Document:

Exhibit 10(a) Employment and Retention Agreement dated 8/31/06 between the
      Company and Thomas M. Patrick

     

    EXHIBIT
      10(a)

     

    EMPLOYMENT
      AND RETENTION AGREEMENT

    BETWEEN

    PEOPLES
      ENERGY CORPORATION

    AND

    THOMAS
      M. PATRICK

    CHAIRMAN,
      PRESIDENT AND CHIEF EXECUTIVE OFFICER

     

     

    THIS
      AGREEMENT is effective as of August 31, 2006 (“Effective Date”), by and between
      Peoples Energy Corporation, an Illinois corporation (“PEC” or the “Company”),
      and Thomas M. Patrick, Chairman, President and Chief Executive Officer (the
      “Executive”).

     

    WITNESSETH

     

    WHEREAS,
      the Executive is a valuable employee of the Company and an integral part of
      the
      management of the Company; and

     

    WHEREAS,
      PEC wishes to encourage the Executive to continue his career and services with
      the Company for the period preceding an anticipated change in control
      transaction; and

     

    WHEREAS,
      the Board of Directors of PEC previously determined that it would be in the
      best
      interests of the Company and its shareholders to assure continuity in the
      management of the Company’s administration and operations in the event of a
      change in control by entering into a severance agreement with the Executive;
      and

     

    WHEREAS,
      PEC and the Executive entered into a severance agreement effective as of August
      1, 2002, which was superseded by a severance agreement effective as of June
      2,
      2004 (the “Severance Agreement”);

     

    WHEREAS,
      the Board of Directors of PEC and the Executive now desire to cancel the
      Severance Agreement and replace it with this Agreement in consideration of
      the
      parties’ agreement that the Executive will delay his retirement pending
      completion of an anticipated change in control transaction; and

     

    WHEREAS,
      the parties acknowledge that the Executive is waiving certain rights under
      the
      Severance Agreement and other arrangements in exchange for new rights provided
      by this Agreement.

     

    NOW
      THEREFORE, for good and valuable consideration, the parties hereby agree to
      the
      following:

     

    1. Definitions.

     

    “AAA”
      shall have the meaning set forth in paragraph 5 of this Agreement.

     

    “Affiliate”
      shall mean the subsidiaries of PEC and other entities controlled by such
      subsidiaries.

     

    “Agreement”
      shall mean this Employment and Retention Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Board”
      shall mean the Board of Directors of PEC.

     

    “Cause”
      shall mean the Executive’s fraud or dishonesty which has resulted in or is
      likely to result in material economic damage to the Company as determined in
      good faith by a vote of at least two-thirds of the non-employee directors of
      PEC
      at a meeting of the Board at which the Executive is provided an opportunity
      to
      be heard.

     

    “Change
      in Control” shall mean:

     

    (i) the
      acquisition by any Person or Persons acting in concert, of ownership of stock
      of
      PEC that, together with stock held by such Person or Persons acting in concert,
      constitutes more than fifty percent (50%) of the total fair market value or
      total voting power of the stock of PEC (calculated in accordance with Code
      Section 318(a) and subject to the limitations of Internal Revenue Service
      (“IRS”) Notice 2005-1); or 

     

    (ii) a
      change
      in the ownership of a substantial portion of the assets (as defined for purposes
      of Code Section 409A) of PEC; or

     

    (iii) a
      change
      in the effective control (as defined for purposes of Code Section 409A) of
      PEC.

     

    “Code”
      shall mean the United States Internal Revenue Code of 1986, as amended, or
      any
      successor thereto.

     

    “Company”
      shall mean PEC and include any Affiliate and successor or successors to
      PEC.

     

    “Compensation
      Committee” shall mean the Management Development and Compensation Committee of
      the PEC Board of Directors.

     

    “Disability”
      shall mean an impairment that affects the Executive and causes him either (a)
      to
      be unable to engage in any substantial gainful activity by reason of a medically
      determinable physical or mental impairment that can be expected to result in
      death or to last for a continuous period of not fewer than 12 months, as
      determined by a physician selected by the Company; or (b) to receive income
      replacement benefits for a period of not fewer than three (3) months under
      an
      accident and health plan covering employees of the Company by reason of a
      medically determinable physical or mental impairment that can be expected to
      result in death or to last for a continuous period of not fewer than 12
      months.

     

    “Effective
      Date” shall mean the date set forth in the first paragraph of this
      Agreement.

     

    “Exchange
      Act” shall mean the Securities Exchange Act of 1934, as amended.

     

    “PEC”
      shall mean Peoples Energy Corporation, an Illinois corporation.

     

    “PEC
      LTIC” shall mean the Peoples Energy Corporation Long Term Incentive Compensation
      Plan, as amended from time to time, or any successor plan.

     

    
      
        
        

      

      
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    “PEC
      Retirement Plan” shall mean the Peoples Energy Corporation Retirement Plan as in
      effect on the Effective Date, as amended from time to time, or any successor
      plan.

     

    “PEC
      SRB”
shall mean the Peoples Energy Corporation Supplemental Retirement Benefit Plan
      as in effect on the Effective Date, as amended from time to time, or any
      successor plan.

     

    “PEC
      STIC” shall mean the Peoples Energy Corporation Short Term Incentive
      Compensation Plan, as amended from time to time, or any successor
      plan.

     

    “Person”
      shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
      modified and used in Sections 13(d) and 14(d) thereof, including a “group” as
      defined in Section 13(d) except that such term shall not include:  (i)
      the Company or any of its subsidiaries; (ii) a trustee or other fiduciary
      holding securities under an employee benefit plan of the Company or any of
      its
      Affiliates; (iii) an underwriter temporarily holding securities pursuant to
      an
      offering of such securities; or (iv) a corporation owned, directly or
      indirectly, by the stockholders of the Company in substantially the same
      proportions as their ownership of stock of the Company.

     

    “Severance
      Agreement” shall have the meaning set forth in the preamble to this
      Agreement.

     

    “Term”
      shall mean the term of this Agreement as set forth in paragraph 2.

     

    2. Term. 
      

     

    This
      Agreement shall be effective as of the Effective Date and shall continue
      thereafter until the Executive retires from employment with the Company, the
      Executive’s employment terminates due to death, Disability or another reason
      other than Cause, or the Company terminates the Executive’s employment for
      Cause.

     

    3. Compensation
      and Employee Benefits.

     

    a. Salary
      and Benefits.

     

    (i) During
      the Term, the Executive shall continue to receive his current salary in
      accordance with the Company’s normal payroll procedures, subject to increase
      from time to time in accordance with salary increases generally granted to
      Company executives, and shall remain eligible to participate in all Company
      bonus programs, incentive arrangements and employee benefit plans for which
      he
      is eligible as of the Effective Date or thereafter in accordance with their
      terms.

     

    (ii) Upon
      the
      termination of the Executive’s employment for any reason other than Cause,
      within five (5) business days after such termination PEC shall pay to the
      Executive (or, if the Executive has died before receiving all payments to which
      he has become entitled hereunder, to the beneficiary or estate of the Executive
      as described in paragraph 12) the sum of his accrued but unpaid salary and
      accrued but unused paid time off for nonunion employees under the Paid Time
      Off
      Bank, as in effect on the Effective Date, as amended from time to time, or
      any
      successor plan.

     

    
      
        
        

      

      
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    b. Incentive
      Payments.

     

    The
      Executive shall be entitled to the following incentive payments if he remains
      employed with the Company through November 30, 2006 or dies or experiences
      a
      Disability that causes termination of his employment on or before that
      date:

     

    (i)
       one
      million dollars ($1,000,000) (less applicable tax withholdings) payable on
      December 1, 2006; and

     

    (ii) one
      million seven hundred seventy-five thousand dollars ($1,775,000) (less
      applicable tax withholdings) payable as soon as practicable following the date
      that is six months after the Executive’s employment termination date, provided
      that he is not terminated for Cause.

     

    The
      incentive payments are in consideration of the Executive’s agreement to and
      compliance with the terms set forth in paragraphs 4, 7, and 17 of this
      Agreement, provided that he complies with such terms and his employment is
      not
      terminated for Cause. PEC shall pay the designated amounts to the Executive
      (or,
      if the Executive dies before receiving the payments to which he has become
      entitled hereunder, to the beneficiary or estate of the Executive as described
      in paragraph 12) in lump sum cash payments.
      If the
      Executive’s employment is terminated for Cause after November 30, 2006 or he
      fails to agree to and comply with paragraphs 4, 7 and 17 of this Agreement,
      he
      shall forfeit his right to receive the incentive payment described in paragraph
      (ii) above. 

     

    c. Success
      Bonus.

     

    If
      the
      Executive remains employed with the Company on:

     

    (i)
       the
      later
      of (A) the closing date of the Change in Control transaction under consideration
      on the Effective Date (“Project Score”), or (B) at the Company’s option (with
      notice to be provided to the Executive before the closing of Project Score),
      the
      date that marks the three (3)-month anniversary of the closing of Project Score;
      or

     

    (ii)
       if
      Project Score is abandoned and does not close, the later of (A) the date
      PEC hires a new chief executive officer and he or she commences service in
      such
      position, or (B) at the Company’s option (with notice to be provided to the
      Executive before the new chief executive officer commences service), the date
      that marks the three (3)-month anniversary of the new chief executive officer’s
      first day of service in such position;

     

    or
      if the
      Company terminates the Executive’s employment due to death, Disability or a
      reason other than Cause before the occurrence of an event described in (i)
      or
      (ii) above, then PEC shall pay to the Executive (or, if the Executive has died
      before receiving all payments to which he has become entitled hereunder, to
      the
      beneficiary or estate of the Executive as described in paragraph 12) a lump
      sum
      cash payment in the amount of two million dollars ($2,000,000), provided that
      the Executive complies with the terms of paragraph 7 of this Agreement. Such
      payment shall be made as soon as practicable following the date that is six
      months after the Executive’s employment termination date.

     

    
      
        
        

      

      
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    d. Retirement
      Benefits and Incentives.

     

    The
      Executive shall be entitled to receive any vested benefits credited or accrued
      on his behalf under any retirement plan, bonus program or incentive arrangement
      maintained by the Company, including, but not limited to, the PEC LTIC, the
      PEC
      Retirement Plan, the PEC SRB and the PEC STIC. Such benefits shall be
      distributed or paid in accordance with the respective provisions of such plans,
      programs or arrangements. To the extent required under Code Section 409A,
      certain benefit distributions or payments (not including benefits due under
      the
      Company’s qualified retirement plans, such as the PEC Retirement Plan) may not
      be payable
      before
      the date that is six months after the Executive’s employment termination date.
      If the Executive’s benefit payments under the PEC SRB are delayed for six months
      to comply with Code Section 409A and he elects an annuity form of distribution
      under that plan, the annuity payments that otherwise would have been payable
      during the six months immediately following the Executive’s employment
      termination shall be aggregated and paid to the Executive all at once as soon
      as
      practicable following the date that is six months after the Executive’s
      employment termination date.

     

    e. Health
      Benefits.

     

    The
      Executive shall be entitled to any post-retirement health benefits for which
      he
      is eligible under the Company’s welfare benefit plans (within the meaning of
      Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
      (“ERISA”)).  If the Executive is not retirement eligible, within the
      meaning of the Company’s welfare benefit plans, at the time of his employment
      termination, the Company may provide health benefits through a fully insured
      health care or HMO plan.  PEC’s obligations under this paragraph 3.e. shall
      cease on the earlier of (i) the date as of which such coverage ends in
      accordance with the Company’s welfare benefit plan and (ii) the date
      following the termination of the Executive’s employment as of which the
      Executive is eligible to receive benefits under welfare benefit plans (within
      the meaning of ERISA Section 3(1)) provided by an employer of the Executive
      other than the Company.

     

    4. Source
      of
      Payments.

     

    a. All
      payments provided for in paragraph 3 shall be paid in cash from the general
      funds of PEC; provided, however, that such payments shall be reduced by the
      amount of any payments made to the Executive or his dependents, beneficiaries
      or
      estate from any trust or special or separate fund established or utilized by
      PEC
      to assure such payments.  The Company shall not be required to establish a
      special or separate fund or other segregation of assets to assure such payments,
      and, if the Company makes any investments to aid it in meeting its obligations
      hereunder, the Executive shall have no right, title or interest whatever in
      or
      to any such investments except as may otherwise be expressly provided in a
      separate written instrument relating to such investments.  Nothing
      contained in this Agreement, and no action taken pursuant to its provisions,
      shall create or be construed to create a trust of any kind, or a fiduciary
      relationship between the Company and the Executive or any other person.  To
      the extent that any person acquires a right to receive payments from the Company
      such right shall be no greater than the right of an unsecured creditor of the
      Company.

     

    
      
        
        

      

      
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    b. The
      Executive hereby waives the contribution requirement described in Section 1(f)
      of the Amended and Restated Trust under Peoples Energy Corporation Directors
      Deferred Compensation Plan, Directors Stock and Option Plan, Executive Deferred
      Compensation Plan and Supplemental Retirement Plan dated February 27, 2004
      (the
“Trust Agreement”) with respect to any benefits to which he may be entitled
      under the plans covered by the Trust Agreement.

     

    5. Litigation
      Expenses; Arbitration.

     

    a. PEC’s
      obligation to make the payments provided for in this Agreement and otherwise
      to
      perform its obligations hereunder shall not be affected by any set-off,
      counterclaim, recoupment, defense or other claim, right or action which the
      Company may have against the Executive or others, except as set forth in
      paragraph 7.  In no event shall the Executive be obligated to seek other
      employment or take any other action by way of mitigation of the amounts payable
      to the Executive under any of the provisions of this Agreement.  PEC agrees
      to pay, upon written demand therefor by the Executive, all legal fees and
      expenses which the Executive may reasonably incur as a result of any dispute
      or
      contest (regardless of the outcome thereof) by or with the Company or others
      regarding the validity or enforceability of, or liability under, any provision
      of this Agreement, plus in each case interest at the federal long-term rate
      in
      effect under Code Section 1274(d), compounded monthly.  In any such action
      brought by the Executive for damages or to enforce any provisions of this
      Agreement, the Executive shall be entitled to seek both legal and equitable
      relief and remedies, including, without limitation, specific performance of
      the
      Company’s obligations hereunder, in his sole discretion.  The obligation of
      the Company under this paragraph 5 shall survive the termination for any reason
      of this Agreement (whether such termination is by the Company, by the Executive,
      upon the expiration of this Agreement or otherwise).

     

    b. In
      the
      event of any dispute or difference between the Company and the Executive with
      respect to the subject matter of this Agreement and the enforcement of rights
      hereunder, the Executive may, in his sole discretion by written notice to PEC,
      require such dispute or difference to be submitted to arbitration.  The
      arbitrator or arbitrators shall be selected by agreement of the parties or,
      if
      they cannot agree on an arbitrator or arbitrators within 30 days after the
      Executive has notified PEC of his desire to have the question settled by
      arbitration, then the arbitrator or arbitrators shall be selected by the
      American Arbitration Association (the “AAA”) in Illinois upon the application of
      the Executive.  The determination reached in such arbitration shall be
      final and binding on both parties without any right of appeal of further
      dispute.  Execution of the determination by such arbitrator may be sought
      in any court of competent jurisdiction.  The arbitrators shall not be bound
      by judicial formalities and may abstain from following the strict rules of
      evidence and shall interpret this Agreement as an honorable engagement and
      not
      merely as a legal obligation.  Unless otherwise agreed by the parties, any
      such arbitration shall take place in Illinois, and shall be conducted in
      accordance with the Rules of the AAA.

     

    6. Tax
      Withholding.

     

    The
      Company may withhold from any payments made under this Agreement all federal,
      state or other taxes, including excise taxes as shall be required pursuant
      to
      any law or governmental regulation or ruling.

     

    
      
        
        

      

      
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    7. Waiver
      and Releases.

     

    In
      consideration of the covenants under this Agreement, including, but not limited
      to, paragraphs 3 and 5, and as a condition precedent to receiving any payments
      under this Agreement, the Executive agrees to execute, concurrently with his
      employment termination, a release substantially in the form of Exhibit A and
      a
      Confidentiality Agreement substantially in the form of Exhibit B,
      respectively, attached hereto and by this reference made a part
      hereof.

     

    8. Entire
      Understanding.

     

    This
      Agreement contains the entire understanding between the Company and the
      Executive with respect to the subject matter hereof and supersedes any prior
      agreement between the Company and the Executive providing for severance or
      similar benefits, except that this Agreement shall not affect or operate to
      reduce any benefit or compensation inuring to the Executive of any kind
      elsewhere provided and not expressly provided for in this
      Agreement.

     

    9. Severability.

     

    If,
      for
      any reason, any one or more of the provisions or part of a provision contained
      in this Agreement is held to be invalid, illegal or unenforceable in any
      respect, such invalidity, illegality or unenforceability shall not affect any
      other provision or part of a provision of this Agreement not held invalid,
      illegal or unenforceable, and each other provision or part of a provision shall,
      to the fullest extent consistent with law, continue in full force and
      effect.

     

    10. Consolidation,
      Merger, or Sale of Assets.

     

    If
      PEC
      consolidates or merges into or with, or transfers all or substantially all
      of
      its assets to, another corporation, limited liability company, limited
      partnership, or other entity, the term “the Company” as used herein shall
      include such other entity and this Agreement shall continue in full force and
      effect.

     

    11. Notices.

     

    All
      notices, requests, demands and other communications required or permitted
      hereunder shall be given in writing and shall be deemed to have been duly given
      if delivered by overnight courier, facsimile or electronic mail or mailed,
      postage prepaid, first class with return receipt, as follows:

     

    a. to
      PEC:

     

    Peoples
      Energy Corporation

    130
      East
      Randolph Drive

    Chicago,
      Illinois  60601

    Attention: 
      Secretary

    Facsimile:
      (312) 240-4348

     

    
      
        
        

      

      
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    b. to
      the
      Executive:

     

    Thomas
      M.
      Patrick

    Chairman,
      President and Chief Executive Officer

    Peoples
      Energy Corporation

    130
      East
      Randolph Drive

    Chicago,
      Illinois  60601

    Facsimile:
      (312) 240-4310

     

    or
      to
      such other address as either party shall have previously specified in writing
      to
      the other.

