Document:

Security Agreement

    
      EXHIBIT
        10.5

                                                                  SECURITY
        AGREEMENT

          THIS
        SECURITY
        AGREEMENT (the “Agreement”),is entered into and made effective
        as of May 17, 2007, by and between UNICORP, INC., a Nevada
        corporation with its principal place of business located at 5075 Westheimer
        Road, Suite 975, Houston, Texas 77056 (the “Parent”), and the each
        subsidiary of the Parent listed on Schedule I attached hereto (each a
“Subsidiary,” and collectively and together with the Parent, the
“Company”), in favor of the BUYER(S) (the “Secured
        Party”) listed on Schedule I attached to the Securities Purchase Agreement
        (the “Securities Purchase Agreement”) dated the date hereof between the
        Company and the Secured Party.

          WHEREAS,
The
        Parent shall issue and sell to the Secured Party, as provided in the Securities
        Purchase Agreement, and the Secured Party shall purchase, up to Seven Million
        Dollars ($7,000,000) of secured convertible debentures (the “Convertible
        Debentures”), which shall be convertible into shares of the Parent’s common
        stock, par value $0.001, in the respective amounts set forth opposite each
        Buyer(s) name on Schedule I attached to the Securities Purchase
        Agreement;

           WHEREAS,
to
        induce the Secured
        Party to enter into the transaction contemplated by the Securities Purchase
        Agreement, the Convertible Debentures, the Investor Registration Rights
        Agreement of even date herewith between the Parent and the Secured Party
        (the
“Investor Registration Rights Agreement”), and the Irrevocable Transfer
        Agent Instructions among the Parent, the Secured Party, the Parent’s transfer
        agent, and David Gonzalez, Esq. (the “Transfer Agent Instructions”)
        (collectively referred to as the “Transaction Documents”), each Company
        hereby grants to the Secured Party a security interest in and to the pledged
        property of each Company identified on Exhibit A hereto (collectively
        referred to as the “Pledged Property”) to secure all of the Obligations
        (as defined below).

          NOW,
        THEREFORE,
in consideration of the promises and the mutual covenants herein
        contained, and for other good and valuable consideration, the adequacy and
        receipt of which are hereby acknowledged, the parties hereto hereby agree
        as
        follows:

                                                                      ARTICLE
        1.

                                                              
        DEFINITIONS AND INTERPRETATIONS

      Section 1.1.     
Recitals.  

      The above recitals are true and correct
        and
        are incorporated herein, in their entirety, by this reference.

      Section 1.2.     
Interpretations. 

      Nothing herein expressed or implied is
        intended or shall be construed to confer upon any person other than the Secured
        Party any right, remedy or claim under or by reason hereof.

      
        
          
          

        

        
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      Section 1.3.      Obligations
        Secured.

      The
        security interest created hereby in the Pledged Property constitutes continuing
        collateral security for all of the obligations of the Parent now existing
        or
        hereinafter incurred to the Buyers, whether oral or written and whether arising
        before, on or after the date hereof including, without limitation following
        obligations (collectively, the “Obligations”):

       

                 
        (a)  for so long as the Convertible Debentures are outstanding, the payment
        by the Parent, as and when due and payable (by scheduled maturity, acceleration,
        demand or otherwise), of all amounts from time to time owing by it in respect
        of
        the Securities Purchase Agreement, the Convertible Debentures and the other
        Transaction Documents; and

       

      (b) 
        for so long as the Convertible Debentures are outstanding, the due performance
        and observance by the Parent of all of its other obligations from time to
        time
        existing in respect of any of the Transaction Documents, including without
        limitation, the Parent’s obligations with respect to any conversion or
        redemption rights of the Secured Party under the Convertible Debentures.

       

                                                                      ARTICLE
        2.

                                                          PLEDGED
        PROPERTY;
        EVENT OF DEFAULT

      Section 2.1.      Pledged
        Property.

          (a)       
        As collateral security for all of the Obligations, the Company hereby pledges
        to
        the Secured Party, and creates in the Secured Party for its benefit, a
        continuing security interest in and to all of the Pledged Property whether
        now
        owned or hereafter acquired.

          (b)       
        Simultaneously with the execution and delivery of this Agreement, the Company
        shall make, execute, acknowledge, file, record and deliver to the Secured
        Party
        any documents reasonably requested by the Secured Party to perfect its security
        interest in the Pledged Property.  Simultaneously with the execution and
        delivery of this Agreement, the Company shall make, execute, acknowledge
        and
        deliver to the Secured Party such documents and instruments, including, without
        limitation, financing statements, certificates, affidavits and forms as may,
        in
        the Secured Party’s reasonable judgment, be necessary to effectuate, complete or
        perfect, or to continue and preserve, the security interest of the Secured
        Party
        in the Pledged Property, and the Secured Party shall hold such documents
        and
        instruments as secured party, subject to the terms and conditions contained
        herein.

          (c)
Establishment
        of a Lockbox Account, Dominion Account. 
As
        of the date hereof the Parent, each Subsidiary and
        the Secured Party shall have established or designated all of the Company’s and
        each Subsidiaries bank accounts as (i) a depository account, dominion account
        or
        such other “blocked account” established at a bank or banks (each such bank, a
“Blocked Account Bank”) pursuant to an arrangement with such Blocked
        Account Bank as well as a (ii) lock box account (collectively the depository
        account, dominion account and the lock box account shall be referred to as
        “Blocked Accounts”) or such other account as may be selected by the
        parties hereto for the deposit of all cash and all collections and proceeds
        from
        the Accounts to be deposited into the deposit Account and/or lock box, as
        applicable, together with the proceeds thereof, all goods represented by
        such
        Accounts and all such goods that may be returned by the  Company’s and each
        Subsidiaries customers, and all proceeds of any insurance thereon, and all
        guarantees, securities and liens which the Company and each Subsidiary may
        hold
        for the payment of any such Accounts including, without limitation, all rights
        of stoppage in transit, replevin and reclamation and as an unpaid vendor
        and/or
        lienor, all of which the Company and each Subsidiary represents and warrants
        will be bona fide and existing obligations of its respective customers, arising
        out of the sale of goods by the Company in the ordinary course of business
        into
        any accounts other than the Deposit and/or the Lockbox Accounts, as
        applicable  The parties hereto and each Blocked Account Bank shall enter
        into a deposit account control agreement in form and substance satisfactory
        to
        Secured Party directing such Blocked Account Bank, upon notification by the
        Secured Party of an Event of Default as defined herein, to transfer such
        funds
        so deposited into the Blocked Accounts, either to any account maintained
        by the
        Secured Party at said Blocked Account Bank or by wire transfer to appropriate
        account(s) the Secured Party directs and providing the Secured Party such
        control over the Blocked Accounts until the earlier of the Event of Default
        being cured or repayment of the Obligations.  Upon an Event of Default all
        funds deposited in such Blocked Accounts shall immediately become the property
        of the Secured Party and the parties hereto shall obtain the agreement by
        such
        Blocked Account Bank to waive any offset rights against the funds so
        deposited.  

      
        
          
          

        

        
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      Section 2.2.      Event of
        Default

          An
“Event
        of
        Default” shall be deemed to have occurred under this Agreement upon an Event
        of Default under and as defined in the Convertible Debentures.

                                                                      ARTICLE
        3.

                                                           ATTORNEY-IN-FACT;
        PERFORMANCE

      Section 3.1.      Secured Party
        Appointed Attorney-In-Fact.

