Exhibit 4(g)

                                                     EXECUTION
                                                          COPY







                               


                         $300,000,000
                               
                               
                             THIRD
                     AMENDED AND RESTATED
                       CREDIT AGREEMENT
                               
                 Dated as of November 20, 1996
                               
                             Among
                               
                     IES DIVERSIFIED INC.
                          as Borrower
                               
                              and
                               
                    THE BANKS NAMED HEREIN
                           as Banks
                               
                              and
                               
                        CITIBANK, N.A.
                           as Agent
                               


                       TABLE OF CONTENTS

Section                                                                   Page

             ARTICLE I - DEFINITIONS AND ACCOUNTING TERMS                   1

     SECTION 1.01.  Certain Defined Terms.                                  1
     SECTION 1.02.  Computation of Time Periods                            15
     SECTION 1.03.  Computations of Outstandings                           16
     SECTION 1.04.  Accounting Terms                                       16

             ARTICLE II - AMOUNTS AND TERMS OF THE ADVANCES                16

     SECTION 2.01.  The A Advances                                         16
     SECTION 2.03.  The B Advances                                         18
     SECTION 2.04.  Fees                                                   21
     SECTION 2.05.  Reduction of the Commitments                           21
     SECTION 2.06.  Repayment of A Advances                                22
     SECTION 2.07.  Interest on A Advances                                 22
     SECTION 2.08.  Additional Interest on Eurodollar Rate Advances        22
     SECTION 2.09.  Interest Rate Determination                            23
     SECTION 2.10.  Voluntary Conversion of A Advances                     25
     SECTION 2.11.  Optional Prepayments of Advances                       25
     SECTION 2.12.  Mandatory Prepayments                                  25
     SECTION 2.13.  Increased Costs                                        26
     SECTION 2.14.  Illegality                                             27
     SECTION 2.15.  Payments and Computations                              28
     SECTION 2.16.  Taxes                                                  29
     SECTION 2.17.  Sharing of Payments, Etc.                              30
     SECTION 2.18.  Extension of Termination Date                          31

             ARTICLE III - CONDITIONS OF LENDING                           32
                    
     SECTION 3.01.  Conditions Precedent to Closing                        32
     SECTION 3.02.  Conditions Precedent to Each A Borrowing               34
     SECTION 3.03.  Conditions Precedent to Each B Borrowing               35
     SECTION 3.04.  Reliance on Certificates                               36

             ARTICLE IV -REPRESENTATIONS AND WARRANTIES                    36

     SECTION 4.01.  Representations and Warranties of the Borrower         36

             ARTICLE V - COVENANTS OF THE BORROWER                         38

     SECTION 5.01.  Affirmative Covenants                                  38
     SECTION 5.02.  Negative Covenants                                     42

             ARTICLE VI - EVENTS OF DEFAULT                                46
     
     SECTION 6.01.  Events of Default                                      46

             ARTICLE VII - THE AGENT                                       48
     
     SECTION 7.01.  Authorization and Action                               48
     SECTION 7.02.  Agent's Reliance, Etc                                  49
     SECTION 7.03.  Citibank, N.A. and Affiliates                          49
     SECTION 7.04.  Lender Credit Decision                                 50
     SECTION 7.05.  Indemnification                                        50
     SECTION 7.06.  Successor Agent                                        50

             ARTICLE VIII - MISCELLANEOUS                                  51
     
     SECTION 8.01.  Amendments, Etc                                        51
     SECTION 8.02.  Notices, Etc                                           51
     SECTION 8.03.  No Waiver; Remedies                                    52
     SECTION 8.04.  Costs, Expenses, Taxes and Indemnification             52
     SECTION 8.05.  Right of Set-off                                       53
     SECTION 8.06.  Binding Effect                                         54
     SECTION 8.07.  Assignments and Participations                         54
     SECTION 8.08.  Confidentiality                                        57
     SECTION 8.09.  Waiver of Jury Trial                                   58
     SECTION 8.10.  Consent                                                58
     SECTION 8.11.  Governing Law                                          58
     SECTION 8.12.  Relation of the Parties; No Beneficiary                58
     SECTION 8.13.  Execution in Counterparts                              58
     


                  THIRD AMENDED AND RESTATED
                       CREDIT AGREEMENT

                 Dated as of November 20, 1996



     THIS CREDIT AGREEMENT is made by and among:

    (i)   IES DIVERSIFIED INC., an Iowa corporation (the
          "Borrower"), all of whose common stock is owned on the date
          hereof by the Parent (as hereinafter defined),

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

   (iii)  Citibank, N.A., as agent (the "Agent") for the
          Lenders hereunder.

                    PRELIMINARY STATEMENTS

     (1)        The  Borrower,  certain banks  (the  "Existing
Banks")  and Citibank, N.A., as agent for the Existing  Banks,
are parties to that certain Second Amended and Restated Credit
Agreement,  dated  as  of  November  9,  1994  (the  "Existing
Facility").

     (2)        The  Borrower has requested that the  Existing
Facility  be  amended and restated so as to (i)  increase  the
Commitments  (as  defined therein) to  $300,000,000  and  (ii)
effect certain other amendments and modifications as set forth
herein.

     (3)        The  Banks and the Agent have agreed  to  such
request, on the terms and conditions set forth herein.

      NOW, THEREFORE, in consideration of the premises and the
mutual  covenants herein contained, the parties hereto  hereby
agree  that  the  Existing  Facility  is  hereby  amended  and
restated in its entirety to read 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):

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

           "A  Borrowing"  means  a  borrowing  consisting  of
     simultaneous A 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
     2.10, 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.

           "A  Note"  means a promissory note of the  Borrower
     payable to the order of any Lender, in substantially  the
     form  of Exhibit 1.01A-1 hereto, evidencing the aggregate
     indebtedness  of  the Borrower to such  Lender  resulting
     from the A Advances made by such Lender.

           "Adjusted  CD Rate" means, for any Interest  Period
     for  each  Adjusted CD Rate Advance made as part  of  the
     same A Borrowing, an interest rate per annum equal to the
     sum of:

               (a)                 the  rate  per  annum  obtained  by
          dividing (i) the rate of interest determined by the Agent to
          be the average (rounded upward to the nearest whole multiple
          of 1/100 of 1% per annum, if such average is not such a
          multiple) of the consensus bid rate determined by each of the
          Reference Banks for the bid rates per annum at 9:00 a.m. (New
          York City time) (or as soon thereafter as practicable) on the
          first day of such Interest Period of New York certificate of
          deposit dealers of recognized standing selected by such
          Reference Bank for the purchase at face value of certificates
          of deposit of such Reference Bank in an amount substantially
          equal to such Reference Bank's Adjusted CD Rate Advance made
          as part of such A Borrowing and maturing on the last day of
          such Interest Period, by (ii) a percentage equal to 100% minus
          the Adjusted CD Rate Reserve Percentage (as defined below) for
          such Interest Period, plus

               (b)                 the  Assessment  Rate  (as  defined
          below) for such Interest Period.

     The   "Adjusted  CD  Rate  Reserve  Percentage"  for  the
     Interest  Period  for  each  Adjusted  CD  Rate   Advance
     comprising part of the same A Borrowing means the reserve
     percentage  applicable on the first day of such  Interest
     Period,  as  determined by the Agent,  under  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,  but  not
     limited to, any emergency, supplemental or other marginal
     reserve  requirement) for a member bank  of  the  Federal
     Reserve  System in New York City with deposits  exceeding
     one   billion   dollars  with  respect   to   liabilities
     consisting of or including (among other liabilities) U.S.
     dollar  nonpersonal time deposits in  the  United  States
     with  a  maturity  equal to such  Interest  Period.   The
     "Assessment  Rate"  for  the  Interest  Period  for  each
     Adjusted  CD Rate Advance comprising part of the  same  A
     Borrowing  means the annual assessment rate estimated  by
     the  Agent  on the first day of such Interest Period  for
     determining the then current annual assessment payable by
     the  Agent  to the Federal Deposit Insurance  Corporation
     (or  any successor) for insuring U.S. dollar deposits  of
     the Agent in the United States.  The Adjusted CD Rate for
     the  Interest  Period for each Adjusted CD  Rate  Advance
     comprising  part  of  the  same  A  Borrowing  shall   be
     determined by the Agent on the basis of applicable  rates
     furnished to and received by the Agent from the Reference
     Banks  on the first day of such Interest Period, subject,
     however, to the provisions of Section 2.09.

           "Adjusted CD Rate Advance" means an A Advance which
     bears interest as provided in Section 2.07(b).

          "Advance" means an A Advance or a B Advance.

          "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.

           "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:

               (c)                   the   rate  of  interest  announced
          publicly by Citibank, N.A. in New York, New York, from time to
          time, as Citibank, N.A.'s base rate; and

               (d)                  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  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, such Lender's CD  Lending
     Office  in  the case of an Adjusted CD Rate  Advance  and
     such Lender's Eurodollar Lending Office in the case of  a
     Eurodollar Rate Advance and, in the case of a B  Advance,
     the  office of such Lender notified by such Lender to the
     Agent  as  its Applicable Lending Office with respect  to
     such B Advance.

           "Applicable  Margin" means, for a  Eurodollar  Rate
     Advance,  an  Adjusted  CD  Rate  Advance  or  Base  Rate
     Advance,  the  basis points per annum set forth,  in  the
     columns identified as Level 1, Level 2, Level 3 or  Level
     4 below, opposite the rate applicable to such Advance.

                  Level 1         Level 2      Level 3      Level 4
S&P               A- or better    BBB+         BBB          below BBB*
                  and             and          and          or    
Moody's           A3 or better    Baa1         Baa2         below Baa2* 
                                                                  
Basis Points Per Annum                                            
                                                                        
Eurodollar Rate      25.0            25.0         30.0         70.0
Adjusted CD Rate     37.5            37.5         42.5         82.5
Base Rate Advance       0               0            0        100.0
                                                       * or unrated

     The  Applicable  Margin  will be  based  upon  the  Level
     corresponding to First Mortgage Bond (IES Utilities) Debt
     Rating  at the time of determination.  Any change in  the
     Applicable Margin shall be effective as of the  Borrowing
     date  following  the date on which the applicable  rating
     agency announces the applicable change in ratings.

          "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;

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

          (iii)       in the case of each Eurodollar Rate Advance
     comprising part of the same A 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 in effect from time to time during such
     Interest Period.

          "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
     Extensions of Credit theretofore made on such day and the
     application of proceeds therefrom.

           "Available Commitments" means the aggregate of  the
     Lenders' Available Commitments hereunder.

           "B  Advance"  means an advance by a Lender  to  the
     Borrower  as  part  of a B Borrowing resulting  from  the
     auction bidding procedure described in Section 2.03.

           "B  Borrowing"  means  a  borrowing  consisting  of
     simultaneous  B Advances from each of the  Lenders  whose
     offer  to  make one or more B Advances as  part  of  such
     borrowing  has  been accepted by the Borrower  under  the
     auction bidding procedure described in Section 2.03.

           "B  Note"  means a promissory note of the  Borrower
     payable to the order of any Lender, in substantially  the
     form  of Exhibit 1.01A-2 hereto, evidencing the aggregate
     indebtedness  of  the Borrower to such  Lender  resulting
     from a B Advance(s) made by such Lender.

           "B Reduction" has the meaning assigned to that term
     in Section 2.01.

           "Base  Rate Advance" means an A Advance that  bears
     interest as provided in Section 2.07(a).

           "Borrowing" means an A Borrowing or a B  Borrowing.
     Any  A Borrowing consisting of A Advances of a particular
     Type  may be referred to as being an A Borrowing of  such
     "Type".

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

           "CD  Lending  Office" means, with  respect  to  any
     Lender,  the office or affiliate of such Lender specified
     as  its "CD 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 to the Borrower and the Agent.

          "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  generally
     accepted  accounting principles, 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  its  head
     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).

           "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
     November 20, 1996, at the offices of King & Spalding, 120
     West   45th  Street,  New  York,  New  York   10036,   at
     10:00  a.m.,  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
     8.07(c), in each such case as such amount may be  reduced
     from   time   to   time   pursuant   to   Section   2.05.
     "Commitments" means the total of the Lenders' Commitments
     hereunder.   The  Commitments shall in  no  event  exceed
     $300,000,000.

           "Consolidated Capital" means, with respect  to  any
     Person,  at  any  date  of  determination,  the  sum   of
     (a)  Consolidated  Debt of such Person, (b)  consolidated
     equity of the common stockholders of such Person and  its
     Consolidated Subsidiaries, (c) consolidated equity of the
     preference   stockholders  of   such   Person   and   its
     Consolidated Subsidiaries and (d)  consolidated equity of
     the   preferred  stockholders  of  such  Person  and  its
     Consolidated  Subsidiaries, in each  case  determined  at
     such   date   in   accordance  with  generally   accepted
     accounting principles.

           "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
     generally accepted accounting principles.

          "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  generally   accepted
     accounting principles.

           "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 2.09 or 2.10.

            "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.

           "Default Rate" means a rate per annum equal at  all
     times to 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.

           "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 (a) a commercial bank  or
     trust  company  organized under the laws  of  the  United
     States,  or  any  State thereof; (b)  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;  (c)  the
     central bank of any country that is a member of the OECD;
     and  (d)  any  other commercial bank or  other  financial
     institution   engaged  generally  in  the   business   of
     extending   credit   or  purchasing   debt   instruments;
     provided,  however, that (A) any such Person  shall  also
     (i) have outstanding unsecured indebtedness 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  unsecured
     indebtedness  of entities engaged in such businesses)  or
     (ii) 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 (b), (c), or (d), above, shall, on the date on
     which it is to become a Lender hereunder, (i) be entitled
     to   receive  payments  hereunder  without  deduction  or
     withholding of any United States Federal income taxes (as
     contemplated  by Section 2.16) and (ii) not be  incurring
     any  losses, costs or expenses of the type for which such
     Person  could  demand  payment under  Section  2.13,  and
     (C)  any  Person described in clauses (b), (c)  and  (d),
     above,  shall,  in addition, be reasonably acceptable  to
     the Agent and the Borrower.

            "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 Borrower or an ERISA Affiliate
     of  the  Borrower from a Multiple Employer 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 Borrower or an ERISA Affiliate of the Borrower 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
     A  Borrowing,  an interest rate per annum  equal  to  the
     average (rounded upward to the nearest whole multiple  of
     1/16  of  1%  per annum, if such average is  not  such  a
     multiple) of the rate per annum at which deposits in U.S.
     dollars  are offered by the principal office of  each  of
     the Reference Banks in London, England to prime banks  in
     the  London interbank market at 11:00 a.m. (London  time)
     two  Business Days before the first day of such  Interest
     Period in an amount substantially equal to such Reference
     Bank's  Eurodollar Rate Advance made as part  of  such  A
     Borrowing and for a period equal to such Interest Period.
     The  Eurodollar  Rate for the Interest  Period  for  each
     Eurodollar  Rate  Advance made as  part  of  the  same  A
     Borrowing  shall be determined by the Agent on the  basis
     of  applicable  rates furnished to and  received  by  the
     Agent  from the Reference Banks two Business Days  before
     the  first day of such Interest Period, subject, however,
     to the provisions of Section 2.09.

           "Eurodollar  Rate Advance" means an A Advance  that
     bears interest as provided in Section 2.07(c).

           "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.

           "Existing Banks" has the meaning assigned  to  that
     term in Preliminary Statement (1) to this Agreement.

          "Existing Credit Agreement" has the meaning assigned
     to that term int he Preliminary Statements.

          "Existing Facility" has the meaning assigned to that
     term in Preliminary Statement (1) to this Agreement.

            "Extension  of  Credit"  means  the  making  of  a
     Borrowing.   For purposes of this Agreement, a Conversion
     shall not constitute an Extension of Credit.

           "External  Line" means any arrangement (other  than
     pursuant  to this Agreement or the Senior Debt Documents)
     with   any   commercial  bank  pursuant  to  which   such
     commercial bank has agreed (whether or not such agreement
     shall  constitute a committed facility or shall otherwise
     be legally enforceable) to make unsecured loans or extend
     credit on an unsecured basis to one or more Borrowers  up
     to  a  specified amount ether on a demand  basis  or  for
     periods  of  not  in excess of 270 days  or  any  similar
     finance arrangement commonly known as a "line of credit".

          "Facility Fee" means a fee which shall be payable on
     the aggregate amount of the Commitments, irrespective  of
     usage,  to  each Lender pro rata on the amount  of  their
     respective Commitments.  As described below, the Facility
     Fee will be determined with reference to the basis points
     per annum set forth in the columns identified as Level 1,
     Level  2, Level 3 or Level 4 and the First Mortgage  Bond
     (IES Utilities) Debt Rating.

              Level 1         Level 2      Level 3      Level 4
S&P           A- or better    BBB+         BBB          below BBB*
              and             and          and          or     
Moody's       A3 or better    Baa1         Baa2         below Baa2*
                                                              
Basis Points     15.0            20.0         25.0         30.0
                                                   * or unrated

     Any  change in the Facility Fee shall be effective as  of
     the  date on which the applicable rating agency announces
     the applicable change of ratings.

           "FDIC  Assessment  Rate" mean, during  an  Interest
     Period   for  CD  Rate  Advances  comprising   a   single
     Borrowing,   the   annual  rate  (rounded   upwards,   if
     necessary,  to  the  next  1/100  of  1%)  most  recently
     estimated by the Administrative Agent as the then current
     annual  assessment  rate payable  by  the  Administrative
     Agent  to  the Federal Deposit Insurance Corporation  (or
     any successor) for insurance by such Corporation (or such
     successor) of time deposits made in U.S. dollars  at  the
     Administrative  Agent's  domestic  offices.    The   FDIC
     Assessment  Rate  shall  be the  same  for  all  CD  Rate
     Advances  comprising  the same  Borrowing  and  shall  be
     adjusted automatically on and as of he effective date  of
     each change in any such rate.

           "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 that certain letter  agreement,
     dated October 17, 1996, among the Borrower, the Agent and
     Citicorp Securities, Inc.

           "First  Mortgage Bonds (IES Utilities) Debt Rating"
     means the rating assigned by Moody's or S&P, as the  case
     may  be, to the senior secured non-credit enhanced  long-
     term Debt of IES Utilities.

           "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.

          "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.

           "IES  Utilities" means IES Utilities Inc., an  Iowa
     corporation,  all of whose common stock is owned  on  the
     date hereof by the Parent.

           "Increasing Lender" means each Existing Bank  whose
     Commitment  exceeds its "Commitment" under  the  Existing
     Facility.

           "Information  Memorandum"  means  the  Confidential
     Information  Memorandum of the Parent dated October  1996
     previously delivered by Citicorp Securities, Inc. at  the
     direction of the Parent to the Lenders.

           "Interest Period" means, for each A Advance made as
     part  of  the same A Borrowing, the period commencing  on
     the  date of such A Advance or the date of the Conversion
     of any A Advance into such an A 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 30, 60, 90 or 180 days in the case of  an
     Adjusted CD Rate Advance, and 1, 2, 3 or 6 months in  the
     case  of a Eurodollar Rate Advance, in each case  as  the
     Borrower may, upon notice received by the Agent not later
     than  12:00  noon (New York City time) (a) on  the  third
     Business  Day  prior to the first day  of  such  Interest
     Period  in  the  case of a Eurodollar  Rate  Advance  and
     (b) on the second Business Day prior to the first day  of
     such  Interest Period in the case of an Adjusted CD  Rate
     Advance, 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 A Advances comprising part of the same A 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.

           "Lenders"  means the Banks listed on the  signature
     pages hereof and each Eligible Assignee that shall become
     a party hereto pursuant to Section 8.07.

            "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 8.07.

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

           "Loan  Documents" means this Agreement, the  Notes,
     the  Support  Agreement, the Fee  Letter  and  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  at least 66-2/3% of the then aggregate  unpaid
     principal  amount of the A Advances owing to Lenders  and
     (ii)   if  no  A  Advances  are  then  outstanding,  have
     Percentages  in the aggregate of at least  66-2/3%.   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.

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

            "Moody's   Rating"   means,   on   any   date   of
     determination, the rating of the long-term senior secured
     Debt of IES Utilities most recently announced by Moody's.