     

    12. No
      Attachment.

     

    Except
      as
      required by law and as expressly provided in this paragraph 12, no right to
      receive payments under this Agreement shall be subject to anticipation,
      commutation, alienation, sale, assignment, encumbrance, charge, pledge or
      hypothecation or to execution, attachment, levy or similar process or assignment
      by operation of law, and any attempt, voluntary or involuntary, to effect any
      such action shall be null, void and of no effect.  Notwithstanding the
      preceding sentence, the Executive may, by giving written notice to PEC during
      the Executive’s lifetime, designate a beneficiary or beneficiaries to whom the
      benefits described in paragraph 3 shall be transferred in the event of the
      Executive’s death.  Any such designation may be revoked or changed by the
      Executive at any time and from time to time by similar written notice.  If
      there is no such designated beneficiary living upon the death of the Executive
      or if all such designated beneficiaries die prior to the receipt by the
      Executive of the referenced benefits, such benefits shall be transferred to
      the
      Executive’s surviving spouse or, if none, then such benefits will be transferred
      to the estate or personal representative of the Executive.  If the Company,
      after reasonable inquiry, is unable to determine within twelve months after
      the
      Executive’s death whether any designated beneficiary of the Executive did in
      fact survive the Executive, such beneficiary shall be conclusively presumed
      to
      have died prior to the Executive’s death.

     

    13. Binding
      Agreement.

     

    This
      Agreement shall be binding upon, and shall inure to the benefit of, the
      Executive and the Company and their respective permitted successors and
      assigns.

     

    14. Modification
      and Waiver.

     

    This
      Agreement may not be modified or amended except by an instrument in writing
      signed by the parties hereto.  No term or condition of this Agreement shall
      be deemed to have been waived, nor shall there be any estoppel against the
      enforcement of any provision of this Agreement except by written instrument
      signed by the party charged with such waiver or estoppel.  No such written
      waiver shall be deemed a continuing waiver unless specifically stated therein,
      and each such waiver shall operate only as to the specific term or condition
      waived and shall not constitute a waiver of such term or condition for the
      future or as to any act other than that specifically waived.

     

    
      
        
        

      

      
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    15. Headings
      of No Effect.

     

    The
      paragraph headings contained in this Agreement are included solely for
      convenience of reference and shall not in any way affect the meaning or
      interpretation of any of the provisions of this Agreement.

     

    16. Governing
      Law.

     

    This
      Agreement and its validity, interpretation, performance, and enforcement shall
      be governed by the laws of the State of Illinois without giving effect to the
      choice of law provisions in effect in such state.

     

    17. Termination
      of Severance Agreement.

     

    The
      Severance Agreement is hereby terminated and no longer in effect as of the
      Effective Date.

     

    18. Code
      Section 409A Compliance.

     

    No
      provision in this Agreement is intended to provide a deferral of compensation
      within the meaning of Code Section 409A.  Company and Executive agree that
      if and to the extent Code Section 409A applies to this Agreement, the Agreement
      shall be administered in accordance with the requirements of Code Section 409A
      so that there will not be a plan failure under Code Section 409A(a)(1), and
      all
      amounts payable hereunder shall be distributed only in compliance with the
      requirements of paragraphs (2), (3) and (4) of such Code section, including,
      by
      way of example and without limitation, Code Section 409A(2)(A)(i), which
      prohibits the distribution of compensation subject to Code Section 409A to
      a
“specified employee” of a publicly traded company any earlier than six months
      after the date of separation of service in the case of a distribution by reason
      of separation of service.  No distribution shall be made under the
      Agreement that would fail to meet the requirements of Code Section
      409A.

     

    In
      addition, this Agreement is not intended to materially modify any deferred
      compensation plan of the Company that existed on October 3, 2004.  However,
      if this Agreement would otherwise be interpreted to be a material modification
      of any deferred compensation plan of the Company that existed on October 3,
      2004, as permitted by IRS Notice 2005-1, Q&A-18(b), this Agreement shall be
      treated as material modification of such deferred compensation plan only as
      to
      the benefits provided by this Agreement and only the benefits provided by this
      Agreement shall be subject to Code Section 409A.

     

    

     

    

     

    

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    IN
      WITNESS WHEREOF, PEC has caused this Agreement to be executed, and the Executive
      has executed this Agreement.

     

    

    PEOPLES
      ENERGY CORPORATION

    

    

    By:
             

    WILLIAM
      J. BRODSKY

    Director
      and Chairman of the Management
                                  
Development
      and Compensation Committee
                                  of
      the Board of
      Directors

    

    

    EXECUTIVE

     

    By:
             

    THOMAS
      M.
      PATRICK

    Chairman,
      President and Chief Executive Officer

    

    

    
      
        
        

        
        

      

      
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    EXHIBIT
      A

    

    RELEASE
      OF CLAIMS

    AND

    COVENANT
      NOT TO SUE

     

     

    THIS
      RELEASE OF CLAIMS AND COVENANT NOT TO SUE (the “Release”) is executed and
      delivered by THOMAS M. PATRICK (the “Executive”), to Peoples Energy Corporation,
      its subsidiaries, and affiliates (collectively referred to as the
“Company”).

     

    In
      consideration of the agreement by the Company to provide the Executive with
      the
      payments and benefits under the Employment and Retention Agreement between
      the
      Executive and the Company dated August 31, 2006, the Executive hereby agrees
      as
      follows: 

     

    1. Release
      and Covenant.

     

    The
      Executive, of his own free volition, forever waives and releases any and all
      claims the Executive, his dependents, relatives, heirs, executors,
      administrators, successors and assigns has or may have against the Company,
      its
      directors, officers, employees, agents, stockholders, successors and assigns
      (both individually and in their official capacities with the Company) of any
      kind or nature whatsoever arising from facts, assertions, circumstances,
      omissions or matters occurring on or before the date hereof, including all
      claims arising from or relating in any way to the Executive’s employment with
      the Company or the conclusion of such employment (whether such claims are
      presently known or hereafter discovered).  This release includes, but is
      not limited to, a release of any claims in tort or contract, including claims
      for wrongful discharge, breach of any employment contract or any other
      agreement, contract, practice or policy.  In addition to any other claims,
      the Executive specifically waives, releases, and covenants not to sue or to
      file
      any charges or administrative actions with respect to any and all claims against
      the Company under the Americans with Disabilities Act, the Age Discrimination
      in
      Employment Act, Title VII (or any other title) of the Civil Rights Act of 1964
      (including all claims of sex, race, national origin, and religious
      discrimination), Section 1981 of the Civil Rights Act, the Federal Equal Pay
      Act, the Illinois Human Rights Act, the Illinois Wage Payment and Collection
      Act, the Cook County Human Rights Ordinance, the City of Chicago Human Rights
      Ordinance, the Employee Retirement Income Security Act, the Family and Medical
      Leave Act, or any other federal, state or local statute, law, regulation,
      ordinance, or doctrine of common law or public policy, contract or tort law
      having any bearing whatsoever on the terms and conditions of employment or
      termination of employment.  This Release shall not, however, constitute a
      waiver of any of the Executive’s rights under the Employment and Retention
      Agreement or any rights he may have as a director or officer of the Company
      to
      indemnification under the Company’s articles of incorporation or by-laws with
      respect to claims by third parties.  The Executive acknowledges that, in
      his decision to enter into this Release, he has not relied on any
      representations, promises or agreements of any kind, including oral statements
      by representatives of the Company, except as set forth in this
      Release.    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2. Due
      Care.

     

    This
      Release contains a release of all claims under the Age Discrimination in
      Employment Act (“ADEA”) and, therefore, pursuant to the requirements of the
      ADEA, the Executive acknowledges that he has been advised (i) that this release
      includes, but is not limited to, all claims under the ADEA arising up to and
      including the date of execution of this release; (ii) to consult with an
      attorney and or other advisor of his choosing concerning his rights and
      obligations under this release; (iii) to fully consider this release before
      executing it, and that he has been offered ample time and opportunity, in excess
      of 21 days, to do so; and (iv) that this release shall become effective and
      enforceable 7 days following execution of this Release by the Executive, during
      which 7-day period the Executive may revoke his acceptance of this Release
      by
      delivering written notice to:  Corporate Secretary, Peoples Energy
      Corporation, 130 East Randolph Drive, Chicago, Illinois 60601.

     

    3. No
      Assignment of Claims.

     

    The
      Executive represents and warrants that there has been no assignment or other
      transfer of any interest in any claim which the Executive may have against
      the
      Company.  The Executive agrees to indemnify and hold the Company harmless
      from any liability, claims, demands, damages, cost, expenses and attorney’s fees
      incurred as a result of any person asserting such assignment or transfer of
      any
      rights or claims under any such assignment or transfer.  It is the
      intention of the Executive and the Company that this indemnity does not require
      payment as a condition precedent to recovery by the Company from the Executive
      under this indemnity.       

     

    4. Modification
      and Waiver.

     

    This
      Release may not be modified or amended except by an instrument in writing signed
      by the Executive and the Company.  No term or condition of this Release
      shall be deemed to have been waived, nor shall there be any estoppel against
      the
      enforcement of any provision of this Release except by written instrument signed
      by the party charged with such waiver or estoppel.  No such written waiver
      shall be deemed a continuing waiver unless specifically stated therein, and
      each
      such waiver shall operate only as to the specific term or condition waived
      and
      shall not constitute a waiver of such term or condition for the future or as
      to
      any act other than that specifically waived.

     

    5. Governing
      Law.

     

    To
      the
      extent not governed by federal law, this Release and its validity,
      interpretation, performance, and enforcement shall be governed by the laws
      of
      the State of Illinois without giving effect to the choice of law provisions
      in
      effect in such state.

     

    IN
      WITNESS WHEREOF, the Executive has executed this Release and delivered it to
      the
      Company on __________________ ____, _______.

     

    

    By:        

    THOMAS
      M.
      PATRICK

    

    

    
      
        
        

        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      B

    

    CONFIDENTIALITY
      AND NON-SOLICITATION AGREEMENT

    BETWEEN

    PEOPLES
      ENERGY CORPORATION

    AND

    THOMAS
      M. PATRICK

    

     

    THIS
      CONFIDENTIALITY AND NON-SOLICITATION AGREEMENT (the “Agreement”), effective as
      of _______________ ____, ______, by and between Peoples Energy Corporation,
      including any of its subsidiaries, affiliates and related entities (the
“Company”) and THOMAS M. PATRICK (the “Executive”).

     

    WITNESSETH

     

    WHEREAS,
      the Executive is an employee of the Company;

     

    WHEREAS,
      the Company and the Executive have entered into an employment and retention
      agreement dated August 31, 2006 (the “Employment and Retention Agreement”) under
      which the Company has covenanted to provide the Executive with certain payments
      and benefits in the event that the Executive’s employment with the Company ends
      under the circumstances described therein;

     

    WHEREAS,
      in consideration of the Company’s covenants under the Employment and Retention
      Agreement, and as a condition precedent to the Executive receiving any payments
      or benefits under the Employment and Retention Agreement, the Executive has
      agreed to execute a confidentiality agreement concurrently with his employment
      termination as described in the Employment and Retention Agreement;

     

    NOW,
      THEREFORE, as a condition precedent, and in consideration of the covenants
      by
      the Company to provide the Executive with the payments and benefits under the
      Employment and Retention Agreement, the Executive hereby agrees as follows:
      

     

    1. Confidential
      Information; Acknowledgement of Legitimate Business Interest of the
      Company.  

     

    The
      Executive expressly recognizes and acknowledges that during his employment
      with
      the Company, he became entrusted with, had access to, or gained possession
      of
      confidential and proprietary information, data, documents, records, materials,
      and other trade secrets and/or other proprietary business information of the
      Company that is not readily available to competitors, outside third parties
      and/or the public, including without limitation, information about (i) current
      or prospective customers and/or suppliers, (ii) employees, research, goodwill,
      production, and prices, (iii) business methods, processes, practices or
      procedures; (iv) computer software and technology development, (v) the Company’s
      hydrocarbon interests and prospects, and (vi) business strategy, including
      acquisition, merger and/or divestiture strategies (collectively or with respect
      to any of the foregoing, the “Confidential Information”).  The Executive
      further 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    recognizes
      and acknowledges that the Confidential Information is the sole and exclusive
      property of the Company and that the Company has a legitimate interest in
      protecting its Confidential Information.   

     

    2. Non-Disclosure
      of Confidential Information.

     

    The
      Executive agrees that following his termination of employment, he shall keep
      and
      retain in confidence all Confidential Information and will not, without the
      consent of the Company, disclose or divulge any Confidential Information
      obtained during his employment with the Company to any third party for so long
      as the Confidential Information is valuable and unique, or until either the
      Company has either itself released the Confidential Information into the public
      domain or the Confidential Information has clearly become publicly available
      by
      means other than the Company or the Executive.  No individual piece of
      Confidential Information shall be deemed to have become publicly available
      merely because other pieces of Confidential Information shall have become
      publicly available, and no individual piece of Confidential Information shall
      be
      deemed to have become publicly available unless all of its substantive
      provisions shall have become publicly available.  This paragraph 2 shall
      not prevent the Executive from using general skills and experience developed
      in
      positions with the Company or other employers, or from accepting a position
      of
      employment with another company, firm, or other organization, provided that
      such
      position does not require divulgence or use of the Confidential
      Information.

     

    3. Cooperation
      with the Company.  

     

    If
      the
      Executive receives a subpoena or other judicial or administrative process
      demanding that he disclose Confidential Information (“Subpoena”), the Executive
      agrees that he will promptly notify the Company and cooperate fully with the
      Company if the Company elects to challenge or otherwise resist disclosure of
      the
      Confidential Information sought by the Subpoena.  Any such challenge or
      resistance by the Company shall be at the Company’s own expense.  If the
      Executive promptly notifies the Company of the receipt of a Subpoena and the
      Company declines or fails to challenge or resist the Subpoena, or if after
      intervention by the Company in the judicial or administrative process, the
      Company is unsuccessful in quashing or opposing the disclosure, the Executive
      may produce the Confidential Information or respond to the Subpoena as he deems
      appropriate.

     

    4. Return
      of
      Property.

     

    The
      Executive understands and agrees that all business information, files, research,
      records, memoranda, books, lists and other documents and tangible materials,
      including computer disks, and other hardware and software that he receives
      during employment, whether confidential or not, are the property of the Company
      and that, immediately upon the termination of the Executive’s employment, he
      will promptly deliver to the Company all such materials, including copies
      thereof, in his possession or under his control.

     

    5. Non-Solicitation.

     

    The
      Executive covenants and agrees that for a period commencing on the date of
      the
      Executive’s termination of employment with the Company and ending on the date
      that is one (1) 

     

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

    year
      after such employment termination date, the Executive shall not, directly or
      indirectly, solicit, induce, influence, or attempt to induce any employee of
      the
      Company to terminate his employment with, or compete against the Company or
      any
      present or future affiliates of the Company.  In particular, and without
      limiting the foregoing, the Executive agrees that during the one-year (1-year)
      period commencing on the Executive’s employment termination date with the
      Company, the Executive shall not directly or indirectly attempt to hire any
      other employee of the Company or otherwise encourage any other employee to
      leave
      the employ of the Company, or (ii) advise or recommend to any other person
      that
      they employ or solicit for employment, any employee of the Company.

     

    6. Equitable
      Relief.

     

    The
      Executive acknowledges that the Confidential Information to be disclosed to
      the
      Executive during his employment is of a special and unique character, and that
      the breach of any provision of this Agreement, including without limitation,
      its
      non-solicitation provision, will cause the Company irreparable injury and
      damage.  Accordingly, the Company shall be entitled, in addition to all
      other remedies available to it, to injunctive and equitable relief to prevent
      a
      breach of any part of this Agreement or to enforce any part of this
      Agreement.           

     

    7. Assignment.

     

    This
      Agreement is not assignable, in whole or in part, and shall not be assigned,
      by
      the Executive; and any purported assignment by the Executive shall be considered
      null and void.  This Agreement is assignable and may be so assigned by
      Employer, and this Agreement shall inure to the Benefit of, and shall be binding
      upon, any and all successors and assigns of the Company.

     

    8. Entire
      Understanding.

     

    This
      Agreement contains the entire understanding between the Company and the
      Executive with respect to the subject matter hereof.

     

    9. Severability.

     

    If,
      for
      any reason, any one or more of the provisions or part of a provision contained
      in this Agreement shall be held to be invalid, illegal or unenforceable in
      any
      respect, such invalidity, illegality or unenforceability shall not affect any
      other provision or part of a provision of this Agreement not held invalid,
      illegal or unenforceable, and each other provision or part of a provision shall,
      to the fullest extent consistent with law, continue in full force and
      effect.

     

    10. Consolidation,
      Merger, or Sale of Assets.

     

    If
      the
      Company consolidates or merges into or with, or transfers all or substantially
      all of its assets to, another corporation, the term “the Company” as used herein
      shall include such other corporation and this Agreement shall continue in full
      force and effect.

     

    
      
        
        

      

      
        - 3 -

        
          

        

      

      
        
        

      

    

    11. Notices.

     

    All
      notices, requests, demands and other communications required or permitted
      hereunder shall be given in writing and shall be deemed to have been duly given
      if delivered by overnight courier, facsimile or electronic mail or mailed,
      postage prepaid, first class with return receipt, as follows:

     

    a. to
      the
      Company:

     

    Peoples
      Energy Corporation

    130
      East
      Randolph Drive

    Chicago,
      Illinois  60601

    Attention: 
      Secretary

    Facsimile:
      (312) 240-4348

     

    b. to
      the
      Executive:

     

    the
      Executive’s most recent home address

    or
      facsimile number on file with the Company

     

    or
      to
      such other address as either party shall have previously specified in writing
      to
      the other.

     

    12. Binding
      Agreement.

     

    This
      Agreement shall be binding upon, and shall inure to the benefit of, the
      Executive and the Company and their respective permitted successors and
      assigns.

     

    13. Modification
      and Waiver.

     

    This
      Agreement may not be modified or amended except by an instrument in writing
      signed by the parties hereto.  No term or condition of this Agreement shall
      be deemed to have been waived, nor shall there be any estoppel against the
      enforcement of any provision of this Agreement except by written instrument
      signed by the party charged with such waiver or estoppel.  No such written
      waiver shall be deemed a continuing waiver unless specifically stated therein,
      and each such waiver shall operate only as to the specific term or condition
      waived and shall not constitute a waiver of such term or condition for the
      future or as to any act other than that specifically waived.

     

    14. Headings
      of No Effect.

     

    The
      paragraph headings contained in this Agreement are included solely for
      convenience of reference and shall not in any way affect the meaning or
      interpretation of any of the provisions of this Agreement.

     

    15. Governing
      Law.

     

    This
      Agreement and its validity, interpretation, performance, and enforcement shall
      be governed by the laws of the State of Illinois without giving effect to the
      choice of law provisions in effect in such state.