          Upon
        the occurrence
        and during the continuance of an Event of Default: (a) the Company hereby
        appoints the Secured Party as its attorney-in-fact, with full authority in
        the
        place and stead of the Company and in the name of the Company or otherwise,
        from
        time to time in the Secured Party’s discretion to take any action and to execute
        any instrument which the Secured Party may reasonably deem necessary to
        accomplish the purposes of this Agreement, including, without limitation,
        to
        receive and collect all instruments made payable to the Company representing
        any
        payments in respect of the Pledged Property or any part thereof and to give
        full
        discharge for the same; (b) the Secured Party may demand, collect, receipt
        for,
        settle, compromise, adjust, sue for, foreclose, or realize on the Pledged
        Property as and when the Secured Party may determine, and (c) to facilitate
        collection, the Secured Party may notify account debtors and obligors on
        any
        Pledged Property to make payments directly to the Secured Party.

      
        
          
          

        

        
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      Section 3.2.      Secured Party
        May Perform.

          If
        the Company fails
        to perform any agreement contained herein, the Secured Party, at its option,
        may
        itself perform, or cause performance of, such agreement, and the expenses
        of the
        Secured Party incurred in connection therewith shall be included in the
        Obligations secured hereby and payable by the Company under
        Section 8.3.

                                                                          ARTICLE
        4.

                                                                REPRESENTATIONS
        AND
        WARRANTIES

      Section 4.1.      Authorization;
        Enforceability.

          Each
        of the parties
        hereto represents and warrants that it has taken all action necessary to
        authorize the execution, delivery and performance of this Agreement and the
        transactions contemplated hereby; and upon execution and delivery, this
        Agreement shall constitute a valid and binding obligation of the respective
        party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
        and similar laws affecting creditors’ rights or by the principles governing the
        availability of equitable remedies.

      Section 4.2.      Ownership of
        Pledged Property.

          The
        Company
        represents and warrants that it is the legal and beneficial owner of the
        Pledged
        Property free and clear of any lien, security interest, option or other charge
        or encumbrance (each, a “Lien”) except for the security interest created by this
        Agreement and other Permitted Liens.  For purposes of this Agreement,
“Permitted Liens” means: (1) the security interest created by this Agreement,
        (2) existing Liens disclosed by the Company to the Secured Party; (3) inchoate
        Liens for taxes, assessments or governmental charges or levies not yet due,
        as
        to which the grace period, if any, related thereto has not yet expired, or
        being
        contested in good faith and by appropriate proceedings for which adequate
        reserves have been established in accordance with GAAP; (4) Liens of carriers,
        materialmen, warehousemen, mechanics and landlords and other similar Liens
        which
        secure amounts which are not yet overdue by more than 60 days or which are
        being
        contested in good faith by appropriate proceedings; (5) licenses, sublicenses,
        leases or subleases granted to other Persons not materially interfering with
        the
        conduct of the business of the Company; (6) Liens securing capitalized lease
        obligations and purchase money indebtedness incurred solely for the purpose
        of
        financing an acquisition or lease; (7) easements, rights-of-way, restrictions,
        encroachments, municipal zoning ordinances and other similar charges or
        encumbrances, and minor title deficiencies, in each case not securing debt
        and
        not materially interfering with the conduct of the business of the Company
        and
        not materially detracting from the value of the property subject thereto;
        (8)
        Liens arising out of the existence of judgments or awards which judgments
        or
        awards do not constitute an Event of Default; (9) Liens incurred in the ordinary
        course of business in connection with workers compensation claims, unemployment
        insurance, pension liabilities and social security benefits and Liens securing
        the performance of bids, tenders, leases and contracts in the ordinary course
        of
        business, statutory obligations, surety bonds, performance bonds and other
        obligations of a like nature (other than appeal bonds) incurred in the ordinary
        course of business (exclusive of obligations in respect of the payment for
        borrowed money); (10) Liens in favor of a banking institution arising by
        operation of law encumbering deposits (including the right of set-off) and
        contractual set-off rights held by such banking institution and which are
        within
        the general parameters customary in the banking industry and only burdening
        deposit accounts or other funds maintained with a creditor depository
        institution; (11) usual and customary set-off rights in leases and other
        contracts; and (12) escrows in connection with acquisitions and
        dispositions.

      
        
          
          

        

        
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                  Section
        4.3.      Name Change.    The
        Company and each Subsidiary have only effectuated changes their respective
        corporate names as designated in Schedule 4.3 herein.

       

                                                                      ARTICLE
        5.

                                                       DEFAULT;
        REMEDIES; SUBSTITUTE
        COLLATERAL

      Section 5.1       Method of
        Realizing Upon the Pledged Property: Other Remedies.

          If
        any Event of
        Default shall have occurred and be continuing:

          (a)       
        The Secured Party may exercise in respect of the Pledged Property, in addition
        to any other rights and remedies provided for herein or otherwise available
        to
        it, all of the rights and remedies of a secured party upon default under
        the
        Uniform Commercial Code (whether or not the Uniform Commercial Code applies
        to
        the affected Pledged Property), and also may (i) take absolute control of
        the
        Pledged Property, including, without limitation, transfer into the Secured
        Party's name or into the name of its nominee or nominees (to the extent the
        Secured Party has not theretofore done so) and thereafter receive, for the
        benefit of the Secured Party, all payments made thereon, give all consents,
        waivers and ratifications in respect thereof and otherwise act with respect
        thereto as though it were the outright owner thereof, (ii) require the
        Company to assemble all or part of the Pledged Property as directed by the
        Secured Party and make it available to the Secured Party at a place or places
        to
        be designated by the Secured Party that is reasonably convenient to both
        parties, and the Secured Party may enter into and occupy any premises owned
        or
        leased by the Company where the Pledged Property or any part thereof is located
        or assembled for a reasonable period in order to effectuate the Secured Party's
        rights and remedies hereunder or under law, without obligation to the Company
        in
        respect of such occupation, and (iii) without notice except as specified
        below and without any obligation to prepare or process the Pledged Property
        for
        sale, (A) sell the Pledged Property or any part thereof in one or more
        parcels at public or private sale, at any of the Secured Party's offices
        or
        elsewhere, for cash, on credit or for future delivery, and at such price
        or
        prices and upon such other terms as the Secured Party may deem commercially
        reasonable and/or (B) lease, license or dispose of the Pledged Property or
        any part thereof upon such terms as the Secured Party may deem commercially
        reasonable.  The Company agrees that, to the extent notice of sale or any
        other disposition of the Pledged Property shall be required by law, at least
        ten
        (10) days' notice to the Company of the time and place of any public sale
        or the
        time after which any private sale or other disposition of the Pledged Property
        is to be made shall constitute reasonable notification.  The Secured Party
        shall not be obligated to make any sale or other disposition of any Pledged
        Property regardless of notice of sale having been given.  The Secured Party
        may adjourn any public or private sale from time to time by announcement
        at the
        time and place fixed therefor, and such sale may, without further notice,
        be
        made at the time and place to which it was so adjourned.  The Company
        hereby waives any claims against the Secured Party arising by reason of the
        fact
        that the price at which the Pledged Property may have been sold at a private
        sale was less than the price which might have been obtained at a public sale
        or
        was less than the aggregate amount of the Obligations, even if the Secured
        Party
        accepts the first offer received and does not offer such Pledged Property
        to
        more than one offeree, and waives all rights that the Company may have to
        require that all or any part of such Pledged Property be marshaled upon any
        sale
        (public or private) thereof.  The Company hereby acknowledges that
        (i) any such sale of the Pledged Property by the Secured Party may be made
        without warranty, (ii) the Secured Party may specifically disclaim any
        warranties of title, possession, quiet enjoyment or the like, and
        (iii) such actions set forth in clauses (i) and (ii) above shall not
        adversely affect the commercial reasonableness of any such sale of Pledged
        Property.  