           "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 Borrower  or  any
     ERISA Affiliate of the Borrower 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 Borrower  or  an  ERISA
     Affiliate  of the Borrower and at least one Person  other
     than the Borrower and its ERISA Affiliates or (ii) was so
     maintained  and  in respect of which the Borrower  or  an
     ERISA  Affiliate  of  the Borrower could  have  liability
     under  Section  4064 or 4069 of ERISA in the  event  such
     plan has been or were to be terminated.

           "New  Lenders"  means  the  Banks  other  than  the
     Existing Banks.

          "Note" means an A Note or a B Note.

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

           "Notice of B Borrowing" has the meaning assigned to
     that term in Section 2.03(a).

           "Notice of Conversion" has the meaning assigned  to
     that term in Section 2.10.

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

            "Parent"  means  IES  Industries  Inc.,  an   Iowa
     corporation,  or  any  successor by merger  thereto  that
     succeeds to the obligations of IES Industries Inc. under,
     and  in  accordance  with Section 2(e)  of,  the  Support
     Agreement.

            "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  such
     Lender's  Commitment  on such day by  the  total  of  the
     Commitments 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.

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

           "Reference Banks" means Citibank, N.A.,  CIBC  Inc.
     and The Sanwa Bank, Ltd., or any additional or substitute
     Lenders  as may be selected from time to time to  act  as
     Reference  Banks  hereunder by the  Agent,  the  Majority
     Lenders and the Borrower.

           "Register" has the meaning assigned to that term in
     Section 8.07(c).

           "S&P"  means Standard & Poor's Corporation  or  any
     successor thereto.

           "S&P  Rating"  means, on any date of determination,
     the  rating of the long-term senior secured Debt  of  IES
     Utilities most recently announced by S&P.

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

          "Significant Subsidiary" means any Subsidiary of the
     Borrower  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 Borrower 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 Borrower or an ERISA  Affiliate  of
     the  Borrower  and no Person other than the Borrower  and
     its  ERISA Affiliates, or (ii) was so maintained  and  in
     respect  of  which the Borrower or an ERISA Affiliate  of
     the  Borrower could have liability under Section 4069  of
     ERISA  in  the  event such plan has been or  were  to  be
     terminated.

           "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 of 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.

           "Support  Agreement" means the  Third  Amended  and
     Restated Support Agreement, dated as of the date  hereof,
     between the Parent and the Borrower, substantially in the
     form of Exhibit 1.01B.

           "Termination Date" means the earlier  to  occur  of
     (i)  November  20, 1999 or such later date to  which  the
     Termination  Date is extended in accordance with  Section
     2.18,  and  (ii) the date of termination or reduction  in
     whole  of  the  Commitments pursuant to Section  2.05  or
     6.01.

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

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

     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 City 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 Extensions
of  Credit 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
consistent  with  those  applied in  the  preparation  of  the
financial  statements  referred to  in  Section  5(d)  of  the
Support Agreement.


                          ARTICLE II
               AMOUNTS AND TERMS OF THE ADVANCES

     SECTION 2.01.   The A Advances. (a) Each Lender severally
agrees, on the terms and conditions hereinafter set forth,  to
make  A  Advances to the Borrower from time  to  time  on  any
Business  Day  during the period from the  Closing  until  the
Termination  Date in an aggregate outstanding  amount  not  to
exceed   at  any  time  such  Lender's  Available  Commitment,
provided that the aggregate amount of the Commitments  of  the
Lenders  shall be deemed used from time to time to the  extent
of the aggregate amount of the B Advances then outstanding and
such  deemed  use  of the aggregate amount of the  Commitments
shall  be  applied to the Lenders ratably according  to  their
respective  Percentages  (such deemed  use  of  the  aggregate
amount  of  the  Commitments being a "B Reduction").   Each  A
Borrowing  shall  be  in an aggregate  amount  not  less  than
$5,000,000  (or,  if  lower,  the  amount  of  the   Available
Commitments) or an integral multiple of $1,000,000  in  excess
thereof and shall consist of A Advances of the same Type  made
on  the  same  day by the Lenders ratably according  to  their
respective  Percentages.  Within the limits of  each  Lender's
Commitment  and as hereinabove and hereinafter  provided,  the
Borrower may request Extensions of Credit hereunder, and repay
or  prepay  Advances pursuant to Section 2.11 and utilize  the
resulting  increase in the Available Commitments  for  further
Extensions of Credit in accordance with the terms hereof.

     (b)        In no event shall the Borrower be entitled  to
request  or receive any Extensions of Credit that would  cause
the  principal  amount  outstanding hereunder  to  exceed  the
Commitments.

     SECTION 2.02.  Making the A Advances. (a) Each A Borrowing
shall  be  made  on notice, given not later  than  12:00  noon
(i)  on  the  third  Business Day prior to  the  date  of  the
proposed  A Borrowing, in the case of an A Borrowing comprised
of  Eurodollar Rate Advances, (ii) on the second Business  Day
prior to the date of the proposed A Borrowing, in the case  of
an  A  Borrowing comprised of Adjusted CD Rate  Advances,  and
(iii) on the date of the proposed A Borrowing, in the case  of
an  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  an A Borrowing (a "Notice of  A  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 A Borrowing,  (B)  Type  of  A
Advances comprising such A Borrowing, (C) aggregate amount  of
such  A  Borrowing  and  (D) in the case  of  an  A  Borrowing
comprised  of  Adjusted CD Rate Advances  or  Eurodollar  Rate
Advances,  initial Interest Period for each  such  A  Advance.
Each Lender shall, before (x) 12:00 noon on the date of such A
Borrowing,  in  the  case  of  an  A  Borrowing  comprised  of
Eurodollar Rate Advances or Adjusted CD Rate Advances, and (y)
1:00 p.m. on the date of such A Borrowing, in the case of an 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 8.02, in same  day  funds,
such  Lender's ratable portion of such A 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 A Borrowing shall be irrevocable
and  binding on the Borrower.  In the case of any A  Borrowing
which  the related Notice of A Borrowing specifies  is  to  be
comprised  of  Adjusted CD Rate Advances  or  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  A  Borrowing for such A 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 A Advance to be  made  by
such  Lender as part of such A Borrowing when such A  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 A Borrowing that  such
Lender  will not make available to the Agent such  Lender's  A
Advance as part of such A Borrowing, the Agent may assume that
such Lender has made such A Advance available to the Agent  on
the date of such A 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 A 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  A  Advances
comprising  such  A 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 A Advance as part  of  such  A
Borrowing for purposes of this Agreement.

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

     SECTION 2.03.  The B Advances. (a)  Each Lender  severally
agrees  that the Borrower may request B Borrowings under  this
Section 2.03 from time to time on any Business Day during  the
period  from the date hereof until the date occurring 30  days
prior  to  the Termination Date in the manner, and subject  to
the  terms  and  conditions, set forth  below.  The  rates  of
interest  offered by the Lenders and accepted by the  Borrower
for each B Borrowing shall be fixed rates per annum.

     (i)          The Borrower may request a B Borrowing under
     this Section 2.03 by delivering to the Agent, by telecopier,
     telex or cable, a notice of a B Borrowing (a "Notice of B
     Borrowing"), in substantially the form of Exhibit 2.03(a)(i)
     hereto, specifying the date and aggregate amount  of  the
     proposed B Borrowing, the maturity date for repayment of each
     B  Advance to be made as part of such B Borrowing  (which
     maturity date may not be earlier than the date occurring 30
     days after the date of such B Borrowing nor later than the
     earlier to occur of the then scheduled Termination Date and
     the date occurring 180 days following the date of such  B
     Borrowing),  the interest payment date or dates  relating
     thereto, and any other terms to be applicable to  such  B
     Borrowing, not later than 3:00 p.m. at least one Business Day
     prior to the date of the proposed B Borrowing.  The Agent
     shall in turn promptly notify each Lender of each request for
     a B Borrowing received by it from the Borrower by sending such
     Lender a copy of the related Notice of B Borrowing.

     (ii)        Each Lender may, if, in its sole discretion, it
     elects to do so, irrevocably offer to make one or more  B
     Advances to the Borrower as part of such proposed B Borrowing
     at a rate or rates of interest specified by such Lender in its
     sole discretion, by notifying the Agent (which shall give
     prompt notice thereof to the Borrower), before 11:00 a.m., on
     the date of such proposed B Borrowing, of the minimum amount
     and maximum amount of each B Advance which such Lender would
     be willing to make as part of such proposed B Borrowing (which
     amounts may, subject to the limitation contained in subsection
     (d), below, exceed such Lender's Commitment), the rate or
     rates  of  interest therefor and such Lender's Applicable
     Lending Office with respect to such B Advance; provided that
     if the Agent in its capacity as a Lender shall, in its sole
     discretion, elect to make any such offer, it shall notify the
     Borrower of such offer before 10:30 a.m. on the date on which
     notice of such election is to be given to the Agent by the
     other Lenders.  If any Lender shall elect not to make such an
     offer, such Lender shall so notify the Agent before 11:00 a.m.
     on the date on which notice of such election is to be given to
     the Agent by the other Lenders, and such Lender shall not be
     obligated to, and shall not, make any B Advance as part of
     such B Borrowing; provided that the failure by any Lender to
     give such notice shall not cause such Lender to be obligated
     to make any B Advance as part of such proposed B Borrowing.

     (iii)         The Borrower shall, in turn, before 12:00 noon
     on the date of such proposed B Borrowing either

                   (x)   cancel such B Borrowing  by  either
          giving the Agent notice to that effect or failing to
          accept one or more offers as provided in clause (y),
          below, or

                   (y)   accept one or more of the offers made
          by any Lender or Lenders pursuant to paragraph (ii),
          above,  in  its  sole discretion, by giving  written
          notice  to the Agent of the amount of each B Advance
          (which amount shall be equal to or greater than  the
          minimum  amount,  and  equal to  or  less  than  the
          maximum  amount,  notified to the  Borrower  by  the
          Agent  on  behalf of such Lender for such B  Advance
          pursuant  to paragraph (ii), above) to  be  made  by
          each  Lender as part of such B Borrowing, and reject
          any  remaining  offers made by Lenders  pursuant  to
          paragraph  (ii), above, by giving the Agent  written
          notice to that effect.

     (iv)     If  the Borrower cancels such B Borrowing
     pursuant to paragraph (iii)(x), above, the Agent shall give
     prompt notice thereof to the Lenders and such B Borrowing
     shall not be made.

     (v)     If the Borrower accepts one or more of the
     offers made by any Lender or Lenders pursuant to paragraph
     (iii)(y), above, such acceptance shall be irrevocable and
     binding on the Borrower and, subject to the satisfaction of
     the applicable conditions set forth in Article III, on such
     Lender or Lenders.  The Borrower shall indemnify each such
     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 the notice provided pursuant to paragraph
     (vii)(A), below, 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
     B  Advance  to be made by such Lender as part of  such  B
     Borrowing when such B Advance, as a result of such failure, is
     not made on such date.

     (vi)     Unless the Agent shall have received notice
     from a Lender prior to the date of any B Borrowing in which
     such Lender is required to participate that such Lender will
     not make available to the Agent such Lender's B Advance as
     part  of such B Borrowing, the Agent may assume that such
     Lender has made such B Advance available to the Agent on the
     date of such B Borrowing in accordance with paragraph (vii),
     below, 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 B 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 to such B Advance 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 B Advance as part of such B
     Borrowing for purposes of this Agreement.

     (vii)     If the Borrower accepts one or more of the
     offers made by any Lender or Lenders pursuant to paragraph
     (iii)(y), above, the Agent shall in turn promptly  notify
     (A)  each  Lender that has made an offer as described  in
     paragraph (ii), above, of the date and aggregate amount of
     such B Borrowing and whether or not any offer or offers made
     by such Lender pursuant to paragraph (ii), above, have been
     accepted by the Borrower, (B) each Lender that is to make a B
     Advance as part of such B Borrowing of the amount of the B
     Advance to be made by such Lender as part of such B Borrowing
     and (C) each Lender that is to make a B Advance as part of
     such B Borrowing, upon receipt, that the Agent has received
     forms  of  documents appearing to fulfill the  applicable
     conditions set forth in Article III.  Each Lender that is to
     make a B Advance as part of such B Borrowing shall, before
     1:00 p.m. on the date of such B Borrowing specified in the
     notice received from the Agent pursuant to clause (A) of the
     preceding sentence or any later time when such Lender shall
     have received notice from the Agent pursuant to clause (C) of
     the preceding sentence, make available for the account of its
     Applicable Lending Office to the Agent at its address referred
     to in Section 8.02 such Lender's B Advance, in same day funds.
     Upon fulfillment of the applicable conditions set forth in
     Article III and after receipt by the Agent of such funds, the
     Agent will promptly make such funds available to the Borrower
     at the Agent's aforesaid address.  Promptly after each  B
     Borrowing the Agent will notify each Lender of the amount of
     the B Borrowing, the consequent B Reduction and the dates upon
     which such B Reduction commenced and will terminate.

     (b)     Each  B  Borrowing shall be  in  an  aggregate
amount  not  less than $5,000,000 or an integral  multiple  of
$1,000,000 in excess thereof.

     (c)     Within  the  limits and on the conditions  set
forth in this Section 2.03, the Borrower may from time to time
borrow  under this Section 2.03, repay pursuant to  subsection
(e), below, prepay pursuant to Section 2.11 and reborrow under
this  Section 2.03, provided that a B Borrowing shall  not  be
made  within  three Business Days of the date of any  other  B
Borrowing.

     (d)     In no event shall the Borrower be entitled  to
request  or  receive  any  B Advances  that  would  cause  the
principal   amount  outstanding  hereunder   to   exceed   the
Commitments.

     (e)     The Borrower shall repay to the Agent for  the
account  of  each Lender which has made a B Advance,  or  each
other  holder  of a B Note, on the maturity  date  of  each  B
Advance  (such  maturity  date being  that  specified  by  the
Borrower for repayment of such B Advance in the related Notice
of B Borrowing delivered pursuant to subsection (a)(i), above,
and  provided  in the B Note evidencing such B  Advance),  the
then unpaid principal amount of such B Advance.

     (f)     The  Borrower shall pay interest on the unpaid
principal  amount of each B Advance from the date  of  such  B
Advance to the date the principal amount of such B Advance  is
repaid  in  full, at the rate of interest for such  B  Advance
specified  by the Lender making such B Advance in  its  notice
with respect thereto delivered pursuant to subsection (a)(ii),
above, payable on the interest payment date or dates specified
by the Borrower for such B Advance in the related Notice of  B
Borrowing  delivered pursuant to subsection (a)(i), above,  as
provided in the B Note evidencing such B Advance.

     (g)     The indebtedness of the Borrower resulting from
each  B  Advance made to the Borrower as part of a B Borrowing
shall  be  evidenced  by a separate B  Note  of  the  Borrower
payable to the order of the Lender making such B Advance.

     SECTION 2.04.  Fees. (a) The Borrower agrees to pay to the
Agent for the account of each Lender the Facility Fee from the
date  hereof, in the case of each Bank, and from the effective
date  specified in the Lender Assignment pursuant to which  it
became  a Lender, in the case of each other Lender, until  the
Termination Date, payable quarterly in arrears on the last day
of each March, June, September and December during the term of
such Lender's Commitment, commencing December 31, 1996, and on
the Termination Date.

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

     (c)     The Borrower agrees to pay to the Agent for the
account of each Bank, on the date of execution and delivery of
this  Agreement, a participation fee equal to (i) in the  case
of  each  Increasing Lender, .10% of the amount by which  such
Bank's  Commitment  hereunder exceeds such  Bank's  Commitment
under  the  Existing  Facility (in each  case  without  giving
effect to any reduction in such Commitment arising as a result
of any Advances being outstanding) and (ii) in the case of any
New Lender, .10% of such Bank's Commitment.

     (d)     The Borrower further agrees to pay to the Agent
a  competitive  bid  auction fee of  $1,000  at  the  time  of
delivery of each Notice of B Borrowing.

     SECTION 2.05.  Reduction  of the Commitments.    (a)  The
Borrower  shall  have the right, upon at least three  Business
Days'  notice  to the Agent, to terminate in whole  or  reduce
ratably   in  part  the  unused  portions  of  the  respective
Commitments of the Lenders; provided that the aggregate amount
of  the Commitments of the Lenders shall not be reduced to  an
amount  which is less than the aggregate principal  amount  of
the  B Advances then outstanding; and provided, further,  that
each  partial reduction shall be in an aggregate amount  equal
to  the  product  of   (A) $1,000,000 and (B)  the  number  of
Lenders  on  the  effective  date of  such  reduction,  or  an
integral multiple in excess thereof.

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

     SECTION 2.06.    Repayment of A Advances.   The  Borrower
shall  repay  the principal amount of each A Advance  made  by
each Lender in accordance with the A Note to the order of such
Lender.

     SECTION 2.07.   Interest  on A Advances.    The  Borrower
shall  pay interest on the unpaid principal amount of  each  A
Advance  owing to each Lender from the date of such A  Advance
until  such  principal amount shall be paid in  full,  at  the
Applicable  Rate  for  such  A Advance  (except  as  otherwise
provided in this Section 2.07), payable as follows:

     (a)             Base Rate Advances.  If such A 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  any  amount of principal that is not paid when  due
     (whether at stated maturity, by acceleration or otherwise)
     shall bear interest, from the date on which such amount is due
     until such amount is paid in full, payable on demand, at a
     rate per annum equal at all times to the Default Rate.

     (b)             Adjusted CD Rate Advances.  If such A Advance
     is an Adjusted CD Rate Advance, interest thereon shall be
     payable on the last day of such Interest Period and, if the
     Interest Period for such A Advance has a duration of more than
     90 days, on each day that occurs during such Interest Period
     every 90 days from the first day of such Interest Period;
     provided that any amount of principal that is not paid when
     due (whether at stated maturity, by acceleration or otherwise)
     shall bear interest, from the date on which such amount is due
     until such amount is paid in full, payable on demand, at a
     rate per annum equal at all times to the Default Rate.

     (c)             Eurodollar Rate Advances.  If such A 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 A 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 any
     amount of principal that is not paid when due (whether at
     stated maturity, by acceleration or otherwise) shall bear
     interest, from the date on which such amount is due until such
     amount is paid in full, payable on demand, at a rate per annum
     equal at all times to the Default Rate.

     SECTION 2.08.    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 which 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 A 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  A  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  A  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 2.09.   Interest  Rate  Determination. (a)   Each
Reference   Bank  agrees  to  furnish  to  the  Agent   timely
information  for the purpose of determining each  Adjusted  CD
Rate or Eurodollar Rate, as applicable.  If any one or more of
the  Reference Banks shall not furnish such timely information
to  the Agent for the purpose of determining any such interest
rate,  the  Agent shall determine such interest  rate  on  the
basis   of  timely  information  furnished  by  the  remaining
Reference Banks.

     (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 2.07(a),  (b)
or  (c),  and the applicable rate, if any, furnished  by  each
Reference  Bank for the purpose of determining the  applicable
interest rate under Section 2.07(b) or (c).

     (c)     If  fewer  than  two Reference  Banks  furnish
timely  information to the Agent for determining the  Adjusted
CD  Rate  for any Adjusted CD Rate Advances, or the Eurodollar
Rate   for   any  Eurodollar  Rate  Advances,   due   to   the
unavailability  of  funds  to  such  Reference  Banks  in  the
relevant financial markets:

     (i)              the Agent shall forthwith notify the Borrower
     and the Lenders that the interest rate cannot be determined
     for  such  Adjusted CD Rate Advances or  Eurodollar  Rate
     Advances, as the case may be;

     (ii)             each such Advance will automatically, on the
     last  day  of the then existing Interest Period therefor,
     Convert into a Base Rate Advance (or if such Advance is then a
     Base Rate Advance, will continue as a Base Rate Advance); and

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

     (d)     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 or,  if
     requested by the Borrower in accordance with Section 2.10, an
     Adjusted CD Rate Advance; and

     (ii)             the obligation of the Lenders to make, or to
     Convert A 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.