     

    
      
        
        

      

      
        -
          4
          -

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, Peoples Energy Corporation, on behalf of itself and its
      subsidiaries, affiliates and related entities, has caused this Agreement to
      be
      executed, and the Executive has executed this Agreement, as of the effective
      date written above.

     

     

    PEOPLES
      ENERGY CORPORATION

     

    By:        

    WILLIAM
      J. BRODSKY

    Director
      and Chairman of the Management
Development and Compensation Committee
of
      the Board of Directors

    

    EXECUTIVE

    

    By:        

    THOMAS
      M.
      PATRICK

    Chairman,
      President and Chief Executive Officer

    
 

     

    
      
        
          
          

        

        
          -
            5
            -Exhibit 10(b) Seasonal Credit Agreement dated 10/20/06 between the Company
      and ABN AMRO Bank N.V.

    

    EXHIBIT
      10(b)

     

    Execution
      Draft

     

    

    
      

      

    

     

    
      	
               

               

              SEASONAL
                CREDIT AGREEMENT

               

              DATED
                AS OF

               

              October
                20, 2006

               

               

              BETWEEN

               

               

              PEOPLES
                ENERGY CORPORATION,

               

              and

               

              ABN
                AMRO BANK N.V.

              as
                Lender.

               

               

            

    

    

    
      

      

    

    

    

    
      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

    

     

    TABLE
      OF CONTENTS

     

    
      
        	
                SECTION
                  1. DEFINITIONS;
                  INTERPRETATION.

              	1
	 	 Section
                1.1 	Definitions	1
	 	 Section
                1.2	Interpretation	7

      

    

     

    
      
        	 SECTION 2. THE
                REVOLVING CREDIT.	7
	 	Section
                2.1	The
                Loan Commitment	7
	 	
                Section
                  2.2

              	
                [Reserved]

              	7
	 	
                Section
                  2.3

              	
                Applicable
                  Interest Rates

              	7
	 	
                Section
                  2.5

              	
                Minimum
                  Borrowing Amounts

              	9
	 	
                Section
                  2.6

              	
                Manner
                  of Borrowing Loans and Designating Interest Rates Applicable to
                  Loans

              	9
	 	
                Section
                  2.8

              	
                Interest
                  Periods

              	10
	 	
                Section
                  2.9

              	
                Maturity
                  of Loans

              	11
	 	
                Section
                  2.10

              	
                Prepayments

              	11
	 	
                Section
                  2.12

              	
                Default
                  Rate

              	11
	 	
                Section
                  2.13

              	
                Evidence
                  of Debt

              	12
	 	
                Section
                  2.14

              	
                Funding
                  Indemnity

              	12
	 	
                Section
                  2.15

              	
                Revolving
                  Credit Commitment Terminations

              	13
	 	
                Section
                  2.16

              	
                Regulation
                  D Compensation

              	13
	 	
                Section
                  2.17

              	
                Arbitrage
                  Compensation

              	13

      

    

     

    
      
        	SECTION 3. FEES.	13 
	 	
                Section
                  3.1

              	
                Fees.

              	13

      

    

     

    
      
        	
                SECTION
                  4. PLACE
                  AND APPLICATION OF PAYMENTS.

              	14 
	 	
                Section
                  4.1

              	
                Place
                  and Application of Payments

              	14

      

    

     

    
      
        	
                SECTION
                  5. REPRESENTATIONS
                  AND WARRANTIES.

              	14 
	 	
                Section
                  5.1

              	
                Corporate
                  Organization and Authority

              	15
	 	
                Section
                  5.2

              	
                Corporate
                  Authority and Validity of Obligations

              	15
	 	
                Section
                  5.3

              	
                Financial
                  Statements

              	15
	 	
                Section
                  5.4

              	
                Approvals

              	15
	 	
                Section
                  5.5

              	
                ERISA

              	15
	 	
                Section
                  5.6

              	
                Government
                  Regulation

              	16
	 	
                Section
                  5.7

              	
                Margin
                  Stock; Proceeds

              	16
	 	
                Section
                  5.8

              	
                Full
                  Disclosure

              	16

      

    

     

    
      
        	
                SECTION
                  6. CONDITIONS
                  PRECEDENT.

              	16
	 	
                Section
                  6.1

              	
                Initial
                  Credit Event

              	16 
	 	
                Section
                  6.2

              	
                All
                  Credit Events

              	17 

      

    

     

    
      
        	
                SECTION
                  7. COVENANTS.

              	17 
	 	
                Section
                  7.1

              	
                Corporate
                  Existence

              	17 
	 	
                Section
                  7.2

              	
                ERISA

              	18 
	 	
                Section
                  7.3

              	
                Financial
                  Reports and Other Information

              	18 

      

    

     

    
      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

    

     

    
      	 	
              Section
                7.5

            	
              Regulation
                U; Proceeds

            	19 
	 	
              Section
                7.6

            	
              Sales
                of Assets

            	19 
	 	
              Section
                7.7

            	
              Capital
                Ratio

            	19 
	 	
              Section
                7.8

            	
              Compliance
                with Laws

            	19 
	 	
              Section
                7.9

            	
              Mergers
                and Consolidations

            	19 

    

     

    
      	
              SECTION
                8. EVENTS
                OF DEFAULT AND REMEDIES.

            	20 
	 	
              Section
                8.1

            	
              Events
                of Default

            	20
	 	
              Section
                8.2

            	
              Non-Bankruptcy
                Defaults

            	21
	 	
              Section
                8.3

            	
              Bankruptcy
                Defaults

            	22
	 	
              Section
                8.4

            	
              Expenses

            	22

    

     

    
      	
              SECTION
                9. CHANGE
                IN CIRCUMSTANCES.

            	22
	 	
              Section
                9.1

            	
              Change
                of Law

            	22
	 	
              Section
                9.2

            	
              Unavailability
                of Deposits or Inability to Ascertain, or Inadequacy of,
                LIBOR

            	22
	 	
              Section
                9.3

            	
              Increased
                Cost and Reduced Return

            	22
	 	
              Section
                9.5

            	
              Lending
                Offices

            	24
	 	
              Section
                9.6

            	
              Discretion
                of Lender as to Manner of Funding

            	24

    

     

    
      	SECTION 10. RESERVED.	24

    

     

    
      
        	
                SECTION
                  11. MISCELLANEOUS.

              	24
	 	
                Section
                  11.1

              	
                Withholding
                  Taxes

              	24
	 	
                Section
                  11.2

              	
                No
                  Waiver of Rights

              	25
	 	
                Section
                  11.3

              	
                Non-Business
                  Day

              	25
	 	
                Section
                  11.4

              	
                Documentary
                  Taxes

              	25
	 	
                Section
                  11.5

              	
                Survival
                  of Representations

              	25
	 	
                Section
                  11.6

              	
                Survival
                  of Indemnities

              	25
	 	
                Section
                  11.7

              	
                Set-Off

              	26
	 	
                Section
                  11.8

              	
                Notices

              	26
	 	
                Section
                  11.9

              	
                Counterparts

              	27
	 	
                Section
                  11.10

              	
                Successors
                  and Assigns

              	27
	 	
                Section
                  11.11

              	
                [Reserved].

              	28
	 	
                Section
                  11.12

              	
                Assignments,
                  Participations, Etc

              	28
	 	
                Section
                  11.13

              	
                Amendments

              	30
	 	
                Section
                  11.14

              	
                Headings

              	30
	 	
                Section
                  11.15

              	
                Legal
                  Fees, Other Costs and Indemnification

              	30
	 	
                Section
                  11.16

              	
                [Reserved].

              	30
	 	
                Section
                  11.17

              	
                Entire
                  Agreement

              	30
	 	
                Section
                  11.18

              	
                Construction

              	30
	 	
                Section
                  11.19

              	
                Governing
                  Law

              	30
	 	
                Section
                  11.20

              	
                SUBMISSION
                  TO JURISDICTION; WAIVER OF JURY TRIAL

              	30
	 	
                Section
                  11.21

              	
                Confidentiality

              	31
	 	
                Section
                  11.22

              	
                Patriot
                  Act

              	31

      

    

     

    
      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

    

     

    
      CREDIT
        AGREEMENT

       

      This
        SEASONAL
        CREDIT AGREEMENT,
        dated as
        of October 20, 2006, is by and between PEOPLES ENERGY CORPORATION, an Illinois
        corporation (the “Borrower”),
        and
        ABN AMRO BANK N.V., as lender (in such capacity, the “Lender”).
        

       

    

    WITNESSETH
      THAT:

     

    
      WHEREAS,
        the
        Borrower desires to obtain the commitment of the Lender to make available
        a
        seasonal revolving credit facility for loans (the “Revolving
        Credit”),
        as
        described herein; and

       

      WHEREAS,
        the
        Lender is willing to extend such commitments subject to all of the terms
        and
        conditions hereof and on the basis of the representations and warranties
        hereinafter set forth.

       

    

    NOW,
      THEREFORE, in
      consideration of the recitals set forth above and for other good and valuable
      consideration, the receipt and adequacy of which are hereby acknowledged, the
      parties hereto hereby agree as follows:

     

    SECTION
      1.  DEFINITIONS;
      INTERPRETATION.

     

    Section
      1.1  Definitions.
      The
      following terms when used herein have the following meanings:

    
       

      “Affiliate”
means,
        as to any Person, any other Person which directly or indirectly controls,
        or is
        under common control with, or is controlled by, such Person. As used in this
        definition, “control”
        (including “controlled
        by”
and
        “under
        common control with”
and
        other cognates thereof,) means possession, directly or indirectly, of power
        to
        direct or cause the direction of management or policies of a Person (whether
        through ownership of securities or partnership or other ownership interests,
        by
        contract or otherwise), provided that, in any event for purposes of this
        definition: (i) any Person which owns directly or indirectly 5% or more of
        the
        securities having ordinary voting power for the election of directors or
        other
        governing body of a corporation or 5% or more of the partnership or other
        ownership interests of any other Person (other than as a limited partner
        of such
        other Person) will be deemed to control such corporation or other Person;
        and
        (ii) each director and executive officer of the Borrower or any Subsidiary
        shall
        be deemed an Affiliate of the Borrower and each Subsidiary.

       

      “Agreement”
means
        this Credit Agreement, including all Exhibits and Schedules hereto, as it
        may be
        amended, supplemented or otherwise modified from time to time in accordance
        with
        the terms hereof.

       

      “Applicable
        Margin”
means,
        at any time (i) with respect to Base Rate Loans, the Base Rate Margin; and
        (ii)
        with respect to LIBOR Loans, the LIBOR Margin.

       

      “Applicable
        Telerate Page”
is
        defined in Section 2.3(b) hereof.

       

    

    
      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

    

     

    
      “Assignment
        and Assumption”
        means an
        assignment and assumption entered into by the Lender and an Eligible Assignee
        (with the consent of any party whose consent is required by
        Section 11.12(b)), in substantially any form approved by the
        Lender.

       

      “Authorized
        Representative”
means
        those persons shown on the list of employees provided by the Borrower pursuant
        to Section 6.1(e) hereof, or on any such updated list provided by the Borrower
        to the Lender, or any further or different employee of the Borrower so named
        by
        any officer of the Borrower in a written notice to the Lender.

       

      “Base
        Rate”
is
        defined in Section 2.3(a) hereof.

       

      “Base
        Rate Loan”
means
        a
        Loan bearing interest prior to maturity at a rate specified in Section 2.3(a)
        hereof.

       

      “Base
        Rate Margin”
means
        the percentage set forth in Schedule 1A hereto corresponding to the then
        applicable Credit Rating.

       

      “Borrower”
is
        defined in the preamble of this Agreement.

       

      “Borrowing”
means
        the total of Loans of a single type advanced, continued for an additional
        Interest Period, or converted from a different type into such type by the
        Lender
        on a single date and for a single Interest Period. A Borrowing is “advanced” on
        the day the Lender advances funds comprising such Borrowing to the Borrower,
        is
“continued” on the date a new Interest Period for the same type of Loans
        commences for such Borrowing, and is “converted” when such Borrowing is changed
        from one type of Loan to the other, all as requested by the Borrower pursuant
        to
        Section 2.5(a).

       

      “Business
        Day”
means
        any day other than a Saturday or Sunday on which Lender is not authorized
        or
        required to close in Chicago, Illinois and, if the applicable Business Day
        relates to the borrowing or payment of a LIBOR Loan, on which banks are dealing
        in U.S. Dollars in the interbank market in London, England.

       

      “Capital”
means,
        as of any date of determination thereof, without duplication, the sum of
        Consolidated Net Worth plus
        Indebtedness, excluding accumulated other comprehensive income/loss, as
        determined in accordance with generally accepted accounting principles
        consistently applied.

       

      “Capital
        Lease”
means
        at any date any lease of Property which, in accordance with GAAP, would be
        required to be capitalized on the balance sheet of the lessee.

       

      “Capital
        Ratio”
means,
        for any fiscal quarter of the Borrower, the ratio, rounded downwards to two
        decimal points, of the sum of Indebtedness for such fiscal quarter to the
        sum of
        Capital for such fiscal quarter.

       

      “Capitalized
        Lease Obligations”
means,
        for any Person, the amount of such Person’s liabilities under Capital Leases
        determined at any date in accordance with GAAP.

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended.

       

    

    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

     

    
      “Commitment
        Fee Rate” means
        the
        percentage set forth on Schedule 1A hereto corresponding to the then applicable
        Credit Rating. 

       

      “Compliance
        Certificate”
means
        a
        certificate in the form of Exhibit A hereto.

       

      “Consolidated
        EBIT”
means,
        for any period, for the Borrower and its Consolidated Subsidiaries, (A) the
        sum
        of the amounts for such period of (i) consolidated net income, (ii) net income
        taxes in respect of such period (such amount to be a positive number in cases
        where net cash taxes are payable and zero in cases where a cash refund in
        respect of taxes paid is due), (iii) consolidated interest expense, and (iv)
        losses on sales of assets (excluding sales in the ordinary course of business)
        and other extraordinary losses less (B) the amount for such period of (i)
        interest income and (ii) gains on sales of assets (excluding sales in the
        ordinary course of business) and other extraordinary gains, all as determined
        on
        a consolidated basis in accordance with GAAP.

       

      “Consolidated Net
        Worth”
means,
        as of the date of any determination thereof, the amount reflected as
        shareholders equity upon a consolidated balance sheet of the Borrower and
        its
        Subsidiaries.

       

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

       

      “Controlled
        Group”
means
        all members of a controlled group of corporations and all trades and businesses
        (whether or not incorporated) under common control that, together with the
        Borrower or any of its Subsidiaries, are treated as a single employer under
        Section 414 of the Code.

       

      “Credit
        Documents”
means
        this Agreement, the Note and all other documents, instrument and agreements
        executed and delivered by Borrower or any Affiliate thereof in connection
        with
        this Agreement.

       

      “Credit
        Event”
means
        the Borrowing of any Loan.

       

      “Credit
        Rating”
means,
        at any time, the long-term senior un-secured non-credit enhanced debt rating
        of
        the Borrower as determined by Standard & Poors’ Ratings Services and/or
        Moody’s Investors Service.

       

      “Default”
means
        any event or condition the occurrence of which would, with the passage of
        time
        or the giving of notice, or both, constitute an Event of Default.

       

      “EBIT”
means,
        for any period, for the Borrower or any of its Subsidiaries, (A) the sum
        of the
        amounts for such period of (i) net income, (ii) net income taxes in respect
        of
        such period (such amount to be a positive number in cases where net cash
        taxes
        are payable and zero in cases where a cash refund in respect of taxes paid
        is
        due), (iii) interest expense, and (iv) losses on sales of assets (excluding
        sales in the ordinary course of business) and other extraordinary losses
        less
        (B) the amount for such period of (i) interest income and (ii) gains on sales
        of
        assets (excluding sales in the ordinary course of business) and other
        extraordinary gains, all as determined in accordance with GAAP.

       

    

    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

     

    
      “Effective
        Date”
means
        October 20, 2006.

       

      “Eligible
        Assignee”
        means
        (a) an Affiliate of the Lender, and (b) any other Person (other than a natural
        person) approved by (i) the Lender, and (ii) unless an Event of Default has
        occurred and is continuing, the Borrower (each such approval not to be
        unreasonably withheld or delayed); provided
        that
        notwithstanding the foregoing, “Eligible Assignee” shall not include the
        Borrower or any of the Borrower’s Affiliates or Subsidiaries. 

       

      “ERISA”
is
        defined in Section 5.5 hereof.

       

      “Event
        of Default”
means
        any of the events or circumstances specified in Section 8.1 hereof.

       

      “Existing
        Credit Agreement”
means
        that certain Credit Agreement dated as of June 13, 2006 by and among Borrower,
        Bank of America, N.A. as “Agent” thereunder, and the other financial
        institutions a party thereto (as may be amended, supplemented or modified
        from
        time to time).

       

      “Federal
        Funds Rate”
means
        the fluctuating interest rate per annum described in part (x) of clause (ii)
        of
        the definition of Base Rate set forth in Section 2.3(a) hereof.

       

      “GAAP”
means
        generally accepted accounting principles as in effect in the United States
        from
        time to time, applied by the Borrower and its Subsidiaries on a basis consistent
        with the preparation of the Borrower’s financial statements furnished to the
        Lender as described in Section 5.3 hereof.

       

      “Guarantee”
means,
        in respect of any Person, any obligation, contingent or otherwise, of such
        Person directly or indirectly guaranteeing any Indebtedness of another Person,
        including, without limitation, by means of an agreement to purchase or pay
        (or
        advance or supply funds for the purchase or payment of) such Indebtedness
        or to
        maintain financial covenants, or to assure the payment of such Indebtedness
        by
        an agreement to make payments in respect of goods or services regardless
        of
        whether delivered, or otherwise, provided, that the term “Guarantee” shall not
        include endorsements for deposit or collection in the ordinary course of
        business; and such term when used as a verb shall have a correlative
        meaning.

       

      “Indebtedness”
means,
        as to any Person, without duplication: (i) all obligations of such Person
        for
        borrowed money or evidenced by bonds, debentures, notes or similar instruments;
        (ii) all obligations of such Person for the deferred purchase price of property
        or services (other than in respect of trade accounts payable arising in the
        ordinary course of business, customer deposits, provisions for rate refunds
        (if
        any), deferred fuel expenses and obligations in respect of pensions and other
        post-retirement benefits and employee welfare plans); (iii) all Capitalized
        Lease Obligations of such Person; (iv) all Indebtedness of others secured
        by a
        Lien on any properties, assets or revenues of such Person (other than stock,
        partnership interests or other equity interests of the Borrower or any
        Subsidiaries in other entities) to the extent of the lesser of the value
        of the
        property subject to such Lien or the amount of such Indebtedness; (v) all
        Indebtedness of others Guaranteed by such Person; and (vi) all obligations
        of
        such Person, contingent or otherwise, in respect of any letters or credit
        (whether commercial or standby) or bankers’ acceptances.

