Document:

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                                                                     EXHIBIT 4.4

THIS INSTRUMENT PREPARED BY AND
AFTER RECORDING SHOULD BE MAILED TO:
Simon B. Halfin
Counsel
The Peoples Gas Light and
   Coke Company
130 East Randolph Drive
Chicago, IL 60601

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                     THE PEOPLES GAS LIGHT AND COKE COMPANY

                                       TO

                         U.S. BANK NATIONAL ASSOCIATION

                                     TRUSTEE

                             SUPPLEMENTAL INDENTURE

                          DATED AS OF FEBRUARY 15, 2003

       FIRST AND REFUNDING MORTGAGE 4% BONDS, SERIES MM-1 AND SERIES MM-2

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                                                                     EXHIBIT 4.4

                                TABLE OF CONTENTS

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<S>                                                                                     <C>
Parties .............................................................................   1

Recitals

         Status of Mortgage .........................................................   1
         First and Refunding Mortgage Bonds
               issued and outstanding ...............................................   2
         Basis for issuance of $50,000,000
               Series MM Bonds ......................................................   2
         Reservation of right to amend the Mortgage .................................   2
         Amendment of Article X of the Mortgage .....................................   3
         Supplemental Indenture authorized by Directors .............................   3

                                    ARTICLE I

                     FIRST AND REFUNDING MORTGAGE 4% BONDS,
                                    SERIES MM

Sec. 1:  Designation, amount limited to
               $50,000,000, maturity and
                       interest rate ................................................   5
               Place and medium of interest and
                       principal payments. ..........................................   5

Sec. 2:  Form of bonds ..............................................................   6
               Denominations of registered bonds
                       without coupons ..............................................   6
               Date of bonds ........................................................   6

Sec. 3:  Interdenominational exchanges of
                       registered bonds .............................................   7

Sec. 4:  Execution, authentication and issue of
                       Series MM Bonds ..............................................   7

Sec. 5:  Redemption of Series MM Bonds
                       by Company ...................................................   7
</Table>

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<S>                                                                                    <C>
Sec. 6:  Notice of Redemption .......................................................   8

Sec. 7:  Legend on Series MM Bonds ..................................................   9

Sec. 8:  Definitions ................................................................  10

Sec. 9: Payments, notices and actions due on
               Saturdays, Sundays and holidays
               to take place on next succeeding
               Business Day .........................................................  13

Sec. 10:  Reservation of right to amend
                       the Mortgage .................................................  13

Sec. 11:  Transfer and Exchange .....................................................  15

                                   ARTICLE II

                            COVENANTS OF THE COMPANY

Sec. 1:  Company each year shall charge against income and place
         to credit of Depreciation Reserve Account the greater of
         $1,550,000 or 2.5% of the sum of the aggregate principal
         amount of all indebtedness of the Company secured by the
         Mortgage and liens superior to the Mortgage ................................  29

         Company after issuing any Series MM Bonds shall not request the
         Trustee to:

               Authenticate any bonds under Mortgage pursuant to Sections 2,
               4 or 5 of Article III or pay cash to the Company pursuant to
               Section 6 of Article III on account of transactions effected prior
               to January 1, 1951 ...................................................  30

               Authenticate any series of bonds or pay any moneys to Company
               on account of payment of any Refunding Mortgage 5% bonds on
               or after January 1, 1944 .............................................  31
</Table>

                                       ii
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<S>                                                                                    <C>
         Company shall not request the Trustee to
               authenticate bonds of any series or to
               pay to the Company any cash deposited
               with or received by the Trustee, unless it
               delivers to the Trustee a certificate
               signed by the President or an Executive
               or other Vice President or Chief Financial Officer
               and Treasurer or Assistant Treasurer containing
               specified information ................................................  31

         Company shall not obtain authentication of
               bonds or payment of cash in excess of
               75% of amount shown on such certificate ..............................  34

         Explanation of terms--
               Mortgage and Prior Lien Debt of Company ..............................  34
               Net Earnings .........................................................  34
               Permanent Property ...................................................  36
               Original Cost ........................................................  36

         Company  to furnish Trustee in connection
               with authentication of bonds pursuant
               to Section 5 of Article III or payment
               of cash pursuant to Section 6 of
               Article III or of Article IX of the Mortgage: ........................  36

               Opinion of counsel that
               Company has acquired good title to
               property .............................................................  37