     (e)     If  the Borrower shall fail to (i) select  the
duration  of  any  Interest Period for any  Adjusted  CD  Rate
Advances  or  any Eurodollar Rate Advances in accordance  with
the  provisions  contained  in  the  definition  of  "Interest
Period"  in  Section 1.01, (ii) provide a Notice of Conversion
with  respect to any Eurodollar Rate Advances or  Adjusted  CD
Rate  Advances  on  or prior to 12:00 noon (A)  on  the  third
Business  Day  prior  to the last day of the  Interest  Period
applicable  thereto,  in the case of a  Conversion  to  or  in
respect  of  Eurodollar Rate Advances, or  (B) on  the  second
Business  Day  prior  to the last day of the  Interest  Period
applicable  thereto,  in the case of a  Conversion  to  or  in
respect  of  Adjusted CD Rate Advances, or (iii)  satisfy  the
applicable conditions precedent set forth in Section 3.02 with
respect  to  the Conversion to or in respect of any Eurodollar
Rate  Advances  or Adjusted CD Rate Advances, the  Agent  will
forthwith  so  notify the Borrower and the  Lenders  and  such
Advances  will  automatically, on the last  day  of  the  then
existing  Interest  Period therefor, Convert  into  Base  Rate
Advances;  provided, however, that if,  in  the  case  of  any
failure  by the Borrower pursuant to clause (iii), above,  the
Majority  Lenders do not notify the Borrower  within  30  days
after  such Conversion into Base Rate Advances that they  have
agreed  to waive, or have decided not to waive, the applicable
conditions  precedent  set  forth in  Section  3.02  that  the
Borrower  failed  to satisfy, the Majority  Lenders  shall  be
deemed  to  have waived such conditions precedent solely  with
respect to the Advances so Converted, and the Borrower  shall,
at  any time after such 30-day period, be permitted to Convert
such  Advances  into Eurodollar Rate Advances or  Adjusted  CD
Rate Advances; and provided further, however, that such deemed
waiver shall be of no further force or effect if, at any  time
after  such  30-day  period, the Majority Lenders  notify  the
Borrower  that  they no longer agree to waive such  conditions
precedent,  in which case any such Advances so Converted  into
Eurodollar  Rate Advances or Adjusted CD Rate  Advances  shall
automatically Convert into Base Rate Advances on the last  day
of the then existing Interest Period therefor.

     (f)     On  the  date  on which the  aggregate  unpaid
principal  amount  of A Advances comprising  any  A  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 A Advances shall, if  they  are
Advances   of   a   Type  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  A
Advances into Advances of a Type other than Base Rate Advances
shall  terminate; provided, however, that if and  so  long  as
each  such  A Advance shall be of the same Type and  have  the
same  Interest  Period  as  A Advances  comprising  another  A
Borrowing  or  other  A Borrowings, and the  aggregate  unpaid
principal amount of all such A 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  A  Advances as, or to Convert all such  A  Advances
into, Advances of such Type having such Interest Period.

     SECTION 2.10.    Voluntary  Conversion  of  A  Advances.
Subject  to  the  applicable conditions set forth  in  Section
3.02,  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,
(ii)  on  the  second Business Day prior to the  date  of  the
proposed  Conversion, in the case of a  Conversion  to  or  in
respect of Adjusted CD Rate Advances and (iii) 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 2.09 and 2.13, Convert all A Advances of one Type
comprising the same A Borrowing into Advances of another Type;
provided, however, that, in the case of any Conversion of  any
Adjusted  CD  Rate Advances or Eurodollar Rate  Advances  into
Advances of another Type on a day other than the last  day  of
an  Interest  Period  for such Adjusted CD  Rate  Advances  or
Eurodollar  Rate Advances, the Borrower shall be obligated  to
reimburse   the  Lenders  in  respect  thereof   pursuant   to
Section 8.04(b).  Each such Notice of Conversion shall  be  in
substantially the form of Exhibit 2.10 and shall,  within  the
restrictions  specified above, specify (A) the  date  of  such
Conversion,  (B) the A Advances to be Converted, (C)  if  such
Conversion  is  into Adjusted CD Rate Advances  or  Eurodollar
Rate  Advances, the duration of the Interest Period  for  each
such  A  Advance, and (D) the aggregate amount of  A  Advances
proposed to be Converted.

     SECTION 2.11.    Optional Prepayments of  Advances.   The
Borrower may, upon at least three Business Day's 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  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 $1,000,000 (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 an Adjusted CD
Rate  Advance,  Eurodollar Rate Advance or a  B  Advance,  the
Borrower  shall  be obligated to reimburse  the  Lender(s)  in
respect  thereof  pursuant  to  Section  8.04(b).   Except  as
provided  in  this Section 2.11, the Borrower  shall  have  no
right to prepay any principal amount of any Advances.

     SECTION 2.12.   Mandatory Prepayments.  (a) On the  date  of
any  termination or reduction of the Commitments  pursuant  to
Section 2.05, the Borrower shall pay or prepay for the ratable
accounts  of  the  Lenders  so much of  the  principal  amount
outstanding  under  this Agreement as shall  be  necessary  in
order  that  the  principal amount outstanding  (after  giving
effect  to  such  prepayment) will not exceed  the  amount  of
Commitments following such termination or reduction,  together
with  (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,  Adjusted  CD  Rate
Advances  or  B  Advances, any amount payable to  the  Lenders
pursuant to Section 8.04(b).

     (b)     All prepayments required to be made pursuant to
this Section 2.12 shall be applied by the Agent as follows:

     (i)             first, to the prepayment of the A Advances
     (without reference to minimum dollar requirements), applied to
     outstanding Base Rate Advances up to the full amount thereof
     before  they  are  applied to the ratable  prepayment  of
     Eurodollar Rate and Adjusted CD Rate Advances; and

     (ii)            second, to the prepayment of the B Advances
     (without reference to minimum dollar requirements), applied
     ratably among all the Lenders holding B Advances.

     (c)     In  lieu  of  prepaying  any  Eurodollar  Rate
Advances,  Adjusted CD Rate Advances or B Advances  under  any
provision  (other  than  Sections  2.14  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 and  under  the
Notes.  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).

     SECTION 2.13.    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  Adjusted  CD  Rate Advances,  included  in  the
definition  of Adjusted CD Rate or, in the case of  Eurodollar
Rate   Advances,  included  in  the  Eurodollar  Rate  Reserve
Percentage)  in  or  in  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 Adjusted CD Rate  Advances  or
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 2.14.    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  in  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, (i) 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  A  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 8.07(g), and (ii) in  the  event
that,  on  the  last day of each of the then-current  Interest
Periods  for  each Eurodollar Rate Advance (each such  Advance
being  an  "Unaffected Lender Advance") of each of  the  other
Lenders  (each such Lender being an "Unaffected Lender"),  the
Agent  shall  have yet to notify the Borrower and the  Lenders
that the circumstances causing such suspension of the Affected
Lender's  obligations  as aforesaid no longer  exist,  or  the
Affected Lender has not yet been replaced pursuant to  Section
8.07(g), such Unaffected Lender Advance shall be Converted  by
the  Borrower in accordance with Section 2.10 into an  Advance
of another Type (or, in the event that the Borrower shall fail
to  duly  deliver a Notice of Conversion with respect thereto,
into  a  Base  Rate  Advance),  and  the  obligation  of  such
Unaffected  Lender  to make, maintain, or Convert  A  Advances
into  Eurodollar  Rate Advances shall be suspended  until  the
Agent  shall  so notify the Borrower and the Lenders,  or  the
Affected  Lender  shall be so replaced.  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 Unaffected Lender Advance to which it corresponded  at
the  time  of  the Conversion of such Affected Lender  Advance
pursuant to clause (i), above.

     SECTION 2.15.  Payments and Computations. (a)The Borrower
shall  make  each payment hereunder and under  the  Notes  not
later  than  1:00 p.m. on the day when due in Dollars  to  the
Agent  at its address referred to in Section 8.02 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 2.03, 2.08, 2.12(b)(iii), 2.16 or 8.04(b)) to  the
Lenders for the account of their respective Applicable 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  8.07(d), from and after the effective date  specified
in  such  Lender Assignment, the Agent shall make all payments
hereunder  and  under  the Notes 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 or under any Note 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  the
Alternate  Base Rate and the Federal Funds Rate  and  of  fees
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 Adjusted CD Rate and the Eurodollar Rate shall be
made  by  the Agent, and all computations of interest pursuant
to  Section 2.08 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
2.08,  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 or  under  the
Notes 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 2.16.   Taxes.   (a) Any and all payments by  the
Borrower hereunder and under the other Loan Documents shall be
made,  in accordance with Section 2.15, 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 the jurisdiction
under the laws of which such Lender or the Agent (as the  case
may be) is organized or any political subdivision thereof and,
in  the case of each Lender, taxes imposed on its overall  net
income  and  franchise taxes imposed on it by the jurisdiction
of  such  Lender's Applicable Lending Office or any  political
subdivision  thereof  (all  such non-excluded  taxes,  levies,
imposts,  deductions,  charges, withholdings  and  liabilities
being  hereinafter referred to as "Taxes"); provided, however,
that,  notwithstanding the foregoing, Taxes shall not  include
any  taxes  otherwise required to be deducted by the  Borrower
pursuant  to this subsection (a) as a result of activities  of
any Lender or the Agent in the State of Iowa (other than as  a
result,  or  in respect, of this Agreement).  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 8.02, 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, 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.

     (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 which 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 and under the Notes.

     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 A Advances made by it (other than pursuant  to
Section 2.08, 2.16 or 8.04(b)) in excess of its ratable  share
of  payments on account of the A Advances obtained by all  the
Lenders,  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.

     SECTION 2.18. Extension of Termination Date. (a) At least
90 but not more than 120 days before each of November 20, 1998
and  November  20,  1999, the Borrower may,  by  delivering  a
written  request  to  the  Agent  (each  such  request   being
irrevocable), request that each Lender extend for one year the
Termination  Date  with respect to such  Lender's  Commitment.
The  Agent shall, upon its receipt of such a request, promptly
notify  each  Lender  thereof, and request  that  each  Lender
promptly advise the Agent of its approval or rejection of such
request.

     (b)     Upon  receipt  of such notification  from  the
Agent, each Lender may (but shall not be required to), in  its
sole  and absolute discretion, agree to extend the Termination
Date  with respect to its Commitment for a period of one year,
and  shall  (should it determine to do so), no later  than  60
days  following its receipt of such notification,  notify  the
Agent  of its approval concerning such request.  If any Lender
shall not so notify the Agent, such Lender shall be deemed not
to  have consented to such request.  The Agent shall thereupon
notify  the  Borrower as to the Lenders,  if  any,  that  have
consented to such request.

     (c)     If  all  of  the Lenders agree to  extend  the
Termination  Date,  the Commitments shall be  extended  for  a
period   of   one   year,  commencing  on  the  then-scheduled
Termination  Date;  provided, however,  that  the  Commitments
shall  be so extended notwithstanding the existence of one  or
more  Lenders (the "Nonextending Lenders") which have  elected
not to extend (or failed to notify the Agent of its consent to
extend)  their  Commitment if (i) such Nonextending  Lender(s)
have  been  replaced  in the full amount  of  its  (or  their)
Commitment(s) pursuant to Section 8.07(g) and (ii) no Event of
Default or Unmatured Default shall then have occurred  and  be
continuing.   If  a  Nonextending Lender is  not  so  replaced
pursuant  to Section 8.07(g), the Commitments of  all  of  the
Lenders  shall  automatically terminate on the  then-scheduled
Termination Date.


                          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
on  or prior to November 20, 1996 (or such later Business  Day
as the parties hereto may mutually agree):

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

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

          (ii)        the A Notes payable to the order of the
          Lenders, respectively, duly completed and executed by the
          Borrower;

          (iii)       certified copies of the resolutions of the
          Board of Directors of the Borrower approving this Agreement,
          the Notes and the other Loan Documents to which it is, or is
          to be, a party, and of all documents evidencing other
          necessary corporate action with respect to this Agreement, the
          Notes and such Loan Documents;

          (iv)        certified copies of the resolutions of the
          Board of Directors of the Parent approving the Support
          Agreement and the other Loan Documents to which it is, or is
          to be, a party, together with a certificate of the Secretary
          or an Assistant Secretary of the Parent certifying that the
          credit facility evidenced by this Agreement is the only credit
          facility of the Borrower having the benefit of a guaranty or
          other support arrangement from the Parent pursuant to such
          resolutions, and of all documents evidencing other necessary
          corporate action with respect to the Support Agreement and
          such Loan Documents;
                      
          (v)         a certificate of the Secretary or an Assistant
          Secretary of the Borrower certifying the names, true
          signatures and incumbency of the officers of the Borrower
          authorized to sign this Agreement, the Notes and the other
          Loan Documents to which it is, or is to be, a party;

          (vi)        a certificate of the Secretary or an Assistant
          Secretary of the Parent certifying the names, true signatures
          and incumbency of the officers of the Parent authorized to
          sign the Support Agreement and the other Loan Documents to
          which it is, or is to be, a party;

          (vii)       copies of the Certificate of Incorporation (or
          comparable charter document) and by-laws of the Borrower,
          together with all amendments thereto, certified by the
          Secretary or an Assistant Secretary of the Borrower;

          (viii)      copies of the Certificate of Incorporation (or
          comparable charter document) and by-laws of the Parent,
          together with all amendments thereto, certified by the
          Secretary or an Assistant Secretary of the Parent;

          (ix)        certified copies of all Governmental Approvals,
          if any, required in connection with the execution, delivery
          and performance of this Agreement and the other Loan
          Documents;

          (x)         certified copies of the financial statements
          referred to in Section 5(d) of the Support Agreement;

          (xi)        the Support Agreement duly executed by the
          Parent and the Borrower, together with (A) a letter from the
          Parent to the Agent affirming that the Lenders are "Lenders"
          under the Support Agreement and (B) proper Financing
          Statements (Form UCC-1 or UCC-3) to be filed under the Uniform
          Commercial Code in all jurisdictions as may be necessary or,
          in the opinion of the Agent, desirable to perfect the security
          interests created by the Support Agreement;

          (xii)       favorable opinions of:

               (A)               Winthrop, Stimson, Putnam &
               Roberts, special New York counsel for the Borrower and the
               Parent, in substantially the form of Exhibit 3.01(a)(xii)-1
               and as to such other matters as the Majority Lenders, through
               the Agent, may reasonably request;

               (B)               Stephen W. Southwick, Counsel for the
               Borrower and Vice President, General Counsel & Secretary of
               the Parent, in substantially the form of Exhibit 3.01(a)(xii)-
               2 and as to such other matters as the Majority Lenders,
               through the Agent, may reasonably request;

               (C)                King & Spalding, special New York counsel
               to the Agent, in substantially the form of Exhibit
               3.01(a)(xii)-3 and as to such other matters as the Majority
               Lenders, through the Agent, may reasonably request; and

          (xiii)       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 Borrower, 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 Agent shall have received a certificate
     (the statements in which shall be true) of a duly authorized
     officer of the Parent, dated the date of the Closing and in
     sufficient  copies  for  each Lender,  stating  that  the
     representations and warranties set forth in Section 5 of the
     Support Agreement are true and correct on and as of the date
     of the Closing as though made on and as of such date.

          (d)     The Borrower shall have paid (i) all fees under
     or referenced in Section 2.04 hereof, 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.

          (e)     Each New Lender and Increasing Lender shall, on
     the date of the Closing, have purchased by assignment from the
     Existing Banks that are parties hereto such portion of the A
     Advances owing to them as shall be designated by the Agent
     such that, after giving effect to all such purchases  and
     assignments, the outstanding A Advances owing to each Lender
     shall equal such Lender's Percentage of the aggregate amount
     of A Advances owing to all Lenders.

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

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

          (i)     the  representations and  warranties
          contained in Section 4.01 (excluding those contained in
          subsections (e), (f), (g), (h) and (j) thereof if such A
          Borrowing does not increase the aggregate outstanding
          principal amount of A Advances over the aggregate outstanding
          principal amount of all Advances immediately prior to making
          such A Borrowing) and in Section 5 of the Support Agreement
          are true and correct on and as of the date of such A
          Borrowing, before and after giving effect to the application
          of the proceeds therefrom, as though made on and as of such
          date; and

          (ii)     no event has occurred and is continuing, or
          would result from such A Borrowing or from the application of
          the proceeds therefrom, which constitutes an Event of Default
          or an Unmatured Default; and

     (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.

     SECTION 3.03.   Conditions Precedent to Each B Borrowing.
The  obligation  of each Lender to make a  B  Advance  on  the
occasion  of a B Borrowing (including the initial B Borrowing)
shall be subject to the conditions precedent that (a) the Agent
shall  have  received  the written confirmatory  Notice  of  B
Borrowing with respect thereto;  (b) on or before the date of such
B  Borrowing, but prior to such B Borrowing, the  Agent  shall
have received a B Note payable to the order of such Lender for
each  of the one or more B Advances to be made by such  Lender
as  part  of such B Borrowing, in a principal amount equal  to
the  principal amount of the B Advance to be evidenced thereby
and  otherwise  on such terms as were agreed  to  for  such  B
Advance in accordance with Section 2.03; (c) on the date of such
B Borrowing the following statements shall be true and correct
(and  each  of  the  giving  of the  applicable  Notice  of  B
Borrowing  and the acceptance by the Borrower of the  proceeds
therefrom  shall constitute a representation and  warranty  by
the  Borrower  that,  on the date of such  B  Borrowing,  such
statements are true and correct):

                 (i)    the   representations  and  warranties
     contained  in Section 4.01 (excluding those contained  in
     subsections (e), (f), (g), (h) and (j) thereof if such  B
     Borrowing  does  not  increase the  aggregate  amount  of
     Advances  over  the  aggregate  amount  of  all  Advances
     outstanding immediately prior to such B Borrowing) and in
     Section  5 of the Support Agreement are true and  correct
     on  and  as  of the date of such B Borrowing, before  and
     after  giving  effect  to such B  Borrowing  and  to  the
     application of the proceeds therefrom, as though made  on
     and as of such date; and

                (ii)  no event has occurred and is continuing,
     or  would  result  from  such B  Borrowing  or  from  the
     application  of the proceeds therefrom, which constitutes
     an Event of Default or an Unmatured Default; and

(d)      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.

     SECTION 3.04.  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  the
Borrower and the Parent 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 Borrower represents and warrants as follows:

     (a)     The Borrower 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 have a material adverse affect on the
business,   financial   condition,  operations,   results   of
operations  or prospects of the Borrower and its Subsidiaries,
taken as a whole).

     (b)     The execution, delivery and performance by
the  Borrower of this Agreement, the Notes and the other  Loan
Documents  to  which it is or will be a party are  within  the
Borrower's corporate powers, have been duly authorized by  all
necessary corporate action, and do not and will not contravene
(i)  the Borrower's charter or by-laws, (ii) law, or (iii) any
legal  or contractual restriction binding on or affecting  the
Borrower; 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 of  any
Loan Document.

     (d)     This  Agreement is, and each  other  Loan
Document  to which the Borrower will be a party when  executed
and  delivered  hereunder will be, legal,  valid  and  binding
obligations  of the Borrower enforceable against the  Borrower
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 December 31, 1995, there has been no
material  adverse change in the business, financial condition,
operations, results of operations or prospects of the Borrower
and  its  Subsidiaries, taken as a whole, or in the Borrower's
ability to perform its obligations under this Agreement or any
other Loan Document to which it is or will be a party.

     (f)     The pro forma unaudited consolidated  and
consolidating   balance  sheets  of  the  Borrower   and   its
Subsidiaries  as  at December 31, 1995, and  the  related  pro
forma  unaudited consolidated and consolidating statements  of
income  of  the Borrower and its Subsidiaries for  the  fiscal
year   then   ended,   and  the  unaudited  consolidated   and
consolidating   balance  sheets  of  the  Borrower   and   its
Subsidiaries  as  at  September  30,  1996  and  the   related
unaudited consolidated and consolidating statements of  income
for  the nine-month period then ended, copies of each of which
have been furnished to each Bank, fairly present (subject,  in
the  case of such balance sheets and statements of income  for
the   nine  months  ended  September  30,  1996,  to  year-end
adjustments)  the  consolidated  financial  condition  of  the
Borrower  and  its  Subsidiaries as  at  such  dates  and  the
consolidated  results of operations of the  Borrower  and  its
Subsidiaries  for  the periods ended on  such  dates,  all  in
accordance, in all material respects, with generally  accepted
accounting principles consistently applied.