       

    

    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

     

    
      “Interest
        Period”
is
        defined in Section 2.6 hereof.

       

      “Lender”
is
        defined in the preamble of this Agreement and includes any successor
        thereto.

       

      “Lending
        Office”
is
        defined in Section 9.4 hereof.

       

      “LIBOR”
is
        defined in Section 2.3(b) hereof.

       

      “LIBOR
        Loan”
means
        a
        Loan bearing interest prior to maturity at the rate specified in Section
        2.3(b)
        hereof.

       

      “LIBOR
        Margin”
means
        the percentage set forth in Schedule 1A hereto beside the then applicable
        Credit
        Rating.

       

      “LIBOR
        Reserve Percentage”
is
        defined in Section 2.3(b) hereof.

       

      “Lien”
means
        any interest in Property securing an obligation owed to, or a claim by, a
        Person
        other than the owner of the Property, whether such interest is based on the
        common law, statute or contract, including, but not limited to, the security
        interest lien arising from a mortgage, encumbrance, pledge, conditional sale,
        security agreement or trust receipt, or a lease, consignment or bailment
        for
        security purposes. For the purposes of this definition, a Person shall be
        deemed
        to be the owner of any Property which it has acquired or holds subject to
        a
        conditional sale agreement, Capital Lease or other arrangement pursuant to
        which
        title to the Property has been retained by or vested in some other Person
        for
        security purposes, and such retention of title shall constitute a
“Lien.”

       

      “Loan”
is
        defined in Section 2.1 hereof and, as so defined, includes a Base Rate Loan
        or
        LIBOR Loan, each of which is a “type” of Loan hereunder.

       

      “Material
        Adverse Effect”
means
        a
        material adverse effect on (i) the business, financial position or results
        of
        operations of the Borrower, (ii) the ability of the Borrower to perform its
        obligations under the Credit Documents, (iii) the validity or enforceability
        of
        the obligations of the Borrower, (iv) the rights and remedies of the Lender
        against the Borrower or (v) the timely payment of the principal of and interest
        on the Loans or other amounts payable by the Borrower hereunder.

       

      “Non-Recourse
        Indebtedness”
means
        all Indebtedness of the Borrower that is non-recourse to the
        Borrower.

       

      “Note”
is
        defined in Section 2.10(a) hereof.

       

      “Obligations”
means
        all fees payable hereunder, all obligations of the Borrower to pay principal
        or
        interest on Loans and all other payment obligations of the Borrower arising
        under or in relation to any Credit Document.

       

    

    
      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

    

     

    
      “Person”
means
        an individual, partnership, corporation, limited liability company, association,
        trust, unincorporated organization or any other entity or organization,
        including a government or any agency or political subdivision
        thereof.

    

     

     

    “Plan”
means
      at any time an employee pension benefit plan covered by Title IV of ERISA or
      subject to the minimum funding standards under Section 412 of the Code that
      is
      either (i) maintained by a member of the Controlled Group or (ii) maintained
      pursuant to a collective bargaining agreement or any other arrangement under
      which more than one employer makes contributions and to which a member of the
      Controlled Group is then making or accruing an obligation to make contributions
      or has within the preceding five plan years made contributions.

     

    “PBGC”
is
      defined in Section 5.5 hereof.

     

    “Property”
means
      any interest in any kind of property or asset, whether real, personal or mixed,
      or tangible or intangible, whether now owned or hereafter acquired.

     

    “Reference
      Bank”
means
      ABN AMRO Bank N.V. 

     

    “Revolving
      Credit Commitment”
is
      defined in Section 2.1 hereof.

     

    “SEC”
means
      the Securities and Exchange Commission.

     

    “Significant
      Subsidiary”
means
      a
      Subsidiary of the Borrower which meets any of the following
      conditions:

     

    (1) the
      book
      value of the Subsidiary’s assets exceeds twenty percent (20%) of the book value
      of the assets of the Borrower and its other Subsidiaries consolidated as of
      the
      end of the most recently completed fiscal quarter; or

     

    (2) the
      Subsidiary’s EBIT exceeds twenty percent (20%) of Consolidated EBIT as of the
      end of the most recently completed fiscal quarter and the twelve month period
      ending therewith.

     

    “SPC”
is
      defined in Section 11.12(g) hereof.

     

    “Subsidiary”
means,
      as to the Borrower, any corporation or other entity of which more than fifty
      percent (50%) of the outstanding stock or comparable equity interests having
      ordinary voting power for the election of the Board of Directors of such
      corporation or similar governing body in the case of a non-corporation
      (irrespective of whether or not, at the time, stock or other equity interests
      of
      any other class or classes of such corporation or other entity shall have or
      might have voting power by reason of the happening of any contingency) is at
      the
      time directly or indirectly owned by the Borrower or by one or more of its
      Subsidiaries.

     

    “Telerate
      Service”
means
      the Moneyline Telerate.

     

    “Termination
      Date”
means
      the earlier to occur of (i) March 31, 2007 and (ii) the consummation of the
      merger between a subsidiary of WPS Resources Corporation and Borrower as
      contemplated by that certain merger application filed with the Illinois Commerce
      Commission on or about August 2, 2006.

     

    
      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

    

     

    
            
“Unfunded
        Vested Liabilities”
means,
        with respect to any Plan at any time, the amount (if any) by which (i) the
        present value of all vested non-forfeitable accrued benefits under such Plan
        exceeds (ii) the fair market value of all Plan assets allocable to such
        benefits, all determined as of the then most recent valuation date for
        such Plan, but only to the extent that such excess represents a potential
        liability of a member of the Controlled Group to the PBGC or the Plan under
        Title IV of ERISA.

       

      “Upfront
        Fee”
is
        defined in Section 3.1(d).

       

      “U.S.
        Dollars”
and
        “$”
each
        means the lawful currency of the United States of America.

       

      “Utilization
        Fee Rate”
means
        the percentage set forth in Schedule 1A hereto corresponding to the then
        applicable Credit Rating.

       

      “Welfare
        Plan”
means
        a
“welfare plan”, as defined in Section 3(l) of ERISA.

       

    

    Section
      1.2  Interpretation.
      The
      foregoing definitions shall be equally applicable to both the singular and
      plural forms of the terms defined. All references to times of day in this
      Agreement shall be references to Chicago, Illinois time unless otherwise
      specifically provided. Where the character or amount of any asset or liability
      or item of income or expense is required to be determined or any consolidation
      or other accounting computation is required to be made for the purposes of
      this
      Agreement, the same shall be done in accordance with GAAP, to the extent
      applicable, except where such principles are inconsistent with the specific
      provisions of this Agreement.

     

    SECTION
      2.  THE
      REVOLVING CREDIT.

     

    Section
      2.1  The
      Loan Commitment.
      Subject
      to the terms and conditions hereof the Lender agrees to make a loan or loans
      (individually a “Loan”
and
      collectively “Loans”)
      to the
      Borrower from time to time on a revolving basis in an aggregate outstanding
      amount up to the TWENTY FIVE MILLION DOLLARS ($25,000,000)
      (such amount, as increased or reduced pursuant to Section 2.12 or changed as
      a
      result of one or more assignments under Section 11.12, the “Revolving
      Credit Commitment”)
      before
      the Termination Date, provided
      that the
      sum of the aggregate amount of Loans at any time outstanding shall not exceed
      the Revolving Credit Commitment in effect at such time. As provided in Section
      2.5(a) hereof, the Borrower may elect that each Borrowing of Loans be either
      Base Rate Loans or LIBOR Loans. Loans may be repaid and the principal amount
      thereof re-borrowed before the Termination Date, subject to all the terms and
      conditions hereof. 

     

    Section
      2.2  [Reserved].

     

    Section
      2.3  Applicable
      Interest Rates. 
       Section
      2.4  Base
      Rate Loans.
Each
      Base
      Rate Loan made or maintained by Lender shall bear interest during each Interest
      Period it is outstanding (computed (x) at all times the Base Rate is based
      on
      the rate described in clause (i) of the definition thereof, on the basis of
      a
      year of 365 or 366 days, as applicable, and actual days elapsed or (y) at all
      times the Base Rate is based on the rate described in clause (ii) of the
      definition thereof, on the basis of a year of 360 days and actual days elapsed)
      on the unpaid principal 

    
      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

     

    
      amount
        thereof from the date such Loan is advanced, continued or created by conversion
        from a LIBOR Loan until maturity (whether by acceleration or otherwise) at
        a
        rate per annum equal to the sum of the Applicable Margin plus the Base Rate
        from
        time to time in effect, payable on the last day of its Interest Period and
        at
        maturity (whether by acceleration or otherwise).

    

     

    
          “Base
        Rate”
means
        for any day the greater of:

    

     

    i  the
      rate
      of interest announced by ABN AMRO Bank N.V. from time to time as its “Prime
      Commercial Lending Rate,” or equivalent, for U.S. Dollar loans as in effect on
      such day, with any change in the Base Rate resulting from a change in said
      prime
      rate to be effective as of the date of the relevant change in said “Prime
      Commercial Lending Rate”; and

     

    ii  the
      sum
      of (x) the rate determined by the Lender to be the prevailing rate per annum
      (rounded upwards, if necessary, to the nearest one hundred-thousandth of a
      percentage point) at approximately 10:00 a.m. (Chicago time) (or as soon
      thereafter as is practicable) on such day (or, if such day is not a Business
      Day, on the immediately preceding Business Day) for the purchase at face value
      of overnight Federal funds in an amount comparable to the principal amount
      owed
      to ABN AMRO Bank N.V. for which such rate is being determined, plus (y) one-half
      of one percent (0.50%).

     

    (b)  LIBOR
      Loans. 
      Each
      LIBOR Loan made or maintained by Lender shall bear interest during each Interest
      Period it is outstanding (computed on the basis of a year of 360 days and actual
      days elapsed) on the unpaid principal amount thereof from the date such Loan
      is
      advanced, continued, or created by conversion from a Base Rate Loan until
      maturity (whether by acceleration or otherwise) at a rate per annum equal to
      the
      sum of the Applicable Margin plus the LIBOR applicable for such Interest Period,
      payable on the last day of the Interest Period and at maturity (whether by
      acceleration or otherwise).

     

    
      “LIBOR”
means,
        for an Interest Period for a Borrowing of LIBOR Loans, (a) the LIBOR Index
        Rate
        for such Interest Period, if such rate is available, and (b) if the LIBOR
        Index
        Rate cannot be determined, the arithmetic average of the rates of interest
        per
        annum (rounded upwards, if necessary, to the nearest one-sixteenth of one
        percent) at which deposits in U.S. Dollars in immediately available funds
        are
        offered to the Reference Bank at 11:00 a.m. (London, England time) two (2)
        Business Days before the beginning of such Interest Period by major banks
        in the
        interbank LIBOR market for delivery on the first day of and for a Period
        equal
        to such Interest Period in an amount equal or comparable to the principal
        amount
        of the LIBOR Loan scheduled to be made by the Reference Bank as part of such
        Borrowing.

       

    

    
      “LIBOR
        Index Rate”
means,
        for any Interest Period, the rate per annum (rounded upwards, if necessary,
        to
        the next higher one-sixteenth of one percent) for deposits in U.S. Dollars,
        for
        delivery on the first day of and for a period equal to such Interest Period
        in
        an amount equal or comparable to the principal amount of the LIBOR Loan
        scheduled to be made by ABN AMRO Bank N.V. as part of such Borrowing, which
        appears on the Applicable Telerate Page, as appropriate for such currency,
        as of
        11:00 a.m. (London, England time) on the day two (2) Business Days before
        the
        commencement of such Interest Period.

       

    

    

    
      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

    

    
      “Applicable
        Telerate Page”
means
        the display page designated as “Page
        3750”
on
        the
        Telerate Service (or such other page as may replace such page, as appropriate,
        on that service or such other service as may be nominated by the British
        Bankers’ Association as the information vendor for the purpose of displaying
        British Bankers’ Association Interest Settlement Rates for deposits in U.S.
        Dollars).

       

    

    
      “LIBOR
        Reserve Percentage”
means
        for any Borrowing of LIBOR Loans from Lender, the daily average for the
        applicable Interest Period of the actual effective rate, expressed as a decimal,
        at which reserves (including, without limitation, any supplemental, marginal
        and
        emergency reserves) are maintained by Lender during such Interest Period
        pursuant to Regulation D of the Board of Governors of the Federal Reserve
        System
        (or any successor) on “LIBOR
        liabilities”,
        as
        defined in such Board’s Regulation D (or in respect of any other category of
        liabilities that includes deposits by reference to which the interest rate
        on
        LIBOR Loans is determined or any category of extensions of credit or other
        assets that include loans by non-United States offices of Lender to United
        States residents), subject to any amendments of such reserve requirement
        by such
        Board or its successor, taking into account any transitional adjustments
        thereto. For purposes of this definition, the LIBOR Loans shall be deemed
        to be
“LIBOR
        liabilities”
as
        defined in Regulation D without benefit or credit for any prorations, exemptions
        or offsets under Regulation D.

       

    

    (c)  Rate
      Determinations. 
      The
      Lender shall determine each interest rate applicable to Obligations and the
      amount of all Obligations, and a determination thereof by the Lender shall
      be
      conclusive and binding except in the case of manifest error.

     

    Section
      2.5  Minimum
      Borrowing Amounts.
      Each
      Borrowing of Base Rate Loans shall be in an amount not less than $1,000,000
      and
      in integral multiples of $500,000. Each Borrowing of LIBOR Loans shall be in
      an
      amount not less than $2,000,000 and in integral multiples of
      $1,000,000.

     

    Section
      2.6  Manner
      of Borrowing Loans and Designating Interest Rates Applicable to
      Loans.  
      Section
      2.7  Notice
      to the Lender.
       The
      Borrower shall give notice to the Lender by no later than 10:00 a.m. (Chicago
      time) (i) at least two (2) Business Days before the date on which the Borrower
      requests the Lender to advance a Borrowing of LIBOR Loans and (ii) at least
      one
      (1) Business Day before the date on which the Borrower requests the Lender
      to
      advance a Borrowing of Base Rate Loans. The Loans included in each Borrowing
      shall bear interest initially at the type of rate specified in such notice
      of a
      new Borrowing. Thereafter, the Borrower may from time to time elect to change
      or
      continue the type of interest rate borne by each Borrowing or, subject to
      Section 2.4’s minimum amount requirement for each outstanding Borrowing, a
      portion thereof, as follows: (i) if such Borrowing is of LIBOR Loans, on the
      last day of the Interest Period applicable thereto, the Borrower may continue
      part or all of such Borrowing as LIBOR Loans for an Interest Period or Interest
      Periods specified by the Borrower or convert part or all of such Borrowing
      into
      Base Rate Loans, (ii) if such Borrowing is of Base Rate Loans, on any Business
      Day, the Borrower may convert all or part of such Borrowing into LIBOR Loans
      for
      an Interest Period or Interest Periods specified by the Borrower. The Borrower
      shall give all such notices requesting the advance, continuation, or conversion
      of a Borrowing to the Lender by telephone or 

     

    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

    facsimile
      (which notice shall be irrevocable once given and, if by telephone, shall be
      promptly confirmed in writing). Notices of the continuation of a Borrowing
      of
      LIBOR Loans for an additional Interest Period or of the conversion of part
      or
      all of a Borrowing of LIBOR Loans into Base Rate Loans or of Base Rate Loans
      into LIBOR Loans must be given by no later than 10:00 a.m. (Chicago time) at
      least three (3) Business Days before the date of the requested continuation
      or
      conversion. All such notices concerning the advance, continuation, or conversion
      of a Borrowing shall specify the date of the requested advance, continuation
      or
      conversion of a Borrowing (which shall be a Business Day), the amount of the
      requested Borrowing to be advanced, continued, or converted, the type of Loans
      to comprise such new, continued or converted Borrowing and, if such Borrowing
      is
      to be comprised of LIBOR Loans, the Interest Period applicable thereto. The
      Borrower agrees that the Lender may rely on any such telephonic or facsimile
      notice given by any person it in good faith believes is an Authorized
      Representative without the necessity of independent investigation, and in the
      event any such notice by telephone conflicts with any written confirmation,
      such
      telephonic notice shall govern if the Lender has acted in reliance thereon.
      There may be no more than five different Interest Periods in effect at any
      one
      time, provided that for purposes of determining the number of Interest Periods
      in effect at any one time, all Base Rate Loans shall be deemed to have one
      and
      the same Interest Period.

     

    (a)  [Reserved]
      .

     

    (b)  Borrower’s
      Failure to Notify. 
      Any outstanding Borrowing of Base Rate Loans shall, subject to Section 6.2
      hereof, automatically be continued for an additional Interest Period on the
      last
      day of its then current Interest Period as a Base Rate Loan unless the Borrower
      has notified the Lender within the period required by Section 2.5(a) that it
      intends to convert such Borrowing into a Borrowing of LIBOR Loans or notifies
      the Lender within the period required by Section 2.8(a) that it intends to
      prepay such Borrowing. If the Borrower fails to give notice pursuant to Section
      2.5(a) above of the continuation or conversion of any outstanding principal
      amount of a Borrowing of LIBOR Loans before the last day of its then current
      Interest Period within the period required by Section 2.5(a) and has not
      notified the Lender within the period required by Section 2.8(a) that it intends
      to prepay such Borrowing, such Borrowing shall automatically be converted into
      a
      Borrowing of Base Rate Loans, subject to Section 6.2 hereof. 

