Exhibit 4(c)


                        CITICORP SECURITIES, INC.
                    COMMERCIAL PAPER DEALER AGREEMENT
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       THIS  AGREEMENT,  dated  as  of  November  9,  1994  between  IES
Diversified Inc. the "Company") and Citicorp Securities, Inc. ("CSI"  or
the "Dealer").

     It is agreed as follows:

     1.  The Notes.  "Notes" shall mean promissory notes of the Company,
offered  for  sale  in a transaction which is exempt  from  registration
under  Section  4(2) the Securities Act of 1933, as amended  (the  "1933
Act"),  and having maturities of 270 days or less.  Notes will be issued
in  a  minimum denomination of $250,000 up to a maximum aggregate amount
of   $150,000,000  face  amount  (the  "Maximum  Amount")  at  any  time
outstanding.

      2.  Issuance and Purchase of Notes.

      2.1  (a) The Company hereby appoints CSI as a placement agent  for
the  Notes.   While (i) the Company has and shall have no obligation  to
sell Notes to CSI or to permit CSI to arrange any sale of Notes for  the
account of the Company and (ii) CSI has and shall have no obligation  to
the  Company  to purchase Notes of the Company or arrange  the  sale  of
Notes for the account of the Company, the parties hereto agree that  any
Notes  which  CSI  purchases or any sale of which CSI arranges  will  be
purchased or sold by CSI in reliance on the representations, warranties,
covenants  and  agreements  of  the Company  contained  herein  or  made
pursuant  hereto  and  on the terms and conditions  and  in  the  manner
provided herein.

      (b)   The  offer  and sale of the Notes by the Company  is  to  be
effected pursuant to the exemption from the registration requirements of
the   1933   Act  provided  by  Section  4(2)  thereof,  which   exempts
transactions by an issuer not involving any public offering.  Offers and
sales of the Notes by the Company will be in accordance with the general
provisions of Rule 506 of Regulation D under the 1933 Act.  CSI and  the
Company hereby establish the following procedures in connection with the
placement by CSI of the Notes:

      (i)   CSI  may  make offers and sales of Notes  to  a  prospective
investor only if reasonably believed by the Dealer to be a sophisticated
institutional investor who (A) is an "Accredited Investor" (as that term
is  defined in Rule 501(a) of Regulation D under the 1933 Act) (or is  a
fiduciary  or  agent  (other  than a  U.S.  bank  or  savings  and  loan
association  or  other institution described in Section 3(a)(5)  of  the
1933  Act)  which  is  purchasing  the  Notes  for  the  account  of  an
institutional Accredited Investor), (B) has knowledge and experience (or
is  a  fiduciary  or agent with sole investment discretion  having  such
knowledge and experience) in financial and business matters and (or such
fiduciary  or  agent) is capable of evaluating the merits and  risks  of
investing in the Notes and (C) in the case of a resale of Notes pursuant
to Rule 144A under the 1933 Act, is a "Qualified Institutional Buyer" as
defined  in  Rule 144A or is a Qualified Institutional Buyer  purchasing
the Notes on behalf of one or more other Qualified Institutional Buyers.

     (ii) No sale of the Notes to any one investor will be for less than
$250,000  face or principal amount.  If the purchaser is a fiduciary  or
agent  (other than a U.S. bank or savings and loan association or  other
institution  described in section 3(a)(5) of the  1933  Act)  acting  on
behalf  of others, each account for which it is acting must purchase  at
least $250,000 face or principal amount of the Notes.

      (iii)      CSI will deliver to each prospective investor  (or  the
fiduciary  or  agent  acting for such investor) a copy  of  the  Private
Placement Memorandum as defined and described in Section 2.5 herein,  as
the  same may be updated from time to time, at or before the time of the
sale of Notes to such investor.

     (iv) The Notes will not be offered or sold by any means of general
solicitation or general advertising within the meaning of Rule 502(c)
under the 1933 Act.