      
        
          
          

        

        
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          (b)       
        Upon an Event of Default all funds deposited in such Blocked Accounts shall
        immediately become the property of the Buyer.  The Secured Party shall
        direct such Blocked Account Bank, to transfer such funds so deposited into
        the
        Blocked Accounts, either to any account maintained by the Secured Party at
        said
        Blocked Account Bank or by wire transfer to appropriate account(s) the Secured
        Party directs and providing the Secured Party such control over the Blocked
        Accounts until the earlier of the Event of Default being cured or repayment
        of
        the Obligations.  

          (c)       
        Any cash held by the Secured Party as Pledged Property and all cash proceeds
        received by the Secured Party in respect of any sale of or collection from,
        or
        other realization upon, all or any part of the Pledged Property shall be
        applied
        (after payment of any amounts payable to the Secured Party pursuant to Section
        8.3 hereof) by the Secured Party against, all or any part of the Obligations
        in
        such order as the Secured Party shall elect, consistent with the provisions
        of
        the Securities Purchase Agreement.  Any surplus of such cash or cash
        proceeds held by the Secured Party and remaining after the indefeasible payment
        in full in cash of all of the Obligations shall be paid over to whomsoever
        shall
        be lawfully entitled to receive the same or as a court of competent jurisdiction
        shall direct.

          (d)       
        In the event that the proceeds of any such sale, collection or realization
        are
        insufficient to pay all amounts to which the Secured Party is legally entitled,
        the Company shall be liable for the deficiency, together with interest thereon
        at the rate specified in the Convertible Debentures for interest on overdue
        principal thereof or such other rate as shall be fixed by applicable law,
        together with the costs of collection and the reasonable fees, costs, expenses
        and other client charges of any attorneys employed by the Secured Party to
        collect such deficiency.

          (e)       
        The Company hereby acknowledges that if the Secured Party complies with any
        applicable state, provincial, or federal law requirements in connection with
        a
        disposition of the Pledged Property, such compliance will not adversely affect
        the commercial reasonableness of any sale or other disposition of the Pledged
        Property.

          (f)        
        The Secured Party shall not be required to marshal any present or future
        collateral security (including, but not limited to, this Agreement and the
        Pledged Property) for, or other assurances of payment of, the Obligations
        or any
        of them or to resort to such collateral security or other assurances of payment
        in any particular order, and all of the Secured Party's rights hereunder
        and in
        respect of such collateral security and other assurances of payment shall
        be
        cumulative and in addition to all other rights, however existing or
        arising.  To the extent that the Company lawfully may, the Company hereby
        agrees that it will not invoke any law relating to the marshaling of collateral
        which might cause delay in or impede the enforcement of the Secured Party's
        rights under this Agreement or under any other instrument creating or evidencing
        any of the Obligations or under which any of the Obligations is outstanding
        or
        by which any of the Obligations is secured or payment thereof is otherwise
        assured, and, to the extent that it lawfully may, the Company hereby irrevocably
        waives the benefits of all such laws.

      
        
          
          

        

        
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              Section
        5.2       Duties Regarding Pledged
        Property.

          The
        Secured Party
        shall have no duty as to the collection or protection of the Pledged Property
        or
        any income thereon or as to the preservation of any rights pertaining thereto,
        beyond the safe custody and reasonable care of any of the Pledged Property
        actually in the Secured Party’s possession.

                                                                      ARTICLE
        6.

                                                                
        AFFIRMATIVE COVENANTS

          The
        Company covenants
        and agrees that, from the date hereof and until the Obligations have been
        fully
        paid and satisfied or the Convertible Debentures have been fully converted,
        unless the Secured Party shall consent otherwise in writing (as provided
        in
        Section 8.4 hereof):

              Section
        6.1.      Existence, Properties,
        Etc.

          (a)       
        The Company shall do, or cause to be done, all things, or proceed with due
        diligence with any actions or courses of action, that may be reasonably
        necessary (i) to maintain Company’s due organization, valid existence and
        good standing under the laws of its state of incorporation, and (ii) to
        preserve and keep in full force and effect all qualifications, licenses and
        registrations in those jurisdictions in which the failure to do so could
        have a
        Material Adverse Effect (as defined below); and (b) the Company shall not
        do, or cause to be done, any act impairing the Company’s corporate power or
        authority (i) to carry on the Company’s business as now conducted, and
        (ii) to execute or deliver this Agreement or any other document delivered
        in connection herewith, including, without limitation, any UCC-1 Financing
        Statements required by the Secured Party (which other loan instruments
        collectively shall be referred to as the “Loan Instruments”) to
        which it is or will be a party, or perform any of its obligations hereunder
        or
        thereunder.  For purpose of this Agreement, the term “Material Adverse
        Effect” shall mean any material and adverse affect as determined by Secured
        Party in its reasonable discretion, whether individually or in the aggregate,
        upon (a) the Company’s assets, business, operations, properties or
        condition, financial or otherwise; (b) the Company’s ability to make
        payment as and when due of all or any part of the Obligations; or (c) the
        Pledged Property.

              Section
        6.2.      Financial Statements and
        Reports.

          The
        Company shall
        furnish to the Secured Party within a reasonable time such financial data
        as the
        Secured Party may reasonably request.

      
        
          
          

        

        
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              Section
        6.3.      Accounts and Reports.

          The
        Company shall
        maintain a standard system of accounting in accordance with generally accepted
        accounting principles consistently applied (“GAAP”) and provide, at its sole
        expense, to the Secured Party the following:

          (a)       
        as soon as available, a copy of any notice or other communication alleging
        any
        nonpayment or other material breach or default, or any foreclosure or other
        action respecting any material portion of its assets and properties, received
        respecting any of the indebtedness of the Company in excess of $500,000 (other
        than the Obligations), or any demand or other request for payment under any
        guaranty, assumption, purchase agreement or similar agreement or arrangement
        respecting the indebtedness or obligations of others in excess of $500,000;
        and

          (b)       
        within fifteen (15) days after the making of each submission or filing, a
        copy of any report, financial statement, notice or other document, whether
        periodic or otherwise, submitted to the shareholders of the Company, or
        submitted to or filed by the Company with any governmental authority involving
        or affecting (i) the Company that could reasonably be expected to have a
        Material Adverse Effect; (ii) the Obligations; (iii) any part of the
        Pledged Property; or (iv) any of the transactions contemplated in this
        Agreement or the Loan Instruments (except, in each case, to the extent any
        such
        submission, filing, report, financial statement, notice or other document
        is
        posted on EDGAR Online).

              Section
        6.4.      Maintenance of Books and Records;
        Inspection.

          The
        Company shall
        maintain its books, accounts and records in accordance with GAAP, and permit
        the
        Secured Party, its officers and employees and any professionals designated
        by
        the Secured Party in writing, at any time during normal business hours and
        upon
        reasonable notice to visit and inspect any of its properties (including but
        not
        limited to the collateral security described in the Transaction Documents
        and/or
        the Loan Instruments), corporate books and financial records, and to discuss
        its
        accounts, affairs and finances with any employee, officer or director thereof
        (it being agreed that, unless an Event of Default shall have occurred and
        be
        continuing, there shall be no more than two (2) such visits and inspections
        in
        any Fiscal Year).

              Section
        6.5.      Maintenance and
        Insurance.

          (a)       
        The Company shall maintain or cause to be maintained, at its own expense,
        all of
        its material assets and properties in good working order and condition, ordinary
        wear and tear excepted, making all necessary repairs thereto and renewals
        and
        replacements thereof.

          (b)       
        The Company shall maintain or cause to be maintained, at its own expense,
        insurance in form, substance and amounts (including deductibles), which the
        Company deems reasonably necessary to the Company’s business, (i) adequate
        to insure all assets and properties of the Company of a character usually
        insured by persons engaged in the same or similar business against loss or
        damage resulting from fire or other risks included in an extended coverage
        policy; (ii) against public liability and other tort claims that may be
        incurred by the Company; (iii) as may be required by the Transaction
        Documents and/or applicable law and (iv) as may be reasonably requested by
        Secured Party, all with financially sound and reputable insurers.