     

    Section
      2.8  Interest
      Periods. As
      provided in Section 2.5(a) hereof, at the time of each request to advance,
      continue, or create by conversion a Borrowing of LIBOR Loans, the Borrower
      shall
      select an Interest Period applicable to such Loans from among the available
      options. The term “Interest
      Period”
means
      the period commencing on the date a Borrowing of Loans is advanced, continued,
      or created by conversion and ending: (a) in the case of Base Rate Loans, on
      the
      last Business Day of the calendar quarter in which such Borrowing is advanced,
      continued, or created by conversion (or on the last day of the following
      calendar quarter if such Loan is advanced, continued or created by conversion
      on
      the last Business Day of a calendar quarter), and (b) in the case of LIBOR
      Loans, 1, 2 or 3 months thereafter; provided,
      however,
      that:

     

    (a)  any
      Interest Period for a Borrowing of Base Rate Loans that otherwise would end
      after the Termination Date shall end on the Termination Date; 

    
      
        
          
          

        

        
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    (b)  for
      any
      Borrowing of LIBOR Loans, the Borrower may not select an Interest Period that
      extends beyond the Termination Date;

     

    (c)  whenever
      the last day of any Interest Period would otherwise be a day that is not a
      Business Day, the last day of such Interest Period shall be extended to the
      next
      succeeding Business Day, provided that, if such extension would cause the last
      day of an Interest Period for a Borrowing of LIBOR Loans to occur in the
      following calendar month, the last day of such Interest Period shall be the
      immediately preceding Business Day; and

     

    (d)  for
      purposes of determining an Interest Period for a Borrowing of LIBOR Loans,
      a
      month means a period starting on one day in a calendar month and ending on
      the
      numerically corresponding day in the next calendar month; provided,
      however,
      that if
      there is no numerically corresponding day in the month in which such an Interest
      Period is to end or if such an Interest Period begins on the last Business
      Day
      of a calendar month, then such Interest Period shall end on the last Business
      Day of the calendar month in which such Interest Period is to end.

     

    Section
      2.9  Maturity
      of Loans. Unless
      an
      earlier maturity is provided for hereunder (whether by acceleration or
      otherwise), each Loan shall mature and become due and payable by the Borrower
      on
      the Termination Date. 

     

    Section
      2.10  Prepayments. 
      Section
      2.11  The
      Borrower may prepay without premium or penalty and in whole or in part (but,
      if
      in part, then: (i) if such Borrowing is of Base Rate Loans, in an amount not
      less than $1,000,000 and integral multiples of $500,000 in excess thereof,
      (ii)
      if such Borrowing is of LIBOR Loans, in an amount not less than $2,000,000
      and
      integral multiples of $1,000,000 in excess thereof and (iii) in an amount such
      that the minimum amount required for a Borrowing pursuant to Section 2.4 hereof
      remains outstanding) any Borrowing of LIBOR Loans upon three Business Days’
prior notice to the Lender or, in the case of a Borrowing of Base Rate Loans,
      notice delivered to the Lender no later than 10:00 a.m. (Chicago time) on the
      date of prepayment, such prepayment to be made by the payment of the principal
      amount to be prepaid and accrued interest thereon to the date fixed for
      prepayment. In the case of LIBOR Loans, any amounts owing under Section 2.11
      hereof as a result of such prepayment shall be paid contemporaneously with
      such
      prepayment. Any amount paid or prepaid before the Termination Date may, subject
      to the terms and conditions of this Agreement, be borrowed, repaid and borrowed
      again.

     

    (a)  At
      any
      time that the Borrower becomes aware, or should have become aware (pursuant
      to
      Borrower’s ordinary business practices) that the aggregate amount of outstanding
      Loans shall at any time for any reason exceed the Revolving Credit Commitment
      then in effect, the Borrower shall, immediately notify the Lender of this
      determination. Within two (2) Business Days of the delivery of the notice
      described in the preceding sentence, the Borrower shall, without further notice
      or demand, pay the amount of such excess to the Lender as a prepayment of the
      Loans. Each such prepayment shall be accompanied by a payment of all accrued
      and
      unpaid interest on the Loans prepaid and shall be subject to Section
      2.11.

     

    Section
      2.12  Default
      Rate. If
      any
      payment of principal on any Loan or other Obligation is not made when due
      (whether by acceleration or otherwise), such Loan shall bear interest (computed
      on the basis of a year of 360 days and actual days elapsed or, if based on
      the
      rate described in clause (i) of the definition of Base Rate, on the basis of
      a
      year of 365 or 366 days, as applicable, and the actual number of days elapsed)
      from the date such payment was due until paid in full, payable on demand, at
      a
      rate per annum equal to:

    
      
        
          
          

        

        
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    (a)  for
      any
      Base Rate Loan or Obligation other than a LIBOR Loan, the sum of two percent
      (2%) plus the Applicable Margin plus the Base Rate from time to time in effect;
      and

     

    (b)  for
      any
      LIBOR Loan, the sum of two percent (2%) plus the rate of interest in effect
      thereon at the time of such default until the end of the Interest Period
      applicable thereto and, thereafter, at a rate per annum equal to the sum of
      two
      percent (2%) plus the Applicable Margin plus the Base Rate from time to time
      in
      effect.

     

    Section
      2.13  Evidence
      of Debt. (a)
      Lender shall maintain in accordance with its usual practice an account or
      accounts evidencing the indebtedness of the Borrower to Lender resulting from
      each Loan owing to Lender from time to time, including the amounts of principal
      and interest payable and paid to Lender from time to time hereunder in respect
      of Loans. The Borrower agrees that upon notice by Lender to the Borrower to
      the
      effect that a Note is required or appropriate in order for Lender to evidence
      (whether for purposes of pledge, enforcement or otherwise) the Loans owing
      to,
      or to be made by, Lender under the Credit Documents, the Borrower shall promptly
      execute and deliver to Lender a promissory note in the form of Exhibit A hereto
      (such promissory note is hereinafter referred to as the “Note”).
      

     

    Section
      2.14  Funding
      Indemnity. If
      Lender
      shall incur any loss, cost or expense (including, without limitation, any loss,
      cost or expense (excluding loss of margin) incurred by reason of the liquidation
      or re-employment of deposits or other funds acquired by Lender to fund or
      maintain any LIBOR Loan or the relending or reinvesting of such deposits or
      amounts paid or prepaid to Lender) as a result of:

     

    (a)  any
      payment (whether by acceleration or otherwise), prepayment or conversion of
      a
      LIBOR Loan on a date other than the last day of its Interest
      Period,

     

    (b)  any
      failure (because of a failure to meet the conditions of Section 6 or otherwise)
      by the Borrower to borrow or continue a LIBOR Loan, or to convert a Base Rate
      Loan into a LIBOR Loan, on the date specified in a notice given pursuant to
      Section 2.5(a) or established pursuant to Section 2.5(c) hereof,

     

    (c)  any
      failure by the Borrower to make any payment of principal on any LIBOR Loan
      when
      due (whether by acceleration or otherwise), or

     

    (d)  any
      acceleration of the maturity of a LIBOR Loan as a result of the occurrence
      of
      any Event of Default hereunder,

     

    then,
      upon the demand of Lender, the Borrower shall pay to Lender such amount as
      will
      reimburse Lender for such loss, cost or expense. If Lender makes such a claim
      for compensation, it shall provide to the Borrower a certificate executed by
      an
      officer of Lender setting forth the amount of such loss, cost or expense in
      reasonable detail (including an explanation of the basis for and the computation
      of such loss, cost or expense) and the amounts shown on such certificate if
      reasonably calculated shall be conclusive absent manifest error.

    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

    Section
      2.15  Revolving
      Credit Commitment Terminations. The
      Borrower shall have the right at any time and from time to time, upon five
      (5)
      Business Days’ prior written notice to the Lender, to terminate the Revolving
      Credit Commitment without premium or penalty, in whole or in part, any partial
      termination to be in an amount not less than $2,000,000 and integral multiples
      of $1,000,000 in excess thereof, provided
      that the
      Revolving Credit Commitment may not be reduced to an amount less than the sum
      of
      the amount of all Loans then outstanding. Any termination of Revolving Credit
      Commitment pursuant to this Section 2.12 may not be reinstated.

     

    Section
      2.16  Regulation
      D Compensation. The
      Lender may require the Borrower to pay, contemporaneously with each payment
      of
      interest on the LIBOR Loans, additional interest on the related LIBOR Loans
      of
      Lender at a rate per annum equal to the excess of (i)(A) the applicable LIBOR
      rate (or other base rate determined pursuant to Section 2.9(b)) divided by
      (B)
      one minus the LIBOR Reserve Percentage over (ii) the rate specified in clause
      (i)(A). Any computation by Lender of such additional interest shall be
      conclusive absent manifest error. If the Lender requires payment of such
      additional interest (x) it shall notify the Borrower that it is subject to
      LIBOR
      reserves under Regulation D of the Board of Governors of the Federal Reserve
      System (or any successor regulation), in which case such additional interest
      on
      the LIBOR Loans of Lender shall be payable to Lender at the place indicated
      in
      such notice with respect to each Interest Period commencing at least five (5)
      Business Days after the giving of such notice and (y) shall notify the Borrower
      at least five (5) Business Days prior to each date on which interest is payable
      on the LIBOR Loans of the amount then due under this Section.

     

    Section
      2.17  Arbitrage
      Compensation. If
      at the
      time of the making of any Loan hereunder, the interest rate payable hereunder
      in
      respect of such Loan is less than the rate (as determined by the Lender in
      consultation with the Borrower) at which funds of comparable term and amount
      are
      generally available to the Borrower in the commercial paper market (the
“CP
      Rate”)
      (an
“Arbitrage
      Condition”),
      the
      Borrower agrees to pay to the Lender arbitrage compensation on such Loan at
      a
      rate equal to the difference between the effective interest rate payable
      hereunder (inclusive of all fees) in respect of such Loan and the CP Rate as
      applied to such Loan. Such payments shall continue, at the time and in the
      manner set forth for payments of interest on such Loan, for as long as the
      Arbitrage Condition continues. Upon the termination of the Arbitrage Condition
      for any reason (as determined by the Lender in consultation with the Borrower),
      such payments shall no longer be due with respect to such Loan, even if a future
      Arbitrage Condition were to occur prior to repayment in full of such
      Loan.

     

    SECTION
      3.  FEES.

     

    Section
      3.1  Fees.

     

    (a)  Commitment
      Fee.
      For the
      period from the Effective Date to and including the Termination Date, Borrower
      shall pay to the Lender a commitment fee accruing at a rate per annum equal
      to
      the Commitment Fee Rate on the average daily amount of the unused Revolving
      Credit Commitment. Such commitment fee is payable in arrears on December 31,
      2006, on the last Business Day of each calendar quarter thereafter and on the
      Termination Date, unless the Revolving Credit Commitment are terminated in
      whole
      on an earlier date, in which event the fee for the period to but not including
      the date of such termination shall be paid in whole on the date of such
      termination.

    
      
        
          
          

        

        
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    (b)  [Reserved].

     

    (c)  Utilization
      Fee.
      From
      and after the Effective Date, for any day on which the aggregate principal
      amount of Loans then outstanding exceeds fifty percent (50%) of the Revolving
      Credit Commitment then in effect, Borrower shall pay to the Lender a utilization
      fee accruing at a rate per annum equal to the Utilization Fee Rate on the
      aggregate amount of Loans outstanding on such date. Such fee is payable in
      arrears on the last Business Day of each calendar quarter and on the Termination
      Date, and if the Revolving Credit Commitment is terminated in whole prior to
      the
      Termination Date, the fee for the period to but not including the date of such
      termination shall be paid in whole on the date of such termination.

     

    (d)  Upfront
      Fee.
      The
      Borrower shall pay to the Lender a fee (the “Upfront
      Fee”)
      in an
      amount equal to $6,250 representing two and one half basis points (0.025%)
      of
      the Revolving Credit Commitment. The Upfront Fee shall be non-refundable and
      shall be fully earned, due and payable in full on the Effective
      Date.

     

    (e)  [Reserved].
      

     

    (f)  [Reserved].
      

     

    (g)  Fee
      Calculations.
      All
      fees payable under this Agreement shall be payable in U.S. Dollars and shall
      be
      computed on the basis of a year of 360 days, for the actual number of days
      elapsed. All determinations of the amount of fees owing hereunder (and the
      components thereof) shall be made by the Lender and shall be conclusive absent
      manifest error..

     

    SECTION
      4.  PLACE
      AND
      APPLICATION OF PAYMENTS.

     

    Section
      4.1  Place
      and Application of Payments. All
      payments of principal of and interest on the Loans, and of all other Obligations
      and other amounts payable by the Borrower under the Credit Documents, shall
      be
      made by the Borrower to the Lender by no later than 12:30 p.m. (Chicago time)
      on
      the due date thereof at the principal office of the Lender in New York, New
      York, pursuant to the payment instructions set forth on Part A of Schedule
      1
      hereof (or such other location in the United States as the Lender may designate
      to the Borrower). Any payments received after such time shall be deemed to
      have
      been received by the Lender on the next Business Day. All such payments shall
      be
      made free and clear of, and without deduction for, any set-off, counterclaim,
      levy, or any other deduction of any kind in U.S. Dollars, in immediately
      available funds at the place of payment.

     

    SECTION
      5.  REPRESENTATIONS
      AND WARRANTIES.

     

    The
      Borrower hereby represents and warrants to the Lender as to itself and, where
      the following representations and warranties apply to Subsidiaries, as to each
      of its Subsidiaries, as follows:

    
      
        
          
          

        

        
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    Section
      5.1  Corporate
      Organization and Authority. The
      Borrower is duly organized and existing in good standing under the laws of
      the
      State of Illinois; has all necessary corporate power to carry on its present
      business; and is duly licensed or qualified and, in good standing in each
      jurisdiction in which the failure to be so licensed, qualified or in good
      standing would have a Material Adverse Effect.

     

    Section
      5.2  Corporate
      Authority and Validity of Obligations. The
      Borrower has full right and authority to enter into this Agreement and the
      other
      Credit Documents to which it is a party, to make the borrowings herein provided
      for, to issue its Notes in evidence thereof, and to perform all of its
      obligations under the Credit Documents to which it is a party. Each Credit
      Document to which it is a party has been duly authorized, executed and delivered
      by the Borrower and constitutes valid and binding obligations of the Borrower
      enforceable in accordance with its terms, except as such enforceability may
      be
      limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
      affecting the enforceability of creditors’ rights generally and by equitable
      principles of general applicability (regardless of whether such enforceability
      is considered in a proceeding in equity or at law). No Credit Document, nor
      the
      performance or observance by the Borrower of any of the matters or things
      therein provided for, contravenes any provision of law or any charter or by-law
      provision of the Borrower or any material Contractual Obligation of or affecting
      the Borrower or any of its Properties or results in or requires the creation
      or
      imposition of any Lien on any of the Properties or revenues of the
      Borrower.

     

    Section
      5.3  Financial
      Statements. All
      financial statements heretofore delivered to the Lender showing historical
      performance of the Borrower for each of the Borrower’s fiscal quarters and/or
      years ending on or before June 30, 2006, have been prepared in accordance with
      generally accepted accounting principles applied on a basis consistent, except
      as otherwise noted therein, with that of the previous fiscal year. Each of
      such
      financial statements fairly presents on a consolidated basis the financial
      condition of the Borrower and its Subsidiaries as of the dates thereof and
      the
      results of operations for the periods covered thereby. The Borrower and its
      Subsidiaries have no material contingent liabilities other than those disclosed
      in the financial statements or in comments or footnotes thereto, or in any
      report supplementary thereto, most recently furnished to the Lender as of the
      time such representation and warranty is made, including reports of the Borrower
      filed with the SEC from time to time. Since June 30, 2006 through the Effective
      Date, there has been no event or series of events which has resulted in a
      Material Adverse Effect.

     

    Section
      5.4  Approvals.
      No
      authorization, approval, consent, license, exemption, filing or registration
      with any court or governmental department, agency or instrumentality, nor any
      approval or consent of the stockholders of the Borrower or any Subsidiary or
      from any other Person, is necessary to the valid execution, delivery or
      performance by the Borrower or any Subsidiary of any Credit Document to which
      it
      is a party.

     

    Section
      5.5  ERISA.
      With
      respect to each Plan, the Borrower and each other member of the Controlled
      Group
      has fulfilled its obligations under the minimum funding standards of and is
      in
      compliance in all material respects with the Employee Retirement Income Security
      Act of 1974, as amended (“ERISA”),
      and
      with the Code to the extent applicable to it and has not incurred any liability
      to the Pension Benefit Guaranty Corporation (“PBGC”)
      or a
      Plan under Title IV of ERISA other than a liability to the PBGC for premiums
      under Section 4007 of ERISA. Neither the Borrower nor any Subsidiary has any
      contingent liabilities for any post-retirement benefits under a Welfare Plan,
      other than liability for continuation coverage described in Part 6 of Title
      I of
      ERISA.

    
      
        
          
          

        

        
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    Section
      5.6  Government
      Regulation. Neither
      the Borrower nor any Subsidiary is an “investment
      company”
within
      the meaning of the Investment Company Act of 1940, as amended.

     

    Section
      5.7  Margin
      Stock; Proceeds. Neither
      the Borrower nor any Subsidiary is engaged principally, or as one of its primary
      activities, in the business of extending credit for the purpose of purchasing
      or
      carrying margin stock (“margin
      stock”
to
      have
      the same meaning herein as in Regulation U of the Board of Governors of the
      Federal Reserve System). The Borrower will not use the proceeds of any Loan
      in a
      manner that violates any provision of Regulation U or X of the Board of
      Governors of the Federal Reserve System. The Borrower is not subject to
      regulation under the Investment Company Act of 1940. In addition, the Borrower
      is not an “investment company” registered or required to be registered under the
      Investment Company Act of 1940. Proceeds of the Loans will only be used to
      backstop commercial paper issued by the Borrower and for general corporate
      purposes.

     

    Section
      5.8  Full
      Disclosure. All
      information heretofore furnished by the Borrower to the Lender for purposes
      of
      or in connection with the Credit Documents or any transaction contemplated
      thereby is, and all such information hereafter furnished by the Borrower to
      the
      Lender will be, to the best of the Borrower’s knowledge, after due inquiry, true
      and accurate in all material respects and not misleading on the date as of
      which
      such information is stated or certified.

     

    SECTION
      6.  CONDITIONS
      PRECEDENT.