      2.2   The authentication and delivery to, or at the direction  of,
CSI  of a Note by Citibank, N.A. (the "Issuing and Paying Agent")  shall
constitute the issuance of such Note by the Company.  The Company agrees
that such Notes shall be made in the manner prescribed in the Commercial
Paper Issuing and Paying Agent and Citi Treasury Manager Agreement dated
as  of  November 9 1994 by and between the Company and the  Issuing  and
Paying  Agent  (the "Issuing and Paying Agency Agreement"),  a  copy  of
which has been delivered to CSI.

      2.3  CSI shall be entitled to compensation for its services in  an
amount  to be agreed upon with the Company with respect to each proposed
issuance and sale of Notes by the Company.

      2.4  Delivery of and payment for Notes shall be made in accordance
with the Issuing and Paying Agency Agreement.

      2.5   (a)  "The  Company  shall prepare in  connection  with  each
issuance  or sale of Notes a disclosure document (the "Private Placement
Memorandum"), the text of which shall have been agreed to by CSI and the
Company.   The Company shall update the Private Placement Memorandum  as
necessary,  so  that  at the time of each sale of a  Note,  the  Private
Placement  Memorandum (including the documents incorporated  therein  by
reference),  as  so updated, will not contain an untrue statement  of  a
material  fact or omit to state a fact necessary in order  to  make  the
statements  therein, in the light of the circumstances under which  they
were  made, not misleading.  The Company shall furnish to CSI the latest
annual  report to shareholders, the latest annual report  on  Form  10-K
and,  if  more  recent than the latest annual report,  the  most  recent
quarterly  report  on Form IO-Q (and, if applicable, current  report  on
Form  8-K)  and  the  most  recent definitive proxy  statement  sent  to
shareholders,  in  each  case,  if any, filed  by  IES  Industries  Inc.
("Industries")  or  the  Company  with  the  Securities   and   Exchange
Commission  (the  "SEC"), as well as any other current periodic  reports
provided  to  shareholders by the Company or Industries  and  any  other
reports  and  other  information filed with  the  SEC  pursuant  to  the
informational requirements of the Securities Exchange Act  of  1934,  as
amended  (the "1934 Act").  As long as any of the Notes are outstanding,
the  Company will provide CSI with all reports described above, as  well
as  all  public  releases of other material information,  in  quantities
sufficient for CSI's subsequent distribution to holders of the Notes.

     (b)  The Private Placement Memorandum will contain, inter alia, the
following information:

     (1)  brief descriptions of the Company and of the Notes, the use of
the  proceeds from the offering, and any material changes in the affairs
of  the Company which are not disclosed in the other documents furnished
hereunder;

     (2)  financial information derived from the
          Company's financial statements; and

     (3)  a statement that such documents filed with the
          SEC referred to in Section 2.5(a)  of  this Agreement
          are incorporated by reference in the  Private
          Placement Memorandum and will be supplied to the offeree
          upon request.

      2.6   Prior  to  any  offer of Notes by CSI,  CSI  may  make  such
investigation  of  the  affairs  of the Company  as  it  may  reasonably
request.

      2.7   The  Dealer agrees that it will not effect  or  approve  any
resale  of  the  Notes  except to itself or to a  person  it  reasonably
believes to be an institutional Accredited Investor or, in the case of a
resale pursuant to Rule 144A, a Qualified Institutional Buyer, and  each
such  resale  shall  be made in accordance with the provisions  of  this
Section 2.

      2.8   The  Company  and  CSI  agree  that  the  Private  Placement
Memorandum and the face of the Notes (except the Notes that are in book-
entry form) will have a legend substantially to the following effect:

