversion  of, any  Eurodollar  Rate
Advance  is made  other  than on the last day of the  Interest  Period for such
Advance as a result of a payment or  Conversion  pursuant  to  Section 2.08(f),
2.09,  2.10,  2.11 or 2.13 or  acceleration  of the  maturity  of the  Advances
pursuant to  Section 6.01  or for any other reason,  the Borrower  shall,  upon
demand by any  Lender  (with a copy of such  demand to the  Agent),  pay to the
Agent  for the  account  of such  Lender,  as the  case  may  be,  any  amounts
required  to  compensate  such  Lender  for any  additional  losses,  costs  or
expenses  which  it may  reasonably  incur  as a  result  of  such  payment  or
Conversion,  including,  without limitation, any loss, cost or expense incurred
by reason  of the  liquidation  or  reemployment  of  deposits  or other  funds
acquired by any Lender to fund or maintain such Advance.

<PAGE>

(c)   The Borrower  hereby agrees to indemnify and hold each Lender,  the Agent
and their respective  officers,  directors,  employees,  professional  advisors
and affiliates  (each, an "Indemnified  Person")  harmless from and against any
and all claims,  damages,  losses,  liabilities,  costs or expenses  (including
reasonable  attorney's  fees and  expenses,  whether  or not  such  Indemnified
Person  is named as a party to any  proceeding  or is  otherwise  subjected  to
judicial or legal process arising from any such  proceeding)  which any of them
may incur or which may be claimed  against  any of them by any  Person  (except
for such claims,  damages,  losses,  liabilities,  costs and expenses resulting
from such Indemnified Person's gross negligence or willful misconduct):

          (i)  by  reason  of or  resulting  from  the  execution,  delivery  or
     performance  of any of the Loan Documents or any  transaction  contemplated
     thereby,  or the  use  by the  Parent  or  any of its  Subsidiaries  of the
     proceeds of any Advance;

          (ii) in connection with any documentary taxes,  assessments or charges
     made by any governmental  authority by reason of the execution and delivery
     of any of the Loan Documents; or

          (iii) in connection with or resulting from the  utilization,  storage,
     disposal, treatment,  generation,  transportation,  release or ownership of
     any Hazardous  Substance (A) at,  upon, or under any property of the Parent
     or any of its Affiliates or (B) by or on behalf of the Parent or any of its
     Affiliates at any time and in any place.

(d)   The  Borrower's  obligations  under this  Section 9.04  shall survive the
repayment of all amounts  owing to the Lenders  hereunder  and the  termination
of  the  Commitments.  If  and  to  the  extent  that  the  obligations  of the
Borrower  under  this  Section 9.04  are  unenforceable  for  any  reason,  the
Borrower   agrees  to  make  the  maximum   contribution  to  the  payment  and
satisfaction thereof which is permissible under applicable law.

SECTION 9.05....Right of Set-off.

(a)   Upon  (i) the  occurrence  and  during  the  continuance  of any Event of
Default and  (ii) the  making of the request or the  granting of the consent by
the Majority  Lenders  specified  by  Section 6.01  to  authorize  the Agent to
declare  all  amounts  owing   hereunder  due  and  payable   pursuant  to  the
provisions of  Section 6.01,  each Lender is hereby  authorized at any time and
from time to time,  to the  fullest  extent  permitted  by law,  to set off and
apply any and all  deposits  (general or special,  time or demand,  provisional
or final) at any time held and  other  indebtedness  at any time  owing by such
Lender to or for the credit or the  account  of the  Borrower  against  any and
all of the  obligations  of the Borrower now or  hereafter  existing  under any
Loan Document,  irrespective  of whether or not such Lender shall have made any
demand  under  such  Loan  Document  and  although  such   obligations  may  be
unmatured.  Each Lender agrees  promptly to notify the Borrower  after any such
set-off  and  application  made by such  Lender,  provided  that the failure to
give  such  notice   shall  not  affect  the   validity  of  such  set-off  and
application.  The rights of each Lender under this  Section are  in addition to
other  rights and  remedies  (including,  without  limitation,  other rights of
set-off) which such Lender may have.

(b)   Each of the Loan  Parties  agrees that it shall have no right of set-off,
deduction or  counterclaim in respect of its  obligations  hereunder,  and that
the  obligations  of the Lenders  hereunder are several and not joint.  Nothing
contained herein shall  constitute a relinquishment  or waiver of the rights of
any of the Loan  Parties  to any  independent  claim  that such Loan  Party may
have against the Agent or any Lender for the Agent's or such  Lender's,  as the
case may be, gross  negligence  or wilful  misconduct;  provided that no Lender
shall be liable  for the  conduct  of the Agent or any other  Lender;  provided
further that the Agent shall not be liable for the conduct of any Lender.