     

    The
      obligation of Lender to advance any Loan shall be subject to the following
      conditions precedent:

     

    Section
      6.1  Initial
      Credit Event. Before
      or
      concurrently with the Effective Date:

     

    (a)  The
      Lender shall have received the favorable written opinion of counsel to the
      Borrower in form and substance reasonably acceptable to the Lender;

     

    (b)  The
      Lender shall have received copies of (i) the Articles of Incorporation, together
      with all amendments and (ii) the Borrower’s bylaws (or comparable constituent
      documents) and any amendments thereto, certified in each instance by its
      Secretary or an Assistant Secretary;

     

    (c)  The
      Lender shall have received copies of resolutions of the Borrower’s Board of
      Directors authorizing the execution and delivery of the Credit Documents and
      the
      consummation of the transactions contemplated thereby together with specimen
      signatures of the persons authorized to execute such documents on the Borrower’s
      behalf, all certified in each instance by its Secretary or an Assistant
      Secretary;

    
      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

    

    (d)  The
      Lender shall have received, if requested, an executed Note of the Borrower
      dated
      the date hereof and otherwise in compliance with the provisions of Section
      2.10(a) hereof;

     

    (e)  The
      Lender shall have received a duly executed original of (i) this Agreement,
      (ii)
      a list of the Borrower’s Authorized Representatives and (iii) such other
      documents as the Lender may reasonably request;

     

    (f)  The
      Lender shall have received a certificate by the chief financial officer of
      the
      Borrower, stating that on the Effective Date no Default or Event of Default
      has
      occurred and is continuing, and that all representations and warranties set
      forth herein are true and correct as of such date;

     

    (g)  The
      Lender shall have received evidence that Borrower is validly existing and in
      good standing under the laws of the jurisdiction of incorporation;

     

    (h)  The
      Lender shall have received payment of the Upfront Fee; and

     

    (i)  The
      Lender shall have received a duly executed Compliance Certificate containing
      information as of June 30, 2006. 

     

    Section
      6.2  All
      Credit Events. As
      of the
      time of each Credit Event hereunder:

     

    (a)  The
      Lender shall have received the notice required by Section 2.5
      hereof;

     

    (b)  Each
      of
      the representations and warranties set forth in Section 5 hereof (except the
      last sentence of Section 5.3) shall be and remain true and correct in all
      material respects as of said time, taking into account any amendments to such
      Section (including without limitation any amendments, modifications and updates
      to the Schedules referenced therein) made after the date of this Agreement
      in
      accordance with its provisions, except that if any such representation or
      warranty relates solely to an earlier date it need only remain true as of such
      date; and

     

    (c)  The
      Borrower shall be in full compliance with all of the terms and conditions
      hereof, and no Default or Event of Default shall have occurred and be continuing
      or would occur as a result of such Credit Event.

     

    Each
      request for a Borrowing consisting of an advance of a Loan hereunder shall
      be
      deemed to be a representation and warranty by the Borrower on the date of such
      Credit Event as to the facts specified in paragraphs (b) and (c) of this Section
      6.2. 

     

    SECTION
      7.  COVENANTS.

     

    The
      Borrower covenants and agrees that, so long as any Loan is outstanding
      hereunder, or any Revolving Credit Commitment is available to or in use by
      the
      Borrower hereunder, except to the extent compliance in any case is waived in
      writing by the Lender:

     

    
      Section
        7.1  Corporate
        Existence. Borrower
        shall preserve and maintain its corporate existence.

       

    

    
      
        
          
          

        

        
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    Section
      7.2  ERISA.
      The
      Borrower will, and will cause each of its Subsidiaries to, promptly pay and
      discharge all obligations and liabilities arising under ERISA of a character
      which if unpaid or unperformed might result in the imposition of a Lien against
      any of its properties or assets and will promptly notify the Lender of (i)
      the
      occurrence of any reportable event (as defined in ERISA) affecting a Plan,
      other
      than any such event of which the PBGC has waived notice by regulation, (ii)
      receipt of any notice from PBGC of its intention to seek termination of any
      Plan
      or appointment of a trustee therefor, (iii) its or any of its Subsidiaries’
intention to terminate or withdraw from any Plan, and (iv) the occurrence of
      any
      event affecting any Plan which could result in the incurrence by the Borrower
      or
      any of its Subsidiaries of any material liability, fine or penalty, or any
      material increase in the contingent liability of the Borrower or any of its
      Subsidiaries under any post-retirement Welfare Plan benefit.

     

    Section
      7.3  Financial
      Reports and Other Information. (a)
      The
      Borrower will maintain a system of accounting in accordance with GAAP and will
      furnish to the Lender and its duly authorized representatives such information
      respecting the business and financial condition of the Borrower as Lender may
      reasonably request; and without any request, the Borrower will furnish each
      of
      the following to the Lender: 

     

    i  within
      one hundred twenty (120) days after the end of its fiscal year ending September
      30, 2006, a copy of the Borrower’s financial statements for such fiscal year,
      including the consolidated balance sheet of the Borrower for such year and
      the
      related statement of income and statement of cash flow, as certified by
      independent public accountants of recognized national standing selected by
      the
      Borrower in accordance with GAAP with such accountants’ opinion to the effect
      that the financial statements have been prepared in accordance with GAAP and
      present fairly in all material respects in accordance with GAAP the consolidated
      financial position of the Borrower and its Subsidiaries as of the close of
      such
      fiscal year and the results of their operations and cash flows for the fiscal
      year then ended and that an examination of such accounts in connection with
      such
      financial statements has been made in accordance with generally accepted
      auditing standards and, accordingly, such examination included such tests of
      the
      accounting records and such other auditing procedures as were considered
      necessary in the circumstances;

     

    ii  within
      sixty (60) days after the end of each of the quarterly fiscal periods of the
      Borrower during the term hereof, a consolidated un-audited balance sheet of
      the
      Borrower, and the related statement of income and statement of cash flow, as
      of
      the close of such period, all of the foregoing prepared by the Borrower in
      reasonable detail in accordance with GAAP and certified by the Borrower’s chief
      financial officer as fairly presenting the financial condition as at the dates
      thereof and the results of operations for the periods covered thereby;
      and

     

    iii  within
      five (5) days after Borrower files a Form 8-K with the SEC, a copy of said
      form
      8-K. 

     

    (b)  Each
      financial statement furnished to the Lender pursuant to subsection (i) or (ii)
      of this Section 7.3 shall be accompanied by (A) a written certificate signed
      by
      the Borrower’s chief financial officer to the effect that no Default or Event of
      Default has occurred during the period covered by such statements or, if any
      such Default or Event of Default has occurred during such period, setting forth
      a description of such Default or Event of Default and specifying the action,
      if
      any, taken by the Borrower to remedy the same, and (B) a Compliance Certificate
      in the form of Exhibit B hereto showing the Borrower’s compliance with the
      covenants set forth in Sections 7.5 and 7.8 hereof.

    
      
        
          
          

        

        
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    (c)  The
      Borrower will promptly (and in any event within five Business Days after an
      officer of the Borrower has knowledge thereof) give notice to the Lender of
      the
      occurrence of any Default or Event of Default.

     

    Section
      7.4  Regulation
      U; Proceeds. The
      Borrower will not use any part of the proceeds of any of the Borrowings,
      directly or indirectly to purchase or carry any margin stock (as defined in
      Section 5.7 hereof) or to extend credit to others for the purpose of purchasing
      or carrying any such margin stock. The Borrower will only use proceeds of the
      Loans to backstop commercial paper issued by the Borrower and for general
      corporate purposes.

     

    Section
      7.5  Sales
      of Assets.  The
      Borrower will not during the term of this Agreement sell, lease or otherwise
      dispose of more that (i) thirty-five percent (35%) of the consolidated fixed
      assets of the Borrower or (ii) fifteen percent (15%) of the consolidated
      "regulated assets" of the Borrower. For purposes of this Section 7.5(a) the
      amount of consolidated fixed assets shall be determined using the net book
      value
      of such assets at the time of such sale, lease or disposition.

     

    (b)  The
      Borrower will not sell, transfer or otherwise dispose of, or permit any
      Subsidiary to issue, sell, transfer or otherwise dispose of, more than twenty
      percent (20%) of any of its public utility Subsidiaries’ shares of stock of any
      class (including as “stock” for purposes of this Section, any warrants, rights
      or options to purchase or otherwise acquire stock or other Securities
      exchangeable for or convertible into stock).

     

    Section
      7.6  Capital
      Ratio. The
      Borrower will not at any time permit the Capital Ratio to exceed 0.65 to
      1.00.

     

    Section
      7.7  Compliance
      with Laws. Without
      limiting any of the other covenants of the Borrower in this Section 7, the
      Borrower will conduct its business, and otherwise be, in compliance with all
      applicable laws, regulations, ordinances and orders of any governmental or
      judicial authorities; provided,
      however,
      that
      the Borrower shall not be required to comply with any such law, regulation,
      ordinance or order if the failure to comply therewith could not reasonably
      be
      expected to have a Material Adverse Effect.

     

    Section
      7.8  Mergers
      and Consolidations. The
      Borrower will not, and will not permit any public utility Subsidiary, to
      consolidate with or be a party to merger with any other Person; provided,
      however,
      that
      the Borrower or any public utility Subsidiary of the Borrower may, upon prior
      notice to the Lender, enter into one or more mergers or acquisitions with any
      other Person so long as (a) in the case of the Borrower, the Borrower is the
      surviving entity and (b) in the case of a public utility Subsidiary of the
      Borrower, the Borrower will at all times continue to own at least 80% of the
      equity securities of such public utility Subsidiary. The Lender acknowledges
      that Borrower has entered into an agreement and plan of merger with a subsidiary
      of WPS Resources Corporation.

    
      
        
          
          

        

        
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    SECTION
      8.  EVENTS
      OF
      DEFAULT AND REMEDIES.

     

    Section
      8.1  Events
      of Default. Any
      one
      or more of the following shall constitute an Event of Default:

     

    (a)  non-payment
      by Borrower (i) when due of the principal of any Loan or (ii) in the payment
      of
      fees, interest or of any other Obligation within five (5) days of the due
      date;

     

    (b)  default
      by the Borrower in the observance or performance of any covenant set forth
      in
      Section 7.1 with regard to the Borrower or (ii) Section 7.3(c), Section 7.4
      through 7.6 hereof;

     

    (c)  any
      default by the Borrower in the observance or performance of any provision
      hereof, or of any other Credit Document not mentioned in (a) or (b) above,
      which
      is not remedied within thirty (30) days after notice thereof shall have been
      given to the Borrower by the Lender, provided
      that,
      with respect only to Section 7.7, if Borrower (or its Subsidiary, as applicable)
      has made good faith efforts to cure such default, then the Borrower shall be
      afforded an additional period of time to cure such default, such additional
      cure
      period not to exceed thirty (30) days;

     

    (d)  failure
      to pay when due Indebtedness in an aggregate principal amount of $15,000,000
      or
      more of the Borrower, or (ii) default shall occur under one or more indentures,
      agreements or other instruments under which any Indebtedness of the Borrower
      in
      an aggregate principal amount of $15,000,000 or more and such default shall
      continue for a period of time sufficient to permit the holder or beneficiary
      of
      such Indebtedness (including, without limitation the Lender with respect to
      loans, credit facilities and other extensions of credit other than pursuant
      to
      this Agreement) or a trustee therefor to cause the acceleration of the maturity
      of any such Indebtedness or any mandatory unscheduled prepayment, purchase
      or
      funding;

     

    (e)  representation
      or warranty made herein or in any other Credit Document by the Borrower, or
      in
      any statement or certificate furnished pursuant hereto or pursuant to any other
      Credit Document by the Borrower, or in connection with any Credit Document,
      proves untrue in any material respect as of the date of the issuance or making,
      or deemed making or issuance, thereof;

     

    (f)  Borrower
      shall (i) have entered involuntarily against it an order for relief under the
      United States Bankruptcy Code, as amended, or any analogous action is taken
      under any other applicable law relating to bankruptcy or insolvency and such
      action continues un-discharged or is not dismissed or stayed for a period of
      sixty (60) days, (ii) fail to pay its debts generally as they become due and
      such failure to pay would constitute an Event of Default under Section 8.1(d)
      or
      admit in writing its inability to pay its debts generally as they become due,
      (iii) make an assignment for the benefit of creditors, (iv) apply for, seek,
      consent to, or acquiesce in, the appointment of a receiver, custodian, trustee,
      examiner, liquidator or similar official for it or any substantial part of
      its
      Property, (v) institute any proceeding seeking to have entered 

    
      
        
          
          

        

        
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    against
      it an order for relief under the United States Bankruptcy Code, as amended,
      to
      adjudicate it insolvent, or seeking dissolution, winding up, liquidation,
      reorganization, arrangement, adjustment or composition of it or its debts under
      any law relating to bankruptcy, insolvency or reorganization or relief of
      debtors or fail to file an answer or other pleading denying the material
      allegations of any such proceeding filed against it, (vi) take any corporate
      action (such as the passage by its board of directors of a resolution) in
      furtherance of any matter described in parts (i)-(v) above, or (vii) fail to
      contest in good faith any appointment or proceeding described in Section 8.1(g)
      hereof;

     

    (g)  Custodian,
      receiver, trustee, examiner, liquidator or similar official shall be appointed
      for the Borrower or any of its Significant Subsidiaries, or any substantial
      part
      of any of their Property, or a proceeding described in Section 8.1(f)(v) shall
      be instituted against the Borrower, and such appointment continues un-discharged
      or such proceeding continues un-dismissed or un-stayed for a period of sixty
      (60) days;

     

    (h)  the
      Borrower shall fail within thirty (30) days to pay, bond or otherwise discharge
      any judgment or order for the payment of money in excess of $15,000,000 which
      is
      not stayed on appeal or otherwise being appropriately contested in good faith
      in
      a manner that stays execution thereon; 

     

    (i)  the
      Borrower or any other member of the Controlled Group shall fail to pay when
      due
      an amount or amounts which it shall have become liable, to pay to the PBGC
      or to
      a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or
      Plans
      having aggregate Unfunded Vested Liabilities in excess of $5,000,000
      (collectively, a “Material
      Plan”)
      shall
      be filed under Title IV of ERISA by the Borrower or any other member of the
      Controlled Group, any plan administrator or any combination of the foregoing;
      or
      the PBGC shall institute proceedings under Title IV of ERISA to terminate or
      to
      cause a trustee to be appointed to administer any Material Plan or a proceeding
      shall be instituted by a fiduciary of any Material Plan against the Borrower
      or
      any other member of the Controlled Group to enforce Section 515 or 4219(c)(5)
      of
      ERISA and such proceeding shall not have been dismissed within thirty (30)
      days
      thereafter; or a condition shall exist by reason of which the PBGC would be
      entitled to obtain a decree adjudicating that any Material Plan must be
      terminated; or

     

    (j)  any
      Event
      of Default under the Existing Credit Agreement, it being the express intent
      of
      the parties hereto that this Agreement shall benefit from the covenants and
      agreements contained in the Existing Credit Agreement.

     

    Section
      8.2  Non-Bankruptcy
      Defaults. When
      any
      Event of Default other than those described in subsections (f) or (g) of Section
      8.1 hereof has occurred and is continuing, the Lender may: (a) terminate the
      remaining Revolving Credit Commitment and all other obligations of the Lender
      hereunder (other than the obligations of the Lender under section 11.21 hereof)
      on the date stated in such notice (which may be the date thereof); and (b)
      declare the principal of and the accrued interest on the outstanding Note to
      be
      forthwith due and payable and thereupon the Note, including both principal
      and
      interest thereon, and all other Obligations, shall be and become immediately
      due
      and payable together with all other amounts payable under the Credit Documents
      without further demand, presentment, protest or notice of any kind.

    
      
        
          
          

        

        
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    Section
      8.3  Bankruptcy
      Defaults. When
      any
      Event of Default described in subsections (f) or (g) of Section 8.1 hereof
      has
      occurred and is continuing, then the Note shall immediately become due and
      payable together with all other amounts payable under the Credit Documents
      without presentment, demand, protest or notice of any kind and the obligation
      of
      the Lender to extend further credit pursuant to any of the terms hereof shall
      immediately terminate.

     

    Section
      8.4  Expenses.
      The
      Borrower agrees to pay to the Lender and any other holder of the Note, all
      costs
      and expenses incurred or paid by the Lender or any such holder, including
      reasonable attorneys’ fees (including reasonable allocable fees of in-house
      counsel) and court costs, in connection with any Default or Event of Default
      by
      the Borrower hereunder or in connection with the enforcement of any of the
      Credit Documents.

     

    SECTION
      9.  CHANGE
      IN
      CIRCUMSTANCES.

     

    Section
      9.1  Change
      of Law. Notwithstanding
      any other provisions of this Agreement or the Note, if at any time after the
      date hereof any change in applicable law or regulation or in the interpretation
      thereof makes it unlawful for Lender to make or continue to maintain LIBOR
      Loans
      or to perform its obligations as contemplated hereby, Lender shall promptly
      give
      notice thereof to the Borrower and Lender’s obligations to make or maintain
      LIBOR Loans under this Agreement shall terminate until it is no longer unlawful
      for Lender to make or maintain LIBOR Loans. The Borrower shall prepay on demand
      the outstanding principal amount of any such affected LIBOR Loans, together
      with
      all interest accrued thereon at a rate per annum equal to the interest rate
      applicable to such Loan; provided,
      however,
      subject
      to all of the terms and conditions of this Agreement, the Borrower may then
      elect to borrow the principal amount of the affected LIBOR Loans from Lender
      by
      means of Base Rate Loans from Lender.

     

    Section
      9.2  Unavailability
      of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR..
If
      on or
      prior to the first day of any Interest Period for any Borrowing of LIBOR
      Loans:

     

    (a)  the
      Lender determines that deposits in U.S. Dollars (in the applicable amounts)
      are
      not being offered to major banks in the LIBOR interbank market for such Interest
      Period, or that by reason of circumstances affecting the interbank LIBOR market
      adequate and reasonable means do not exist for ascertaining the applicable
      LIBOR, or

     

    (b)  Lender
      reasonably determines that LIBOR as reasonably determined by the Lender will
      not
      adequately and fairly reflect the cost to Lender of funding its LIBOR Loans
      or
      Loan for such Interest Period, then the Lender shall forthwith give notice
      thereof to the Borrower, whereupon until the Lender notifies the Borrower that
      the circumstances giving rise to such suspension no longer exist, the
      obligations of the Lender to make LIBOR Loans shall be suspended.