      "THIS  NOTE  HAS NOT BEEN REGISTERED UNDER THE SECURITIES  ACT  OF
1933, AS AMENDED ("THE ACT"), AND THE INITIAL SALES OF THIS NOTE MAY  BE
MADE  ONLY TO INSTITUTIONAL INVESTORS APPROVED AS "ACCREDITED INVESTORS"
AS  DEFINED IN RULE 501(A) UNDER THE ACT.  SUBSEQUENT SALES OF THIS NOTE
MAY  BE  MADE  ONLY TO INSTITUTIONAL INVESTORS APPROVED  AS  "ACCREDITED
INVESTORS"  OR,  PURSUANT  TO  RULE 144A UNDER  THE  ACT,  TO  QUALIFIED
INSTITUTIONAL BUYERS AS DEFINED IN RULE 144A.  BY ITS ACCEPTANCE OF THIS
NOTE,   THE  PURCHASER  (A)  REPRESENTS  THAT  IT  IS  AN  INSTITUTIONAL
ACCREDITED INVESTOR, THAT THIS NOTE IS BEING ACQUIRED FOR INVESTMENT AND
NOT  WITH  A  VIEW  TO, OR FOR SALE IN CONNECTION WITH ANY  DISTRIBUTION
THEREOF AND, IN THE CASE OF RESALES PURSUANT TO RULE 144A, THAT IT IS  A
QUALIFIED  INSTITUTIONAL BUYER, THAT ANY PERSON  FOR  WHICH  IT  MAY  BE
PURCHASING  THIS NOTE IS A QUALIFIED INSTITUTIONAL BUYER  AND  THAT  THE
PURCHASER UNDERSTANDS THAT THIS NOTE MAY BE SOLD TO IT PURSUANT TO  RULE
144A,  AND  (B) AGREES THAT ANY RESALE OR TRANSFER OF THIS NOTE  OR  ANY
INTEREST  THEREIN  WILL  BE  MADE ONLY  IN  A  TRANSACTION  EXEMPT  FROM
REGISTRATION  UNDER  THE  ACT AND ONLY (1) TO AN  APPROVED  DEALER,  (2)
THROUGH  AN  APPROVED  DEALER TO AN INSTITUTION  WHO  IS  AN  ACCREDITED
INVESTOR  OR  (3)  DIRECTLY  TO A QUALIFIED  INSTITUTIONAL  BUYER  IN  A
TRANSACTION MADE PURSUANT TO RULE 144A."

      2.9   The  Company  and  CSI  agree  that  the  Private  Placement
Memorandum will include statements substantially as follows:

                "Each  purchaser  of  a  Note will  be  deemed  to  have
          represented   and  agreed  as  follows:  (1)   the   purchaser
          understands   that  the  Notes  are  being  issued   only   in
          transactions  not  involving any public  offering  within  the
          meaning  of  the  Act; (2) the purchaser  is  a  sophisticated
          institutional investor who (A) is an "Accredited Investor" (as
          that term is defined in Rule 501(a) of Regulation D under  the
          Act)  (or is a fiduciary or agent (other than a U.S.  bank  or
          savings  and loan association) which is purchasing  the  Notes
          for  the account of an institutional Accredited Investor), (B)
          has  knowledge and experience (or is a fiduciary or agent with
          sole   investment   discretion  having  such   knowledge   and
          experience) in financial and business matters and it (or  such
          fiduciary  or agent) is capable of evaluating the  merits  and
          risks  of investing in the Notes, (C) has had access  to  such
          information as the purchaser deems necessary in order to  make
          an  informed  investment decision, and (D) in the  case  of  a
          resale  of  Notes pursuant to Rule 144A under the  Act,  is  a
          "Qualified Institutional Buyer" as defined in Rule 144A or  is
          a Qualified Institutional Buyer purchasing the Notes on behalf
          of  one or more other Qualified Institutional Buyers; (3) such
          Note  is  being purchased for the purchaser's own account  (or
          for  the account of one or more other institutional Accredited
          Investors  (or, in the case of a resale pursuant to Rule  144A
          under  the  Act,  one  or  more other Qualified  Institutional
          Buyers) for which it is acting as duly authorized fiduciary or
          agent) for investment and not with a view to distribution; (4)
          if  in the future the purchaser (or any such other investor or
          any  other  fiduciary  or  agent representing  such  investor)
          decides  to sell such Note prior to maturity, it will be  sold
          only  in a transaction exempt from registration under the Act,
          and  only  (A)  to  CSI, (B) through CSI to  an  institutional
          investor  approved  by  CSI  as  an  institutional  Accredited
          Investor or a Qualified Institutional Buyer or (C) directly to
          a Qualified Institutional Buyer in a transaction made pursuant
          to Rule 144A; (5) the purchaser understands that, although CSI
          may  repurchase  Notes, CSI is not obligated  to  do  so,  and
          accordingly the purchaser (or any such other investor)  should
          be  prepared  to  hold  such  Note  until  maturity;  (6)  the
          purchaser  acknowledges that CSI has not verified any  of  the
          information  contained or incorporated by  reference  in  this
          Memorandum  and  makes no representation with respect  to  any
          such  information; (7) the purchaser acknowledges  that  Notes
          sold  to  the  purchaser by CSI may be sold to  the  purchaser
          pursuant  to  Rule 144A under the Act; and (8)  the  purchaser
          understands that each Note will bear a legend substantially as
          set forth in capital letters above."