     (g)     Except as disclosed in the Parent's Report
on  Form 10-K for the year ended December 31, 1995 and  Report
on  Form 10-Q for the period ended  September 30, 1996,  there
is no pending or threatened action or proceeding affecting the
Borrower  or any of its Subsidiaries or properties before  any
court,   governmental   agency  or  arbitrator,   that   might
reasonably be expected to materially adversely affect (i)  the
business,  financial  condition,  results  of  operations   or
prospects  of the Borrower and its Subsidiaries,  taken  as  a
whole,  or  (ii)  the ability of the Borrower to  perform  its
obligations under this Agreement or any other Loan Document to
which  the Borrower or the Parent is or is to be a party;  and
since   September 30, 1996 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
Borrower or any of its ERISA Affiliates which would result  in
a  material liability to the Borrower.  Since the date of  the
most  recent Schedule B (Actuarial Information) to the  annual
report of Plans maintained by the Borrower (Form 5500 Series),
if  any,  there  has been no material adverse  change  in  the
funding  status  of  the  Plans referred  to  therein  and  no
"prohibited  transaction" has occurred  with  respect  thereto
which is reasonably expected to result in a material liability
to  the  Borrower.  Neither the Borrower nor any of its  ERISA
Affiliates  has incurred nor reasonably expects to  incur  any
material withdrawal liability under ERISA to any Multiemployer
Plan.

     (i)     The Support Agreement is in full force and
effect  without  having  been  amended,  modified,  waived  or
terminated  in  any manner, except in each case in  accordance
with the terms thereof.

     (j)     The  Borrower 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 Borrower is  contesting  in
good  faith  an assertion of liability based on such  returns,
has   provided  adequate  reserves  for  payment  thereof   in
accordance with generally accepted accounting principles.

     (k)     Following application of the proceeds of
each Advance, not more than 25 percent of the value of the
assets of the Borrower and its Subsidiaries on a consolidated
basis will be margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve
System).

     (l)     The   Borrower  is  not  an  "investment
company" or a company "controlled" by an "investment company",
within  the meaning of the Investment Company Act of 1940,  as
amended.

     (m)     As of the date hereof, the Borrower is not
a "holding company" within the meaning of PUHCA.

     (n)     From and after the date upon which, and at
all  times during which, any Subsidiary of the Borrower  shall
be a "public-utility company" within the meaning of PUHCA, the
Borrower  will  be a "holding company" within the  meaning  of
PUHCA,  but the Borrower and its Subsidiaries will  be  exempt
from  the  provisions  of  that Act,  except  Section  9(a)(2)
thereof,  by  virtue of having filed with the  Securities  and
Exchange  Commission a Statement by Holding  Company  Claiming
Exemption  Under Rule U-2 from the Provisions  of  the  Public
Utility Holding Company Act of 1935 on Form U-3A-2.


                           ARTICLE V
                   COVENANTS OF THE BORROWER

     SECTION 5.01.   Affirmative Covenants.  So  long  as
any  amount in respect of any Note shall remain unpaid or  any
Lender  shall  have any Commitment, the Borrower 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 Borrower 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  generally   accepted
accounting principles.

     (b)     Maintenance of Insurance.   Maintain,  or
cause  to  be maintained, insurance covering the Borrower  and
each  of  its Subsidiaries and their respective properties  in
effect at all times in such amounts and covering such risks as
is  usually carried by 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 generally accepted
accounting   principles  consistently  applied),  engaged   in
similar  businesses and owning similar properties in the  same
general geographical area in which the Borrower and each  such
Subsidiary operates, either with reputable insurance companies
or,  in  whole or in part, by establishing reserves of one  or
more  insurance funds, 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 Borrower 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 have a material adverse effect on the business,
financial condition, operations, results of operations or
prospects of the Borrower and its Subsidiaries, taken as a
whole, or on the Borrower's ability to perform its obligations
under this Agreement or any other Loan Document to which it is
or will be a party.

     (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   have  a  material  adverse  effect  on  the  business,
financial  condition,  operations, results  of  operations  or
prospects  of the Borrower and its Subsidiaries,  taken  as  a
whole, or on the Borrower's ability to perform its obligations
under this Agreement or any other Loan Document to which it is
or will be a party.

     (e)     Inspection Rights.  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 Borrower and each of its Subsidiaries, and to discuss
the  affairs,  finances and accounts of the Borrower  and  its
Subsidiaries with the Borrower 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  Borrower and its Subsidiaries  and  the
assets  and business of the Borrower and its Subsidiaries,  in
accordance   with  generally  accepted  accounting  principles
consistently applied.

     (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 have a material adverse effect
on  the business, financial condition, operations, results  of
operations  or prospects of the Borrower and its Subsidiaries,
taken as a whole, or on the Borrower's ability to perform  its
obligations under this Agreement or any other Loan Document to
which it is or will be a party.

     (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 Borrower 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 Borrower, a consolidated
     balance sheet of the Borrower and its Subsidiaries as at the
     end of such quarter and consolidated statements of income,
     retained earnings and cash flows of the Borrower and  its
     Subsidiaries for the period commencing at the end of  the
     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 generally accepted accounting principles consistent with
     those applied in the preparation of the financial statements
     referred to in Section 5(d) of the Support Agreement, 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 Borrower 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
     Borrower, a copy of the consolidated balance sheet of the
     Borrower and its Subsidiaries as at the end of such fiscal
     year and consolidated statements of income, retained earnings
     and cash flows of the Borrower and its Subsidiaries for such
     fiscal year, in each case (x) accompanied by the audit report
     of Arthur Andersen & Co. or another nationally-recognized
     independent public accounting firm acceptable to the Majority
     Lenders if at any time during such fiscal year the Moody's
     Rating was Baa2 or lower or the S&P Rating was BBB or lower or
     (y)  in  reasonable detail and duly certified by a Senior
     Financial Officer as having been prepared in accordance (in
     all material respects) with generally accepted accounting
     principles consistent with those applied in the preparation of
     the financial statements referred to in Section 5(d) of the
     Support Agreement, 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
     Borrower proposes to take with respect thereto;

             (iv)     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  Borrower or any ERISA Affiliate of the Borrower  has
     occurred and (B) within 10 days after any other ERISA Event
     with  respect  to any Plan of the Borrower or  any  ERISA
     Affiliate of the Borrower has occurred, a statement of  a
     Senior Financial Officer describing such ERISA Event and the
     action, if any, which the Borrower or such ERISA Affiliate
     proposes to take with respect thereto;

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

             (vi)     promptly and in any event within 30 days
     after the filing thereof with the Internal Revenue Service,
     copies of each Schedule B (Actuarial Information) to  the
     annual report (Form 5500 Series) with respect to each Plan (if
     any) to which the Borrower or any ERISA Affiliate of  the
     Borrower is a contributing employer;

             (vii)     promptly after receipt thereof by the
     Borrower  or any ERISA Affiliate of the Borrower  from  a
     Multiemployer Plan sponsor, a copy of each notice received by
     the Borrower or such ERISA Affiliate 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 Borrower or such ERISA Affiliate is
     reasonably expected to be liable;

             (viii)     promptly after the Borrower  becomes
     aware of the occurrence thereof, notice of all actions, suits,
     proceedings or other events of (A) of the type described in
     Section 4.01(g) or (B) for which the Agent, the Lenders will
     be entitled to indemnity under Section 8.04(c);

             (ix)     promptly after the sending or filing
     thereof,  copies of all such proxy statements,  financial
     statements, and reports which the Borrower 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 Borrower or 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 Borrower or  any  of  its
     Subsidiaries as the Agent or any Lender through the Agent may
     from time to time reasonably request.

     (i)     Further Assurances.  At the expense of the
Borrower,  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 Borrower will  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 any Note shall remain unpaid or any Lender shall
have  any  Commitment,  the Borrower  will  not,  without  the
written consent of the Majority Lenders:

     (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  the
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 Borrower 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 Borrower or any of its
     Subsidiaries in the ordinary course of business (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
     Borrower's  single-purpose  Subsidiaries  or   any   such
     Subsidiary's  assets to secure the repayment  of  project
     financing 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 and the applicable insurance company has
     acknowledged its liability therefor in writing;

     (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; and

     (viii)     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 any Debt other than:

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

             (B)      other Debt of the Borrower; provided, however,
          that both immediately before and after the incurrence of any
          such other Debt, the Parent shall be in compliance with the
          covenant set forth in Section 2(a) of the Support Agreement.

     (ii)     Permit any of its Subsidiaries to create,
     incur, assume, or suffer to exist any Debt other than:

          (A)            Debt of any Person acquired by the Borrower or
          any such Subsidiary (whether by merger, stock or asset
          purchase, or otherwise) that was in effect and outstanding at
          the time of acquisition;

          (B)            Debt owing by any such Subsidiary to the
          Borrower or to any other such Subsidiary;

          (C)            Debt of such Subsidiaries under working capital
          lines and with respect to Capitalized Lease Obligations not to
          exceed $5,000,000 in the aggregate at any one time outstanding
          (such dollar limitation to apply to the Debt of any Persons
          acquired by and merged into any such Subsidiary to the extent
          of any surviving working capital lines and Capitalized Lease
          Obligations of any such Person which shall survive such
          acquisition and merger);

          (D)            Debt secured by Liens permitted by Section
          5.02(a)(iv) and (v);

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

          (F)            existing Debt set forth in Schedule III hereto;

provided, however, that both immediately before and after  the
incurrence of any Debt described in clauses (A), (B), (C), (D)
and  (E),  above, the Parent shall be in compliance  with  the
covenant set forth in Section 2(a) of the Support Agreement.

     (c)     Compliance  with ERISA.   (i)  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  Borrower has no control over the reduction or elimination
of  such  deficiency), (ii) terminate,  or  permit  any  ERISA
Affiliate  of  the  Borrower to terminate,  any  Plan  of  the
Borrower  or  such  ERISA Affiliate so as  to  result  in  any
material (in the opinion of the Majority Lenders) liability of
the  Borrower  to  the  PBGC, or (iii)  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 Borrower or such
ERISA Affiliate and such a material liability to the Borrower.

     (d)     Transactions with Affiliates.  Enter into,
or   permit  any  of  its  Subsidiaries  to  enter  into,  any
transaction  with  an Affiliate of the Borrower,  unless  such
transaction  is on terms no less favorable to the Borrower  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 which was not an Affiliate of the Borrower.

     (e)     Mergers, Etc.   (i) Merge with or into or
consolidate  with or into any other Person,  except  that  the
Borrower  may merge with or into or consolidate with  or  into
any  of the Parent's Subsidiaries or the Parent, provided that
immediately  after  giving  effect  thereto,  (A)   no   event
shall  occur and be continuing which constitutes an  Unmatured
Default  or  an  Event  of Default, (B) the  Borrower  is  the
surviving  corporation  or, with  respect  to  any  merger  or
consolidation  of the Borrower with or into  the  Parent,  the
surviving (if not the Borrower) or resulting corporation shall
have  expressly assumed the obligations of the Borrower  under
this  Agreement,  the Notes and the other  Loan  Documents  to
which the Borrower is a party, (C) the Parent (unless it shall
be  the  surviving corporation) shall reaffirm its obligations
to  the  surviving or resulting corporation under the  Support
Agreement  and  (D)  the Borrower 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, and  (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, (x) the
surviving corporation is a Subsidiary of the Borrower, (y)  no
event  shall  occur  and be continuing  which  constitutes  an
Unmatured Default or an Event of Default and (z) the  Borrower
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  all   or   any
substantial  part  of  its  assets,  or  permit  any  of   its
Subsidiaries  to  sell, lease, transfer, assign  or  otherwise
dispose  of all or any substantial part of its assets,  except
(i)   sales,  leases,  transfers  and  assignments  from   one
Subsidiary of the Borrower to another such Subsidiary, (ii) in
any  transaction in which the proceeds from such sale,  lease,
transfer,  assignment or disposition are solely  in  Cash  and
Cash  Equivalents  and such proceeds are  (A)  reinvested,  or
held  for  no  more than 180 days in Cash and Cash Equivalents
pending  reinvestment, in lines of business (other  than  real
estate)  in  which the Borrower or any of its Subsidiaries  is
engaged  in  at  the time of the Closing,  (B)  applied  as  a
reduction  of  the  Commitments  and  an  optional  prepayment
pursuant   to   Sections  2.05  and  2.11,  respectively,   or
(C) applied to pay or prepay Debt incurred by the Borrower  or
any  such Subsidiary in connection with the project comprising
such  assets, or (iii) in connection with a sale and leaseback
transaction  entered into by any Subsidiary of  the  Borrower,
provided  in each case that no Unmatured Default or  Event  of
Default  shall  have occurred and be continuing  after  giving
effect  thereto,  and provided, further, that, notwithstanding
the  foregoing, so long as no Unmatured Default  or  Event  of
Default  shall have occurred and be continuing,  the  Borrower
and  its  Subsidiaries may sell, lease,  transfer,  assign  or
otherwise dispose of up to $20,000,000 (in book value) in  the
aggregate  of  their collective assets during any 12-calendar-
month  period in any single or series of transactions, whether
or not related.

     (g)     Modification of Support Agreement.  Agree
to  amend,  modify, terminate, or waive any provision  of  the
Support Agreement.

     (h)     Letter of Credit Obligations.  Incur,  or
permit  any  of  its Subsidiaries to incur, any  indebtedness,
liabilities  or obligations (whether contingent or  otherwise)
in  excess  of  $1,000,000 in the aggregate at  any  one  time
outstanding  under  reimbursement or similar  agreements  with
respect  to  letters  of credit issued to support  obligations
that do not constitute Debt.

     (i)     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.


                          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 Note when the same becomes due and  payable;
or

     (b)     The  Borrower  shall  fail  to  pay  any
interest  on  any  Note  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 Borrower 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)     Any representation or warranty made by or
on  behalf  of the Parent in the Support Agreement 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

     (e)     The  Borrower shall fail  to  perform  or
observe  any  term or covenant on its part to be performed  or
observed  contained  in Section 5.02 (other  than  subsections
(c),  (d), (g), (i) or (j) thereof), or the Parent shall  fail
to  perform or observe any term or covenant on its part to  be
performed or observed contained in Section 1, 2 or  4  of  the
Support Agreement; or

     (f)     The  Borrower shall fail  to  perform  or
observe any other term or covenant on its part to be performed
or  observed contained in Section 5.01, Section 5.02 or in any
other  Loan  Document, or the Parent shall fail to perform  or
observe any other term or covenant on its part to be performed
or  observed contained in the Support Agreement, and any  such
failure  shall remain unremedied, after written notice thereof
shall  have  been given to the Borrower by the  Agent,  for  a
period of 30 days; or

     (g)     The  Parent  or  any of its  Subsidiaries
(including  the  Borrower but excluding IES  Utilities)  shall
fail to pay any of its Debt (including any interest or premium
thereon but excluding Debt evidenced by the Notes) aggregating
$5,000,000  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

     (h)     IES Utilities shall fail to pay any of its
Debt  (including any interest or premium thereon)  aggregating
$5,000,000  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 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

     (i)     The Borrower, the Parent or IES Utilities
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   Borrower,  the  Parent  or  IES  Utilities  seeking   to
adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding    up,    reorganization,   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
Borrower,  the Parent or IES Utilities, 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  Borrower, the Parent or IES Utilities or the  appointment
of  a  receiver, trustee, custodian or other similar  official
for  the Borrower, the Parent or IES Utilities or any  of  its
property)  shall  occur; or the Borrower, the  Parent  or  IES
Utilities  shall  take  any  corporate  or  other  action   to
authorize  any  of  the  actions  set  forth  above  in   this
subsection (i); or

     (j)     Any judgment or order for the payment  of
money  equal  to or in excess of $5,000,000 shall be  rendered
against   the   Parent  or  any  of  its  Direct  Subsidiaries
(including,   without  limitation,  the   Borrower   and   IES
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

     (k)     The  Support  Agreement,  after  delivery
thereof under Article III, shall for any reason, except to the
extent  permitted by the terms thereof, cease to be valid  and
binding on the Parent or the Borrower; or

     (l)     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

     (m)     Any ERISA Event shall have occurred  with
respect to a Plan which could reasonably be expected to result
in  a  material liability to the Borrower, 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;

then,  and  in  any such event, the Agent  (i)  shall  at  the
request,  or may with the consent, of the holders of at  least
66-2/3% in principal amount of the A Advances then outstanding
or,  if  no  A Advances are then outstanding, Banks having  at
least 66-2/3% of the Commitments (without giving effect to any
B   Reduction),  by  notice  to  the  Borrower,  declare   the
obligation  of each Lender to make Advances to be  terminated,
whereupon  the same shall forthwith terminate, and (ii)  shall
at  the request, or may with the consent, of the holders of at
least  66-2/3%  in  principal  amount  of  the  Advances  then
outstanding  or, if no Advances are then outstanding,  Lenders
having  at least 66-2/3% of the Commitments, by notice to  the
Borrower, declare the Notes (if any), all interest thereon and
all other amounts payable under this Agreement to be forthwith
due  and  payable, whereupon the Notes, 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 Notes, 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.


                         ARTICLE VII
                          THE AGENT

     SECTION 7.01.    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 Notes), 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; 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  Citibank,  N.A.
accords  credit  facilities similar  to  the  credit  facility
hereunder for which it is the sole lender.

     SECTION 7.02.   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 8.07; (ii) may consult  with
legal   counsel   (including  counsel   for   the   Borrower),
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 Borrower or the Parent or  to  inspect  the
property (including the books and records) of the Borrower  or
the Parent; (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 7.03.    Citibank,  N.A.  and  Affiliates.   With
respect  to  its Commitment, the Advances made by it  and  the
Notes  issued to it, Citibank, N.A. 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 "Bank" or "Banks" and "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include Citibank, N.A.  in  its
individual  capacity.  Citibank, N.A. 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, the Parent any of its Subsidiaries and any
Person  who  may  do  business with or own securities  of  the
Borrower,  the  Parent  or  any such  Subsidiary,  all  as  if
Citibank,  N.A.  were not the Agent and without  any  duty  to
account therefor to the Lenders.

     SECTION 7.04.   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  5(d)  of  the   Support
Agreement 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 7.05.    Indemnification.  The Lenders  agree  to
indemnify  the  Agent  (to the extent not  reimbursed  by  the
Borrower),   ratably  according  to  (a)  on  or  before   the
Termination Date, the respective principal amounts  of  the  A
Notes  then held by each of them (or if no A Notes are at  the
time  outstanding or if any A Notes are held by Persons  which
are   not   Lenders,  ratably  according  to  the   respective
Percentages  of  the  Lenders), or (b) after  the  Termination
Date, the respective principal amounts of the Notes then  held
by each of them (or if no Notes are at the time outstanding or
if  any  Notes  are  held by Persons which  are  not  Lenders,
ratably  according to the respective unpaid principal  amounts
of the Advances made by each Lender), 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 7.06.   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 7.06.  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 reasonably
acceptable  to the Borrower 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 VII 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 VIII
                         MISCELLANEOUS

     SECTION 8.01.   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 Article III,  (b)
increase the Commitments of the Lenders or subject the Lenders
to any additional obligations, (c) reduce the principal of, or
interest on, the A Notes, 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 A  Notes
or any fees or other amounts payable hereunder, (e) change the
percentage  of  the  Commitments or of  the  aggregate  unpaid
principal  amount  of the A Notes, or the number  of  Lenders,
which shall be required for the Lenders or any of them to take
any  action  hereunder  or (f) amend this  Section  8.01;  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.

     SECTION 8.02.    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 200  First  Street,  Cedar
Rapids, Iowa 52401, Attention: Treasurer; if to the Parent, at
its  address  at 200 First Street, Cedar Rapids,  Iowa  52401,
Attention: Treasurer; if to any Bank, at its Domestic  Lending
Office specified opposite its name on Schedule I hereto; 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 One Court Square,  7th
Floor,  Zone  2, Long Island City, New York 11120,  Attention:
Bank  Loan  Syndications; 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 VII shall not be effective until received by the Agent.