SECTION 9.06....Binding Effect.  This Agreement shall become  effective when it
shall  have been  executed  by the  Borrower,  each of the  Guarantors  and the
Agent and when the Agent  shall have been  notified  in writing by each  Lender
that such  Lender has  executed  it and  thereafter  shall be binding  upon and
inure to the benefit of the  Borrower,  each of the  Guarantors,  the Agent and
each Lender and their  respective  successors and assigns,  except that neither
the  Borrower  nor any of the  Guarantors  shall  have the right to assign  its
rights  hereunder or any interest  herein without the prior written  consent of
the Lenders.

<PAGE>

SECTION 9.07....Assignments and Participations.

(a)   Each  Lender  may  assign  to one or  more  Eligible  Assignees  all or a
portion of its  rights and  obligations  under the Loan  Documents  (including,
without limitation,  all or a portion of its Commitment,  the Advances owing to
it and the  Note or  Notes  (if  any)  held by  it);  provided,  however,  that
(i) each such assignment shall be of a constant, and not a varying,  percentage
of all of  the  assigning  Lender's  rights  and  obligations  under  the  Loan
Documents,  (ii) the  amount of the Commitment  and/or Advance of the assigning
Lender being assigned  pursuant to each such  assignment  (determined as of the
date of the Lender  Assignment  with  respect to such  assignment)  shall in no
event be less than the lesser of the  amount of such  Lender's  then  remaining
Commitment and $1,000,000  (except in the case of assignments  between  Lenders
at the time  already  parties  hereto and between a Lender and an  Affiliate of
such  Lender),  (iii)  the  Agent,  the  Arranger  and,  so long as no Event of
Default  shall  have  occurred  and be  continuing,  the  Borrower,  shall have
consented  to such  assignment  (which  may  not be  unreasonably  withheld  or
delayed),  and  (iv) the  parties to each such  assignment  shall  execute  and
deliver to the Agent,  for its  acceptance  and  recording in the  Register,  a
Lender  Assignment,  together  with any Note or Notes (if any)  subject to such
assignment  and  a  processing  and   recordation   fee  of  $3,500.   Promptly
following  its  receipt of such Lender  Assignment,  Note or Notes (if any) and
fee,  the  Agent  shall  accept  and  record  such  Lender  Assignment  in  the
Register.  Upon such execution,  delivery,  acceptance and recording,  from and
after  the  effective  date  specified  in  each  Lender  Assignment,   (x) the
assignee  thereunder  shall be a party  hereto  and,  to the extent that rights
and  obligations  hereunder  have been  assigned  to it pursuant to such Lender
Assignment,  have the rights and obligations of a Lender  hereunder and (y) the
Lender  assignor  thereunder  shall,  to the extent that rights and obligations
hereunder  have  been  assigned  by it  pursuant  to  such  Lender  Assignment,
relinquish  its  rights  and  be  released  from  its  obligations  under  this
Agreement  (and,  in  the  case  of a  Lender  Assignment  covering  all or the
remaining  portion of an assigning  Lender's rights and obligations  under this
Agreement,  such  Lender  shall  cease to be a party  hereto).  Notwithstanding
anything to the  contrary  contained in this  Agreement,  any Lender may at any
time,  with notice to the Borrower and the Agent,  assign all or any portion of
the  Advances  owing to it to any other  Lender or any  Affiliate  of a Lender.
No such  assignment,  other  than  to an  Eligible  Assignee,  a  Lender  or an
Affiliate  of  a  Lender,   shall  release  the   assigning   Lender  from  its
obligations hereunder.