     3.   Representations and Warranties of the Company.   The  Company
represents and warrants to CSI that:

      (a)   The  Private Placement Memorandum (including  the  documents
incorporated  therein by reference) does not, and the Private  Placement
Memorandum  (including the documents incorporated by reference  therein)
as  supplemented  or revised from time to time shall  not,  contain  any
untrue  statement of a material fact or omit to state  a  material  fact
required by the terms hereof to be stated therein or necessary in  order
to  make such statements in the light of the circumstances in which they
were made not misleading.

     (b)  The Company has been duly incorporated and is validly existing
as  a  corporation in good standing under the laws of the State of Iowa.
The  Company has, (except to the extent that the lack thereof would  not
have  an  adverse  material effect on the Company and  its  subsidiaries
taken as a whole or its ability to perform its obligations hereunder and
under   the   Notes)  all  corporate  power  and  authority,   and   all
authorizations, approvals, orders, licenses, certificates, consents, and
permits necessary to carry on its business as presently conducted and to
enter  into, deliver, and perform this Agreement, the Issuing and Paying
Agency  Agreement  and  the  Notes and to  consummate  the  transactions
contemplated  hereby  to  which  it shall  be  a  party,  including  the
issuance, sale and delivery by it of Notes.

      (c)   No  other  offering  of  securities  of  the  Company  makes
unavailable  the  exemption under Section  4(2)  of  the  1933  Act  for
offering and sale of the Notes hereunder.

      (d)   No  default exists, and no event or condition  has  occurred
which  with  notice  or  after the expiration of  any  applicable  grace
period,  or both, would constitute a default, under any credit  facility
or  any  indenture, mortgage, deed of trust, note or other agreement  or
instrument binding upon the Company or any of its subsidiaries or its or
their  properties or business which is material to the Company  and  its
subsidiaries taken as a whole.

     (e)  The execution, delivery and performance of this Agreement, the
Commercial  Paper Support Agreement (as defined below), the Issuing  and
Paying   Agency  Agreement  and  the  Notes  by  the  Company  and   the
consummation  of  the  transactions contemplated hereby,  including  the
issuance, sale and delivery by the Company of any Notes hereunder,  will
not  contravene  any  provision  of  the  certificate  or  articles   of
incorporation  or by-laws of the Company or any of its  subsidiaries  or
constitute  a default (or an event which with notice or after expiration
of  any  applicable grace period, or both, would constitute  a  default)
under,  or result in the creation or imposition of any lien, charge,  or
encumbrance  upon  any  property  or  assets  of  the  Company  or   its
subsidiaries pursuant to the terms of any agreement or instrument or any
franchise,  license, permit, judgment, decree, order, statute,  rule  or
regulation known to the Company which is binding upon the Company or any
of  its  subsidiaries or its or their properties or  business  which  is
material to the Company and its subsidiaries taken as a whole.

      (f)   No consent of, or action by, or filing or registration with,
any   governmental  authority  or  other  regulatory  body  (other  than
approvals  that may be required by any state securities  or  "blue  sky"
laws  and  have  been obtained or are being arranged by the  Company  in
accordance  with  Section  4(e)  of  this  Agreement)  is  required   in
connection  with the execution, delivery and performance by the  Company
of  this Agreement, the Issuing and Paying Agency Agreement or the Notes
or  the  consummation  by  the Company of the transactions  contemplated
hereby  and thereby, including the issuance, sale, delivery and  payment
of any Notes.

     (g)  Since the respective dates as of which information is given in
the Private Placement Memorandum, except as otherwise set forth therein,
there  has  not  been any material adverse change, or, to the  Company's
knowledge,  any  development  involving a prospective  material  adverse
change,  in  the  financial condition, or in the earnings,  business  or
operations of the Company and its subsidiaries taken as a whole.