     

    Section
      9.3  Increased
      Cost and Reduced Return.  Section
      9.4  
      If, on or after the date hereof, the adoption of any applicable law, rule or
      regulation, or any change therein, or any change in the interpretation or
      administration thereof by any governmental authority, central bank or comparable
      agency charged with the interpretation or administration thereof, or compliance
      by Lender (or its Lending Office) with any request or directive (whether or
      not
      having the force of law but, if not having the force of law, compliance with
      which is customary in the relevant jurisdiction) of any such authority, central
      bank or comparable agency:

    
      
        
          
          

        

        
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    i  shall
      subject Lender (or its Lending Office) to any tax, duty or other charge with
      respect to its LIBOR Loans, its Notes or
      its
      participation in any thereof or its obligation to make Eurodollar Loans, or
      to
      participate therein, or
      shall
      change the basis of taxation of payments to Lender (or its Lending Office)
      of
      the principal of or interest on its LIBOR Loans, Letter(s) of Credit, or
      participations therein or any other amounts due under this Agreement in respect
      of its LIBOR Loans or its obligation to make LIBOR Loans, (except for changes
      in
      the rate of tax on the overall net income or profits of Lender or its Lending
      Office imposed by the jurisdiction in which Lender or its lending office is
      incorporated in which Lender’s principal executive office or Lending Office is
      located); or

     

    ii  shall
      impose, modify or deem applicable any reserve, special deposit or similar
      requirement (including, without limitation, any such requirement imposed by
      the
      Board of Governors of the Federal Reserve System, but excluding with respect
      to
      any LIBOR Loans any such requirement included in an applicable LIBOR Reserve
      Percentage) against assets of, deposits with or for the account of, or credit
      extended by, Lender (or its Lending Office) or shall impose on Lender (or its
      Lending Office) or on the interbank market any other condition affecting its
      LIBOR Loans, its Note, or
      its
      obligation to make Eurodollar Loans;

     

    and
      the
      result of any of the foregoing is to increase the cost to Lender (or its Lending
      Office) of making or maintaining any LIBOR Loan, or to reduce the amount of
      any
      sum received or receivable by Lender (or its Lending Office) under this
      Agreement or under its Note with respect thereto, by an amount deemed by Lender
      to be material, then, within fifteen (15) days after demand by Lender, the
      Borrower shall be obligated to pay to Lender such additional amount or amounts
      as will compensate Lender for such increased cost or reduction. In the event
      any
      law, rule, regulation or interpretation described above is revoked, declared
      invalid or inapplicable or is otherwise rescinded, and as a result thereof
      Lender is determined to be entitled to a refund from the applicable authority
      for any amount or amounts which were paid or reimbursed by Borrower to Lender
      hereunder, Lender shall refund such amount or amounts to Borrower without
      interest.

     

    (b)  If,
      after
      the date hereof, Lender shall have determined that the adoption of any
      applicable law, rule or regulation regarding capital adequacy, or any change
      therein (including, without limitation, any revision in the Final Risk-Based
      Capital Guidelines of the Board of Governors of the Federal Reserve System
      (12
      CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A) or of the Office of
      the
      Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any other
      applicable capital rules heretofore adopted and issued by any governmental
      authority), or any change in the interpretation or administration thereof by
      any
      governmental authority, central bank or comparable agency charged with the
      interpretation or administration thereof, or compliance by Lender (or its
      Lending Office) with any request or directive regarding capital adequacy
      (whether or not having the force of law but, if not having the force of law,
      compliance with which is customary in 

    
      
        
          
          

        

        
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    the
      applicable jurisdiction) of any such authority, central bank or comparable
      agency, has or would have the effect of reducing the rate of return on Lender’s
      capital, or on the capital of any corporation controlling Lender, as a
      consequence of its obligations hereunder to a level below that which Lender
      could have achieved but for such adoption, change or compliance (taking into
      consideration Lender’s policies with respect to capital adequacy) by an amount
      deemed by Lender to be material, then from time to time, within fifteen (15)
      days after demand by Lender, the Borrower shall pay to Lender such additional
      amount or amounts as will compensate Lender for such reduction.

     

    (c)  If
      Lender
      determines to seek compensation under this Section 9.3, it shall notify the
      Borrower of the circumstances that entitle it to such compensation pursuant
      to
      this Section 9.3 and will designate a different Lending Office if such
      designation will avoid the need for, or reduce the amount of, such compensation
      and will not, in the sole judgment of Lender, be otherwise disadvantageous
      to
      Lender. A certificate of Lender claiming compensation under this Section 9.3
      and
      setting forth the additional amount or amounts to be paid to it hereunder shall
      be conclusive in the absence of manifest error. In determining such amount,
      Lender may use any reasonable averaging and attribution methods. Lender shall
      not be entitled to demand compensation under this Section 9.3 for any period
      more than 90 days prior to the day on which such demand is made; provided
      however,
      that
      the foregoing shall in no way limit the right of Lender to demand or receive
      such compensation to the extent that such compensation relates to the
      retroactive application of any law, regulation, guideline or request if such
      demand is made within 90 days after the implementation of such retroactive
      law,
      interpretation, guideline or request. A certificate as to the nature and amount
      of such increased cost, submitted to the Borrower and the Lender in good faith,
      shall be conclusive and binding for all purposes, absent manifest
      error.

     

    Section
      9.5  Lending
      Offices. The
      Lender may, at its option, elect to make Loans hereunder at the branch, office
      or affiliate specified on the appropriate signature page hereof or in the
      assignment agreement which any assignee bank executes pursuant to Section 11.12
      hereof (each a “Lending Office”) for each type of Loan available hereunder or at
      such other of its branches, offices or affiliates as it may from time to time
      elect and designate in a written notice to the Borrower.

     

    Section
      9.6  Discretion
      of Lender as to Manner of Funding. Notwithstanding
      any other provision of this Agreement, the Lender shall be entitled to fund
      and
      maintain its funding of all or any part of its Loans in any manner it sees
      fit,
      it being understood, however, that for the purposes of this Agreement all
      determinations hereunder shall be made as if the Lender had actually funded
      and
      maintained each LIBOR Loan through the purchase of deposits in the LIBOR
      interbank market having a maturity corresponding to such Loan’s Interest Period
      and bearing an interest rate equal to LIBOR for such Interest
      Period.

     

    SECTION
      10.  RESERVED.

     

    SECTION
      11.  MISCELLANEOUS.

     

    Section
      11.1  Withholding
      Taxes. Subject
      to this Section 11.1, each payment by the Borrower under this Agreement or
      the
      other Credit Documents shall be made without withholding for or on account
      of
      any present or future taxes (other than overall net income taxes on the
      recipient). If any such withholding is so required, the Borrower shall make
      the
      withholding, pay the amount withheld to the appropriate governmental authority
      before penalties attach thereto or interest accrues thereon and forthwith pay
      such additional amount as may be necessary to ensure that the net amount
      actually received by the Lender free and clear of such taxes (including such
      taxes on such additional 

    
      
        
          
          

        

        
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    amount)
      is equal to the amount which the Lender would have received had such withholding
      not been made. If the Lender pays any amount in respect of any such taxes,
      penalties or interest the Borrower shall reimburse the Lender for that payment
      on demand. If the Borrower pays any such taxes, penalties or interest, it shall
      deliver official tax receipts evidencing that payment or certified copies
      thereof to the Lender on or before the thirtieth day after payment. If the
      Lender determines it has received or been granted a credit against or relief
      or
      remission for, or repayment of, any taxes paid or payable by it because of
      any
      taxes, penalties or interest paid by the Borrower and evidenced by such a tax
      receipt, Lender shall, to the extent it can do so without prejudice to the
      retention of the amount of such credit, relief, remission or repayment, pay
      to
      the Borrower such amount as Lender determines is attributable to such deduction
      or withholding and which will leave Lender (after such payment) in no better
      or
      worse position than it would have been in if the Borrower had not been required
      to make such deduction or withholding. Nothing in this Agreement shall interfere
      with the right of the Lender to arrange its tax affairs in whatever manner
      it
      thinks fit nor oblige the Lender to disclose any information relating to its
      tax
      affairs or any computations in connection with such taxes.

     

    Section
      11.2  No
      Waiver of Rights. No
      delay
      or failure on the part of the Lender or on the part of the holder or holders
      of
      the Note in the exercise of any power or right under any Credit Document shall
      operate as a waiver thereof, nor as an acquiescence in any default, nor shall
      any single or partial exercise thereof preclude any other or further exercise
      of
      any other power or right, and the rights and remedies hereunder of the Lender
      and/or the holder or holders of the Note are cumulative to, and not exclusive
      of, any rights or remedies which any of them would otherwise have.

     

    Section
      11.3  Non-Business
      Day. If
      any
      payment of principal or interest on any Loan or of any other Obligation shall
      fall due on a day which is not a Business Day, interest or fees (as applicable)
      at the rate, if any, such Loan or other Obligation bears for the period prior
      to
      maturity shall continue to accrue on such Obligation from the stated due date
      thereof to and including the next succeeding Business Day, on which the same
      shall be payable.

     

    Section
      11.4  Documentary
      Taxes. The
      Borrower agrees that it will pay any documentary, stamp or similar taxes payable
      in respect to any Credit Document, including interest and penalties, in the
      event any such taxes are assessed, irrespective of when such assessment is
      made
      and whether or not any credit is then in use or available
      hereunder.

     

    Section
      11.5  Survival
      of Representations. All

      representations and warranties made herein or in certificates given pursuant
      hereto shall survive the execution and delivery of this Agreement and the other
      Credit Documents, and shall continue in full force and effect with respect
      to
      the date as of which they were made as long as any credit is in use or available
      hereunder.

     

    Section
      11.6  Survival
      of Indemnities. All
      indemnities and all other provisions relative to reimbursement to the Lender
      of
      amounts sufficient to protect the yield of the Lender with respect to the Loans,
      including, but not limited to, Section 2.11, Section 9.3 and Section 11.15
      hereof, shall survive the termination of this Agreement and the other Credit
      Documents and the payment of the Loans and all other Obligations.

    
      
        
          
          

        

        
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    Section
      11.7  Set-Off.
       In
      addition to any rights now or hereafter granted under applicable law and not
      by
      way of limitation of any such rights, upon the occurrence of any Event of
      Default, Lender and each subsequent holder of the Note is hereby authorized
      by
      the Borrower at any time or from time to time, without notice to the Borrower
      or
      to any other Person, any such notice being hereby expressly waived, to set
      off
      and to appropriate and to apply any and all deposits (general or special,
      including, but not limited to, Indebtedness evidenced by certificates of
      deposit, whether matured or unmatured, and in whatever currency denominated)
      and
      any other Indebtedness at any time held or owing by the Lender or that
      subsequent holder to or for the credit or the account of the Borrower, whether
      or not matured, against and on account of the obligations and liabilities of
      the
      Borrower to the Lender or that subsequent holder under the Credit Documents,
      including, but not limited to, all claims of any nature or description arising
      out of or connected with the Credit Documents, irrespective of whether or not
      (a) the Lender or that subsequent holder shall have made any demand hereunder
      or
      (b) the principal of or the interest on the Loans or the Note and other amounts
      due hereunder shall have become due and payable pursuant to Section 8 and
      although said obligations and liabilities, or any of them, may be contingent
      or
      unmatured.

     

    Section
      11.8  Notices. 
      Except
      as
      otherwise specified herein, all notices under the Credit Documents shall be
      in
      writing (including facsimile or other electronic communication) and shall be
      given to a party hereunder at its address or facsimile number set forth below
      or
      such other address or facsimile number as such party may hereafter specify
      by
      notice to the Lender and the Borrower, given by courier, by United States
      certified or registered mail, or by other telecommunication device capable
      of
      creating a written record of such notice and its receipt. Notices under the
      Credit Documents to the Lender and the Borrower shall be addressed
      to:

     

    
      	
              If
                to the Borrower:

            
	 
	
              Peoples
                Energy Corporation

              130
                East Randolph Drive

              Chicago,
                Illinois 60601

              Attention:
                Vice President, Finance

              Facsimile:
                312.373.4213

              Telephone:
                312.240.3818

            
	 
	
              If
                to the Lender: (Notices related to commitments, covenants or extensions
                of
                expiry/termination dates)

            
	 
	
              ABN
                AMRO Bank N.V.

              540
                W. Madison Street

              Chicago,
                IL 60661-2591

              Attention:
                Kris Grosshans

              Facsimile:
                312 904 1466

              Telephone:
                312 904 7301 (Mr. Grosshans) 

            

    

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	 
	
              ABN
                AMRO Bank N.V.

              540
                West Madison Street, 26th
                Floor

              Chicago,
                IL 60661-2591

              Attn:
                Credit Administration

              E-Mail:
                melanie.dziobas@abnamro.com

              FAX: 312-992-5111

               

              ABN
                AMRO Bank N.V.

              4400
                Post Oak Parkway, Suite 1500

              Houston,
                TX 77027

              Attn:
                Scott Donaldson

              E-Mail:
                scott.donaldson@abnamro.com

              Fax:
                (832)681-7141

            
	 
	
              Borrowing
                Requests and notices relating to Loans, Interest and
                Fees:

            
	 
	
              ABN
                AMRO Bank N.V.

              540
                W. Madison St., 21st
                Flr.

              Chicago,
                IL 60661-2591

              Attn:
                Loan Administration

              Facsimile:
                (312) 992-5157

              E-mail:
                cpu.team.b@abnamro.com

              Telephone:
                (312) 992-5152

            
	 

    

    

      Each
        such
        notice, request or other communication shall be effective (i) if given by
        facsimile, when such facsimile is transmitted to the facsimile number specified
        in this Section 11.8 or on the signature pages hereof and a confirmation
        of
        receipt of such facsimile has been received by the sender, (ii) if given
        by
        courier, when delivered, (iii) if given by mail, three business days after
        such
        communication is deposited in the mail, registered with return receipt
        requested, addressed as aforesaid or (iv) if given by any other means, when
        delivered at the addresses specified in this Section 11.8; provided
        that
        any
        notice given pursuant to Section 2 hereof shall be effective only upon
        receipt.

       

    

    Section
      11.9  Counterparts.
      This
      Agreement may be executed in any number of counterpart signature pages, and
      by
      the different parties on different counterparts, each of which when executed
      shall be deemed an original but all such counterparts taken together shall
      constitute one and the same instrument. Delivery of an executed counterpart
      via
      facsimile or other electronic means shall for all purposes be deemed as
      effective as delivery of an original counterpart.

     

    Section
      11.10  Successors
      and Assigns.
      This
      Agreement shall be binding upon the Borrower and its successors and assigns,
      and
      shall inure to the benefit of each of the Lender and the benefit of their
      respective successors, and assigns, including any subsequent holder of any
      Note.
      The Borrower may not assign any of its rights or obligations under any Credit
      Document without the written consent of all of the Lender.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    Section
      11.11  [Reserved].

     

    Section
      11.12  Assignments,
      Participations, Etc.

     

    
      (a)  Successors
        and Assigns Generally The
        provisions of this Agreement shall be binding upon and inure to the benefit
        of
        the parties hereto and their respective successors and assigns permitted
        hereby,
        except that the Borrower may not assign or otherwise transfer any of its
        rights
        or obligations hereunder without the prior written consent of the Lender
        and
        Lender may not assign or otherwise transfer any of its rights or obligations
        hereunder except (i) to an Eligible Assignee in accordance with the
        provisions of paragraph (b) of this Section, (ii) by way of
        participation in accordance with the provisions of paragraph (d) of this
        Section or (iii) by way of pledge or assignment of a security interest
        subject to the restrictions of paragraph (f) of this Section (and any other
        attempted assignment or transfer by any party hereto shall be null and void).
        Nothing in this Agreement, expressed or implied, shall be construed to confer
        upon any Person (other than the parties hereto, their respective successors
        and
        assigns permitted hereby, Participants to the extent provided in
        paragraph (d) of this Section and, to the extent expressly contemplated
        hereby, the affiliates of each of the Lender and the Lender) any legal or
        equitable right, remedy or claim under or by reason of this Agreement.

       

    

    
      (b)  Assignments
        by Lender. The
        Lender may at any time assign to one or more Eligible Assignees its rights
        and
        obligations under this Agreement (including its Revolving Credit Commitment
        and
        the Loans at the time owing to it); provided
        that so
        long as no Event of Default has occurred and is continuing, any assignment
        of a
        Revolving Credit Commitment must be approved by the Borrower, which approval
        shall not be unreasonably withheld, unless the Person that is the proposed
        assignee is itself an Eligible Assignee. Subject to acceptance and recording
        thereof by the Lender pursuant to paragraph (c) of this Section, from and
        after the effective date specified in each Assignment and Assumption, the
        Eligible Assignee thereunder shall be a party to this Agreement and, to the
        extent of the interest assigned by such Assignment and Assumption, have the
        rights and obligations of Lender under this Agreement shall to the extent
        of the
        interest assigned by such Assignment and Assumption, be released from its
        obligations under this Agreement (and, in the case of an Assignment and
        Assumption covering all of the Lender’s rights and obligations under this
        Agreement, Lender shall cease to be a party hereto) but shall continue to
        be
        entitled to the benefits of Sections 9.3 and 11.1 with respect to facts and
        circumstances occurring prior to the effective date of such assignment. Any
        assignment or transfer by Lender of rights or obligations under this Agreement
        that does not comply with this paragraph shall be treated for purposes of
        this
        Agreement as a sale by Lender of a participation in such rights and obligations
        in accordance with paragraph (d) of this Section.

       

    

    

      (e)  Participations.
        Lender
        and/or any holder of the Note may at any time, without the consent of, or
        notice
        to, the Borrower, sell participations to any Person (other than a natural
        person
        or a Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”)
        in all
        or a portion of Lender’s or such holder’s rights and/or obligations under this
        Agreement (including all or a portion of its Revolving Credit Commitment
        and/or
        the Loans owing to it); provided
        that
        (i) Lender’s obligations under this Agreement shall remain unchanged,
        (ii) Lender shall remain solely responsible to the other parties hereto for
        the performance of such obligations and (iii) the Borrower shall continue
        to deal solely and directly with Lender in connection with Lender’s rights and
        obligations under this Agreement. 

      
        
          
            
            

          

          
            28

            
              

            

          

          
            
            

          

        

      

      
        Any
          agreement or instrument pursuant to which Lender sells such a participation
          shall provide that Lender shall retain the sole right to enforce this Agreement
          and to approve any amendment, modification or waiver of any provision of
          this
          Agreement; provided
          that
          such agreement or instrument may provide that Lender will not, without
          the
          consent of the Participant, agree to any amendment, modification or waiver
          of
          the type described in Section 11.13(i) that directly affects such Participant.
          Subject to paragraph (e) of this Section, the Borrower agrees that each
          Participant shall be entitled to the benefits of Section 2.11, Section
          9.3 and
          Section 11.7 to the same extent as if it were Lender and had acquired its
          interest by assignment pursuant to paragraph (b) of this Section. Lender
          shall keep a register, meeting the requirements of Treasury Regulation
          Section
          5f.103-1(c), of each participant, specifying such participant’s entitlement to
          payments of principal and interest with respect to such
          participation.