(b)   By executing  and  delivering a Lender  Assignment,  the Lender  assignor
thereunder  and the  assignee  thereunder  confirm to and agree with each other
and the other  parties  hereto as follows:  (i) other  than as provided in such
Lender  Assignment,  such assigning Lender makes no  representation or warranty
and assumes no  responsibility  with respect to any  statements,  warranties or
representations  made  in or in  connection  with  any  Loan  Document  or  the
execution,  legality,  validity,  enforceability,  genuineness,  sufficiency or
value of any Loan  Document  or any  other  instrument  or  document  furnished
pursuant  thereto;  (ii)  such  assigning  Lender  makes no  representation  or
warranty  and  assumes  no   responsibility   with  respect  to  the  financial
condition of the Borrower or the  performance  or observance by the Borrower of
any of its  obligations  under any Loan  Document  or any other  instrument  or
document furnished  pursuant thereto;  (iii) such assignee confirms that it has
received a copy of each Loan  Document,  together  with copies of the financial
statements  referred to in Section 4.01(f)  hereof and such other documents and
information as it has deemed  appropriate  to make its own credit  analysis and
decision  to enter  into  such  Lender  Assignment;  (iv) such  assignee  will,
independently  and without  reliance upon the Agent,  such assigning  Lender or
any other Lender and based on such  documents and  information as it shall deem
appropriate  at the time,  continue to make its own credit  decisions in taking
or not taking  action  under the Loan  Documents;  (v) such  assignee  confirms
that it is an Eligible  Assignee;  (vi) such  assignee  appoints and authorizes
the  Agent to take such  action as agent on its  behalf  and to  exercise  such
powers  under the Loan  Documents  as are  delegated  to the Agent by the terms
thereof,  together with such powers as are reasonably  incidental thereto;  and
(vii) such  assignee  agrees  that it will  perform  in  accordance  with their
terms  all of the  obligations  which by the  terms of the Loan  Documents  are
required to be performed by it as a Lender.

(c)   The Agent shall  maintain at its address  referred to in  Section 9.02  a
copy of each Lender  Assignment  delivered to and accepted by it and a register
for  the  recordation  of the  names  and  addresses  of the  Lenders  and  the
Commitment  of, and  principal  amount of the  Advances  owing to,  each Lender
from  time to time (the  "Register").  The  entries  in the  Register  shall be
conclusive  and  binding  for all  purposes,  absent  manifest  error,  and the
Borrower,  the Agent  and the  Lenders  may treat  each  Person  whose  name is
recorded  in the  Register  as a  Lender  hereunder  for all  purposes  of this
Agreement.  The Register  shall be available for  inspection by the Borrower or
any Lender at any reasonable time and from time to time upon  reasonable  prior
notice.

<PAGE>

(d)   Upon its receipt of a Lender  Assignment  executed by an assigning Lender
and an assignee  representing  that it is an Eligible  Assignee,  together with
any Note or Notes (if any)  subject to such  assignment,  the Agent  shall,  if
such Lender  Assignment has been completed and is in substantially  the form of
Exhibit 9.07  hereto,  (i) accept  such  Lender  Assignment,   (ii) record  the
information  contained  therein in the Register and  (iii) give  prompt  notice
thereof to the Borrower.

(e)   Each  Lender  may sell  participations  to one or more  banks,  financial
institutions  or  other  entities  in  all  or a  portion  of  its  rights  and
obligations under the Loan Documents (including,  without limitation,  all or a
portion of its  Commitment,  the Advances owing to it and the Note or Notes (if
any) held by it); provided,  however,  that (i) such Lender's obligations under
this Agreement (including,  without limitation,  its Commitment to the Borrower
hereunder)  shall  remain  unchanged,  (ii) such  Lender  shall  remain  solely
responsible  to  the  other  parties   hereto  for  the   performance  of  such
obligations,  (iii) such  Lender  shall  remain the holder of any such Note (if
any) for all purposes of this Agreement,  and (iv) the Borrower,  the Agent and
the other Lenders  shall  continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement.

(f)   Any Lender may, in connection  with any  assignment or  participation  or
proposed  assignment or participation  pursuant to this Section 9.07,  disclose
to the  assignee or  participant  or  proposed  assignee  or  participant,  any
information  relating to the Borrower  furnished to such Lender by or on behalf
of the Borrower;  provided that, prior to any such disclosure,  the assignee or
participant  or proposed  assignee or  participant  shall agree,  in accordance
with  the  terms  of  Section 9.08,  to  preserve  the  confidentiality  of any
Confidential  Information  relating  to the  Borrower  received by it from such
Lender.