      
        
          
          

        

        
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                Section
          6.6.      Contracts and Other
          Collateral.

      

       

          The
        Company shall
        perform all of its obligations under or with respect to each instrument,
        receivable, contract and other intangible included in the Pledged Property
        to
        which the Company is now or hereafter will be party on a timely basis and
        in the
        manner therein required, including, without limitation, this Agreement, except
        to the extent the failure to so perform such obligations would not reasonably
        be
        expected to have a Material Adverse Effect.

            Section
        6.7.      Defense of Collateral,
        Etc.

          The
        Company shall
        defend and enforce its right, title and interest in and to any part of: 
(a) the Pledged Property; and (b) if not included within the Pledged
        Property, those assets and properties whose loss would reasonably be expected
        to
        have a Material Adverse Effect, each against all manner of claims and demands
        on
        a timely basis to the full extent permitted by applicable law (other than
        any
        such claims and demands by holders of Permitted Liens).

            Section
        6.8.      Taxes and Assessments.

          The
        Company shall
        (a) file all material tax returns and appropriate schedules thereto that
        are required to be filed under applicable law, prior to the date of delinquency
        (taking into account any extensions of the original due date), (b) pay and
        discharge all material taxes, assessments and governmental charges or levies
        imposed upon the Company, upon its income and profits or upon any properties
        belonging to it, prior to the date on which penalties attach thereto, and
        (c) pay all material taxes, assessments and governmental charges or levies
        that, if unpaid, might become a lien or charge upon any of its properties;
        provided, however, that the Company in good faith may contest any such
        tax, assessment, governmental charge or levy described in the foregoing clauses
        (b) and (c) so long as appropriate reserves are maintained with respect thereto
        if and to the extent required by GAAP. 

            Section
        6.9.      Compliance with Law and Other
        Agreements.  

          The
        Company shall
        maintain its business operations and property owned or used in connection
        therewith in compliance with (a) all applicable federal, state and local
        laws, regulations and ordinances governing such business operations and the
        use
        and ownership of such property, and (b) all agreements, licenses,
        franchises, indentures and mortgages to which the Company is a party or by
        which
        the Company or any of its properties is bound, except where the failure to
        so
        comply would not reasonably be expected to have a Material Adverse Effect.

            Section
        6.10.    Notice of Default.  

          The
        Company shall
        give written notice to the Secured Party of the occurrence of any Event of
        Default.

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

         

                Section
          6.11.    Notice of Litigation.

      

       

          The
        Company shall
        give notice, in writing, to the Secured Party of (a) any actions, suits or
        proceedings wherein the amount at issue is in excess of $250,000, instituted
        by
        any persons against the Company, or affecting any of the assets of the Company,
        and (b) any dispute, not resolved within fifteen (15) days of the
        commencement thereof, between the Company on the one hand and any governmental
        or regulatory body on the other hand, which might reasonably be expected
        to have
        a Material Adverse Effect on the business operations or financial condition
        of
        the Company.

              Section
        6.13.    Future Subsidiaries.

          If
        the Company shall
        hereafter create or acquire any subsidiary with respect to which the Company
        holds 80% or more of the equity ownership interests therein, simultaneously
        with
        the creation or acquisition of such subsidiary, the Company shall cause such
        subsidiary to grant to the Secured Party a security interest in the Pledged
        Property of such subsidiary of the same tenor as created under this Agreement;
        provided, however, that notwithstanding the foregoing to the contrary, such
        security interest shall terminate from and after the date the Company no
        longer
        holds such 80% or greater equity ownership interest in such subsidiary (and
        the
        Secured Party shall take all actions requested by the Company to terminate
        the
        same).

                                                                        ARTICLE
        7.

                                                                   NEGATIVE
        COVENANTS

      The Company covenants and agrees that, from the date
        hereof
        until the Obligations have been fully paid and satisfied, the Company shall
        not,
        unless the Secured Party shall consent otherwise in writing:

             Section
        7.1.      Liens and Encumbrances.

          Directly
        or
        indirectly make, create, incur, assume or permit to exist any Lien in, to
        or
        against any part of the Pledged Property other than Permitted Liens.

              Section
        7.2.      Restriction on Redemption and Cash
        Dividends

          Directly
        or
        indirectly, redeem, repurchase or declare or pay any cash dividend or
        distribution on its capital stock without the prior express written consent
        of
        the Secured Party.

              Section
        7.3.      Incurrence of Indebtedness.

          Directly
        or
        indirectly, incur or guarantee, assume or suffer to exist any indebtedness,
        other than the indebtedness evidenced by the Convertible Debentures and other
        Permitted Indebtedness.  “Permitted Indebtedness” means: (i)
        indebtedness evidenced by Convertible Debentures; (ii) indebtedness described
        on
        the Disclosure Schedule to the Securities Purchase Agreement; (iii) indebtedness
        incurred solely for the purpose of financing any construction project or
        asset
        acquisition or the acquisition or lease of any equipment by the Company,
        including capital lease obligations with no recourse other than to such
        equipment, but expressly excluding indebtedness incurred for use in financing
        any other working capital or corporate purpose; (iv) indebtedness (A) the
        repayment of which has been subordinated to the payment of the Convertible
        Debentures on terms and conditions acceptable to the Secured Party, including
        with regard to interest payments and repayment of principal, (B) which does
        not
        mature or otherwise require or permit redemption or repayment prior to or
        on the
        91st day after the maturity date of any Convertible Debentures then
        outstanding; and (C) which is not secured by any assets of the Company; (v)
        indebtedness solely between the Company and/or one of its domestic subsidiaries,
        on the one hand, and the Company and/or one of its domestic subsidiaries,
        on the
        other which indebtedness is not secured by any assets of the Company or any
        of
        its subsidiaries, provided that (x) in each case a majority of the equity
        of any
        such domestic subsidiary is directly or indirectly owned by the Company,
        such
        domestic subsidiary is controlled by the Company and such domestic subsidiary
        has executed a security agreement in the form of this Agreement and (y) any
        such
        loan shall be evidenced by an intercompany note that is pledged by the Company
        or its subsidiary, as applicable, as collateral pursuant to this Agreement;
        (vi)
        reimbursement obligations in respect of letters of credit issued for the
        account
        of the Company or any of its subsidiaries for the purpose of securing
        performance obligations of the Company or its subsidiaries incurred in the
        ordinary course of business so long as the aggregate face amount of all such
        letters of credit does not exceed $500,000 at any one time; and (vii) renewals,
        extensions and refinancing of any indebtedness described in clauses (i) or
        (iii)
        of this subsection.

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

              Section
        7.4.      Places of Business.

          Change
        the location
        of its chief place of business, chief executive office or any place of business
        disclosed to the Secured Party, unless such change in location is to a different
        location within the United States and the Company provides notice to the
        Secured
        Party of new location within 10 days’ of such change in location.

              Section
        7.5.      Company
        Name.          The Company and
        each Subsidiary shall not change their respective names with out providing
        the
        Secured Party thirty (30) calendar days prior written notice.

              Section
        7.6.      Bank Accounts. 
          The Company and each
        Subsidiary shall not open, create, assume, establish or maintain any bank
        account without having it designated as a “Deposit Account” and complying with
        the term hereunder.

              Section
        7.7.      Deposit/Lockbox
        Accounts.     The Company and each Subsidiary shall not
        direct, instruct, cause to be deposited or otherwise deposit any cash and
        or any
        collections and proceeds from the Accounts, together with the proceeds thereof,
        all goods represented by such Accounts and all such goods that may be returned
        by the Company’s and each Subsidiaries customers, and all proceeds of any
        insurance thereon, and all guarantees, securities and liens which the Company
        and each Subsidiary may hold for the payment of any such Accounts including,
        without limitation, all rights of stoppage in transit, replevin and reclamation
        and as an unpaid vendor and/or lienor, all of which the Company represents
        and
        warrants will be bona fide and existing obligations of its respective customers,
        arising out of the sale of goods by the Company and each Subsidiary in the
        ordinary course of business into any accounts other than the Deposit and/or
        the
        Lockbox Accounts, as applicable.