               Certificate of President or any
               Executive or other Vice President
               or Chief Financial Officer and also by
               the Treasurer or an Assistant Treasurer certifying
               that the property involved is
               "permanent property" .................................................  37

         Company shall not hereafter issue any bonds
               under any underlying mortgage ........................................  37
</Table>

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<S>                                                                                    <C>
         Company  not to request Trustee to authenticate
               bonds or to pay to it cash on account
               of bonds purchased or redeemed through
               operation of, or bonds deposited in,
               the sinking funds provided for in
               supplemental indentures ..............................................  37

         In event of acquisition of substantially
               all properties subject to lien of
               Mortgage by federal, state or municipal
               authority, Company shall be deemed to
               have requested Trustee to redeem all
               bonds of all series under Mortgage ...................................  38

         Classifying of "property replaced or retired" ..............................  38

         If Company consolidates or merges with
               another corporation, successor must
               assume payment of principal and
               interest on all bonds outstanding
               under Mortgage .......................................................  38

Sec. 2:  After-acquired property shall be
                       subject to lien of Mortgage ..................................  38

Sec. 3:  Company to furnish certificates,
                       mortgages, deeds, opinions of
                       counsel to Trustee within sixty
                       (60) days after acquiring land,
                       plants or interests in lands or
                       plants the aggregate cost of
                       which shall equal or
                       exceed $500,000 ..............................................  39

Sec. 4:  Company covenants that upon cancellation
                       of any "prior lien" it shall cause
                       all cash or obligations held by
                       trustee of such "prior lien" to be
                       paid over to Trustee. ........................................  41
</Table>

                                       iv
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<S>                                                                                    <C>
                                   ARTICLE III

                              AMENDMENT OF MORTGAGE

Sec. 1.  Amendment of Section 1 of Article X of Mortgage ............................  41

                                   ARTICLE IV

                                  MISCELLANEOUS

Sec. 1:  Trustee's Acceptance .......................................................  42

Sec. 2:  Supplemental Indenture executed
                       pursuant to Article XVI of Mortgage ..........................  42

Sec. 3:  All covenants and conditions by or
                       on behalf of Company to bind its
                       successors and assigns .......................................  42

Sec. 4:  Supplemental Indenture to become
                       effective only from time of its
                       actual execution and delivery
                       by the Company and Trustee ...................................  42

Execution in counterparts ...........................................................  42

Attestation clause by Company .......................................................  43
Signature by Company ................................................................  43
Attestation clause by Trustee .......................................................  44
Signature by Trustee ................................................................  44
Acknowledgment by Company ...........................................................  45
Acknowledgment by Trustee ...........................................................  34
Exhibit A Form of Series MM-1 Registered Bond Without Coupon
Exhibit B Form of Series MM-2 Registered Bond Without Coupon
Exhibit C Form of Certificate of Transfer
Exhibit D Form of Certificate of Exchange
Exhibit E Form of Regulation S Temporary Global Bond
</Table>

                                        v
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     This Supplemental Indenture, dated as of February 15, 2003, made and
entered into by and between THE PEOPLES GAS LIGHT AND COKE COMPANY, a
corporation organized and existing under the laws of the State of Illinois
(hereinafter called the "Company") and U.S. Bank National Association
(hereinafter called the "Trustee"), a corporation organized and existing under
the laws of the United States of America and successor to Illinois Merchants
Trust Company, as trustee under the indenture of Chicago By-Product Coke Company
to said Illinois Merchants Trust Company, as trustee, dated January 2, 1926,

                                   WITNESSETH:

     WHEREAS, Chicago By-Product Coke Company, a corporation organized and
existing under the laws of the State of Delaware, heretofore gave its mortgage
in the form of an indenture (hereinafter called the "Original Mortgage") to
Illinois Merchants Trust Company, as trustee, under date of the second day of
January, 1926; and

     WHEREAS, the Company executed and delivered to said Illinois Merchants
Trust Company, as trustee under the Original Mortgage, an indenture bearing date
the first day of March, 1928, whereby, among other things, the Company assumed
and agreed to pay the principal and interest of all bonds issued or to be issued
under the Original Mortgage and secured thereby, and to perform and fulfill all
of the terms, covenants, and conditions of the Original Mortgage binding upon
said Chicago By-Product Coke Company, and in and by said indenture the Company
subjected to the lien of the Original Mortgage, subject to the existing liens
permitted by Section 2 of Article XIV of the Original Mortgage but with
statements required by said Section 2 with regard to such existing liens, all of
the property then owned by the Company or thereafter acquired by it (excepting
such of its property as the Company was by said Section 2 of Article XIV of the
Original Mortgage expressly authorized to reserve from the lien of the Original
Mortgage); and