     (h)   Assuming  the   Notes are offered  and  sold  in  the  manner
contemplated herein, the offer and sale of the Notes by the Company will
constitute exempted transactions under Section 4(2) of the 1933 Act and,
consequently, registration of the notes under the 1933 Act will  not  be
required.

     (i)   This  Agreement  and the Issuing and Paying Agency  Agreement
have  been  duly and validly authorized, executed and delivered  by  the
Company  and,  assuming that they are such with  respect  to  the  other
parties  thereto, are legal, valid and binding agreements of the Company
subject   to  (a)  the  effect  of  applicable  bankruptcy,  insolvency,
fraudulent conveyance, reorganization, moratorium or other similar  laws
relating  to  or  affecting  creditors' rights  generally  and  (b)  the
application  of  general  equitable principles  (regardless  of  whether
considered in a proceeding in equity or at law).  The issuance and  sale
of  Notes in an aggregate principal amount at any time outstanding of up
to  the  Maximum  Amount by the Company hereunder  have  been  duly  and
validly authorized by the Company and, when delivered by the Issuing and
Paying Agent upon payment therefor as provided in the Issuing and Paying
Agency  Agreement,  each  Note  will be the  legal,  valid  and  binding
obligation  of  the  Company subject to (a)  the  effect  of  applicable
bankruptcy,    insolvency,   fraudulent   conveyance,    reorganization,
moratorium  or  other  similar laws relating to or affecting  creditors'
rights generally and (b) the application of general equitable principles
(regardless of whether considered in a proceeding in equity or at law).

     (j)  The  Commercial Paper Support Agreement dated November 9, 1994
by  and between Industries and the Company (the "Support Agreement")  is
in full force and effect to the benefit of the holders of the Notes.

     (k)   The  Company  is not an "investment company"  nor  a  company
"controlled"  by  an  "investment company" within  the  meaning  of  the
Investment Company Act of 1940, as amended.

     (l)  Except as disclosed to CSI in writing, neither the Company nor
any  subsidiary  has,  (i) any debt, duty, liability  or  obligation  in
respect  of, or contained in any agreement pertaining to borrowed  money
or any other material liability or obligation the payment or performance
of  which  is  past due and the failure of such payment  or  performance
could have a material adverse effect on the Company and its subsidiaries
taken  as  a  whole or (ii) any litigation, investigation or  proceeding
pending  or  threatened (or any basis therefor) before or by any  court,
arbitrator, governmental authority or other regulatory body of which  it
has  knowledge,  which,  if  determined adversely  could  reasonably  be
expected  to  have  a material adverse effect on the  business,  assets,
financial  condition  or prospects of the Company and  its  subsidiaries
taken as a whole.

     (m)   Unless, prior  to the date of the delivery of any  Note,  the
Company has provided CSI with written notice that any representation  or
warranty  set forth herein is not true and correct, each delivery  of  a
Note to CSI or to a person whose purchase of a Note was arranged by  CSI
shall be deemed a representation and warranty by the Company, as of  the
date  thereof  that  (i) all Notes issued on such date  have  been  duly
authorized,  issued  and  delivered and,  upon  payment  therefor,  will
constitute  legal, valid and binding obligations of the Company  subject
to  (a)  the  effect  of  applicable bankruptcy, insolvency,  fraudulent
conveyance, reorganization, moratorium or other similar laws relating to
or  affecting  creditors' rights generally and (b)  the  application  of
general  equitable  principles (regardless of whether  considered  in  a
proceeding  in  equity  or  at  law) and (ii)  the  representations  and
warranties  of  the Company set forth in paragraphs (a) through  (1)  of
this Section 3 are true and correct on and as of such date as if made on
and as of such date.