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

                                                                      ARTICLE
        8.

                                                                   
MISCELLANEOUS

              Section
        8.1.      Notices.

          All
        notices or other
        communications required or permitted to be given pursuant to this Agreement
        shall be in writing and shall be considered as duly given on:  (a) the
        date of delivery, if delivered in person or by nationally recognized overnight
        delivery service or (b) five (5) days after mailing if mailed
        from within the continental United States by certified mail, return receipt
        requested to the party entitled to receive the same:

      
        	
                If
                  to the Secured Party:

              	
                Cornell
                  Capital Partners, LP

              
	
                 

              	
                101
                  Hudson Street-Suite 3700 

              
	
                 

              	
                Jersey
                  City, New Jersey 07302 

              
	
                 

              	
                Attention:         
                  Mark Angelo

              
	
                 

              	
                                       
                  Portfolio Manager

              
	
                 

              	
                Telephone:       
                  (201) 986-8300

              
	
                 

              	
                Facsimile:        
                  (201) 985-8266

              
	
                 

              	
                 

              
	
                With
                  a copy to:

              	
                David
                  Gonzalez or Troy Rillo, Esq.

              
	
                 

              	
                101
                  Hudson Street, Suite 3700

              
	
                 

              	
                Jersey
                  City, NJ 07302

              
	
                 

              	
                Telephone:       
                  (201) 985-8300

              
	
                 

              	
                Facsimile:        
                  (201) 985-8266

              
	
                 

              	
                 

              
	
                 

              	
                 

              
	
                 

              	
                 

              
	
                And
                  if to the Company:

              	
                Unicorp, Inc.

              
	
                 

              	
                5075 Westheimer Road, Suite
                  975

              
	
                 

              	
                Houston, TX 77056

              
	
                 

              	
                Attention:
                           Kevan Casey

              
	
                 

              	
                Telephone:       
                  (713) 402-6717

              
	
                 

              	
                Facsimile:        
                  (713) 402-6799

              
	
                 

              	
                 

              
	
                With
                  a copy to:

              	
                Sichenzia
                  Ross Friedman Ference LLP

              
	
                 

              	
                61
                  Broadway, 32nd Floor

              
	
                 

              	
                New
                  York, New York 10006

              
	
                 

              	
                Attention: 
                  Marc Ross, Esq.

              
	
                 

              	
                Telephone: 
                  (212) 930-9700

              
	
                 

              	
                Facsimile: 
                  (212) 930-9725

              

      

       

      Any party may change its address by giving
        notice to the other party stating its new address.  Commencing on the tenth
        (10th) day after the giving of such notice, such newly
        designated address shall be such party’s address for the purpose of all notices
        or other communications required or permitted to be given pursuant to this
        Agreement.

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

         

                Section
          8.2.      Severability.

      

       

          If
        any provision of
        this Agreement shall be held invalid or unenforceable, such invalidity or
        unenforceability shall attach only to such provision and shall not in any
        manner
        affect or render invalid or unenforceable any other severable provision of
        this
        Agreement, and this Agreement shall be carried out as if any such invalid
        or
        unenforceable provision were not contained herein.

             Section
        8.3.      Expenses.

          In
        the event of an
        Event of Default, the Company will pay to the Secured Party the amount of
        any
        and all reasonable out-of-pocket expenses, including the reasonable fees
        and
        expenses of its counsel, which the Secured Party may incur in connection
        with:  (i) the custody or preservation of, or the sale, collection
        from, or other realization upon, any of the Pledged Property; (ii) the
        exercise or enforcement of any of the rights of the Secured Party hereunder
        or
        (iii) the failure by the Company to perform or observe any of the
        provisions hereof.

             Section
        8.4.      Waivers, Amendments, Etc.

          The
        Secured Party’s
        delay or failure at any time or times hereafter to require strict performance
        by
        Company of any undertakings, agreements or covenants shall not waive, affect,
        or
        diminish any right of the Secured Party under this Agreement to demand strict
        compliance and performance herewith.  Any waiver by the Secured Party of
        any Event of Default shall not waive or affect any other Event of Default,
        whether such Event of Default is prior or subsequent thereto and whether
        of the
        same or a different type.  None of the undertakings, agreements and
        covenants of the Company contained in this Agreement, and no Event of Default,
        shall be deemed to have been waived by the Secured Party, nor may this Agreement
        be amended, changed or modified, unless such waiver, amendment, change or
        modification is evidenced by an instrument in writing specifying such waiver,
        amendment, change or modification and signed by the Secured Party in the
        case of
        any such waiver, and signed by the Secured Party and the Company in the case
        of
        any such amendment, change or modification.

              Section
        8.5.      Continuing Security Interest; Partial
        Release.

          (a) 
This
        Agreement shall create a continuing security interest in the Pledged Property
        and shall: (i) remain in full force and effect until payment or conversion
        in full of the Convertible Debentures; (ii) be binding upon the Company and
        its successors and assigns; and (iii) inure to the benefit of the Secured
        Party and its successors and assigns.  Upon the payment or satisfaction in
        full or conversion in full of the Convertible Debentures, this Agreement
        and the
        security interest created hereby shall terminate, and, in connection therewith,
        the Company shall be entitled to the return, at its expense, of such of the
        Pledged Property as shall not have been sold in accordance with Section 5.2
        hereof or otherwise applied pursuant to the terms hereof and the Secured
        Party
        shall deliver to the Company such documents as the Company shall reasonably
        request to evidence such termination.

          (b)       
        Effective upon the closing of a disposition of any Pledged Property, provided
        the Secured Party consents in writing prior to such disposition or such
        disposition is made in the ordinary course of business, the security interest
        granted hereunder in the Pledged Property so disposed of shall terminate
        and the
        Secured Party shall deliver such documents as the Company shall reasonably
        request to evidence such termination; provided, however, the security interest
        granted hereunder in all remaining Pledged Property shall remain in full
        force
        and effect.

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

         

                Section
          8.6.      Independent
          Representation.

      

       

          Each
        party hereto
        acknowledges and agrees that it has received or has had the opportunity to
        receive independent legal counsel of its own choice and that it has been
        sufficiently apprised of its rights and responsibilities with regard to the
        substance of this Agreement.

            Section
        8.7.      Applicable Law: 
Jurisdiction.

          This
        Agreement shall
        be governed by and interpreted in accordance with the laws of the State of
        New
        Jersey without regard to the principles of conflict of laws.  The parties
        further agree that any action between them shall be heard in Hudson County,
        New
        Jersey, and expressly consent to the jurisdiction and venue of the Superior
        Court of New Jersey, sitting in Hudson County and the United States District
        Court for the District of New Jersey sitting in Newark, New Jersey for the
        adjudication of any civil action asserted pursuant to this Paragraph.

            Section
        8.8.      Waiver of Jury Trial.

      AS A FURTHER INDUCEMENT FOR THE SECURED
        PARTY
        TO ENTER INTO THIS AGREEMENT AND TO MAKE THE FINANCIAL ACCOMMODATIONS TO
        THE
        COMPANY, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL
        PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OTHER
        DOCUMENTS RELATED TO THIS TRANSACTION. 

            Section
        8.9.      Entire Agreement.

      This Agreement constitutes the entire
        agreement among the parties and supersedes any prior agreement or understanding
        among them with respect to the subject matter hereof.

       

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

       

       

      

       

      IN WITNESS WHEREOF, the
        parties hereto have executed this Security Agreement as of the date first
        above
        written.