     WHEREAS, by virtue of all the things done as in the next preceding
paragraph recited, the Company has become the successor corporation under the
Original Mortgage, subject to all the terms, conditions and restrictions
thereof; and

     WHEREAS, thereafter the Company has made, executed and delivered other
indentures supplemental to the Original Mortgage, of which the indentures
supplemental to the Original Mortgage delivered to U.S. Bank National
Association, as Trustee, successor to Illinois Merchants Trust Company, as
Trustee under the Original Mortgage, dated, respectively, May 20, 1936, March
10, 1950, as of June 1, 1951, as of August 15, 1967, as of September 15, 1970,
as of March 1, 1985, as of April 1, 1993, as of December 1, 1993, as of December
1, 1993, as of June 1, 1995, as of March 1, 2000, as of March 1, 2000, as of
March 1, 2000, as of March 1, 2000, as of February 1, 2003 and as of February 1,
2003 are wholly or partially in full force and effect (said Original Mortgage,
and said Indenture dated March 1, 1928, as so supplemented and amended, being
collectively called the "Mortgage", and said Mortgage, as supplemented by this
Supplemental Indenture, being collectively called the "Mortgage as
supplemented"); and

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     WHEREAS, all bonds which have heretofore been issued and outstanding under
the Mortgage have been retired and cancelled, except that as of December 31,
2002, there were bonds of the following series outstanding in the aggregate
principal amounts indicated below (the Series X bonds listed below have been
called for redemption in full on March 14, 2003 and the Series GG bonds listed
below have been called for redemption in full on March 27, 2003):

<Table>
<Caption>
                                                  Aggregate
  Bonds                Due Date               Principal Amount
-------------------    --------------------   ----------------
<S>                    <C>                      <C>
Series X               March 1, 2015            $ 50,000,000
Series CC              May 1, 2003              $ 75,000,000
Series DD              December 1, 2023         $ 75,000,000
Series EE              December 1, 2023         $ 27,000,000
Series FF              June 1, 2025             $ 50,000,000
Series GG              March 1, 2030            $ 50,000,000
Series HH              March 1, 2030            $ 50,000,000
Series II              March 1, 2030            $ 37,500,000
Series JJ              March 1, 2030            $ 37,500,000
Series KK              February 1, 2033         $ 50,000,000
Series LL              February 1, 2033         $ 50,000,000
</Table>

; and

     WHEREAS, it is provided in Article III of the Mortgage that bonds of any
series may from time to time be issued by the Company under the Mortgage in a
principal amount equal to 75% of expenditures made for the acquisition of any
permanent property as defined in the Mortgage or upon the deposit of cash with
the Trustee equal to the aggregate principal amount of bonds whose
authentication and delivery is then applied for; and

     WHEREAS, it is provided in Article III of the Mortgage that bonds of any
series may from time to time be issued by the Company under the Mortgage for or
on account of the acquisition and cancellation, or of the payment, cancellation,
redemption or other discharge, at, before or after maturity, of an equal
aggregate principal amount of bonds of any one or more other series theretofore
authenticated under any of the provisions of the Mortgage and which shall have
been or shall be outstanding; and

     WHEREAS, the Company has duly determined to create two additional series of
its bonds to be issued under the Mortgage as supplemented designated "The
Peoples Gas Light and Coke Company First and Refunding Mortgage 4% Bonds, Series
MM-1" (herein sometimes referred to as "bonds of Series MM-1") and The Peoples
Gas Light and Coke Company First and Refunding Mortgage 4% Bonds, Series MM-2"
(herein sometimes referred to as "bonds of Series MM-2" or "Exchange
Bonds") (together, the bonds of Series MM-1 and the bonds of Series MM-2 are
referred to as the "bonds of

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Series MM") and to issue an aggregate of $50,000,000 (that is $50,000,000 for
each of the bonds of Series MM-1 and bonds of Series MM-2) principal amount of
said bonds all of which bonds shall be fully registered without coupons; and