     SECTION 8.03.   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 8.04. Costs, Expenses, Taxes and Indemnification.
(a) The Borrower agrees to pay on demand all costs and expenses
of  the  Agent 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 the Agent with respect thereto and with respect to
the administration of, and advising the Agent 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), in connection with  the
enforcement  (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  8.04(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  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 Adjusted CD Rate Advance, Eurodollar  Rate
Advance or B Advance is made other than on the last day of the
Interest  Period  for  such A Advance or  other  than  on  the
maturity  date of such B Advance, as a result of a payment  or
Conversion  pursuant to Section 2.09(f), 2.10, 2.11,  2.12  or
2.14 or acceleration of the maturity of the Notes 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  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.

     (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 in connection  with  the
     execution,  delivery or performance of any  of  the  Loan
     Documents or any transaction contemplated thereby, or the use
     by the Borrower of the proceeds of any Extension of Credit;

          (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  (i) at, upon, or under any property of the Borrower
     or  any of its Affiliates or (ii) by or on behalf of  the
     Borrower or any of its Affiliates at any time and in  any
     place.

     (d)     The  Borrower's  obligations  under  this
Section 8.04 shall survive the repayment of all amounts  owing
to  the  Lenders  under the Notes and the termination  of  the
Commitments.  If and to the extent that the obligations of the
Borrower  under  this Section 8.04 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 8.05.   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 the Notes  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 and
any  Note held by such Lender, irrespective of whether or  not
such  Lender  shall  have  made any  demand  under  such  Loan
Document  or  such Note 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)     The Borrower 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 Borrower's
rights  to  any independent claim that the Borrower  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, but no Lender shall be liable for the  conduct  of
the  Agent  or  any other Lender, and the Agent shall  not  be
liable for the conduct of any Lender.

     SECTION 8.06.   Binding  Effect.   This  Agreement  shall
become  effective  when it shall have  been  executed  by  the
Borrower  and  the Agent and when the Agent  shall  have  been
notified  in writing by each Bank that such Bank has  executed
it  and  thereafter shall be binding upon  and  inure  to  the
benefit  of the Borrower, the Agent and each Lender and  their
respective  successors and assigns, except that  the  Borrower
shall not have the right to assign its rights hereunder or any
interest  herein  without the prior  written  consent  of  the
Lenders.

     SECTION 8.07.   Assignments and  Participations. (a) Each
Lender may assign to one or more Eligible Assignees all  or  a
portion  of  its  rights and obligations under this  Agreement
(including,  without  limitation, all  or  a  portion  of  its
Commitment,  the Advances owing to it and the  Note  or  Notes
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  this
Agreement, (ii) the amount of the Commitment 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 $5,000,000 (except in the case of  assignments
between  Lenders  at  the time already  parties  hereto),  and
(iii)  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
subject  to  such assignment and a processing and  recordation
fee  of $2,500.  Promptly following its receipt of such Lender
Assignment, Note or Notes 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  assign  all  or  any
portion  of the Advances owing to it to any Affiliate of  such
Lender.   No  such  assignment,  other  than  to  an  Eligible
Assignee,  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 Parent or the performance or observance by the
Borrower  or  the Parent 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 5(d)  of  the
Support Agreement 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.  Anything in  this
Section  8.07  to the contrary notwithstanding,  this  Section
8.07 shall not apply to any of the assignments contemplated by
Section 3.01(e).

     (c)     The  Agent shall maintain at its  address
referred  to in Section 8.02 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 Parent,
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.

     (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  subject  to such assignment, the Agent shall,  if  such
Lender  Assignment has been completed and is in  substantially
the  form  of  Exhibit  8.07 hereto, (i)  accept  such  Lender
Assignment, (ii) record the information contained  therein  in
the  Register  and  (iii) give prompt notice  thereof  to  the
Borrower.  Within 10 Business Days after its receipt  of  such
notice,  the  Borrower, at its own expense, shall execute  and
deliver  to the Agent in exchange for the surrendered Note  or
Notes a new Note to the order of such Eligible Assignee in  an
amount equal to the Commitment assumed by it pursuant to  such
Lender Assignment and, if the assigning Lender has retained  a
Commitment hereunder, a new Note to the order of the assigning
Lender  in  an amount equal to the Commitment retained  by  it
hereunder.   Such new Note or Notes shall be in  an  aggregate
principal  amount equal to the aggregate principal  amount  of
such  surrendered Note or Notes, shall be dated the  effective
date  of  such  Lender Assignment and shall  otherwise  be  in
substantially the form of Exhibit 1.01A-1 hereto.

     (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
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 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 8.07, disclose  to  the
assignee  or  participant or proposed assignee or participant,
any  information  relating  to  the  Borrower  or  the  Parent
furnished  to such Lender by or on behalf of the  Borrower  or
the  Parent; 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 8.08,  to
preserve  the confidentiality of any Confidential  Information
relating  to the Borrower or the Parent 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  2.08 or 2.13, (ii) give notice to the Agent  pursuant
to   Section  2.14  or  (iii)  determine  not  to  extend  the
Termination  Date in response to any request by  the  Borrower
pursuant  to Section 2.18, then (A) 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), and (B) in the case of
the  occurrence of the event described in clause (iii), above,
at  any time prior to the then-scheduled Termination Date, 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 8.07 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 in clause (A) or (B), above,
as  applicable, (y) the last day of the longest  of  the  then
current Interest Periods for such Advances, and (z) the latest
maturity date of any B Advances owing to such Lender.  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 and under
the  Note  made  by the Borrower to such Lender,  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.

     (h)     Anything  in  this Section  8.07  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.

     SECTION 8.08.  Confidentiality.  In connection  with  the
negotiation and administration of this Agreement and the other
Loan Documents, the Borrower and the Parent 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  Parent,   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   current   or   prospective
participants  in  or  assignees of  the  Recipient's  position
herein,   but   the  Recipient's  ability   to   so   exchange
Confidential  Information shall be conditioned upon  any  such
prospective  participant's  or  assignee'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
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 and the Parent as promptly as practicable.

     SECTION 8.09.    WAIVER OF JURY TRIAL.   THE  AGENT,  THE
LENDERS,   THE  BORROWER  AND  THE  PARENT  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, THE  BORROWER
OR  THE PARENT.   THIS PROVISION IS A MATERIAL INDUCEMENT  FOR
THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT.

     SECTION 8.10.    Consent.  Unless otherwise specified  as
being within the sole discretion of the Agent, the Lenders the
Majority  Lenders  or the Borrower, whenever  the  consent  or
approval  of the Agent, the Lenders, the Majority  Lenders  or
the  Borrower, respectively, is required herein, such  consent
or approval shall not be unreasonably withheld or delayed.

     SECTION 8.11.    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,   the   Parent,   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.   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 8.12.    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 8.13.  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.


      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.


                    IES DIVERSIFIED INC.

                    By
                       Title:


                    CITIBANK, N.A.,
                       as Agent


                    By
                       Vice President






                    Bank

                    CITIBANK, N.A.


                    By
                       Title:





                    Bank

                    CIBC INC.


                    By
                       Title:





                    Bank

                    MELLON BANK, N.A.


                     By
                        Title:





                     Bank

                     THE CHASE MANHATTAN BANK



                      By
                         Title:





                       Bank

                       BARCLAYS BANK PLC



                       By
                          Title:






                       Bank

                       THE FIRST NATIONAL BANK OF CHICAGO



                       By
                          Title:





                       Bank

                       THE FUJI BANK, LIMITED



                       By
                          Title:





                       Bank

                       THE SANWA BANK, LIMITED,
                         CHICAGO BRANCH



                       By
                          Title:





                       Bank

                       UNION BANK OF CALIFORNIA, N.A.


                       By
                          Title:





                       Bank

                       NORWEST BANK IOWA,
                         NATIONAL ASSOCIATION



                       By
                          Title:




                       Bank

                       ABN AMRO N.V. by
                       ABN AMRO NORTH AMERICA, INC.


                       By
                          Title:





                                                               EXHIBIT 1.01A-1



                        FORM OF A NOTE



U.S.$__________                                         Dated:__________, 19__


      FOR  VALUE  RECEIVED, the undersigned,  IES  DIVERSIFIED
INC., an Iowa corporation (the "Borrower"), HEREBY PROMISES TO
PAY to the order of ___________________________ (the "Lender")
for  the  account of its Applicable Lending Office (as defined
in  the Credit Agreement referred to below) the principal  sum
of  U.S.$[amount of the Lender's Commitment in figures] or, if
less,  the  aggregate principal amount of the A  Advances  (as
defined below) made by the Lender to the Borrower pursuant  to
the  Credit Agreement outstanding on the Termination Date  (as
defined in the Credit Agreement).

      The  Borrower  promises to pay interest  on  the  unpaid
principal  amount of each A Advance from the date  of  such  A
Advance  until such principal amount is paid in full, at  such
interest rates, and payable at such times, as are specified in
the Credit Agreement.

      Both  principal and interest are payable in lawful money
of  the  United States of America to Citibank, N.A., as Agent,
at  399  Park  Avenue,  New York, New York  10043,  Attention:
Utilities Department, in same day funds.  Each A Advance  made
by   the  Lender  to  the  Borrower  pursuant  to  the  Credit
Agreement,  and  all  payments made on  account  of  principal
thereof,  shall be recorded by the Lender and,  prior  to  any
transfer hereof, endorsed on the grid attached hereto which is
part of this Promissory Note, provided that the failure to  so
record  any A Advance or any payment thereof shall not  affect
the payment obligations of the Borrower hereunder or under the
Credit Agreement.

      This  Promissory Note is one of the A Notes referred  to
in,  and is entitled to the benefits of, the Third Amended and
Restated  Credit Agreement, dated as of November 20, 1996  (as
amended,  modified  or supplemented from  time  to  time,  the
"Credit  Agreement"),  among  the  Borrower,  the  Lender  and
certain other lenders parties thereto, and Citibank, N.A.,  as
Agent  for  the  Lender and such other  lenders.   The  Credit
Agreement, among other things, (i) provides for the making  of
advances (the "A Advances") by the Lender to the Borrower from
time  to time in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned,  the
indebtedness  of  the  Borrower resulting  from  each  such  A
Advance   being  evidenced  by  this  Promissory   Note,   and
(ii)  contains  provisions for acceleration  of  the  maturity
hereof  upon the happening of certain stated events  and  also
for  prepayments on account of principal hereof prior  to  the
maturity   hereof  upon  the  terms  and  conditions   therein
specified.

      The  Borrower hereby waives presentment, demand, protest
and  notice of any kind.  No failure to exercise, and no delay
in  exercising, any rights hereunder on the part of the holder
hereof shall operate as a waiver of such rights.

      This Promissory Note shall be governed by, and construed
in  accordance with, the laws of the State of New  York.   The
Borrower   (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  this
Promissory  Note, (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.   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.


                         IES DIVERSIFIED INC.



                         By
                           Title:




        ADVANCES, MATURITIES, AND PAYMENTS OF PRINCIPAL


                                                      Amount of
                         Maturity      Principal       Unpaid
            Amount of       of          Paid or       Principal     Notation
  Date      Advance       Advance       Prepaid        Balance      Made By

_____________________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________




                                                               EXHIBIT 1.01A-2



                        FORM OF B NOTE



U.S.$__________                                         Dated:__________, 19__



      FOR  VALUE  RECEIVED, the undersigned,  IES  DIVERSIFIED
INC., an Iowa corporation (the "Borrower"), HEREBY PROMISES TO
PAY   to   the  order  of _______________________________ (the
"Lender") for the account of its Applicable Lending Office (as
defined  in  the  Credit  Agreement  referred  to  below),  on
__________,19__,  the  principal amount  of __________ Dollars
($________).

      The  Borrower  promises to pay interest  on  the  unpaid
principal  amount  hereof  from the  date  hereof  until  such
principal  amount  is paid in full, at the interest  rate  and
payable on the interest payment date or dates provided below:

     Interest  Rate: ____% per annum (calculated on the  basis
     of a year  of ______ days for the actual number  of  days
     elapsed).

     Interest Payment Date or Dates:__________

      Both  principal and interest are payable in lawful money
of  the  United States of America to Citibank, N.A., as Agent,
at  399  Park  Avenue,  New York, New York  10043,  Attention:
Utilities Department, in same day funds.

      This  Promissory Note is one of the B Notes referred  to
in,  and is entitled to the benefits of, the Third Amended and
Restated  Credit Agreement, dated as of November 20, 1996  (as
amended,  modified  or supplemented from  time  to  time,  the
"Credit  Agreement"),  among  the  Borrower,  the  Lender  and
certain other lenders parties thereto, and Citibank, N.A.,  as
Agent  for  the  Lender and such other  lenders.   The  Credit
Agreement,   among  other  things,  contains  provisions   for
acceleration  of  the maturity hereof upon  the  happening  of
certain stated events.

      The  Borrower hereby waives presentment, demand, protest
and  notice of any kind.  No failure to exercise, and no delay
in  exercising, any rights hereunder on the part of the holder
hereof shall operate as a waiver of such rights.

      This Promissory Note shall be governed by, and construed
in  accordance with, the laws of the State of New  York.   The
Borrower   (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  this
Promissory  Note, (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.   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.


                         IES DIVERSIFIED INC.



                         By
                            Title:







                       SUPPORT AGREEMENT


      THIS THIRD AMENDED AND RESTATED SUPPORT AGREEMENT,  made
the  20th day of November, 1996, by and between IES INDUSTRIES
INC., an Iowa corporation (together with any successor thereto
in accordance with Section 2(e) hereof, the "Parent"), and IES
DIVERSIFIED INC., an Iowa corporation (the "Borrower").


                     W I T N E S S E T H:

      WHEREAS,  the  Parent  is  the  owner  of  100%  of  the
outstanding common stock of the Borrower;

      WHEREAS,  the  Borrower, certain  banks  (the  "Existing
Banks")  and Citibank, N.A., as agent for the Existing  Banks,
are parties to that certain Second Amended and Restated Credit
Agreement,  dated  as  of  November  9,  1994  (the  "Existing
Facility").   The  Borrower has requested  that  the  Existing
Facility  be  amended and restated so as to (i)  increase  the
Commitments   (as   defined  therein)  to   $300,000,000   and
(ii) effect certain other amendments and modifications as  set
forth  in  the  Third  Amended Credit  Agreement  (as  defined
below).

      WHEREAS,  the Borrower intends to make borrowings  from,
and  issue  promissory notes to, certain lenders  pursuant  to
that  certain  Third  Amended and Restated  Credit  Agreement,
dated  as  of  November 20, 1996 (said Agreement,  as  it  may
hereafter be amended or otherwise modified from time to  time,
being  the "Third Amended Credit Agreement", the terms defined
therein and not otherwise defined herein being used herein  as
therein  defined),  among  the  Borrower,  said  lenders  (the
"Lenders") and Citibank, N.A., as Agent, so that the  Borrower
will be in a position to provide financing for itself and  for
some  or  all of its (and, in turn, the Parent's) Subsidiaries
(other than IES Utilities);

      WHEREAS, the Parent and the Borrower are parties to that
certain  Second Amended and Restated Support Agreement,  dated
as of November 9, 1994 (the "Existing Support Agreement").  In
connection with the amendment and restatement of the  Existing
Facility,  the  Parent and the Borrower desire  to  amend  and
restate the Existing Support Agreement to enhance and maintain
the  financial  condition of the Borrower as  hereinafter  set
forth in order to enable the Borrower to incur Debt under  the
Third  Amended  Credit  Agreement  on  more  advantageous  and
reasonable terms; and

      WHEREAS,  the  Parent has entered into an Agreement  and
Plan  of  Merger, dated as of November 10, 1995,  as  amended,
with WPL Holdings, Inc., a Wisconsin Corporation ("WPL"),  and
Interstate  Power  Company,  a Delaware  corporation  ("IPC"),
pursuant  to  which, if the merger contemplated  thereby  (the
"Proposed Merger") is consummated, the Parent will merge  with
and  into WPL and IPC will become a subsidiary of such  merged
entity;

     WHEREAS, the Parent and the Borrower understand and agree
that the Agent and the Lenders have relied upon this Agreement
in  entering into the Third Amended Credit Agreement and  will
rely hereon in making Advances to the Borrower;

      NOW,  THEREFORE, in consideration of the  premises,  and
other  good  and  valuable  consideration,  the  receipt   and
sufficiency  of  which  are hereby acknowledged,  the  parties
hereto  agree  that the Existing Support Agreement  is  hereby
amended and restated in its entirety to read as follows:

     SECTION 1.   Affirmative Covenants of the Parent.      So
long  as any amount in respect of any Note shall remain unpaid
or  any  Lender  shall have any Commitment, the  Parent  will,
unless  the  Majority  Lenders  shall  otherwise  consent   in
writing:

          (a)     Stock  Ownership.  At all times  maintain
direct  ownership of 100% of the shares of capital  stock  (or
comparable interests) of the Borrower and IES Utilities now or
hereafter issued and outstanding, other than the preferred and
preference stock of IES Utilities.

          (b)     Net Worth.  Cause the Borrower to have at
all  times  a  positive net worth (net assets less  intangible
assets,  if  any), as determined in accordance with  generally
accepted accounting principles.

     SECTION 2.     Negative Covenants of the Parent.  So long
as  any  amount in respect of any Note shall remain unpaid  or
any  Lender  shall have any Commitment, the Parent  will  not,
without the written consent of the Majority Lenders:

          (a)      Consolidated Leverage Ratio.  Allow the ratio
     of (i) Consolidated Debt of the Parent to (ii) Consolidated
     Capital of the Parent to exceed 0.65 to 1.00 at any time.

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

                   (i)     Debt under (A) existing guaranties of the
          mortgage obligations of certain officers of the Parent and (B)
          an existing line of credit provided to the Parent by Firstar
          Bank which supports the Parent's obligations under such
          guaranties, provided that such Debt shall not exceed
          $1,500,000 in the aggregate at any one time outstanding;

                   (ii)     Debt under guaranties and other types of
          support agreements in respect of Debt of the Borrower;
          provided that if the terms of any such guaranty or support
          agreement are more favorable to the beneficiary thereof than
          are the terms of this Agreement to the Agent and the Lenders,
          this Agreement shall, coincident with the delivery of such
          guaranty or support agreement, be replaced with an agreement
          containing such more favorable terms (or amended to contain
          such more favorable terms); and provided, further, that both
          immediately before and after the execution and delivery of
          such guaranty or support agreement, the Parent shall be in
          compliance with the covenant set forth in subsection (a),
          above;

                    (iii)     unsecured Debt owing to the Borrower;

                    (iv)      existing Debt set forth in Schedule 2 
                              hereto; and

                    (v)       from and after the consummation of the
                              Proposed Merger and the satisfaction of
                              the conditions set forth in Section 2(e)
                              hereof, other Debt in the aggregate not
                              to exceed $50,000,000.

          (c)        Prohibited Transactions.  Enter into  any
     transaction,  or permit the Borrower to  enter  into  any
     transaction, which will result in an Event of Default.

          (d)       Negative Pledge.  Create or suffer to exist any
     Lien upon or with respect to any capital stock of the Borrower
     from time to time owned by the Parent or any capital stock of
     IES Utilities from time to time owned by the Parent.

          (e)       Merger.       Merge with or into or consolidate
     with or into any other entity,  unless, as a condition to such
     merger or consolidation, the surviving corporation (if not the
     Parent) (i) expressly assumes in a writing delivered to the
     Agent (with sufficient copies for each Lender) the due and
     punctual performance and observance of all of the obligations
     in the Support Agreement to be performed or observed by the
     Parent and (ii) delivers to the Agent (with sufficient copies
     for each Lender) an opinion of counsel, in form and substance
     satisfactory to the Agent, as to the enforceability of the
     obligations set forth in such writing and the obtaining of all
     Governmental Approvals necessary for the performance of such
     obligations by such surviving corporation and such  other
     matters as the Agent may reasonably request.