       

      
        	
                 

              	
                COMPANY:

              
	
                 

              	
                UNICORP, INC.
                  

              
	
                 

              	
                 

              
	
                 

              	
                By:  /s/  Carl A.
                  Chase                                    
                  

              
	
                 

              	
                Name:  Carl A. Chase

              
	
                 

              	
                Title:     Chief
                  Financial Officer

              
	
                 

              	
                 

              

      

    

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    IN WITNESS WHEREOF, the
      parties hereto have executed this Security Agreement as of the date first above
      written.

     

    
      	
               

            	
              COMPANY:

            
	
               

            	
              AFFILIATED
                HOLDINGS, INC.

            
	
               

            	
               

            
	
               

            	
              By:
                   /s/  Carl A.
                Chase                                      
                

            
	
               

            	
              Name:  Carl A. Chase

            
	
               

            	
              Title:     Chief
                Financial Officer

            
	
               

            	
               

            

    

     

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the
      parties hereto have executed this Security Agreement as of the date first above
      written.

     

    
      	
               

            	
               

            
	
               

            	
              SECURED
                PARTY:

            
	
               

            	
              CORNELL CAPITAL PARTNERS,
                LP

            
	
               

            	
               

            
	
               

            	
              By:     
                Yorkville Advisors, LLC

            
	
               

            	
              Its:     
                Investment Manager

            
	
               

            	
               

            
	
               

            	
              By:    /s/  Mark
                Angelo                                        
                

            
	
               

            	
              Name:  Mark Angelo

            
	
               

            	
              Title:     Portfolio
                Manager

            
	
               

            	
               

            

    

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

    

    SCHEDULE
      I

     

     

    LEGAL
      NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OF ORGANIZATION

     

     

     

    
      	
               

              Company’s Name

            	
              State of
                Organization

            	
              Employer ID

            	
              Organizational
                ID

            
	
              Affiliated Holdings, Inc.

               

            	
              Texas

            	
              20-1356071 

               

            	
               State of Texas

              1-20-1356071-4

            
	
               

            	
               

            	
               

            	
               

               

            
	
               

            	
               

            	
               

            	
               

               

            
	
               

            	
               

            	
               

            	
               

               

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

       

    

    
      EXHIBIT
        A

    

    
      
                                                        DEFINITION
        OF PLEDGED
        PROPERTY

    

        For
      the purpose of
      securing prompt and complete payment and performance by the Company of all
      of
      the Obligations, the Company unconditionally and irrevocably hereby grants
      to
      the Secured Party a continuing security interest in and to, and lien upon,
      the
      following Pledged Property of the Company:

            (a)       
      all goods of the Company, including, without limitation, machinery, equipment,
      furniture, furnishings, fixtures, signs, lights, tools, parts, supplies and
      motor vehicles of every kind and description, now owned by the Company or in
      which the Company may have any interest, and all replacements, additions,
      accessions, substitutions and proceeds thereof, arising from the sale or
      disposition thereof, and where applicable, the proceeds of insurance and of
      any
      tort claims involving any of the foregoing;

            (b)       
      all inventory of the Company now owned, including, but not limited to, all
      goods, wares, merchandise, parts, supplies, finished products, other tangible
      personal property, including such inventory as is temporarily out of Company’s
      custody or possession and including any returns upon any accounts or other
      proceeds, including insurance proceeds, resulting from the sale or disposition
      of any of the foregoing;

            (c)       
      all contract rights and general intangibles of the Company, including, without
      limitation, goodwill, trademarks, trade styles, trade names, leasehold
      interests, partnership or joint venture interests, patents and patent
      applications, copyrights, deposit accounts whether now owned or hereafter
      created;

            (d)       
      all documents, warehouse receipts, instruments and chattel paper of the Company
      whether now owned or hereafter created;

            (e)       
      all accounts and other receivables, instruments or other forms of obligations
      and rights to payment of the Company (herein collectively referred to as
“Accounts”), together with the proceeds thereof, all goods represented by
      such Accounts and all such goods that may be returned by the Company’s
      customers, and all proceeds of any insurance thereon, and all guarantees,
      securities and liens which the Company may hold for the payment of any such
      Accounts including, without limitation, all rights of stoppage in transit,
      replevin and reclamation and as an unpaid vendor and/or lienor now
      owned;

            (f)        
      to the extent assignable, all of the Company’s rights under all present and
      future authorizations, permits, licenses and franchises issued or granted in
      connection with the operations of any of its facilities;

            (g)       
      all equity interests, securities or other instruments in other companies,
      including, without limitation, any subsidiaries, investments or other entities
      (whether or not controlled); whether now existing or later acquired or created
      and

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

            (h)       
      all products and proceeds (including, without limitation, insurance proceeds)
      from the above-described Pledged Property.

    Notwithstanding anything
      contained in this
      Agreement or in this Exhibit A to the contrary, no assets or properties of
      the
      Company shall be deemed to be Pledged Property if and to the extent that any
      financial institution or other lender extending credit to the Company which
      (credit extension) is deemed to be Permitted Indebtedness in accordance with
      the
clause (iii) of the definition of such term, prohibits
      or restricts the right or the ability of the Company to encumber, pledge or
      grant a security interest in the same with any Lien (including, without
      limitation, the Lien of the Secured Party hereunder, whether any such
      restriction or limitation is express or generic in form and/or substance),
      or if
      the Lien of the Secured Party on any such assets or properties results or would
      result in a default under any of the agreements between the Company and any
      such
      financial institution or other lender, and the Secured Party shall take all
      actions relating reasonably requested by any such financial institution or
      other
      lender (or requested of the Company by any such financial institution or other
      lender), to subordinate the Secured Party’s right to payment and its Lien on any
      of the Pledged Property to the rights of any such financial institution or
      other
      lender, on commercially reasonable terms and conditions satisfactory to any
      such
      financial institution or other lender, as and when requested by any such
      financial institution or other lender (or, if applicable, by the Company, which
      request at the Company shall be made as and when, or immediately prior to,
      the
      request or requirement of any such financial institution or other lender in
      respect of the same).  At the request of the Secured Party, the Company
      shall request of any such financial institution or other lender that the Secured
      Party have the right to maintain a subordinated security interest in and perfect
      a Lien on any such assets and properties.Exhibit 10.1 Guaranty

    GUARANTY
      

    

    This
GUARANTY
      dated
      as of May 18,
      2007 (the “Guaranty”),
      is executed by
Integrys
      Energy
      Group, Inc., a Wisconsin corporation (the
“Guarantor”)
      to and for the
      benefit of Bank of America, N.A., in its capacity as administrative agent for
      the Banks (as defined below) (in such capacity, the “Administrative
      Agent”).

    

    WHEREAS,
      Peoples Energy
      Corporation, an Illinois corporation (the “Borrower”)
      has obtained a
      revolving line of credit in the original amount of $400,000,000 pursuant to
      that
      certain Credit Agreement dated as of June 13, 2006 by and among the Borrower,
      the Administrative Agent and the other Banks party thereto (the “Banks”)
      as amended by
      that certain letter agreement effective as of March 6, 2007 by and between
      the
      Borrower and the Administrative Agent (the Credit Agreement as so amended is
      referred to herein as, the “Credit
      Agreement”);

    

    WHEREAS,
      contemporaneously
      with the execution of this Guaranty, the Borrower and the Administrative Agent
      are entering into a First Amendment and Consent to Credit Agreement to provide
      for, among other things, the delivery of this Guaranty; 

    

    WHEREAS,
      the Borrower is a
      wholly owned subsidiary of the Guarantor and the extension of credit by the
      Banks is desirable to the conduct and operation of the business of the Borrower
      and will inure to the financial benefit of the Guarantor; 

    

    WHEREAS,
      the
      Administrative Agent has requested that Guarantor execute and deliver this
      Guaranty and the Guarantor has agreed to execute and deliver this Guaranty;
      and

    

    NOW,
      THEREFORE,
      in consideration
      of the foregoing and for other good and valuable consideration, the receipt
      of
      which is hereby acknowledged, the parties hereto agree as follows:

     

    1. Definitions.
      Capitalized terms
      used but not defined herein shall have the meaning ascribed to them in the
      Credit Agreement.