(g)   If any Lender (or any bank,  financial  institution,  or other  entity to
which  such  Lender has sold a  participation)  shall  (i) make  any demand for
payment under  Section 2.07  or 2.12 or claim any  additional  amounts  payable
pursuant  to  Section  2.16  or  (ii) give  notice  to the  Agent  pursuant  to
Section 2.13,  then in the case of any demand made under  clause (i)  above, or
the  occurrence of the event  described in  clause (ii)  above,  within 30 days
after  any such  demand  or  occurrence  (if,  but only if,  in the case of any
demanded payment  described in clause (i),  such demanded payment has been made
by the  Borrower),  the  Borrower  may,  with the  approval of the Agent (which
approval  shall not be  unreasonably  withheld),  and provided that no Event of
Default or  Unmatured  Default  shall  then have  occurred  and be  continuing,
demand that such Lender assign in accordance  with this  Section 9.07 to one or
more  Eligible  Assignees  designated  by the  Borrower  all (but not less than
all) of such  Lender's  Commitment  and the  Advances  owing to it  within  the
period  ending  on the  latest  to occur  of  (x) the  last  day in the  period
described  above  and  (y) the  last  day of the  longest  of the  then-current
Interest Periods for such Advances.  If any such Eligible  Assignee  designated
by the Borrower shall fail to consummate  such  assignment on terms  acceptable
to such Lender,  or if the Borrower  shall fail to designate  any such Eligible
Assignees  for all or part of such Lender's  Commitment or Advances,  then such
demand by the  Borrower  shall  become  ineffective,  it being  understood  for
purposes of this  subsection (g)  that such  assignment  shall be  conclusively
deemed to be on terms  acceptable  to such  Lender,  and such  Lender  shall be
compelled to consummate such assignment to an Eligible  Assignee  designated by
the Borrower,  if such Eligible Assignee  (1) shall agree to such assignment by
entering  into a  Lender  Assignment  with  such  Lender  and  (2) shall  offer
compensation  to such Lender in an amount  equal to all  amounts  then owing by
the Borrower to such Lender hereunder,  whether for principal,  interest, fees,
costs or  expenses  (other  than the  demanded  payment  referred  to above and
payable by the Borrower as a condition to the  Borrower's  right to demand such
assignment),  or  otherwise  (including  amounts  payable  pursuant  to Section
9.04(b) hereof).

(h)   Anything  in  this  Section 9.07  to the  contrary  notwithstanding,  any
Lender  may assign and  pledge  all or any  portion of its  Commitment  and the
Advances  owing to it to any  Federal  Reserve  Bank (and its  transferees)  as
collateral  security  pursuant to Regulation A of the Board of Governors of the
Federal  Reserve  System  and any  Operating  Circular  issued by such  Federal
Reserve Bank. No such  assignment  shall release the assigning  Lender from its
obligations hereunder.

<PAGE>

(i)   Notwithstanding  anything to the contrary contained herein, any Lender (a
"Granting  Lender") may grant to a special  purpose  funding vehicle (an "SPC")
of such  Granting  Lender  identified  as such in writing  from time to time by
the  Granting  Lender to the Agent and the  Borrower,  the option to provide to
the  Borrower all or any part of any Advance  that such  Granting  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 such
SPC to make any  Advance,  (ii) if such SPC elects not to exercise  such option
or  otherwise  fails to provide all or any part of such  Advance,  the Granting
Lender shall be  obligated  to make such  Advance  pursuant to the terms hereof
and (iii) no SPC or  Granting  Lender  shall be entitled to receive any greater
amount  pursuant to  Section 2.12  or 9.04(b)  than the  Granting  Lender would
have been  entitled to receive had the Granting  Lender not  otherwise  granted
such SPC the option to provide  any Advance to the  Borrower.  The making of an
Advance by an SPC  hereunder  shall  utilize  the  Commitment  of the  Granting
Lender to the same extent,  and as if, such Advance were made by such  Granting
Lender.  Each party  hereto  hereby  agrees that no SPC shall be liable for any
indemnity  or  similar  payment  obligation  under this  Agreement  for which a
Lender  would  otherwise  be liable so long as,  and to the  extent  that,  the
related  Granting  Lender  provides such  indemnity or makes such  payment.  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.
Notwithstanding the foregoing,  the Granting Lender  unconditionally  agrees to
indemnify  the  Borrower,  the Agent and each Lender  against all  liabilities,
obligations,  losses, damages,  penalties,  actions,  judgments,  suits, costs,
expenses  or  disbursements  of any  kind or  nature  whatsoever  which  may be
incurred by or asserted  against the  Borrower,  the Agent or such  Lender,  as
the case may be, in any way  relating  to or  arising as a  consequence  of any
such  forbearance  or delay in the  initiation of any such  proceeding  against
its SPC.  Each party hereto  hereby  acknowledges  and agrees that no SPC shall
have the  rights of a Lender  hereunder,  such  rights  being  retained  by the
applicable  Granting Lender.  Accordingly,  and without limiting the foregoing,
each party hereby  further  acknowledges  and agrees that no SPC shall have any
voting  rights  hereunder  and  that  the  voting  rights  attributable  to any
Advance  made  by an SPC  shall  be  exercised  only by the  relevant  Granting
Lender and that each Granting  Lender shall serve as the  administrative  agent
and  attorney-in-fact  for its SPC and shall on behalf of its SPC  receive  any
and all  payments  made  for the  benefit  of such  SPC and  take  all  actions
hereunder  to the  extent,  if any,  such SPC shall have any rights  hereunder.
In  addition,  notwithstanding  anything  to the  contrary  contained  in  this
Agreement  any SPC may (i) with  notice  to,  but  without  the  prior  written
consent of any other party  hereto,  assign all or a portion of its interest in
any Advances to the Granting  Lender and (ii) disclose on a confidential  basis
any  information  relating  to its  Advances to any rating  agency,  commercial
paper  dealer or  provider  of any  surety,  guarantee  or credit or  liquidity
enhancement to such SPC. This  Section 9.07(i)  may not be amended  without the
prior  written  consent  of each  Granting  Lender,  all or any  part of  whose
Advance is being funded by an SPC at the time of such amendment.