     SECTION 3.   Delivery of Financial Statements.   So  long
as  any  amount in respect of any Note shall remain unpaid  or
any  Lender shall have any Commitment, the Parent will, unless
the  Majority  Lenders  shall otherwise  consent  in  writing,
furnish to each Lender:

          (a)       Quarterly Financial Statements.  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, (i) a consolidated and consolidating balance sheet of
     the Parent and its Subsidiaries as at the end of such quarter
     and (ii) consolidated and consolidating statements of income
     and retained earnings, and a consolidated statement of cash
     flows,  of the Parent and its Subsidiaries for the period
     commencing at the end of the 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 the
     chief financial officer of the Parent as having been prepared
     in accordance with generally accepted accounting principles
     consistent with those applied in the preparation  of  the
     financial statements referred to in Section 5(d)  hereof,
     together with a schedule in form satisfactory to the Majority
     Lenders of the computations used by the Parent in determining
     compliance with the covenant contained in Section 2(a) hereof.

          (b)       Annual Consolidated Financial Statements.  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
     consolidated balance sheet of the Parent and its Subsidiaries
     as at the end of such fiscal year and consolidated statements
     of income, retained earnings and cash flows of the Parent and
     its  Subsidiaries  for such fiscal  year,  in  each  case
     accompanied by the audit report of Arthur Andersen & Co. or
     another nationally-recognized independent public accounting
     firm acceptable to the Majority Lenders, together with  a
     schedule in form satisfactory to the Majority Lenders of the
     computations used by such accounting firm in determining, as
     of the end such fiscal year, compliance with the covenant
     contained in Section 2(a) hereof.

          (c)      Annual Consolidating Financial Statements.  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
     consolidating balance sheet of the Parent and its Subsidiaries
     as at the end of such fiscal year and consolidating statements
     of  income  and retained earnings of the Parent  and  its
     Subsidiaries for such fiscal year, all in reasonable detail
     and  duly certified by the chief financial officer of the
     Parent as having been prepared in accordance with generally
     accepted accounting principles consistent with those applied
     in the preparation of the financial statements referred to in
     Section 5(d) hereof.

          (d)      Other Information.  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.

     SECTION 4.    Liquidity  Undertaking.   If,  during   the
term  of this Agreement, the Borrower is unable to make timely
payment  of  any of its obligations now or hereafter  existing
under  the  Third  Amended  Credit Agreement  and  the  Notes,
whether  for principal, interest, fees, expenses or  otherwise
(such  obligations being the "Obligations"), the Parent agrees
that it shall promptly provide to the Borrower, at its request
or  at the request of the Agent or any Lender, such amount  of
funds (in the form of cash or liquid assets, and as equity or,
subject  to  Section  5.02(b)  of  the  Third  Amended  Credit
Agreement,  as  a loan) as shall be necessary  to  enable  the
Borrower  to make payment of such Obligations.  If such  funds
are advanced to the Borrower as a loan, such loan shall be  on
such  terms  and conditions, including maturity  and  rate  of
interest,  as  the  Parent  and  the  Borrower  shall   agree.
Notwithstanding  the  foregoing,  any  such  loan   shall   be
subordinated  in all respects to any and all Obligations  upon
the  terms set forth in Schedule 1 hereto, whether or not  any
Obligations are outstanding at the time of such loan.

     SECTION 5.   Representations and  Warranties of the Parent.
The Parent represents and warrants to the  Borrower, the Agent
and the Lenders 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 have a material adverse affect on the
     business,  financial  condition, operations,  results  of
     operations or prospects of the Parent and its Subsidiaries,
     taken as a whole).

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

          (c)    This Agreement is the legal, valid and binding
     obligation of the Parent enforceable against the Parent in
     accordance with its terms, subject to the qualifications,
     however,  that the enforcement of the rights and remedies
     herein 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.

          (d)         The consolidated balance sheet of the Parent
     and its Subsidiaries as at December 31, 1995, and the related
     consolidated statements of income, retained earnings and cash
     flows of the Parent and its Subsidiaries for the fiscal year
     then ended, and accompanied by a report thereon of Arthur
     Andersen & Co., and the consolidated unaudited balance sheet
     of the Parent and its Subsidiaries as at September 30, 1996,
     and the related consolidated unaudited statements of income,
     retained  earnings and cash flows of the Parent  and  its
     Subsidiaries for the nine-month period then ended, 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, retained earnings and cash flows for the
     nine months ended September 30, 1996, 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 with generally accepted
     accounting  principles consistently  applied,  and  since
     September 30, 1996, there has been no material adverse change
     in the business, financial condition, operations, results of
     operations or prospects of the Parent and its Subsidiaries,
     taken as a whole, or in the Parent's ability to perform its
     obligations under this Agreement or any other Loan Document to
     which it is or will be a party.

          (e)       Except as disclosed in the Parent's Report on
     Form 10-K for the year ended December 31, 1995 and Report on
     Form 10-Q for the period ended September 30, 1996, 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 materially adversely affect (i) the
     business,  financial  condition, operations,  results  of
     operations or prospects of the Parent and its Subsidiaries,
     taken as a whole, or (ii) the ability of the Parent to perform
     its obligations under this Agreement or under any other Loan
     Document  to which it is or is to be a party;  and  since
     September  30,  1996 there have been no material  adverse
     developments in any action or proceeding so disclosed.

          (f)        The Parent 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 is contesting in good faith an assertion
     of liability based on such returns, has provided adequate
     reserves for payment thereof in accordance with generally
     accepted accounting principles.

               (g)     (i)     Until such time as the Proposed Merger is
          consummated, the Parent is and will continue to be  a "holding
          company" within the meaning of the PUHCA, but the Parent and
          its Subsidiaries are and will be exempt from the provisions of
          that Act, except Section 9(a)(2) thereof, by virtue of having
          filed with the Securities and Exchange Commission a Statement
          by Holding Company Claiming Exemption Under Rule U-2 from the
          Provisions of the Public Utility Holding Company Act of 1935
          on Form U-3A-2.  Until such time, such exemption is and will
          be in full force and effect and the Parent is not aware of any
          existing or proposed proceedings contemplating the revocation
          or modification of such exemption.

               (ii)     From and after the consummation of the Proposed
          Merger, the Parent is and will continue to be a "holding
          company" within the meaning of he PUHCA.

          (h)      No Governmental Approval which has not been
     obtained  is  required in connection with the  execution,
     delivery and performance by the Parent of this Agreement.

          (i)      The consolidated and consolidating financial
     statements of the Parent and its Subsidiaries contained in the
     Information Memorandum fairly present the financial condition
     of the Parent and its Subsidiaries as at the dates specified
     therein and the results of operations of the Parent and its
     Subsidiaries for the periods ended on such dates, all  in
     accordance  with generally accepted accounting principles
     consistently applied.

     SECTION 6.   Waivers. (a)   The Parent hereby waives  any
failure  or delay on the part of the Borrower in asserting  or
enforcing any of its rights or in making any claims or demands
hereunder.  The Borrower, the Agent or any Lender may  at  any
time,  without  the Parent's consent, without  notice  to  the
Parent and without affecting or impairing the Borrower's,  the
Agent's  or  such Lender's rights or the Parent's  obligations
hereunder, do any of the following with respect to  the  Third
Amended  Credit  Agreement and the Notes:  (i)  make  changes,
modifications, amendments or alterations thereto, by operation
of  law  or  otherwise,  including,  without  limitation,  any
increase  in  the Commitments or the rate of interest  payable
with  respect  to  Advances or any change  in  the  method  of
calculating the rate of interest payable with respect thereto,
(ii)  grant  renewals and extensions of time, for  payment  or
otherwise,   (iii)   accept  new  or   additional   documents,
instruments  or  agreements relating  to  or  in  substitution
thereof,  or  (iv) otherwise handle the enforcement  of  their
respective  rights  and  remedies  in  accordance  with  their
business judgment.

       (b)     If the Parent shall at any time or from time to
time  fail  to  perform or comply with any of its  obligations
contained herein and if for any reason the Agent or any Lender
shall have failed to receive when due and payable (whether  at
stated maturity, by acceleration, or otherwise) the payment of
all  or any part of principal of, or interest on, or any other
amount  payable by the Borrower in respect of any  Obligations
owing  to the Agent or such Lender, then in each case, to  the
fullest  extent  permitted by law,  (i) it  shall  be  assumed
conclusively without necessity of proof that such  failure  by
the  Parent  was the sole and direct cause of the  Agent's  or
such  Lender's  (as the case may be) failure to  receive  such
payment  when  due irrespective of any other  contributing  or
intervening  cause  whatsoever, and (ii)  the  Parent  further
irrevocably  waives any right or defense that the  Parent  may
have  to  cause the Agent or any Lender to prove the cause  or
amount of any damages or to mitigate the same.

       (c)     The  Parent  irrevocably waives, to the fullest
extent  permitted  by law and for the benefit  of,  and  as  a
separate  undertaking  with, the Agent and  each  Lender,  any
defense  to  the  performance of this Agreement  that  may  be
available  to the Parent as a consequence of this  Agreement's
being rejected or otherwise not assumed by the Borrower or any
trustee  or  similar  official for the  Borrower  or  for  any
substantial  part  of the property of the Borrower,  or  as  a
consequence of this Agreement's being otherwise terminated  or
modified, in any bankruptcy or insolvency proceeding,  whether
such  rejection,  non-assumption, termination or  modification
shall have been by reason of this Agreement's being held to be
an  executory contract or by reason of any other circumstance.
If,  notwithstanding the foregoing, this  Agreement  shall  be
rejected  or otherwise not assumed, or terminated or modified,
the Parent agrees, to the fullest extent permitted by law, for
the  benefit of, and as a separate undertaking with, the Agent
and  each  Lender,  that  the Parent will  be  unconditionally
liable to pay to the Agent and each Lender an amount equal  to
each  payment  that would otherwise be payable by  the  Parent
under  or  in connection with this Agreement if this Agreement
were not so rejected or otherwise not assumed or terminated or
modified.

     SECTION 7.   Amendments, Etc.   No  amendment  or  waiver
of  any  provision  of  this Agreement,  nor  consent  to  any
departure  therefrom, shall in any event be  effective  unless
the  same  shall be in writing and signed by both parties  and
consented to by the Majority Lenders.

     SECTION 8.    Rights  of  the Lenders.      The  Borrower
hereby  assigns  and  pledges to the  Agent  for  the  ratable
benefit   of   each  Lender,  the  Borrower's   rights   under
Sections  1,  2 and 4 of this Agreement, and, if the  Borrower
fails  or refuses to take timely action to enforce its  rights
under  Section 1, 2 or 4 of this Agreement or if the  Borrower
defaults in the timely payment of any Obligations owed to  the
Agent  or  any Lender when due, the Agent may proceed directly
against  the  Parent  to enforce the Borrower's  rights  under
Sections 1, 2 and 4 of this Agreement or to obtain payment  of
such defaulted Obligations owed to the Agent or such Lender.

     SECTION 9.      Notices.    All   notices    and    other
communications  provided for hereunder  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 200
First  Street, Cedar Rapids, Iowa 52401, Attention: Treasurer;
if  to  the Parent, at its address at 200 First Street,  Cedar
Rapids,  Iowa 52401, Attention: Treasurer; if to any Bank,  at
its  Domestic Lending Office specified opposite  its  name  on
Schedule  I to the Third Amended Credit Agreement; 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 One Court Plaza, 7th  Floor,
Zone 2, Long Island City, New York 11120, Attention: Bank Loan
Syndication;  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.

     SECTION 10.   Successors.   Subject to Section 2(e), this
Agreement  shall be binding upon the parties hereto and  their
respective successors and assigns and is also intended for the
benefit of the Agent and the Lenders and, notwithstanding that
the  Agent  and the Lenders are not parties hereto, the  Agent
and each Lender shall be entitled to the full benefits of this
Agreement   and  to  enforce  the  covenants  and   agreements
contained  herein.   This Agreement is not  intended  for  the
benefit  of  any Person other than the Agent and the  Lenders,
and  shall  not confer or be deemed to confer upon  any  other
such Person any benefits, rights or remedies hereunder.

     SECTION 11.    Governing Law.   This Agreement  shall  be
governed by, and construed in accordance with, the laws of the
State of New York.

     SECTION 12.   Remedies.    The parties to this  Agreement
acknowledge  and agree that breach of any of the covenants  of
the  Parent set forth herein may not be compensable by payment
of  money  damages and, therefore, that the covenants  of  the
Parent  set forth herein may be enforced in equity by a decree
requiring  specific  performance.   Such  remedies  shall   be
cumulative and non-exclusive and shall be in addition  to  any
other  rights  and remedies the Borrower may have  under  this
Agreement.

      IN  WITNESS WHEREOF, the parties hereto have  set  their
hands and affixed their corporate seals as of the day and year
above written.


                         IES INDUSTRIES INC.



                         By_________________________________
                            Title:


                         IES DIVERSIFIED INC.



                         By_________________________________
                            Title:





                          Schedule 1


                    TERMS OF SUBORDINATION



         [The following provisions are to be included
           in each instrument or document evidencing
        loans from the Parent to the Borrower pursuant
            to Section 4 of the Support Agreement]


     1.         Reference  is  made to the Third  Amended  and
Restated Credit Agreement, dated as of November 20, 1996 (such
agreement,  as  it  may  hereafter  be  amended,  modified  or
supplemented from time to time, being the "Credit  Agreement";
the  terms  defined therein and not otherwise  defined  herein
being  used  herein as therein defined), among IES Diversified
Inc.,  the Lenders named therein and Citibank, N.A., as  Agent
for the Lenders.  The Parent hereby agrees for the benefit  of
the Agent and the Lenders that all obligations of the Borrower
to  the  Parent  hereunder (the "Subordinated Debt")  are  and
shall  be  subordinate, to the extent and in  the  manner  set
forth hereinafter, in right of payment to the prior payment in
full  of  all  obligations of the Borrower  under  the  Credit
Agreement and the other Loan Documents, whether for principal,
interest   (including  interest,  as  provided  in  the   Loan
Documents,  after  the  filing of a  petition  initiating  any
proceeding referred to in paragraph 3, below), fees,  expenses
or otherwise (all such obligations being the "Senior Debt").

     2.         Upon the occurrence and during the continuance
of  an  Event of Default or an Unmatured Default,  the  Parent
shall  not  ask,  demand, sue for, take or  receive  from  the
Borrower, directly or indirectly, in cash or other property or
by   set-off  or  in  any  other  manner  (including,  without
limitation, from or by way of collateral), payment of  all  or
any of the Subordinated Debt.

     3.         Upon  any distribution of all or  any  of  the
assets  of the Borrower to creditors of the Borrower upon  the
dissolution,    winding    up,    liquidation,    arrangement,
reorganization or composition of the Borrower, whether in  any
bankruptcy,     insolvency,    arrangement,    reorganization,
receivership or similar proceedings or upon an assignment  for
the benefit of creditors or any other marshaling of the assets
and  liabilities of the Borrower or otherwise, any payment  or
distribution  of  any  kind  (whether  in  cash,  property  or
securities)  which otherwise would be payable  or  deliverable
upon or with respect to the Subordinated Debt shall be paid or
delivered  directly to the Agent for the benefit of the  Agent
and the Lenders for application (in the case of cash) to or as
collateral  (in  the case of non-cash property or  securities)
for  the  payment or prepayment of the Senior Debt  until  the
Senior Debt shall have been paid in full.  For the purposes of
these provisions, the Senior Debt shall not be deemed to  have
been  paid in full until the Agent and the Lenders shall  have
indefeasibly  received payment in full of the Senior  Debt  in
cash.

     4.         Until such time as the Senior Debt shall  have
been  paid in full, if any proceeding referred to in paragraph
3,  above, is commenced by or against the Borrower, the  Agent
is  hereby  irrevocably authorized and empowered (in  its  own
name, on behalf of the Lenders, in the name of the Parent,  or
otherwise), but shall have no obligation, to demand, sue  for,
collect and receive every payment or distribution referred  to
in  paragraph 3, above, and give acquittance therefor  and  to
file  claims  and proofs of claim and take such  other  action
(including,  without limitation, voting the Subordinated  Debt
or  enforcing  any  Lien securing payment of the  Subordinated
Debt)  as  it may deem necessary or advisable for the exercise
or  enforcement  of  any of the rights  or  interests  of  the
Lenders hereunder.

     5.         All  payments or distributions  upon  or  with
respect  to  the Subordinated Debt which are received  by  the
Parent contrary to the provisions hereof shall be received  in
trust  for the benefit of the Agent and the Lenders, shall  be
segregated  from other funds and property held by  the  Parent
and  shall be forthwith paid over to the Agent for the benefit
of  the  Agent and the Lenders in the same form as so received
(with any necessary endorsement) to be applied (in the case of
cash)  to  or  held  as collateral (in the  case  of  non-cash
property or securities) for the payment or prepayment  of  the
Senior  Debt  in  accordance  with  the  terms  of  the   Loan
Documents.

     6.         The  Agent  is  hereby  authorized  to  demand
specific performance of these terms of subordination,  whether
or  not  the  Borrower shall have complied  with  any  of  the
provisions  hereof  applicable to it, at  any  time  when  the
Parent shall have failed to comply with any of such provisions
applicable  to it.  The Parent hereby irrevocably  waives  any
defense  based on the adequacy of a remedy at law which  might
be asserted as a bar to such remedy of specific performance.

     7.         So long as any of the Senior Debt shall remain
unpaid,  the Parent shall not (i) commence, or join  with  any
creditor  other than the Agent and the Lenders in  commencing,
any  involuntary proceeding referred to in paragraph 3, above,
or  (ii) declare any default in payment due hereunder  or  sue
for  breach  of  the terms hereof, if and so long  as  payment
hereunder  would not be permissible pursuant  to  paragraph  2
above.

     8.        No payment or distribution to the Agent and the
Lenders  pursuant  to the above provisions shall  entitle  the
Parent  to  exercise  any  rights of  subrogation  in  respect
thereof until the Senior Debt shall have been paid in full.

     9.        The holders of the Senior Debt may, at any time
and from time to time, without any consent of or notice to the
Parent  or  any  other  holder of the  Subordinated  Debt  and
without  impairing or releasing the obligations of the  Parent
under  these  terms of subordination:  (i) change the  manner,
place  or  terms of payment or change or extend  the  time  of
payment of, or renew or alter, the Senior Debt (including  any
change in the interest rate under which any of the Senior Debt
is outstanding); (ii) sell, exchange, release, not perfect and
otherwise deal with any property at any time pledged, assigned
or  mortgaged to secure the Senior Debt; (iii) release  anyone
liable  in any manner under or in respect of the Senior  Debt;
(iv)  exercise  or refrain from exercising any rights  against
the  Borrower and others; and (v) apply any sums from time  to
time received to the Senior Debt.

     10.           The    foregoing    provisions    regarding
subordination are for the benefit of the holders of the Senior
Debt  and  shall be enforceable by them directly  against  the
holders of any Subordinated Debt, and no holder of the  Senior
Debt shall be prejudiced in its right to enforce subordination
of  any of the Subordinated Debt by any act or failure to  act
by  the  Borrower  or  anyone in  custody  of  its  assets  or
property.   No  such  provisions may be  amended  or  modified
without the prior written consent of the Agent.



                            SCHEDULE 2

    Principal Borrower           Amount        Lender         Type

1.  Iowa Northern Railway Co.    220,649.00    Iowa Railway   IES Guarantee of
                                               Financing      unsecured loan
                                               Authority      to Iowa Northern
                                                              Railway



                                                               EXHIBIT 2.02(a)



                 FORM OF NOTICE OF A BORROWING



Citibank, N.A., as Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below

Attention: __________


                                                        [Date]



Gentlemen:

      The  undersigned, IES Diversified Inc.,  refers  to  the
Third  Amended  and  Restated Credit Agreement,  dated  as  of
November  20, 1996 (as amended, modified or supplemented  from
time  to  time,  the  "Credit Agreement",  the  terms  defined
therein  being  used  herein as therein  defined),  among  the
undersigned,  the  Lenders named therein and  the  Agent,  and
hereby gives you notice, irrevocably, pursuant to Section 2.02
of  the  Credit Agreement that the undersigned hereby requests
an  A  Borrowing  under  the Credit  Agreement,  and  in  that
connection sets forth below the information relating to such A
Borrowing (the "Proposed A Borrowing") as required by  Section
2.02(a) of the Credit Agreement:

     (i)       The Business Day of the Proposed A Borrowing is
               __________, 19__.

     (ii)      The Type of A Advances comprising the Proposed
               A  Borrowing  is [Adjusted CD Rate Advances]
               [Base Rate Advances] [Eurodollar Rate Advances].