    

    2. Guaranty.
      Guarantor does
      hereby fully and unconditionally guaranty for the benefit of the Banks and
      the
      Administrative Agent (a) the due and punctual payment of all “Obligations” (as
      defined in the Credit Agreement) of Borrower, whether on the Termination Date
      or
      at any earlier or accelerated date or dates as provided in the Credit Documents
      or at any time hereafter made or granted, and the due and punctual performance
      in full of all other obligations of the Borrower under the Credit Documents
      (collectively, the “Guaranteed
      Obligations”)
      and (b) in case
      of any extension of time of payment or renewal of any of the Guaranteed
      Obligations, that the same will be promptly paid in full when due or performed
      in accordance with the terms of the extension or renewal, whether on the
      Termination Date, by acceleration, or otherwise. In case of the failure of
      Borrower to punctually make any such payment of the Obligations, Guarantor
      hereby agrees to cause any such payment to be made promptly when and as the
      same
      shall become due and payable. This
      Guaranty
      constitutes a guaranty of payment and not of collection and shall not be
      impaired by the failure to endorse evidence of this Guaranty on any Credit
      Document.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Guarantor
      hereby
      agrees that its obligations under this Guaranty shall be as if it were principal
      debtor and not merely surety, and
      shall
      be
      absolute and unconditional, irrespective of, and shall be unaffected by, any
      invalidity, irregularity or unenforceability of any Note or any other Credit
      Document, any failure to enforce the provisions of any Note or any other Credit
      Document, or any waiver, modification or indulgence granted to Borrower with
      respect thereto, by any Bank or the Administrative Agent, or any other
      circumstance which may otherwise constitute a legal or equitable discharge
      of a
      surety or guarantor; provided,
      however,
      that,
      notwithstanding the foregoing, no such waiver, modification, or indulgence
      shall, without the consent of Guarantor, increase the aggregate principal amount
      of the Revolving Credit Commitments (except any increase resulting from the
      Borrower’s exercise of the “Increase Option” as set forth in Section 2.1(b) of
      the Credit Agreement) or the interest rate thereon or increase any premium
      payable thereon. 

     

    3. Representations
      and Warranties.
      Guarantor
      represents and warrants to the Administrative Agent and the Banks as
      follows:

    

    (a) Guarantor
      has the
      requisite power, authority, capacity and legal right to execute, deliver and
      perform this Guaranty and all other documents required to be executed and
      delivered in connection herewith. This Guaranty and all other documents required
      to be executed and delivered by Guarantor, when executed and delivered, will
      constitute legal, valid and binding obligations of Guarantor, enforceable
      against Guarantor in accordance with their terms subject to bankruptcy,
      insolvency, fraudulent conveyance, reorganization, moratorium or other similar
      laws relating to or affecting creditor’s rights and general principles of
      equity, regardless of whether considered in a proceeding in equity or at
      law;

    

    (b)
 The
      execution,
      delivery and performance of this Guaranty by the Guarantor do not and will
      not
      (i) require the consent or approval of, any governmental body, agency or
      authority, or (ii) result in a breach of or constitute a default under, or
      result in the imposition of, any lien, charge or encumbrance upon any property
      of the Guarantor pursuant to (A) any of the Guarantor’s organizational documents
      or (B) any indenture or other agreement or instrument under which the Guarantor
      is a party or by which it or any of its properties may be bound or affected,
      other than, with respect to clause (ii)(B) above, those which are not reasonably
      expected to result in a material adverse effect on the Guarantor or its
      subsidiaries. 

     

    (c) As
      of the date of
      this Guaranty, there is not any litigation, arbitration, governmental or
      administrative proceedings, actions, examinations, claims or demands pending
      or,
      to the Guarantor’s knowledge, threatened against the Guarantor that would
      reasonably be expected to materially adversely affect performance by Guarantor
      of its obligations under this Guaranty; 

    

    (d) Guarantor
      has taken
      all necessary corporate action to ensure that the execution, delivery and
      performance of this Guaranty have been duly authorized; and

    

    
      
        
        

      

      
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    (e) The
      execution,
      delivery and performance of this Guaranty by Guarantor and compliance with
      the
      provisions hereof by Guarantor will not violate any provision of Guarantor’s
      Articles of Incorporation or By-laws.

    

    4. Covenants
      and
      Agreements.
      Guarantor hereby
      acknowledges, covenants and agrees that:

    

    (a) Guarantor
      shall be
      subrogated to all rights of any Banks and Administrative Agent against Borrower
      in respect of any amounts paid to such Bank or Administrative Agent by Guarantor
      pursuant to the provisions of this Guaranty; provided,
      however,
      that Guarantor
      shall not be entitled to enforce, or to receive any payments arising out of
      or
      based upon, such right of subrogation until the Obligations have been paid
      in
      full. 

     

    (b)  This
      Guaranty shall
      continue in full force and effect until payment of the Obligations in full
      and
      the termination of all Commitments thereunder.

     

    (c)
 The
      Guarantor’s
      liability under this Guaranty shall in no way be modified, affected, impaired,
      reduced, released or discharged by: (i) any acceptance by the Administrative
      Agent or any Bank of any new or renewal Note or Notes, or of any security or
      collateral for, or other guarantors or obligors of, any of the Obligations;
      (ii)
      any compromise, settlement, surrender, release, discharge, renewal, refinancing,
      extension, alteration, exchange, sale, pledge or election by the Administrative
      Agent or any Bank with respect to the Obligations or any note by the Borrower,
      or with respect to any collateral under Section 1111 or any action taken under
      Section 364, or any other section of the United States Bankruptcy Code, now
      existing or hereafter amended, or other disposition of, or substitution for,
      or
      indulgence with respect to, or failure, neglect or omission to realize upon,
      or
      to enforce or exercise any liens or rights of appropriation or other rights
      of
      the Administrative Agent or any Bank with respect to, the Obligations or any
      security or collateral therefor or any claims against any person or persons
      primarily or secondarily liable thereon; (iii) any failure, neglect or omission
      to perfect, protect, secure or insure any of the foregoing security interests,
      liens, or encumbrances of the properties or interests in properties subject
      thereto; or (iv) any change in the Borrower’s name or the merger of the Borrower
      into another corporation or other entity or omission of any kind or at any
      time
      upon the part of any Bank or the Administrative Agent.

     

    (d) No
      delay on the
      part of the Administrative Agent or the Banks in the exercise of any right
      or
      remedy shall operate as a waiver thereof, and no single or partial exercise
      by
      the Administrative Agent of any right or remedy shall preclude other or further
      exercise thereof, or the exercise of any other right or remedy. No modification,
      termination, discharge or waiver of any of the provisions hereof shall be
      binding upon the Administrative Agent, except as expressly set forth in a
      writing duly signed and delivered on behalf of the Administrative
      Agent.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (e) Should
      a claim (a
“Repayment
      Claim”)
      be made upon the
      Administrative Agent or any Bank at any time for repayment of any amount
      received by the Administrative Agent or such Bank in payment of the Obligations,
      or any part thereof, whether received from the Borrower or the Guarantor
      pursuant hereto by reason of: (a) any judgment, decree or order of any court
      or
      administrative body having jurisdiction over the Administrative Agent or such
      Bank or any of their respective properties; or (b) any settlement or compromise
      of any such Repayment Claim effected by the Administrative Agent or such Bank,
      in its sole discretion, with the claimant (including the Borrower), the
      Guarantor shall remain liable to the Administrative Agent or such Bank for
      the
      amount so repaid to the same extent as if such amount had never originally
      been
      received by the Administrative Agent or such Bank, notwithstanding any
      termination hereof or the cancellation of any note or other instrument
      evidencing the Obligations.