     WHEREAS, the Company desires to reserve the right to amend the Mortgage
without any consent or other action by holders of the bonds of Series MM or any
subsequent series, to provide that the Mortgage, the rights and obligations of
the Company and the rights of the bondholders may be modified with the consent
of the holders of not less than 60% in aggregate principal amount of the bonds
adversely affected; provided, however, that no modification shall (1) extend the
time, or reduce the amount, of any payment on any bond, without the consent of
the holder of each bond so affected, (2) permit the creation of any lien, not
otherwise permitted, prior to or on a parity with the lien of the Mortgage,
without the consent of the holders of all bonds then outstanding, or (3) reduce
the above percentage of the aggregate principal amount of bonds the holders of
which are required to approve any such modification without the consent of the
holders of all bonds then outstanding; and

     WHEREAS, the form of registered bond of Series MM-1 and the form of the
Trustee's Certificate to appear on all bonds of Series MM-1 shall be
substantially as set forth in Exhibit A, attached hereto and made a part hereof;
and

     WHEREAS, the form of registered bond of Series MM-2 and the form of the
Trustee's Certificate to appear on all bonds of Series MM-2 shall be
substantially as set forth in Exhibit B, attached hereto and made a part hereof;
and

     WHEREAS, the Company also desires in and by this Supplemental Indenture to
amend Section 1 of Article X of the Mortgage as herein set forth; and

     WHEREAS, all acts and things necessary to make the bonds of Series MM, when
authenticated by the Trustee and issued as in the Mortgage and in this
Supplemental Indenture provided, the valid, binding and legal obligations of the
Company, entitled in all respects to the security of the Mortgage, have been
done and performed and the creation, execution and delivery of this Supplemental
Indenture have in all respects been duly authorized by a resolution adopted by
the Board of Directors of the Company; and

     WHEREAS, the Company has requested the Trustee, pursuant to the provisions
of Article XVI of the Mortgage, to enter into this Supplemental Indenture for
the purpose of supplementing and amending the Mortgage as herein provided;

     NOW, THEREFORE, in consideration of the premises and of the sum of One
Dollar ($1.00) duly paid by the Trustee to the Company and for other good and
valuable considerations, the receipt whereof is hereby acknowledged, the parties
hereto agree as follows:

           DESCRIPTION OF CERTAIN PROPERTY SUBJECT TO THE LIEN OF THE
                                    MORTGAGE

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     The Company hereby mortgages and conveys unto the Trustee, its successor or
successors in trust, the property described in Schedule 1 hereto attached and
expressly made a part hereof.

     TO HAVE AND TO HOLD all of said property hereby conveyed and mortgaged or
intended to be conveyed and mortgaged, together with the rents, issues and
profits thereof, unto Trustee, and its successor or successors in trust and
their assigns in trust, under the and subject to all of the terms, conditions
and provisions of the Mortgage (as the Mortgage is defined herein) and of this
Supplemental Indenture as fully and in all respects as if said property had
originally been described in said Mortgage.

     Subject, however, to the reservations, exceptions, limitations and
restrictions contained in the several deeds, leases, servitudes, contracts or
other instruments through which the Company acquired and/or claimed title to
and/or enjoys the use of the mortgaged property, and subject also to any
mortgages or easements existing or placed on any of said property at the time of
its acquisition, liens for taxes and assessments not due or, if due, in the
course of contests, judgments in the course of appeal or otherwise in contest
and secured by sufficient bond, liens arising out of proceedings in court in the
course of contests and undetermined liens or charges (if any) incidental to
construction, and subject also to such servitudes, easements, rights and
privileges in, over, on or through said property as may have been granted by the
Company to other persons prior to the date of this Supplemental Indenture.

     BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and
security of the holders of all bonds and interest coupons now or hereafter
issued under the Mortgage and for the enforcement of and payment of said bonds
and coupons when payable and the performance of and compliance with the
covenants and conditions of the Mortgage without any preference, distinction or
priority as to lien or otherwise of any bond or bonds over others by reason of
difference in time of the actual issue, sale or negotiation thereof; but so that
each and every bond now or hereafter issued under the Mortgage shall have the
same lien so that the interest and principal of any and all of such bonds shall,
subject to the terms of the Mortgage, be equally and proportionately secured
thereby, as if they had been made, executed, delivered, sold and negotiated
simultaneously with the execution thereof.

     UPON CONDITION that, until the happening of an event of default as provided
in the Mortgage, the Company shall be suffered and permitted to possess, use and
enjoy the property, rights, privileges and franchises conveyed herein and to
receive and use the rents, issues, income, revenues, earnings and profits
thereof.

     IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the Company and
the Trustee, and its successor or successors in trust, as follows:

                                        4
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                                    ARTICLE I

                     FIRST AND REFUNDING MORTGAGE 4% BONDS,
                                    SERIES MM

     SECTION 1.  Two new series of bonds of the Company shall be issued under
and secured by the Mortgage as supplemented, which shall be designated as the
Company's "First and Refunding Mortgage 4% Bonds, Series MM-1" and "First and
Refunding Mortgage 4% Bonds, Series MM-2". The aggregate principal amount of
bonds of Series MM which may be executed by the Company and authenticated by the
Trustee shall be limited to $50,000,000 (that is $50,000,000 for each of the
bonds of Series MM-1 and the bonds of Series MM-2) (exclusive of bonds
authenticated and delivered upon interdenominational or other exchanges and
transfers pursuant to Section 3 of Article I hereof and Sections 2, 5, 11 and 12
of Article I of the Original Mortgage and delivered pursuant to Section 3 of
Article VI of the Original Mortgage as the same may relate to fully registered
bonds including, without limitation, any exchange of bonds of Series MM-2 for
bonds of Series MM-1). Bonds of Series MM all shall be registered bonds without
coupons, and shall be due and payable March 1, 2010. All bonds of Series MM
shall bear interest from the date thereof, payable at or before 9:00 o'clock
a.m. Chicago time on the first day of March and the first day of September in
each year, commencing September 1, 2003, until the principal thereof shall have
become due and payable, at the rate of 4% per annum, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
the applicable law) on any overdue installment of interest at the same rate per
annum, and shall be payable both as to principal and interest, and as to
premium, if any, in coin or currency of the United States of America which at
the time of payment is legal tender for the payment of public and private debts,
at the office or agency of the Trustee in St. Paul, Minnesota PROVIDED, however,
that if a Registration Default (as defined in the Registration Rights Agreement
by and among the Company and the Initial Purchaser (as defined therein), dated
as of February 19, 2003) occurs, additional interest will accrue on the bonds of
Series MM at a rate of 0.25% per annum (increasing by an additional 0.25% per
annum after each consecutive 90-day period that occurs, after the date on which
such Registration Default occurs up to a maximum additional interest rate of
1.00% per annum) from and including the date on which any such Registration
Default shall occur to but excluding the date on which all Registration Defaults
have been cured.

     So long as there is no existing default in the payment of interest on the
bonds of Series MM, the interest payable on any interest payment date shall be
to the person in whose name any bond of Series MM is registered at the close of
business on any record date with respect to any payment date, and such person
shall be entitled to receive the interest payable on such interest payment date
notwithstanding any transfer or exchange of such bond of Series MM subsequent to
the record date and on or prior to such interest payment date, except as and to
the extent the Company shall default in the payment of the interest due on such
interest payment date, in which case such defaulted interest shall be paid to
the person in whose name such bond of Series MM is registered at the close of

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business on a subsequent record date, which shall not be less than five (5) days
prior to the date of payment of such defaulted interest established by notice
given by mail by or on behalf of the Company to the person in whose name such
bond of Series MM is then registered and to the Trustee not less than ten (10)
days preceding such subsequent record date.

     The term "record date" as used herein with respect to any interest payment
date (March 1 or September 1, as the case may be) shall mean the fifteenth day
of February or the fifteenth day of August, as the case may be, next preceding
such interest payment day.

     As used in this Section I, the term "default in the payment of interest"
means failure to pay interest on the applicable interest payment date
disregarding any period of grace permitted by Article X of the Mortgage.

     SECTION 2.  Bonds of Series MM may be issued only as registered bonds
without coupons (hereinafter sometimes referred to as "registered bonds"), and
they shall be substantially in the form hereinbefore recited. They shall be
issuable in denominations which shall be multiples of $1,000 and any integral
multiple thereof and the execution by the Company of any bond of Series MM shall
evidence conclusively the due authorization of the denomination of such bond.
Each registered bond of Series MM shall be dated as of the date of the interest
payment date on which interest was paid on other bonds of said Series next
preceding the date of issue of such registered bond, except that (i) so long as
there is no existing default in the payment of interest upon the bonds of Series
MM, any bond of Series MM issued after the close of business on any record date
with respect to any interest payment date and prior to such interest payment
date, shall be dated as of such interest payment date, and (ii) any bond of
Series MM issued on an interest payment date on which interest on other bonds of
Series MM was paid shall be dated as of the date of issue and (iii) any bond of
Series MM issued before the initial interest payment date, shall be dated
February 27, 2003, the date of commencement of the first interest period for the
bonds of Series MM, unless (i) above is applicable.