SECTION 9.08....Confidentiality.   In  connection   with  the  negotiation  and
administration  of this  Agreement and the other Loan  Documents,  the Borrower
and the  Guarantors  have  furnished  and will from time to time furnish to the
Agent and the  Lenders  (each,  a  "Recipient")  written  information  which is
identified to the  Recipient in writing when  delivered as  confidential  (such
information,  other than any such information which (i) as publicly  available,
or   otherwise   known  to  the   Recipient,   at  the   time  of   disclosure,
(ii) subsequently  becomes  publicly  available  other than  through any act or
omission by the  Recipient or  (iii) otherwise  subsequently  becomes  known to
the  Recipient  other  than  through a Person  whom the  Recipient  knows to be
acting  in  violation  of  his  or  its  obligations  to  the  Borrower  or the
Guarantors,  as  applicable,  being  hereinafter  referred to as  "Confidential
Information").   The  Recipient  will  maintain  the   confidentiality  of  any
Confidential  Information in accordance  with such  procedures as the Recipient
applies  generally to  information of that nature.  It is understood,  however,
that  the  foregoing  will not  restrict  the  Recipient's  ability  to  freely
exchange such  Confidential  Information with its Affiliates or with current or
prospective  participants  in or  assignees  of, or any current or  prospective
counterparty  (or its  advisors)  to any  swap,  securitization  or  derivative
transaction  relating to, the Recipient's  position herein, but the Recipient's
ability to so exchange  Confidential  Information shall be conditioned upon any
such Affiliate's or prospective  participant's or assignee's or  counterparty's
entering  into  an  understanding  as  to   confidentiality   similar  to  this
provision.  It is further  understood  that the foregoing will not prohibit the
disclosure  of any or all  Confidential  Information  if and to the extent that
such  disclosure  may be required  (i) by a  regulatory  agency or otherwise in
connection  with an  examination  of the  Recipient's  records  by  appropriate

<PAGE>

authorities,  (ii) pursuant to court order,  subpoena or other legal process or
in connection  with any pending or threatened  litigation,  (iii) otherwise  as
required by law, or (iv) in  order to protect  its  interests  or its rights or
remedies  hereunder  or under the  other  Loan  Documents;  in the event of any
required  disclosure under  clause (ii) or (iii) above, the Recipient agrees to
use reasonable efforts to inform the Borrower as promptly as practicable.

SECTION 9.09....WAIVER OF JURY TRIAL.  THE AGENT,  THE LENDERS AND THE BORROWER
HEREBY  KNOWINGLY,  VOLUNTARILY  AND  INTENTIONALLY  WAIVE ANY RIGHTS  THEY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION  BASED HEREON,  OR ARISING
OUT OF,  UNDER,  OR IN  CONNECTION  WITH,  THIS  AGREEMENT  OR ANY  OTHER  LOAN
DOCUMENT,  OR ANY COURSE OF  CONDUCT,  COURSE OF DEALING,  STATEMENTS  (WHETHER
VERBAL OR  WRITTEN),  OR ACTIONS OF THE AGENT,  SUCH  LENDERS OR THE  BORROWER.
THIS  PROVISION  IS A  MATERIAL  INDUCEMENT  FOR  THE  AGENT  AND  THE  LENDERS
ENTERING INTO THIS AGREEMENT.