     (iii)     The  aggregate amount of the  Proposed  A
               Borrowing is $__________.

1]  [(iv)      The Interest Period for each A Advance made as
               part of the Proposed A Borrowing is [_____days]
               [_____month[s]].]

_______________
1     To be included for a Proposed A Borrowing comprised of
      Adjusted CD Rate Advances or Eurodollar Rate Advances.



      The undersigned hereby acknowledges that the delivery of
this  Notice  of A Borrowing shall constitute a representation
and warranty by the Borrower that, on the date of the Proposed
A  Borrowing, the statements contained in Section 3.02 of  the
Credit Agreement are true.

                         Very truly yours,

                         IES DIVERSIFIED INC.



                         By
                           Title:



                                                            EXHIBIT 2.03(a)(i)



                 FORM OF NOTICE OF B BORROWING



Citibank, N.A., as Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below

Attention: ___________

                                                        [Date]
          

Gentlemen:

      The  undersigned, IES Diversified Inc.,  refers  to  the
Third  Amended  and  Restated Credit Agreement,  dated  as  of
November  20, 1996 (as amended, modified or supplemented  from
time  to  time,  the  "Credit Agreement",  the  terms  defined
therein  being  used  herein as therein  defined),  among  the
undersigned,  the  Lenders named therein and  the  Agent,  and
hereby gives you notice pursuant to Section 2.03 of the Credit
Agreement  that the undersigned hereby requests a B  Borrowing
under  the Credit Agreement, and in that connection sets forth
the  terms  on  which  such  B  Borrowing  (the  "Proposed   B
Borrowing") is requested to be made:

     (A)  Date of B Borrowing          __________
     (B)  Amount of B Borrowing        __________
     (C)  Maturity Date                __________
     (D)  Interest Payment Date(s)     __________
     (E)  __________                   __________
     (F)  __________                   __________
     (G)  __________                   __________


      The undersigned hereby acknowledges that the delivery of
this  Notice  of B Borrowing shall constitute a representation
and warranty by the Borrower that, on the date of the Proposed
B  Borrowing, the statements contained in Section 3.03 of  the
Credit Agreement are true.

      The  undersigned  hereby confirms that  the  Proposed  B
Borrowing  is  to  be made available to it in accordance  with
Section 2.03 of the Credit Agreement.

                         Very truly yours,

                         IES DIVERSIFIED INC.



                         By
                             Title:




                                                                  EXHIBIT 2.10



                 FORM OF NOTICE OF CONVERSION




Citibank, N.A., as Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below

Attention: _____________________


                                                        [Date]


Gentlemen:

      The  undersigned, IES Diversified Inc.,  refers  to  the
Third  Amended  and  Restated Credit Agreement,  dated  as  of
November  20, 1996 (as amended, modified or supplemented  from
time  to  time,  the  "Credit Agreement",  the  terms  defined
therein  being  used  herein as therein  defined),  among  the
undersigned,  the  Lenders named therein and  the  Agent,  and
hereby gives you notice, irrevocably, pursuant to Section 2.10
of the Credit Agreement that the undersigned hereby requests a
Conversion  under the Credit Agreement, and in that connection
sets  forth  below the information relating to such Conversion
(the "Proposed Conversion") as required by Section 2.10 of the
Credit Agreement:

     (i)     The Business Day of the Proposed Conversion is
             __________, ____.

     (ii)    The Type of Advances comprising the Proposed
             Conversion is [Adjusted CD Rate Advances]
             [Base Rate Advances] [Eurodollar Rate Advances].

     (iii)   The aggregate amount of the Proposed Conversion
             is $__________.

     (iv)    The Type of Advances to which such Advances are
             proposed to be Converted is [CD Rate Advances]
             [Base Rate Advances] [Eurodollar Rate Advances].

     (v)     The Interest Period for each Advance made as
             part of the Proposed Conversion is [_____days]
             [_____ month(s)].  2

_______________
2     Delete for Base Rate Advances


      The undersigned hereby represents and warrants that  the
following statements are true on the date hereof, and will  be
true on the date of the Proposed Conversion:

            (A)   The  Borrower's  request  for  the  Proposed
     Conversion is made in compliance with Section 2.10 of the
     Credit Agreement; and

            (B)   The statements contained in Section 3.02 of
     the Credit Agreement are true.


                    Very truly yours,

                    IES DIVERSIFIED INC.



                    By
                       Title:




                                                        EXHIBIT 3.01(a)(xii)-1



                      FORM OF OPINION OF
              WINTHROP, STIMSON, PUTNAM & ROBERTS


                                             [Date of Closing]



To each of the Lenders parties to the
   Credit Agreement referred to below,
   and to Citibank, N.A., as Agent


                   Re:  IES Diversified Inc.


Ladies and Gentlemen:

      This  opinion  is furnished to you pursuant  to  Section
3.01(a)(xii)(A)  of  the  Third Amended  and  Restated  Credit
Agreement,  dated  as  of  November  ___,  1996  (the  "Credit
Agreement"), among IES Diversified Inc. (the "Borrower"),  the
Banks parties thereto and the other Lenders from time to  time
parties  thereto, and Citibank, N.A., as Agent.  Terms defined
in  the Credit Agreement and not otherwise defined herein  are
used herein as therein defined.

      We have acted as counsel for the Borrower and the parent
in connection with the preparation, execution and delivery of,
and  the Closing on this date under, the Credit Agreement  and
the other Loan Documents.

     In that capacity we have examined:

     (a)     The Credit Agreement;

     (b)     The A Notes;

     (c)     The Support Agreement;

     (d)     The Articles of Incorporation of the Borrower and all
             amendments thereto (the "Borrower Charter");

     (e)     The by-laws of the Borrower and all amendments thereto
             (the "Borrower By-laws");

     (f)     The Articles of Incorporation of the Parent and all
             amendments thereto (the "Parent Charter"); and

     (g)     The by-laws of the Parent and all amendments thereto (the
             "Parent By-laws").

      In  addition, we have examined the originals, or  copies
certified to our satisfaction, of such other corporate records
of  the  Borrower  and of the Parent, certificates  of  public
officials  and of officers of the Borrower and of the  Parent,
and  agreements, instruments and other documents, as  we  have
deemed  necessary as a basis for the opinions expressed below.
As  to  questions of fact material to such opinions, we  have,
when relevant facts were not independently established by  us,
relied upon certificates of the Borrower and of the Parent  or
their respective officers or of public officials.

      We  have  assumed  (i) the due execution  and  delivery,
pursuant to due authorization, of the Credit Agreement by  all
parties  to  the  Credit Agreement and the  Existing  Facility
(other  than the Borrower), (ii) the authenticity of all  such
documents  submitted to us as originals, (iii) the genuineness
of all signatures (other than those of the Borrower and of the
Parent)  and (iv) the conformity to the originals of all  such
documents submitted to us as copies.

      Our opinions expressed herein are limited to the laws of
the  State  of  New York and the Federal laws  of  the  United
States  of  America.  To the extent that any of  the  opinions
expressed below involve conclusions as to matters governed  by
the  laws of the State of Iowa, we have relied on the  opinion
of  _______________,  General Counsel  and  Secretary  of  the
Borrower and Vice President, General Counsel and Secretary  of
the     Parent,     delivered    to    you     pursuant     to
Section  3.01(a)(xii)(B) of the Credit Agreement.  We  believe
that  you and we are justified in relying on such opinion  for
such purposes.

      Based  upon to the foregoing and upon such investigation
as we have deemed necessary, we are of the following opinion:

          1.    Each of the Borrower and the Parent is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Iowa.

          2.    The execution, delivery and performance by the
Borrower  of  the  Credit Agreement, the  Notes,  the  Support
Agreement  and  the  Fee  Letter  are  within  the  Borrower's
corporate  powers, have been duly authorized by all  necessary
corporate  action,  and  do not contravene  (a)  the  Borrower
Charter or the Borrower By-laws, (b) any law, rule, regulation
or, to our knowledge, any order or judgment, applicable to the
Borrower,  (c) any contractual restriction arising  under  any
agreement  or instrument evidencing indebtedness described  in
Schedule III of the Credit Agreement, or (d) to our knowledge,
any  other  legal  or contractual restriction  binding  on  or
affecting  the Borrower or its properties; and such execution,
delivery  and  performance do not result  in  or  require  the
creation or imposition of any Lien (other than the Lien of the
Agent  for the benefit of the Lenders upon the rights  of  the
Borrower under the Support Agreement) upon or with respect  to
any  of  its  properties  under any  agreement  or  instrument
evidencing  indebtedness described  in  Schedule  III  of  the
Credit  Agreement  or,  to  our  knowledge,  under  any  other
agreement or instrument.  The Credit Agreement, the  A  Notes,
the  Support  Agreement  and the Fee  Letter  have  been  duly
executed  and  delivered  on behalf  of  the  Borrower.   When
completed  in the form thereof attached as Exhibit 1.01A-2  to
the  Credit  Agreement,  and executed by  a  Senior  Financial
Officer and delivered on behalf of the Borrower, each  B  Note
will  have been duly executed and delivered on behalf  of  the
Borrower.

          3.    The execution, delivery and performance by the
Parent  of  the  Support  Agreement are  within  the  Parent's
corporate  powers, have been duly authorized by all  necessary
corporate action, and do not contravene (a) the Parent Charter
or  the  Parent By-laws, (b) any law, rule, regulation or,  to
our  knowledge,  any  order  or judgment,  applicable  to  the
Parent, (c) any contractual restriction arising under (i)  the
$1,500,000  line of credit provided to the Parent  by  Firstar
Bank   or   (ii)   any  agreement  or  instrument   evidencing
indebtedness described in Schedule 2 of the Support Agreement,
or  (d)  to  our  knowledge, any other  legal  or  contractual
restriction  binding  on  or  affecting  the  Parent  or   its
properties;  and such execution, delivery and  performance  do
not  result  in or require the creation or imposition  of  any
Lien  upon or with respect to any of its properties under  the
$1,500,000  line of credit provided to the Parent  by  Firstar
Bank   or   under  any  agreement  or  instrument   evidencing
indebtedness described in Schedule 2 of the Support Agreement,
or, to our knowledge, under any other agreement or instrument.
The Support Agreement has been duly executed and delivered  on
behalf of the Parent.

          4.    No  authorization or approval or other  action
by,  and  no  notice  to  or  filing  with,  any  governmental
authority  or  regulatory  body  is  required  for   the   due
execution,  delivery and performance by the  Borrower  of  the
Credit Agreement and the other Loan Documents to which it  is,
or is to be, a party.

          5.    No  authorization or approval or other  action
by,  and  no  notice  to  or  filing  with,  any  governmental
authority  or  regulatory  body  is  required  for   the   due
execution,  delivery  and performance by  the  Parent  of  the
Support Agreement.

          6.    The Credit Agreement, the A Notes, the Support
Agreement  and  the  Fee Letter are legal, valid  and  binding
obligations of the Borrower, enforceable against the  Borrower
in  accordance with their respective terms; and when completed
in  the form thereof attached as Exhibit 1.01A-2 to the Credit
Agreement,  and  executed by a Senior  Financial  Officer  and
delivered  on  behalf  of the Borrower pursuant  to  corporate
authorization  existing and as in effect on the  date  hereof,
each  B Note will be a legal, valid and binding obligation  of
the  Borrower, enforceable against the Borrower in  accordance
with its terms.

          7.    The Support Agreement is the legal, valid  and
binding  obligation  of  the Parent, enforceable  against  the
Parent in accordance with its terms.

          8.    Neither  the  Borrower nor the  Parent  is  an
"investment company" as defined in the Investment Company  Act
of  1940, as amended.  The Borrower is not a "holding company"
as  that  term is defined in, and is not otherwise subject  to
regulation  under, the Public Utility Holding Company  Act  of
1935,  as amended.  The Parent is a "holding company" as  that
term  is defined in the Public Utility Holding Company Act  of
1935,  as  amended, but is exempt from said  Act  except  with
respect  to  the  acquisition of securities  in  other  public
utility companies and other public utility holding companies.

      The opinions set forth in paragraphs 6 and 7, above, are
subject to the following qualifications:

          (a)         The  enforceability  of  the  Borrower's
     obligations under the Credit Agreement and the other Loan
     Documents to which it is, or is to be, a party,  and  the
     enforceability of the Parent's obligations under the Support
     Agreement,  are  subject to the effect of any  applicable
     bankruptcy, insolvency, reorganization, moratorium or similar
     law affecting creditors' rights generally.

          (b)         The  enforceability  of  the  Borrower's
     obligations under the Credit Agreement and the other Loan
     Documents to which it is, or is to be, a party,  and  the
     enforceability of the Parent's obligations under the Support
     Agreement,  are subject to general principals  of  equity
     (regardless of whether such enforceability is considered in a
     proceeding in equity or at law).  Such principles of equity
     are of general application and, in applying such principles, a
     court, among other things, might not allow a contracting party
     to  exercise  remedies in respect  of  a  default  deemed
     immaterial, or might decline to order an obligor to perform
     covenants.  Such principles would include an expectation that
     parties act with reasonableness and in good faith, and might
     be applied, for example, to provisions which purport to grant
     a party with the authority to exercise sole discretion or make
     conclusive determinations.

           (c)         We note further that, in addition to  the
     application of equitable principles described above, courts
     have imposed an obligation on contracting parties to  act
     reasonably  and  in good faith in the exercise  of  their
     contractual rights and remedies, and may also apply public
     policy considerations in limiting the right of parties seeking
     to obtain indemnification.

                         Very truly yours,




                                                        EXHIBIT 3.01(a)(xii)-2



           FORM OF OPINION OF GENERAL COUNSEL OF THE
                    BORROWER AND THE PARENT



                                             [Date of Closing]



To each of the Lenders parties to the
   Credit Agreement referred to below,
   and to Citibank, N.A., as Agent


                     IES Diversified Inc.


Ladies and Gentlemen:

      This  opinion  is furnished to you pursuant  to  Section
3.01(a)(xii)(B)  of  the  Third Amended  and  Restated  Credit
Agreement,  dated  as  of  November  ___,  1996  (the  "Credit
Agreement"), among IES Diversified Inc. (the "Borrower"),  the
Banks parties thereto and the other Lenders from time to  time
parties  thereto, and Citibank, N.A., as Agent.  Terms defined
in  the Credit Agreement and not otherwise defined herein  are
used herein as therein defined.

     I am Secretary of the Borrower and act as its counsel and
Vice President, General Counsel & Secretary of the Parent  and
have  acted  as  such  in  connection  with  the  preparation,
execution and delivery of, and the Closing on this date under,
the Credit Agreement and the other Loan Documents.

      In  that capacity I have examined, or have arranged  for
the  examination by an attorney or attorneys under my  general
supervision of:

     (d)     The Credit Agreement;

     (e)     The A Notes;

     (f)     The Support Agreement;

     (g)     The Articles of Incorporation of the Borrower and all
             amendments thereto (the "Borrower Charter");

     (h)     The by-laws of the Borrower and all amendments thereto
             (the "Borrower By-laws");

     (i)     The Articles of Incorporation of the Parent and all
             amendments thereto (the "Parent Charter"); and

     (j)     The by-laws of the Parent and all amendments thereto (the
             "Parent By-laws").

      In  addition,  I, or an attorney or attorneys  under  my
general  supervision, have examined the originals,  or  copies
certified to my or their satisfaction, of such other corporate
records  of  the  Borrower and of the Parent, certificates  of
public  officials and of officers of the Borrower and  of  the
Parent, and agreements, instruments and other documents, as  I
or  such  attorneys have deemed necessary as a basis  for  the
opinions expressed below.  As to questions of fact material to
such  opinions, I or such attorneys have, when relevant  facts
were  not  independently established by me or by them,  relied
upon  certificates of the Borrower and of the Parent or  their
respective officers or of public officials.

      I  have  assumed  (i)  the due execution  and  delivery,
pursuant to due authorization, of the Credit Agreement by  all
parties  to such document (other than the Borrower), (ii)  the
authenticity  of  all  such  documents  submitted  to  me   as
originals, (iii) the genuineness of all signatures (other than
those  of  the  Borrower  and of  the  Parent)  and  (iv)  the
conformity to the originals of all such documents submitted to
me as copies.

       I,  or  an  attorney  or  attorneys  under  my  general
supervision, have made such examination of law  as  in  my  or
their  judgment  is necessary or appropriate for  purposes  of
this  opinion.  I and such attorneys do not, however,  purport
to  be  qualified to pass upon, and express no opinion as  to,
the  laws of any jurisdiction other than the laws of the State
of Iowa.

      Based  upon and subject to the foregoing, I  am  of  the
opinion that:

          1.     Each of the Borrower and the Parent is a
corporation duly organized, validly existing and in  good
standing under the laws of the State of Iowa 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 the property owned or leased by it makes  such
qualification necessary, except where the failure  to  so
qualify would not have a material adverse affect  on  the
business,  financial condition, results of operations  or
prospects of the Borrower and its Subsidiaries, taken as a
whole, or of the Parent and its Subsidiaries, taken as  a
whole.

          2.    The execution, delivery and performance by the
Borrower  of  the  Credit Agreement, the  Notes,  the  Support
Agreement  and  the  Fee  Letter  are  within  the  Borrower's
corporate  powers, have been duly authorized by all  necessary
corporate  action,  and  do not contravene  (a)  the  Borrower
Charter   or   the  Borrower  By-laws,  (b)  any  law,   rule,
regulation,  order  or judgment applicable  to  the  Borrower,
(c) any contractual restriction arising under any agreement or
instrument  evidencing indebtedness described in Schedule  III
of  the  Credit Agreement, or (d) to my knowledge,  any  other
legal  or contractual restriction binding on or affecting  the
Borrower  or its properties; and such execution, delivery  and
performance  do  not  result in or  require  the  creation  or
imposition of any Lien (other than the Lien of the  Agent  for
the  benefit  of the Lenders upon the rights of  the  Borrower
under  the Support Agreement) upon or with respect to  any  of
its  properties  under any agreement or instrument  evidencing
indebtedness described in Schedule III of the Credit Agreement
or,  to my knowledge, under any other agreement or instrument.
The  Credit Agreement, the A Notes, the Support Agreement  and
the Fee Letter have been duly executed and delivered on behalf
of  the Borrower.  When completed in the form thereof attached
as Exhibit 1.01A-2 to the Credit Agreement, and executed by  a
Senior  Financial  Officer  and delivered  on  behalf  of  the
Borrower,  each  B  Note  will have  been  duly  executed  and
delivered on behalf of the Borrower.

          3.    The execution, delivery and performance by the
Parent  of  the  Support  Agreement are  within  the  Parent's
corporate  powers, have been duly authorized by all  necessary
corporate action, and do not contravene (a) the Parent Charter
or the Parent By-laws, (b) any law, rule, regulation, order or
judgment   applicable  to  the  Parent,  (c)  any  contractual
restriction  arising under (i) the $1,500,000 line  of  credit
provided  to the Parent by Firstar Bank or (ii) any  agreement
or instrument evidencing indebtedness described in Schedule  2
of  the  Support Agreement, or (d) to my knowledge, any  other
legal  or contractual restriction binding on or affecting  the
Parent  or  its properties; and such execution,  delivery  and
performance  do  not  result in or  require  the  creation  or
imposition  of  any Lien upon or with respect to  any  of  its
properties under the $1,500,000 line of credit provided to the
Parent  by  Firstar Bank or under any agreement or  instrument
evidencing indebtedness described in Schedule 2 of the Support
Agreement,  or, to my knowledge, under any other agreement  or
instrument.  The Support Agreement has been duly executed  and
delivered on behalf of the Parent.

          4.    No  authorization or approval or other  action
by,  and  no  notice  to  or  filing  with,  any  governmental
authority  or  regulatory  body  is  required  for   the   due
execution,  delivery and performance by the  Borrower  of  the
Credit Agreement and the other Loan Documents to which it  is,
or is to be, a party.

          5.    No  authorization or approval or other  action
by,  and  no  notice  to  or  filing  with,  any  governmental
authority  or  regulatory  body  is  required  for   the   due
execution,  delivery  and performance by  the  Parent  of  the
Support Agreement.