      4.   Covenants of the Company.  The Company covenants and
           agrees that:

      (a)   For the benefit of CSI and the holders from time to time  of
the  Notes,  the  Company  will  not  permit  to  become  effective  any
amendment,  supplement, rider, waiver or consent to or under the  Notes,
the  Support Agreement, the Credit Agreement (as defined below), or  the
Issuing  and  Paying Agency Agreement which might adversely  affect  the
interests of the holder of any Note then outstanding.  The Company  will
give CSI notice of any proposed amendment, supplement, rider, waiver  or
consent to or under the Notes or such Agreement at least ten days  prior
to the effective date thereof.

      (b)   The Company will cause CSI to receive, on or before the date
of the first placement of Notes by CSI hereunder, (i) resolutions of the
Company's  Board  of Directors substantially in the form  of  Exhibit  A
hereto,  (ii)  an  Incumbency Certificate naming those company  officers
authorized to sign commercial paper notes substantially in the  form  of
Exhibit  B hereto, (iii) a favorable opinion from counsel to the Company
satisfactory to CSI substantially in the form of Exhibit C hereto,  (iv)
a true and complete copy of the Issuing and Paying Agency Agreement, (v)
a  true  and complete copy of the Support Agreement, (vi) evidence  that
the  Notes have been rated[                    ] by Standard and  Poor's
Corporation  and Moody's Investors Service, respectively,  and  (vii)  a
Certificate of the President, any Vice President or the Treasurer of the
Company  as  to the continuing accuracy of the Company's representations
and warranties contained herein; and subsequently, upon CSI's reasonable
request  (to  be made not more frequently than once in any  twelve-month
period), the items set forth in clauses (ii), (iii) and (vii) above.

      (c)   The  Company will, whenever there shall occur  any  material
change  in  the  financial  condition of the Company,  or  any  material
development or occurrence in relation to the Company known to  it  which
is  material  to  the  Company and its subsidiaries  taken  as  a  whole
(including, without limitation, the Company's being put on a "watchlist"
or  being  downgraded  by  a rating agency which  rates  its  commercial
paper), immediately notify CSI thereof, prior to any subsequent issuance
of Notes.

      (d)   The  Company will, at all times that any Notes  sold  by  it
hereunder  are outstanding, maintain unused and available  in  same  day
funds  credit  facilities under the Second Amended and  Restated  Credit
Agreement  dated  as  of November 9, 1994 among the Company,  the  banks
party  thereto  and Citibank, N.A. as Agent (the "Credit Agreement")  or
with other banks reasonably satisfactory to CSI in an amount equal to at
least 100% of the aggregate amount to be paid upon maturity of the Notes
then  outstanding.   If at any. time the Company has reason  to  believe
that  the  Credit Agreement may not be available to meet its obligations
under  this  agreement  and  the Notes, the  Company  shall  immediately
provide written notice to that effect to CSI.  The Company will send CSI
all  notices, reports and information which it is required  to  give  or
gives  (or which it receives from) any lender or the agent, as the  case
may be, pursuant to the Credit Agreement.

      (e)   The Company will use good faith efforts to arrange  for  the
qualification of the Notes for sale under the state securities or  "blue
sky"  laws  of  such  jurisdictions in the  United  States  as  CSI  may
reasonably  request and will maintain such qualification  in  effect  as
long as required for the distribution of the Notes and will arrange  for
the  determination  of  the  legality  of  the  Notes  for  purchase  by
institutional investors.

      (f)  Neither the Company nor any of its Affiliates (as defined  in
Rule  501  (b) of Regulation D under the 1933 Act) will sell, offer  for
sale  or solicit offers to buy or otherwise negotiate in respect of  any
securities  (as  defined in the 1933 Act) which will be integrated  with
the sale of Notes in a manner which would require the registration under
the 1933 Act of the Notes.

      (g)   The  Company  will  provide  to  CSI  and  any  investor  or
prospective investor of the Notes, upon the request of such investor  or
prospective  investor,  the information required  to  render  the  Notes
eligible  for resale pursuant to Section (d) (4) (i) of Rule 144A  under
the 1933 Act.