SECTION 9.10....Governing  Law.  This  Agreement  and the other Loan  Documents
shall be governed by, and construed in accordance  with,  the laws of the State
of  New  York.  The  Borrower,  each  Guarantor,  each  Lender  and  the  Agent
(i) irrevocably  submits  to the  non-exclusive  jurisdiction  of any New  York
State  court or Federal  court  sitting in New York City in any action  arising
out of any Loan  Document,  (ii) agrees  that all claims in such  action may be
decided in such court,  (iii) waives,  to the fullest extent it may effectively
do so, the defense of an inconvenient  forum and  (iv) consents  to the service
of process by mail,  provided  that a copy shall be promptly  sent by overnight
courier  to  Foley &  Lardner,  Firstar  Center,  777  East  Wisconsin  Avenue,
Milwaukee,  Wisconsin  53202-5367,  Attention:  Emory  Ireland,  Esq.  A  final
judgment in any such action  shall be  conclusive  and may be enforced in other
jurisdictions.  Nothing  herein  shall  affect  the right of any party to serve
legal  process in any manner  permitted by law or affect its right to bring any
action in any other court.

SECTION 9.11....Relation of the Parties;  No  Beneficiary.  No term,  provision
or requirement,  whether express or implied,  of any Loan Document,  or actions
taken or to be taken by any party  thereunder,  shall be  construed to create a
partnership,  association,  or joint  venture  between  such  parties or any of
them.  No term or  provision  of the  Loan  Documents  shall  be  construed  to
confer a benefit  upon,  or grant a right or  privilege  to, any  Person  other
than the parties thereto.

SECTION 9.12....Execution in  Counterparts.  This  Agreement may be executed in
any  number  of  counterparts  and by  different  parties  hereto  in  separate
counterparts,  each  of  which  when  so  executed  shall  be  deemed  to be an
original  and all of which taken  together  shall  constitute  one and the same
agreement.

SECTION 9.13....Entire Agreement.  This Agreement,  together with any Note, the
Fee Letter and any other agreements,  instruments and other documents  required
to be executed and  delivered in  connection  herewith,  represents  the entire
agreement  of the  parties  hereto  and  supersedes  all prior  agreements  and
understandings  of the  parties  with  respect to the  subject  matter  covered
hereby.

<PAGE>

      IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to be
executed by their  respective  officers  thereunto duly  authorized,  as of the
date first above written.

                               ALLIANT ENERGY RESOURCES, INC.
                               as Borrower


                               By  /s/ Thomas L. Hanson
                                   ------------------------
                                   Name:  Thomas L. Hanson
                                   Title:  Vice President and Treasurer


                               ALLIANT ENERGY CORPORATION
                               as Guarantor


                               By  /s/ Thomas L. Hanson
                                   ------------------------
                                   Name:  Thomas L. Hanson
                                   Title:  Vice President and Treasurer


                               HEARTLAND PROPERTIES, INC.
                               as Guarantor


                               By  /s/ Ruth A. Domack
                                   ----------------------
                                   Name: Ruth A. Domack
                                   Title:  President


                               ALLIANT ENERGY INTERNATIONAL, INC.
                               as Guarantor


                               By  /s/ Thomas L. Hanson
                                   ------------------------
                                   Name:  Thomas L. Hanson
                                   Title:  Vice President and Treasurer


                               MERRILL LYNCH CAPITAL CORPORATION
                               as Agent and as Lender


                               By  /s/ Anthony J. LaFare
                                   -------------------------
                                   Name:  Anthony J. LaFare
                                   Title:  Vice President


<PAGE>

                                                                     SCHEDULE I

<TABLE>
<CAPTION>
                                                                                                                  2
                                            ALLIANT ENERGY CORPORATION
                          364-Day Credit Agreement, dated as of December 27, 2002, among
                                    Alliant Energy Resources, Inc. as Borrower,
          Alliant Energy Corporation, Heartland Properties, Inc. and Alliant Energy International, Inc.,
                                                  as Guarantors,
                                             the Lenders named therein
                          and Merrill Lynch Capital Corporation, as Administrative Agent



Name of Lender                 Commitment         Domestic Lending Office          Eurodollar Lending Office
--------------                 ----------         -----------------------          -------------------------
<S>                                <C>              <C>
Merrill Lynch Capital         $250,000,000        4 World Financial Center -       Same as Domestic Lending
Corporation                                       16th Floor, New York, NY         Office
                                                  10080, Attention:  Eve Lam /
                                                  Mark Campbell

TOTAL                         $250,000,000


</TABLE>