         

      

    

    (f)  Limitations
      upon Participant Rights. A
      Participant shall not be entitled to receive any greater payment under Section
      2.11, Section 9.3 or Section 11.7 than the Lender would have been entitled
      to
      receive with respect to the participation sold to such Participant, unless
      the
      sale of the participation to such Participant is made with the Borrower’s prior
      written consent.

     

    (g)  Certain
      Pledges. The
      Lender may at any time pledge or assign a security interest in all or any
      portion of its rights under this Agreement to secure obligations of the Lender,
      including without limitation any pledge or assignment to secure obligations
      to a
      Federal Reserve Bank; provided that no such pledge or assignment shall release
      Lender from any of its obligations hereunder or substitute any such pledgee
      or
      assignee for Lender as a party hereto.  Certain
      Funding Arrangements.  Notwithstanding
      anything to the contrary contained herein, Lender may grant to a special purpose
      funding vehicle (a “SPC”),
      identified as such in writing from time to time by the Lender and the Borrower,
      the option to provide to the Borrower all or any part of any Loan that the
      Lender would otherwise be obligated to make to the Borrower pursuant to this
      Agreement; provided
      that (i)
      nothing herein shall constitute a commitment by any SPC to make any Loan, (ii)
      if an SPC elects not to exercise such option or otherwise fails to provide
      all
      or any part of such Loan, the Lender shall be obligated to make such Loan
      pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
      utilize the Revolving Credit Commitment of the Lender to the same extent, and
      as
      if, such Loan were made by the Lender. Each party hereto hereby agrees that
      no
      SPC shall be liable for any indemnity or similar payment obligation under this
      Agreement (all liability for which shall remain with the Lender). In furtherance
      of the foregoing, each party hereto hereby agrees (which agreement shall survive
      the termination of this Agreement) that, prior to the date that is one year
      and
      one day after the payment in full of all outstanding commercial paper or other
      senior indebtedness of any SPC, it will not institute against, or join any
      other
      person in instituting against, such SPC any bankruptcy, reorganization,
      arrangement, insolvency or liquidation proceedings under the laws of the United
      States or any State thereof arising out of any claim relating to the Credit
      Documents. In addition, notwithstanding anything to the contrary contained
      in
      this Section 11.12(b), any SPC may (i) with notice to, but without the prior
      written consent of, the Borrower, assign all or a portion of its interests
      in
      any Loan to the Lender or to any financial institutions (consented to by the
      Borrower and Lender) providing liquidity and/or credit support to or for the
      account of such SPC to support the funding or maintenance of Loans and (ii)
      disclose on a confidential basis any non-public information relating to its
      Loans to any rating agency, commercial paper dealer or provider of any surety,
      guarantee or credit or liquidity enhancement to such SPC. This section may
      not
      be amended without the written consent of the SPC.
      

    
      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

    

    Section
      11.13  Amendments.
      Any
      provision of the Credit Documents may be amended or waived if, but only if,
      such
      amendment or waiver is in writing and is signed by the Borrower and the
      Lender.

     

    Section
      11.14  Headings.
      Section
      headings used in this Agreement are for reference only and shall not affect
      the
      construction of this Agreement.

     

    Section
      11.15  Legal
      Fees, Other Costs and Indemnification.
      The
      Borrower agrees to pay all reasonable costs and expenses of the Lender in
      connection with the preparation and negotiation of the Credit Documents,
      including without limitation, the reasonable fees and disbursements of counsel
      to the Lender in connection with the preparation and execution of the Credit
      Documents, and any amendment, waiver or consent related hereto, whether or
      not
      the transactions contemplated herein are consummated. The Borrower further
      agrees to indemnify the Lender and its directors, agents, officers and
      employees, against all losses, claims, damages, penalties, judgments,
      liabilities and expenses (including, without limitation, all reasonable expenses
      of litigation or preparation therefor, whether or not the indemnified Person
      is
      a party thereto) which any of them may incur or reasonably pay arising out
      of or
      relating to any Credit Document or any of the transactions contemplated thereby
      or the direct or indirect application or proposed application of the proceeds
      of
      any Loan, other than those which arise from the gross negligence or willful
      misconduct of the party claiming indemnification. The Borrower, upon demand
      by
      the Lender at any time, shall reimburse the Lender for any reasonable legal
      or
      other expenses (including reasonable allocable fees and expenses of in-house
      counsel) incurred in connection with investigating or defending against any
      of
      the foregoing except if the same is directly due to the gross negligence or
      willful misconduct of the party to be indemnified.

     

    Section
      11.16  [Reserved].

     

    Section
      11.17  Entire
      Agreement.
      The
      Credit Documents constitute the entire understanding of the parties thereto
      with
      respect to the subject matter thereof and any prior or contemporaneous
      agreements, whether written or oral, with respect thereto are superseded
      thereby.

     

    Section
      11.18  Construction.
      The
      parties hereto acknowledge and agree that neither this Agreement nor the other
      Credit Documents shall be construed more favorably in favor of one than the
      other based upon which party drafted the same, it being acknowledged that all
      parties hereto contributed substantially to the negotiation of this Agreement
      and the other Credit Documents.

    
       

      
        Section
          11.19  Governing
          Law.
          This
          Agreement and the other Credit Documents, and the rights and duties of
          the
          parties hereto, shall be construed and determined in accordance with the
          internal laws of the State of Illinois.

         

      

    

    Section 11.20  SUBMISSION
      TO JURISDICTION; WAIVER OF JURY TRIAL. 
      THE
      BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF 

    
 

    
      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

    

    THE
      UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS AND OF ANY
      ILLINOIS STATE COURT SITTING IN THE CITY OF CHICAGO FOR PURPOSES OF ALL LEGAL
      PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
      DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE BORROWER
      IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
      IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
      BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH
      A
      COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE BORROWER HEREBY IRREVOCABLY
      WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
      OF
      OR RELATING TO ANY CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
      THEREBY.

     

    Section
      11.21  Confidentiality.
      The
      Lender shall hold all non-public information provided to it by Borrower pursuant
      to or in connection with this Agreement in accordance with its customary
      procedures for handling confidential information of this nature, but may make
      disclosure to any of its examiners, regulators, Affiliates, outside auditors,
      counsel and other professional advisors in connection with this Agreement or
      any
      other Credit Document or as reasonably required by any potential bona
      fide
      transferee, participant or assignee, or in connection with the exercise of
      remedies under a Credit Document, or to any nationally recognized rating agency
      that requires access to information about Lender’s investment portfolio in
      connection with ratings issued with respect to Lender, or as requested by any
      governmental agency or representative thereof or pursuant to legal process;
      provided,
      however,
      that
      unless specifically prohibited by applicable law or court order, the Lender
      shall use reasonable efforts to promptly notify Borrower of any request by
      any
      governmental agency or representative thereof (other than any such request
      in
      connection with an examination of the financial condition of the Lender by
      such
      governmental agency) for disclosure of any such non-public information and,
      where practicable, prior to disclosure of such information. Prior to any such
      disclosure pursuant to this Section 11.21, the Lender shall require any
      such bona
      fide transferee,
      participant and assignee receiving a disclosure of non-public information to
      agree, for the benefit of Borrower, in writing to be bound by this Section
      11.21; and to require such Person to require any other Person to whom such
      Person discloses such non-public information to be similarly bound by this
      Section 11.21. The Lender shall not be required to hold confidential any
      information that becomes public by any means other than as a result of a breach
      by it of its obligations under this Section 11.21. 

    
       

      
        Section
          11.22  Patriot
          Act.
          As
          required by federal law or the Lender or Lender’s polices and practices, the
          Lender may need to collect certain customer identification information
          and
          documentation in connection with opening or maintaining accounts or establishing
          or continuing to provide services.

         

        

        Balance
          of Page Intentionally Left Blank

        -
          Signature Page Follows -

      

       

    

    
      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

    

     

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

    

    
      	 	
              PEOPLES
                ENERGY CORPORATION,
                an Illinois corporation, as Borrower

            
	 	 
	 	
              By: 
                /s/  Douglas M. Ruschau

            
	 	
              Its: 
                Vice President & Treasurer

            
	 	 
	 	 

    

    

    
      	 	
              ABN
                AMRO BANK N.V.,
                as Lender

            
	 	 
	 	
              By: 
                /s/  Charles F. Randolph

            
	 	
              Its: 
                Managing Director

            
	 	
              Title: 
                _________________________________________

            
	 	 
	 	 
	 	
              By: 
                /s/  E. Bennett

            
	 	
              Its: 
                Director

            
	 	
              Title: 
                _________________________________________

            

    

    

    
      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

    

    

    EXHIBIT
      A

    REVOLVING
      NOTE

    
      	 $25,000,000	
                
                October 20, 2006

            

    

     

    FOR
      VALUE RECEIVED,
      the
      undersigned, PEOPLES
      ENERGY CORPORATION,
      an
      Illinois corporation (the “Borrower”),
      promises to pay to the order of ABN
      AMRO Bank N.V.
      (the
“Bank”)
      on the
      Termination Date of the hereinafter defined Credit Agreement, or such earlier
      date as provided in the Credit Agreement or this Note, at the principal office
      of the Bank in Chicago, Illinois, in U.S. Dollars in accordance with Section
      4.1
      of the Credit Agreement, the aggregate unpaid principal of all Loans made by
      the
      Bank to the Borrower pursuant to the Credit Agreement, together with interest
      on
      the principal amount of each Loan from time to time outstanding hereunder at
      the
      rates, and payable in the manner and on the dates, specified in the Credit
      Agreement.

     

    
      The
        Bank
        shall record on its books or records or on a schedule attached to this Note,
        which is a part hereof, each Loan made by it pursuant to the Credit Agreement,
        together with all payments of principal and interest and the principal balances
        from time to time outstanding hereon, whether the Loan is a Base Rate Loan
        or a
        LIBOR Loan and the interest rate and Interest Period applicable thereto,
        provided that prior to the transfer of this Note all such amounts shall be
        recorded on a schedule attached to this Note. The record thereof, whether
        shown
        on such books or records or on a schedule to this Note, shall be prima
        facie
        evidence
        of the same, provided, however, that the failure of the Bank to record any
        of
        the foregoing or any error in any such record shall not limit or otherwise
        affect the obligation of the Borrower to repay all Loans made to it pursuant
        to
        the Credit Agreement together with accrued interest thereon.

       

    

    
      This
        Note
        is the “Note” referred to in that certain Seasonal Credit Agreement dated as of
        October 20, 2006, by and between the Borrower and ABN AMRO Bank N.V. (the
        “Credit
        Agreement”),
        and
        this Note and the holder hereof are entitled to all the benefits provided
        for
        thereby or referred to therein, to which Credit Agreement reference is hereby
        made for a statement thereof. This Note may only be conveyed, transferred,
        assigned or otherwise negotiated to a holder in accordance with the terms
        of the
        Credit Agreement. All defined terms used in this Note, except terms otherwise
        defined herein, shall have the same meaning as in the Credit Agreement. This
        Note shall be governed by and construed in accordance with the internal laws
        of
        the State of Illinois.

       

    

    
      Prepayments
        may be made hereon and this Note may be declared due prior to the expressed
        maturity hereof, all in the events, on the terms and in the manner as provided
        for in the Credit Agreement.

       

    

    The
      Borrower hereby waives demand, presentment, protest or notice of any kind
      hereunder.

     

    
      	 	
              PEOPLES
                ENERGY CORPORATION,
                an Illinois corporation

            
	 	 
	 	
              By: 
                __________________________________________   

            
	 	
              Its: 
                __________________________________________ 

            

    

    

    

    
      
        
          
            A-1

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

    

     

    EXHIBIT
      B

     

    COMPLIANCE
      CERTIFICATE

     

    This
      Compliance Certificate is furnished to ABN AMRO Bank N.V., as Lender pursuant
      to
      the Credit Agreement (the “Credit
      Agreement”)
      dated
      as of October 20, 2006, by and between Peoples Energy Corporation and ABN AMRO
      Bank N.V. Unless otherwise defined herein, the terms used in this Compliance
      Certificate have the meanings ascribed thereto in the Credit
      Agreement.

     

    THE
      UNDERSIGNED HEREBY CERTIFIES THAT:

     

    1.  I
      am the
      duly elected or appointed ___________________of Peoples Energy
      Corporation;

     

    2.  I
      have
      reviewed the terms of the Credit Agreement and I have made, or have caused
      to be
      made under my supervision, a detailed review of the transactions and conditions
      of Peoples Energy Corporation and its Subsidiaries during the accounting period
      covered by the attached financial statements; 

     

    3.  The
      examinations described in paragraph 2 did not disclose, and I have no knowledge
      of, the existence of any condition or event which constitutes a Default or
      an
      Event of Default during or at the end of the accounting period covered by the
      attached financial statements or as of the date of this Certificate, except
      as
      set forth below. Without limitation to the foregoing, except as noted below
      the
      Borrower is in compliance with 7.5 and Section 7.6 of the Credit Agreement;
      and

     

    4.  Schedule
      1 attached hereto sets forth (i) financial data and computations evidencing
      compliance with certain covenants of the Credit Agreement, all of which data
      and
      computations are true, complete and correct, and are made in accordance with
      the
      terms of the Credit Agreement, and (ii) the list of Subsidiaries in existence
      as
      of the date hereof.

     

    Described
      below are the exceptions, if any, to paragraph 3 by listing, in detail, the
      nature of the condition or event, the period during which it has existed and
      the
      action which the Borrower has taken, is taking, or proposes to take with respect
      to each such condition or event:

     

    
      	 
	 
	 
	 

    

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

     

    
      	 	 

    

    

    

    
      
        
          
            B
              -
              1

            Credit
              Agreement

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

    

     

    SCHEDULE
      1 TO COMPLIANCE CERTIFICATE

     

    Compliance
      Calculations for Credit Agreement

     

    CALCULATION
      AS OF ________ __,200_

     

    

    
      	
              Capital
                Ratio (Sec. 7.6)

            	 	 
	
              1.
                 (a)
                consolidated Indebtedness

            	
              $  

            	 
	
                  
                (b) less
                accumulated other comprehensive income/loss

            	
              $__________

            	 
	
                  
                (c) net consolidated Indebtedness

            	
              $__________

            	 
	
              2.
                 Consolidated
                Net Worth

            	
              $  

            	 
	
              3.
                 Sum
                of Line 1(c) plus
                Line 2

            	
              $  

            	 
	
              4.
                 Capital
                Ratio

            	
               _____:1.00

            	
              (ratio
                of (A) Line 1(c) to (B) Line 3 not to exceed 0.65 to
                1.00)

            

    

    

     

    List
      of Subsidiaries

     

    
      	
              The
                Peoples Gas Light and Coke Company 

              Peoples
                Gas Light Exploration Company

              Peoples
                Gas Neighborhood Development Corporation

              North
                Shore Gas Company 

              North
                Shore Exploration Company

              Peoples
                District Energy Corporation 

              Peoples
                NGV Corp.  

              Peoples
                Energy Production Company 

              PEP
                Holding, LLC 

              Peoples
                Energy Canadian Holdings, Inc.

              Peoples
                Energy Production Company of Canada

              Peoples
                Energy Production Operating Company

              Peoples
                Energy Production Partners, L.P.

              Peoples
                Energy Production - Texas, L.P.

              EnerVest
                Energy, L.P. 

              Sierra
                1996-I Limited Partnership

              Peoples
                Energy Resources Company, LLC 

              Peoples
                Energy Wholesale Marketing, LLC

            	
              PERC
                Canada, Inc.

              Peoples
                Natural Gas Liquids, LLC

              PERC
                Holdings, LLC 

              PV
                Midstream Ventures, LLC 

              PERC
                Power, LLC 

              COB
                Energy Facility, LLC

              Peoples
                Calumet, LLC

              Calumet
                Power, LLC

              Peoples
                Elwood, LLC

              Elwood
                Energy, LLC 

              Peoples
                Elwood Expansion, LLC

              Elwood
                Expansion, LLC 

              Valencia
                Energy, LLC

              Peoples
                MW, LLC 

              Peoples
                Energy Services Corporation

              Peoples
                Energy Ventures, LLC 

              Peoples
                Energy Business Services, LLC

              Peoples
                Energy Home Services, LLC

              Peoples
                Energy Neighborhood Development, LLC

              Peoples
                Technology, LLC

            

    

    

    

    

    
      
        
          
            Credit
              Agreement

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

    

    

    SCHEDULE
      1

     

    LENDER’S
      PAYMENT INFORMATION

     

    

    

    Loan
      Repayments, Interest, Fees:

    

    ABN
      AMRO
      Bank N.V.

    New
      York,
      NY

    ABA
      #
      026009580

    F/O
      ABN
      AMRO Bank, N.V.

    Chicago
      Branch CPU

    Account
      #
      650-001-1789-41

    Reference:
      Peoples Energy Corporation

    ACBS#:
      00004049

    

    

     

    
      
        Schedule
          1

      

      
        Credit
          Agreement

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      1A

     

    PRICING
      GRID

     

    (Basis
      Points)

     

     

    
      	
              S
                & P/ Moody’s Senior Un-Secured Rating 

            	
              A/
                A2 or higher

            	
              A-/
                A3 

            	
              BBB+/
                Baa1

            	
              BBB/
                Baa2

            	
              BBB-/
                Baa3

            	
              lower
                than
BBB-/ Baa3

            
	
              Commitment
                Fee

            	
              6.0

            	
              7.0

            	
              8.0

            	
              10.0

            	
              12.5

            	
              20.0

            
	
              Base
                Rate Margin

            	
              0.0

            	
              0.0

            	
              0.0

            	
              0.0

            	
              0.0

            	
              0.0

            
	
              LIBOR
                Margin

            	
              25.0

            	
              30.0

            	
              40.0

            	
              50.0

            	
              62.5

            	
              87.5

            
	
              Utilization
                Fee (>50%)

            	
              10.0

            	
              10.0

            	
              12.5

            	
              12.5

            	
              12.5

            	
              12.5

            

    

    

    Any
      change in a Credit Rating of the Borrower (and if applicable, any change in
      fees
      or interest payable hereunder based on such Credit Rating), shall be effective
      as of the date such change is announced by the applicable rating
      agency.

     

    *
      If
      the Borrower is split-rated and the ratings differential is one level, the
      higher rating will apply. If the Borrower is split-rated and the ratings
      differential is two levels or more, the rating level one below the higher level
      will apply. If at any time the Borrower has no Moody’s rating or no Standard
& Poors’ rating, the “Lower than BBB-/Baa3” level will apply; provided,
      however, that in such event the Borrower may propose an alternative rating
      agency or mechanism in replacement thereof.

    

    

    
      
        Schedule
          1 - A

      

      
        Credit
          Agreement

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