     

    (f) Guarantor
      shall aid
      and assist the Borrower in satisfying all of the Borrower’s obligations set
      forth in Sections 7.3 and 7.6 of the Credit Agreement and shall provide the
      Borrower with information sufficient to allow the Borrower to make the
      representations and warranties contained in Section 5.3 of the Credit Agreement
      to the extent such representations and warranties relate to the
      Guarantor.

     

    5. Waivers.
Guarantor
      hereby
      waives:

     

    (a) diligence,
      presentment, demand of payment, filing of claims with a court in the event
      of a
      merger or bankruptcy of Borrower, any right to require a proceeding first
      against Borrower, protest or notice with respect to any Note or the indebtedness
      evidenced thereby, and all demands whatsoever, and covenants that this Guaranty
      will not be discharged with respect to any Note except by payment in full of
      the
      Obligations. 

     

    (b)
 any
      and all
      defenses, claims and discharges of the Borrower pertaining to the Obligations,
      except the defense of discharge by payment in full of the Obligations and the
      termination of the Commitments thereunder.

     

    6. Restrictions
      on
      Liens.
      After the date of
      this Guaranty and so long as this Guaranty remains effective, Guarantor will
      not
      pledge, mortgage, hypothecate or grant a security interest in, or permit any
      mortgage, pledge, security interest or other lien upon, any capital stock of
      any
      Guarantor Subsidiary now or hereafter directly or indirectly owned by Guarantor
      to secure any Indebtedness, without making effective provisions whereby the
      Obligations shall be (so long as such other Indebtedness shall be so secured)
      equally and ratably secured with any and all such other Indebtedness and any
      other indebtedness similarly entitled to be equally and ratably secured;
provided,
      however,
      that this
      restriction shall not apply to nor prevent the creation or existence of (a)
      any
      mortgage, pledge, security interest, lien or encumbrance upon any such capital
      stock (i) created at the time of the acquisition of such capital stock by
      Guarantor or within one year after such time to secure all or a portion of
      the
      purchase price for such capital stock or (ii) existing thereon at the time
      of
      the acquisition thereof by Guarantor (whether or not the 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    obligations
      secured
      thereby are assumed by Guarantor), or (b) any extension, renewal or refunding
      of
      any mortgage, pledge, security interest, lien or encumbrance described in clause
      (a) above on capital stock of any Guarantor Subsidiary theretofore subject
      thereto (or substantially the same capital stock) or any portion thereof.

     

    In
      case Guarantor
      or any Guarantor Subsidiary shall propose to pledge, mortgage, hypothecate
      or
      grant a security interest in any capital stock of any Guarantor Subsidiary
      owned
      by Guarantor or such Guarantor Subsidiary to secure any Indebtedness, other
      than
      as permitted by clauses (a) and (b) in the preceding paragraph, Guarantor will
      prior thereto give written notice thereof to the Administrative Agent, and
      Guarantor will prior to or simultaneously with such pledge, mortgage,
      hypothecation or grant of security interest, in form satisfactory to the
      Administrative Agent, effectively cause the Obligations to be secured (for
      so
      long as other Indebtedness shall be secured) equally and ratably with such
      Indebtedness and with any other indebtedness for money borrowed similarly
      entitled to be equally and ratably secured.

     

    For
      purposes of
      this Section 6, “Guarantor
      Subsidiary”
means
      (i) any corporation of which more than 50% of the outstanding securities
      having ordinary voting power shall at the time be owned or controlled, directly
      or indirectly, by Guarantor or by one or more other Guarantor Subsidiaries
      or by
      Guarantor and one or more other Guarantor Subsidiaries, or (ii) any
      partnership, association, joint venture or similar business organization of
      which more than 50% of the ownership interests having ordinary voting power
      shall at the time be so owned or controlled.

     

    7. Guarantor
      May
      Consolidate.
      Nothing contained
      in this Guaranty or any of the Credit Documents shall prevent any consolidation
      or merger of Guarantor with or into any other Person or Persons (whether or
      not
      affiliated with Guarantor), or successive consolidations or mergers in which
      Guarantor or its successor or successors shall be a party or parties, or shall
      prevent any conveyance or transfer of the properties and assets of Guarantor
      as
      an entirety or substantially as an entirety to any other Person (whether or
      not
      affiliated with Guarantor) lawfully entitled to acquire the same; provided,
      however,
      and Guarantor
      hereby covenants and agrees, that upon any such consolidation, merger,
      conveyance or transfer, (a) the obligations of Guarantor as set forth in this
      Guaranty shall be expressly assumed by an assumption agreement, in form
      reasonably satisfactory to the Administrative Agent, executed and delivered
      to
      the Administrative Agent by the Person (if other than Guarantor) formed by
      such
      consolidation, or into which Guarantor shall have been merged, or by the Person
      which shall have acquired such properties and assets and (b) Guarantor shall
      deliver to the Administrative Agent an officers’ certificate and an opinion of
      counsel, each stating that such consolidation, merger, conveyance or transfer
      and, if an assumption agreement is required in connection with such transaction,
      such assumption agreement, comply with this Section 7 and that all conditions
      precedent herein provided for relating to such transaction have been fulfilled.
      

     

    Upon
      any
      consolidation of Guarantor with, or merger of Guarantor into, any other Person
      or any conveyance or transfer of the properties and assets of Guarantor as
      an
      entirety or substantially as an entirety in accordance with this Section 7,
      the
      successor Person formed by such consolidation or into which Guarantor is merged
      or to which such conveyance or transfer is made shall succeed to, and be
      substituted for, and shall have all obligations and may exercise every right
      and
      power of, Guarantor under this Guaranty and the other Credit Documents with
      

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    the
      same effect as
      if such successor Person had been named as Guarantor herein, and thereafter,
      in
      the case of a conveyance or transfer, the predecessor Person shall be relieved
      of all obligations and covenants under this Guaranty and the other Credit
      Documents.

     

    8. Governing
      Law.
      This Guaranty
      shall be construed in accordance with and governed by the internal laws of
      the
      State of Illinois. Any legal action or proceeding with respect to this Guaranty
      shall be brought in the courts of the State of Illinois or of the United States
      for the Northern District of Illinois.

    

    9. Successors
      and
      Assigns.
      Guarantor agrees
      that this Guaranty shall inure to the benefit of and may be enforced by the
      Administrative Agent, and any holder of the Notes and their respective
      successors and assigns, and shall be binding upon and enforceable against
      Guarantor and its respective successors and assigns. All references herein
      to
      the Borrower and to the Guarantor, respectively, shall be deemed to include
      any
      successors or assigns, whether immediate or remote, to such
      corporation.

    

     

    [signature
      page
      follows]

     

    

     

    

     

    
      
        
           

        

        
        

      

      
        6

        
          

        

      

      
        
        

        
        

      

    

    IN
      WITNESS
      WHEREOF,
      this Guaranty has
      been executed as of the date first above written.

    

    GUARANTOR:

    

    INTEGRYS
      ENERGY
      GROUP, INC.

    

    

    By:
/s/
      Bradley
      A. Johnson

    Name: Bradley
      A.
      Johnson

    Title:
 Vice
      President and
      Treasurer

    

    

    Accepted
      and Agreed:

    

    BANK
      OF AMERICA,
      N.A.,

    as
      Administrative
      Agent

    

    By:
/s/
      John P.
      Wofford     

    Name:  John
      P. Wofford     

    Title: 
      Vice President

         

    
      
        
        

      

      
        7

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