     The registered owner of any bond of Series MM dated as of an interest
payment date as provided in (i) above shall, if the Company shall default in the
payment of interest due on such interest payment date and such default shall be
continuing, be entitled to exchange such bond for a bond or bonds of Series MM
of the same aggregate principal amount dated as of the interest payment date
next preceding the interest payment date first mentioned in this sentence, or,
if the Company shall default in the payment of interest on the first interest
payment date for bonds of Series MM, such owner shall be entitled to exchange
such bond for a bond or bonds of Series MM of the same aggregate principal
amount dated as of February 27, 2003. If the Trustee shall have knowledge at any
time that any registered owner of a bond of Series MM shall be entitled by the
provision of the next preceding sentence to exchange such bond, the Trustee
shall within thirty (30) days mail to such owner at the address of such owner
appearing upon the registry book, a notice informing such owner that such owner
has

                                        6
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such right of exchange.

     SECTION 3.  In the manner prescribed in the Mortgage, the holder of a
registered bond or bonds of Series MM may, at the office or agency of the
Trustee in the City of St. Paul, State of Minnesota, surrender such bond or
bonds in exchange for a like aggregate principal amount of one or more
registered bonds of Series MM of any authorized denomination or denominations.

     No charge will be made by the Company to the registered owner of a bond of
Series MM for the transfer thereof or for the exchange thereof for bonds of
Series MM of other authorized denominations, except, in the case of transfer, a
charge sufficient to reimburse the Company for any stamp or other tax or
governmental charge required to be paid by the Company or the Trustee.

     SECTION 4.  All bonds of Series MM shall be executed on behalf of the
Company by the manual or facsimile signature of its President or the Executive
Vice President or the Chief Financial Officer or the Treasurer or a Vice
President and shall have affixed thereon the manual or facsimile seal of the
Company attested by the manual or facsimile signature of its Secretary or one of
its Assistant Secretaries and be authenticated by the execution by the Trustee
of the certificate endorsed on said bonds, and said bonds shall be issued from
time to time, as the Board of Directors of the Company may determine, but in
accordance with the terms, provisions, conditions and restrictions set forth in
the Mortgage and in this Supplemental Indenture. The definitive bonds of Series
MM may be issued in typewritten or printed form or otherwise as provided in the
Mortgage.

     SECTION 5.  (a) The bonds of Series MM are subject to optional redemption
by the Company, in whole but not in part, at any time, at a redemption price of
100% of the principal amount thereof plus accrued interest, if any, to the
redemption date, if any of the following shall have occurred and if within one
hundred and eighty (180) days following said occurrence the Company files
written notice with the Trustee and directs that the bonds of Series MM are to
be redeemed:

             (i) if, in the Company's reasonable judgment, unreasonable burdens
        or excessive liabilities shall have been imposed upon the Company with
        respect to its property or the operation thereof, including, without
        limitation, federal, state or other ad valorem property, income or other
        taxes, other than ad valorem taxes presently levied upon privately owned
        property used for the same general purposes as its property; or

             (ii) if changes in the economic availability of raw materials,
        operating supplies, fuel or other energy sources or supplies, or
        facilities necessary for the operation of the Company's property or such
        technological or other changes shall have occurred which, in the
        Company's reasonable judgment, render its property uneconomic for such
        purposes; or

                                        7
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             (iii) any court or administrative body shall enter an order or
        decree preventing operations at the Company's business for six
        consecutive months; or

             (iv) any court or administrative agency shall issue an order,
        decree or regulation the compliance with which would, in the opinion of
        the Company, render the continuation of its operations economically
        unfeasible.

     (b) All of the outstanding bonds of Series MM may be redeemed at any time
by the Company, by the payment of the principal amount thereof and accrued
interest thereon to the date of redemption, without the payment of any premium,
in the event of the acquisition by any federal, state or municipal authority of
any substantial portion (which shall be not less than one-third as determined by
book values) of the income-producing properties of the Company which are subject
to the lien of the Mortgage.