          6.    There  is  no  pending or,  to  my  knowledge,
threatened action or proceeding affecting the Borrower or  its
properties   before   any   court,  governmental   agency   or
arbitrator,  that could reasonably be expected,  if  adversely
determined,  to materially and adversely affect the  business,
financial  condition,  operations, results  of  operations  or
prospects of the Borrower, or affect the legality, validity or
enforceability  of  the Credit Agreement  or  any  other  Loan
Document to which the Borrower is, or is to be, a party.

          7.    There  is  no  pending or,  to  my  knowledge,
threatened  action or proceeding affecting the Parent  or  its
properties   before   any   court,  governmental   agency   or
arbitrator,  that could reasonably be expected,  if  adversely
determined,  to materially and adversely affect the  business,
financial  condition,  operations, results  of  operations  or
prospects  of the Parent, or affect the legality, validity  or
enforceability of the Support Agreement.

      I authorize Winthrop, Stimson, Putnam & Roberts, special
New  York counsel to the Borrower and the Parent, to  rely  on
this opinion respecting matters covered by or relating to  the
laws of the State of Iowa.

                         Very truly yours,




                                                        EXHIBIT 3.01(a)(xii)-3


                FORM OF KING & SPALDING OPINION

                       [Date of Closing]


To each of the Lenders parties to the
    Credit Agreement referred to below
    and to Citibank, as Agent

                     IES Diversified, Inc.

Ladies and Gentlemen:

      We  have  acted as special New York counsel to Citibank,
N.A.,  individually  and  as Agent,  in  connection  with  the
preparation, execution and delivery of the Third  Amended  and
Restated Credit Agreement, dated as of November __, 1996  (the
"Credit  Agreement"), among IES Diversified, Inc.,  the  Banks
party  thereto  and Citibank, N.A., as Agent  for  the  Banks.
Unless  otherwise  indicated,  terms  defined  in  the  Credit
Agreement are used herein as therein defined.

      In  that  connection,  we have  examined  the  following
documents:

           (1)  counterparts of the Credit Agreement, executed
     by the Borrower, the Agent and the Banks; and

            (2)   a  counterpart  of  the  Support  Agreement,
     executed by the Parent; and

           (3)   the other documents furnished by the Borrower
     pursuant   to  Section  3.01  of  the  Credit  Agreement,
     including  the  opinion of Winthrop,  Stimson,  Putnam  &
     Roberts,  special New York  counsel for the Borrower  and
     Stephen  W. Southwick, Counsel for the Borrower and  Vice
     President,  General Counsel and Secretary of  the  Parent
     (collectively, the "Opinions").

     In our examination of the documents referred to above, we
have  assumed the authenticity of all such documents submitted
to us as originals, the genuineness of all signatures, the due
authority  of  the  parties executing such documents  and  the
conformity to the originals of all such documents submitted to
us as copies.  We have also assumed that each of the Banks and
the  Agent has duly executed and delivered, with all necessary
power  and  authority  (corporate and otherwise),  the  Credit
Agreement.

      To  the extent that our opinions expressed below involve
conclusions as to matters governed by law other than  the  law
of the State of New York, we have relied upon the Opinions and
have assumed without independent investigation the correctness
of the matters set forth therein, our opinions expressed below
being   subject   to   the  assumptions,  qualifications   and
limitations set forth in the Opinions.  As to matters of fact,
we have relied solely upon the documents we have examined.

       Based   upon   the  foregoing,  and  subject   to   the
qualifications set forth below, we are of the opinion that:

          (i)            The Credit Agreement and the A Notes
     are, and the B Notes will be, when executed and delivered by
     the  Borrower  for  value, the legal, valid  and  binding
     obligations of the Borrower enforceable against the Borrower
     in accordance with their respective terms.

          (ii)   The Support Agreement is the legal, valid and
     binding obligation of the Parent enforceable against  the
     Parent in accordance with its terms.

          (iii)  While we have not independently considered the
     matters covered by the Opinions to the extent necessary to
     enable us to express the conclusions stated therein,  the
     Opinions and the other documents referred to in item (3) above
     are substantially responsive to the corresponding requirements
     set forth in Section 3.01 of the Credit Agreement pursuant to
     which the same have been delivered.

            Our   opinions   are  subject  to  the   following
qualifications:

          (a)    Our opinions in paragraphs (i) and (ii) above
     are  subject  to the effect of any applicable bankruptcy,
     insolvency, reorganization, fraudulent conveyance, moratorium
     or similar law affecting creditors' rights generally.

          (b)     Our opinions in paragraphs (i) and (ii) above
     are subject to the effect of general principles of equity,
     including  (without limitation) concepts of  materiality,
     reasonableness, good faith and fair dealing (regardless of
     whether considered in a proceeding in equity or at law).

          (c)          We note further that, in addition to  the
     application of equitable principles described above, courts
     have imposed an obligation on contracting parties to  act
     reasonably  and  in good faith in the exercise  of  their
     contractual rights and remedies, and may also apply public
     policy considerations in limiting the right of parties seeking
     to  obtain indemnification under circumstances where  the
     conduct of such parties in the circumstances in question is
     determined to have constituted negligence.

          (d)          We  express  no  opinion  herein  as   to (i)
     Section 8.05 of the Credit Agreement or Section 14 of the
     Support  Agreement,  (ii) the  enforceability  of  provisions
     purporting  to  grant  to a party  conclusive  rights  of
     determination,  (iii) the availability of specific performance or
     other equitable remedies, (iv) the enforceability of rights to
     indemnity under Federal or state securities laws and (v) the
     enforceability of waivers by parties of their  respective
     rights and remedies under law.

          (e)       Our opinions expressed above are limited to the
     law of the State of New York and the Federal law of the United
     States, and we do not express any opinion herein concerning
     any  other law.  Without limiting the generality  of  the
     foregoing, we express no opinion as to the effect of the law
     of any jurisdiction other than the State of New York wherein
     any Bank may be located or wherein enforcement of the Credit
     Agreement, any Note or the Support Agreement may be sought
     that  limits the rates of interest legally chargeable  or
     collectible.

      The foregoing opinion is solely for your benefit and may
not  be  relied upon by any other Person other than any Person
that  may  become a Bank under the Credit Agreement after  the
date hereof.

                         Very truly yours,

MEO:IS:pc




                                                                  EXHIBIT 8.07



                   FORM OF LENDER ASSIGNMENT

                      Dated__________, 19__



      Reference  is  made  to the Third Amended  and  Restated
Credit   Agreement,  dated  as  of  November  _,  1996   (said
Agreement,  as  it  may  hereafter  be  amended  or  otherwise
modified from time to time, being the "Credit Agreement",  the
terms  defined therein and not otherwise defined herein  being
used  herein as therein defined), among IES Diversified  Inc.,
an  Iowa  corporation  (the  "Borrower"),  the  Lenders  named
therein  and  the  Agent.  Pursuant to the  Credit  Agreement,
_________________  (the  "Assignor")  has  committed  to  make
advances  ("Advances")  to the Borrower,  which  Advances  are
evidenced  by  a promissory note (the "Note")  issued  by  the
Borrower to the Assignor.

           The  Assignor and _______________ (the  "Assignee")
agree as follows:

     1.         The  Assignor hereby sells and assigns to  the
Assignee,  and the Assignee hereby purchases and assumes  from
the  Assignor,  that interest in and to all of the  Assignor's
rights  and obligations under the Credit Agreement as  of  the
Effective  Date  (as  defined  below)  which  represents   the
percentage interest specified on Schedule 1 of all outstanding
rights  and  obligations  under  the  Credit  Agreement   (the
"Assigned  Interest"),  including,  without  limitation,  such
interest  in the Assignor's Commitment, the Advances owing  to
the  Assignor,  and the Note[s] held by the  Assignor.   After
giving  effect  to  such sale and assignment,  the  Assignee's
Commitment  and  the  amount  of the  Advances  owing  to  the
Assignee will be as set forth in Section 2 of Schedule 1.  The
effective date of this sale and assignment shall be  the  date
specified on Schedule 1 hereto (the "Effective Date").

     2.        On the Effective Date, the Assignee will pay to
the  Assignor, in same day funds, at such address and  account
as  the Assignor shall advise the Assignee, $___________,  and
the  sale  and assignment contemplated hereby shall  thereupon
become  effective.   From and after the  Effective  Date,  the
Assignor  agrees  that the Assignee shall be entitled  to  all
rights, powers and privileges of the Assignor under the Credit
Agreement  and  the  Note[s] to the  extent  of  the  Assigned
Interest,  including  without  limitation  (1)  the  right  to
receive  all payments in respect of the Assigned Interest  for
the  period  from  and after the Effective  Date,  whether  on
account  of principal, interest, fees, indemnities in  respect
of  claims arising after the Effective Date, increased  costs,
additional amounts or otherwise, (2) the right to vote and  to
instruct the Agent under the Credit Agreement according to its
Percentage  based on the Assigned Interest, (3) the  right  to
set-off  and to appropriate and apply deposits of the Borrower
as  set  forth  in the Credit Agreement and (4) the  right  to
receive  notices, requests, demands and other  communications.
The  Assignor  agrees  that  it will  promptly  remit  to  the
Assignee  any amount received by it in respect of the Assigned
Interest  (whether from the Borrower, the Agent or  otherwise)
in  the  same  funds in which such amount is received  by  the
Assignor.

     3.         The Assignor (i) represents and warrants  that
it  is  the  legal and beneficial owner of the interest  being
assigned  by it hereunder and that such interest is  free  and
clear  of  any adverse claim; (ii) makes no representation  or
warranty  and  assumes no responsibility with respect  to  any
statements,  warranties  or  representations  made  in  or  in
connection   with  the  Credit  Agreement  or  the  execution,
legality,  validity, enforceability, genuineness,  sufficiency
or  value  of the Credit Agreement or any other instrument  or
document   furnished   pursuant  thereto;   (iii)   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 the Credit Agreement or any other instrument
or   document  furnished  pursuant  thereto;  (iv)  makes   no
representation or warranty and assumes no responsibility  with
respect  to  the  financial condition of  the  Parent  or  the
performance  or  observance  by  the  Parent  of  any  of  its
obligations   under  the  Support  Agreement  or   any   other
instrument   or  document  furnished  pursuant  thereto;   and
(v)  attaches the Note[s] referred to in paragraph 1 above and
requests  that the Agent exchange such Note[s] for a new  Note
payable to the order of the Assignee in an amount equal to the
Commitment  assumed  by the Assignee pursuant  hereto  or  new
Notes  payable to the order of the Assignee in an amount equal
to  the Commitment assumed by the Assignee pursuant hereto and
the Assignor in an amount equal to the Commitment retained  by
the  Assignor  under  the Credit Agreement,  respectively,  as
specified on Schedule 1 hereto.  Except as specified  in  this
Section  3, the assignment of the Assigned Interest  shall  be
without recourse to the Assignor.

     4.         The Assignee (i) confirms that it has received
a  copy  of the Credit Agreement, together with copies of  the
financial  statements  referred to  in  Section  5(d)  of  the
Support Agreement and such other documents and information  as
it  has deemed appropriate to make its own credit analysis and
decision  to  enter into this Lender Assignment;  (ii)  agrees
that  it  will,  independently and without reliance  upon  the
Agent,  the  Assignor 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 Credit Agreement; (iii)  confirms
that  it is an Eligible Assignee; (iv) appoints and authorizes
the  Agent to take such action as agent on its behalf  and  to
exercise  such  powers  under  the  Credit  Agreement  as  are
delegated  to  the Agent by the terms thereof,  together  with
such  powers as are reasonably incidental thereto; (v)  agrees
that it will perform in accordance with their terms all of the
obligations  which  by the terms of the Credit  Agreement  are
required   to   be  performed  by  it  as  a   Lender;   [and]
(vi)  specifies  as  its CD Lending Office,  Domestic  Lending
Office (and address for notices) and Eurodollar Lending Office
the  offices set forth beneath its name on the signature pages
hereof  [and  (vii)  attaches  the  forms  prescribed  by  the
Internal Revenue Service of the United States certifying as to
the  Assignee's  status for purposes of determining  exemption
from  United  States  withholding taxes with  respect  to  all
payments to be made to the Assignee under the Credit Agreement
and  the  Notes  or such other documents as are  necessary  to
indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty].  1

     5.          Following  the  execution  of   this   Lender
Assignment  by  the  Assignor and the  Assignee,  it  will  be
delivered  to  the Agent for acceptance and recording  by  the
Agent.  Upon such acceptance and recording by the Agent, as of
the  Effective Date, (i) the Assignee shall be a party to  the
Credit  Agreement and, to the extent provided in  this  Lender
Assignment,  have  the  rights and  obligations  of  a  Lender
thereunder  and under the other Loan Documents  and  (ii)  the
Assignor  shall,  to  the  extent  provided  in  this   Lender
Assignment,  relinquish its rights and be  released  from  its
obligations  under  the Credit Agreement and  the  other  Loan
Documents.

     6.         Upon  such  acceptance and  recording  by  the
Agent, from and after the Effective Date, the Agent shall make
all  payments  under the Credit Agreement  and  the  Notes  in
respect  of  the interest assigned hereby (including,  without
limitation, all payments of principal, interest and commitment
fees with respect thereto) to the Assignee.  The Assignor  and
Assignee  shall make all appropriate adjustments  in  payments
under the Credit Agreement and the Notes for periods prior  to
the Effective Date directly between themselves.

     7.         This Lender Assignment may be executed in  any
number  of  counterparts and by different parties in  separate
counterparts, each of which when so executed shall  be  deemed
to  be  an  original  and all of which  taken  together  shall
constitute but one and the same instrument.

     8.         This  Lender Assignment shall be governed  by,
and construed in accordance with, the laws of the State of New
York.


      IN  WITNESS WHEREOF, the parties hereto have caused this
Lender  Assignment to be executed by their respective officers
thereunto duly authorized, as of the date first above written,
such execution being made on Schedule 1 hereto.

_______________
1     If the Assignee is organized under the laws of a
      jurisdiction outside the United States.



                          SCHEDULE 1

                              to

                       LENDER ASSIGNMENT

                     Dated__________, 19__



Section 1.

     Percentage Interest:                                   _____%

Section 2.

     Assignee's Commitment:                               $ _____

     Aggregate Outstanding Principal
       Amount of A Advances owing to the Assignee:        $ _____ 

     An A Note payable to the order of the Assignee               
                             Dated:__________, 19__

                             Principal amount:              _____
                                                            
     An A Note payable to the order of the Assignor
                             Dated:__________, 19__         

                             Principal amount:              _____

     Aggregate Outstanding Principal
       Amount of B Advances owing to the Assignee:        $ _____

     A B Note payable to the order of the Assignee
                             Dated:__________, 19__             

                             Principal amount:              _____

     A B Note payable to the order of the Assignor
                             Dated:__________, 19__

                             Principal amount:              _____


Section 3.

     Effective Date:         __________, 19


                    [NAME OF ASSIGNOR]



                    By _______________
                       Title:


                    [NAME OF ASSIGNEE]



                    By _______________
                       Title:


                    CD Lending Office:
                         [Address]


                    Domestic Lending Office (and
                      address for notices):
                         [Address]


                    Eurodollar Lending Office:
                         [Address]


Accepted this _____ day
of __________, 19__


CITIBANK, N.A., as Agent



By __________
   Title:
                          SCHEDULE I

                     IES DIVERSIFIED INC.
                               
   Third Amended and Restated Credit Agreement, dated as of
                   November 20, 1996, among
  IES Diversified Inc., the Banks named therein and Citibank,
                        N.A., as Agent
                               
<TABLE>
<CAPTION>
                               

Name of Bank    Commitment      Domestic Lending Office          CD Lending Office    Eurodollar Lending Office
<S>           <C>             <C>                              <C>                  <C>
                                                
ABN AMRO N.V.   $28,000,000      ABN AMRO Bank                     Same as Domestic     Same as Domestic
                                 N.V. Chicago Branch               Lending Office       Lending Office
                                 135 South LaSalle Street,
                                 Suite 625
                                 Chicago, IL 60603
                                 Telephonr:  312.904.2007
                                 Telecopy:  312.606.8425
                                 Attention:  Barbara Popp

Barclays        $20,000,000      222 Broadway                      Same as Domestic     Same as Domestic
Bank PLC                         New York, New York  10038         Lending Office       Lending Office
                                 Telephone:  212.412.3571
                                 Telecopy:  212.412.5002
                                 Attention:  Stephanie Gledhill
                      
The Chase       $28,000,000      One Chase Plaza, 8th Floor        Same as Domestic     Same as Domestic
Manhattan                        New York, NY  10081               Lending Office       Lending Office
Bank                             Telephone:  212.552.7692
                                 Telecopy:  212.552.5777
                                 Attention:  Lynett Lang

CIBC Inc.       $40,000,000      Two Paces West                    Same as Domestic     Same as Domestic
                                 2727 Paces Ferry Road,            Lending Office       Lending Office
                                 Suite 1200
                                 Atlanta, Georgia
                                 Telephone:  404.319.4836
                                 Telecopy:  404.319.4950
                                 Attention:  Clare Coyne
                                                
Citibank,       $40,000,000      One Court Square, 7th Floor       Same as Domestic     Same as Domestic
N.A.                             Zone 2                            Lending Office       Lending Office
                                 Long Island City, NY 11120            
                                 Telecopy:  718.248.4490
                                 Attention: Bank Loan Syndications

The First       $28,000,000      One First National Plaza,         Same as Domestic     Same as Domestic
National                         Suite 0363                        Lending Office       Lending Office
Bank of                          Chicago, Illinois  60670-0363                      
Chicago                          Telephone:  312.732.9780
                                 Telecopy:  312.732.3055 /
                                 312.732.6485
                                 Attention:  Robert G. Bussa

The Fuji        $28,000,000      U.S. Corporate Banking            Same as Domestic     Same as Domestic
Bank,                            225 West Wacker Drive,            Lending Office       Lending Office
Limited,                         Suite 2000
Chicago                          Chicago, Illinois  60606
Branch                           Telephone:  312.621.0526
                                 Telecopy:  312.621.0539
                                 Attention:  James Bell
                                                
Mellon          $40,000,000      One Mellon Bank Center-151-4425   Same as Domestic     Same as Domestic
Bank                             Pittsburgh, Pennsylvania          Lending Office       Lending Office
                                 15258-0001
                                 Telephone:  412.236.2988
                                 Telecopy:  412.234.6375
                                 Attention:  Jacquelyn S. Peters
                      
Norwest         $ 8,000,000      101 Third Avenue S.W.             Same as Domestic     Same as Domestic
Bank Iowa,                       Cedar Rapids, Iowa 52404          Lending Office       Lending Office
N.A.                             Telephone:  319.368.1143
                                 Telecopy:  319.368.1299
                                 Attention:  R. Troy Hansen
                                                
The Sanwa       $28,000,000      10 South Wacker Drive,            Same as Domestic     Same as Domestic
Bank, Ltd.                       31st Floor                        Lending Office       Lending Office
Chicago                          Chicago, Illinois  60606
Branch                           Telephone:  312.368.3016
                                 Telecopy:  312.346.6677
                                 Telex:  3735188
                                 Attention:  Beverly Wyckoff
                      
Union Bank      $12,000,000      445 South Figueroa Street         Same as Domestic     Same as Domestic
                                 Los Angeles, California 90071     Lending Office       Lending Office
                                 Telephone: 213.236.5809
                                 Telecopier: 213.236.4096
                                 Attention: John M. Edmonston
</TABLE>
                      

                                   SCHEDULE II

                                      LIENS

Subsidiary             Amount          Holder                Property

1.  Centerplace
    Limited         $1,029,724.00    Norwest Bank     River Place Apartments
                                                      Cedar Rapids, Iowa
2.  2060 
    Partnership     $9,485,088.00    Firstar Bank     201/221 Town Center
                                                      Building
                                                      Cedar Rapids, Iowa
3.  2002 
    Partnership     $1,553,811.00    Brenton Bank     Iowa Building
                                                      Cedar Rapids, Iowa


                                  SCHEDULE III

                                      DEBT

Subsidiary                     Amount            Holder            Property

1. Centerplace Limited     $1,029,724.00      Norwest Bank         Mortgage
2. 2060 Partnership        $9,485,088.00      Firstar Bank         Mortgage
3. 2002 Partnership        $1,553,811.00      Brenton Bank         Mortgage