     5.  Indemnification.

     The   Company  agrees to indemnify and hold harmless CSI  and  each
person, if any, who controls CSI within the meaning of Section 15 of the
1933  Act  or Section 20 of the 1934 Act, (each an "Indemnified Party"),
against  any  and  all  reasonably  incurred  losses,  claims,  damages,
liabilities or expenses (including reasonable legal fees and  expenses),
joint  or  several,  to which CSI or any of them may become  subject  or
which  may  be  claimed against CSI any of them insofar as such  losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
arise  out  of  or  are based upon (i) any untrue statement  or  alleged
untrue  statement of a material fact contained in the Private  Placement
Memorandum  (including the documents incorporated therein by  reference)
or  the omission or alleged omission to state in any such information  a
material  fact  required by the terms hereof to  be  stated  therein  or
necessary  to  make  any  statement  therein,  in  the  light   of   the
circumstances  in which such statement is made, not misleading  or  (ii)
any inaccuracy of any of the Company's representations or warranties, or
any  breach of any of the Company's covenants and agreements,  contained
in  this Agreement; Indemnified Party must notify Company in writing and
the  Company  agrees to reimburse each such Indemnified  Party  for  any
legal  or  other  expenses reasonably incurred by it in connection  with
investigating  or  defending any such loss,  claim,  damage,  liability,
expense  or  action; provided, however, that the Company shall  not,  in
connection  with  any  one  such action or  separate  but  substantially
similar or related actions in the same jurisdiction arising out  of  the
same  general allegations or circumstances, be liable for the reasonable
fees  and expenses of more than one separate firm of attorneys at a time
for the Indemnified Parties which firm shall be designated in writing by
CSI.   As soon as practicable after receipt by the Indemnified Party  of
notice of the commencement of any action, the Indemnified Party will, if
a  claim  in  respect thereof is to be made against  the  Company  under
Section  5  hereof,  notify the Company in writing of  the  commencement
thereof;  provided, however, the failure to so notify the  Company  will
not relieve the Company from liability under this Section 5.

     The Company shall be entitled to appoint counsel of the Company's
choice at the Company's expense to represent CSI in any action for which
indemnification is sought (in which case the Company shall not
thereafter be responsible for the fees and expenses of any separate
counsel retained by CSI except as set forth below); provided, however,
that such counsel shall be satisfactory to CSI.  Notwithstanding the
Company's election to appoint counsel to represent CSI in an action, CSI
shall have the right to employ separate counsel (including local
counsel), and the Company shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel chosen by
the Company to represent CSI would present such counsel with a conflict
of interest, (ii) the actual or potential defendants in, or targets of,
any such action include both CSI and the Company and CSI shall have
reasonably concluded that there may be legal defenses available to it
which are different from or additional to those available to the
Company, (iii) the Company shall not have employed counsel satisfactory
to CSI to represent CSI within a reasonable time after the institution
of such action or (iv) the Company shall authorize CSI to employ
separate counsel at the expense of the Company.

     6.  General.

     6.1  All notices required under the terms and provisions hereof
shall be in writing, given in person, or by telex, telecopier or
telegram (charges prepaid), and if by telex, telecopier or telegram,
promptly confirmed by letter, and any such notice shall be effective
when received at the address specified for the intended recipient on the
signature page hereof or at such other address as such recipient may
designate from time to time by notice to the other party.

      6.4  This Agreement may be terminated by either party hereto on 15
days  notice  to  the other; provided, however, that termination  hereof
shall  not  affect  (i)  any obligation of either party  hereunder  with
respect to any Note outstanding at the time of such termination or  with
respect  to  any action or event occurring prior to such termination  or
(ii) any obligation of the Company under Section 5 hereof.

      6.5  This Agreement may be executed in any number of counterparts,
each  part  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 have executed this Agreement as of  the
day and year first above written.





                           CITICORP SECURITIES, INC.
                           399 Park Avenue
                           New York, New York 10043
                           Telecopier No.: 212-291-3910
                           Attention:  Commercial Paper
                                   
                                   
                             /s/  MA Renaud
                         By:      Mark A.Renaud
                         Title:   Vice President
                                  
                                  
                                  
                         IES DIVERSIFIED INC.
                         200 First Street S.E.,
                         Cedar Rapids, Iowa 52401
                         Telecopier No.: (319) 398-4533
                         Attention:
                                  
                                  
                             /s/  Robert J. Latham
                         By:      ROBERT J. LATHAM
                         Title:   TREASURER