     (c) In the event of the acquisition at any time by any federal, state or
municipal authority of all or substantially all of the income-producing
properties of the Company which are subject to the lien of the Mortgage, the
Company shall be deemed to have elected to redeem and to have requested the
Trustee to redeem all the bonds of all series at the respective applicable
redemption price or prices (together with accrued interest to the date of
redemption), without the payment of any premium, on a date determined by the
Trustee in its discretion to be the earliest practicable redemption date after
receipt by the Trustee of all cash which the Trustee is entitled to receive in
respect of such acquisition by such federal, state or municipal authority. If
the cash so received by the Trustee and all other cash then held by the Trustee
as such, except funds held in trust for the benefit of the holders of particular
bonds and coupons, is not sufficient to effect the redemption of all the bonds
of all series as aforesaid and to pay all amounts owing to the Trustee under the
Mortgage as supplemented (including fees and expenses to be incurred by the
Trustee in connection with such redemption), the Company covenants and agrees
that, within five (5) days after receipt by the Trustee of all cash which the
Trustee is entitled to receive as aforesaid in respect of such acquisition, the
Company will deposit with the Trustee for that purpose cash in an amount
sufficient to make up such deficiency.

     Upon receipt by the Trustee of moneys sufficient for said purposes, notice
of such redemption shall be given by the Trustee for and on behalf and in the
name of the Company. To the extent that such cash received, held and deposited
as aforesaid shall be required for the purpose of redeeming bonds pursuant to
this subparagraph (i), the Company shall be deemed to have directed the Trustee
to apply the same for the purpose, and the balance, if any, after payment of all
said amounts owing to the Trustee, shall be paid to or upon the order of the
Company.

     SECTION 6.  If bonds of Series MM are to be redeemed as provided in Section
5 of this Article I, notice of redemption shall be mailed by or on behalf of the
Company, postage prepaid, at least thirty (30) days and not more than sixty (60)
days prior to such date of redemption, to the registered owners of all bonds of
Series MM to be so

                                        8
<Page>

redeemed, at their respective addresses appearing upon the registry book. Any
notice which is mailed as herein provided shall be conclusively presumed to have
been properly and sufficiently given on the date of such mailing, whether or not
the holder receives the notice. In any case, failure to give due notice by mail,
or any defect in the notice, to the registered owners of any bonds of Series MM
designated for redemption as a whole or in part, shall not affect the validity
of the proceedings for the redemption of any other bond of Series MM. In case of
any redemption of bonds of Series MM by the Trustee pursuant to the provisions
of the Mortgage or any indenture supplemental thereto, notice of redemption
shall be given in a similar manner by the Trustee.

     Except as provided above, the provisions of Article VI of the Mortgage
shall in all respects apply to any such redemption.

     SECTION 7.  (a) GLOBAL BONDS. Bonds of Series MM issued in global form will
be substantially in the form of Exhibit A or Exhibit B attached hereto
(including the Global Bond Legend thereon and the "Schedule of Exchanges of
Interests in the Global Bond" attached thereto). Bonds of Series MM issued in
definitive form will be substantially in the form of Exhibit A or Exhibit B
attached hereto (but without the Global Bond Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Bond" attached thereto). Each
Global Bond will represent such of the outstanding bonds as will be specified
therein and each shall provide that it represents the aggregate principal amount
of outstanding bonds of Series MM from time to time endorsed thereon and that
the aggregate principal amount of outstanding bonds represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Bond to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding bonds of
Series MM represented thereby will be made by the Trustee or the Custodian, at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 11 of Article I hereof.

     (b) TEMPORARY GLOBAL BONDS. Bonds of Series MM offered and sold in reliance
on Regulation S will be issued initially in the form of the Regulation S
Temporary Global Bond, which will be deposited on behalf of the purchasers of
the bonds represented thereby with the Trustee, at its St. Paul, Minnesota
office, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Clearstream Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period will be terminated upon the receipt by the Trustee of:

          (1)  a written certificate from the Depositary, together with copies
     of certificates from Euroclear and Clearstream Bank certifying that they
     have received certification of non-United States beneficial ownership of
     100% of the aggregate principal amount of the Regulation S Temporary Global
     Bond (except to the extent of any beneficial owners thereof who acquired an
     interest therein

                                       9
<Page>

     during the Restricted Period pursuant to another exemption from
     registration under the Securities Act and who will take delivery of a
     beneficial ownership interest in a 144A Global Bond bearing a Private
     Placement Legend, all as contemplated by Section 11 of Article I hereof);
     and

          (2)  an Officers' Certificate from the Company.

     Following the termination of the Restricted Period, beneficial interests in
the Regulation S Temporary Global Bond will be exchanged for beneficial
interests in Regulation S Permanent Global Bonds pursuant to the Applicable
Procedures. Simultaneously with the authentication of Regulation S Permanent
Global Bonds, the Trustee will cancel the Regulation S Temporary Global Bond.
The aggregate principal amount of the Regulation S Temporary Global Bond and the
Regulation S Permanent Global Bonds may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.

     (c)  EUROCLEAR AND CLEARSTREAM PROCEDURES APPLICABLE. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream
Banking" and "Customer Handbook" of Clearstream in effect from time to time will
be applicable to transfers of beneficial interests in the Regulation S Global
Bonds that are held by Participants through Euroclear or Clearsteam.

     SECTION 8. In this Supplemental Indenture, the following terms shall have
the meanings specified in this Section 8, unless the context otherwise requires:

     "144A GLOBAL BOND" means a Global Bond substantially in the form of Exhibit
A hereto bearing the Global Bond Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Bonds sold in reliance on Rule 144A.

     "ADDITIONAL INTEREST" means all additional interest then owing pursuant to
Section 6 of the Registration Rights Agreement.

     "APPLICABLE PROCEDURES" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Bond, the rules and procedures of the
Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

     "BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such

                                       10
<Page>

"person" has the right to acquire by conversion or exercise of other securities,
whether such right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition. The terms "Beneficially Owns" and
"Beneficially Owned" have a corresponding meaning.

     "BROKER-DEALER" has the meaning set forth in the Registration Rights
Agreement.

     "BUSINESS DAY" means any day which is not a Sunday or a legal holiday or a
day (including Saturday) on which banking institutions in Chicago, Illinois, in
New York, New York, and in the city where the Principal Office of the Trustee is
located are not required or authorized to remain closed and other than a day on
which the New York Stock Exchange is not closed.

     "CUSTODIAN" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.

     "DEFINITIVE BOND" means a certificated Bond registered in the name of the
Holder thereof and issued in accordance with Section 11 of Article I hereof,
substantially in the form of Exhibit A1 hereto except that such Bond shall not
bear the Global Bond Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Bond" attached thereto.

     "DEPOSITARY" means, with respect to the bonds of any series issuable or
issued in whole or in part in the form of one or more Global bonds, a clearing
agency registered under the Securities Exchange Act of 1934 or any successor
clearing agency registered under such Act, and if at any time there is more than
one such person, the term "Depositary" as used with respect to the bonds of any
series shall mean the Depositary with respect to the bonds of such series.

     "EUROCLEAR" means Euroclear Bank S.A./N.V., as operator of the Euroclear
system.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     "EXCHANGE BONDS" means the Bonds issued in the Exchange Offer pursuant to
Section 11(f) of Article I hereof.

     "EXCHANGE OFFER" has the meaning set forth in the Registration Rights
Agreement.

     "EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in the
Registration Rights Agreement.

     "GLOBAL BONDS" means, individually and collectively, each of the Restricted
Global Bonds and the Unrestricted Global Bonds, substantially in the form of
Exhibits A

                                       11
<Page>

or B hereto issued in accordance with Section 11 of Article I hereof.

     "GLOBAL BOND LEGEND" means the legend set forth in Section 11(g)(2) of
Article I, which is required to be placed on all Global Bonds issued under this
Indenture.

     "INDIRECT PARTICIPANT" means a Person who holds a beneficial interest in a
Global Note through a Participant.

     "INITIAL PURCHASER" means Banc One Capital Markets, Inc.

     "LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Bonds for use by such Holders in
connection with the Exchange Offer.

     "NON-U.S. PERSON" means a Person who is not a U.S. Person.

     "PARTICIPANT" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).

     "PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

     "PRIVATE PLACEMENT LEGEND" means the legend set forth in Section 11(g)(1)
of Article I to be placed on all Bonds issued under this Supplemental Indenture
except where otherwise permitted by the provisions of this Supplemental
Indenture.

     "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

     "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of February 19, 2003, between the Company and the Initial Purchaser, as
such agreement may be amended, modified or supplemented from time to time.

     "REGULATION S" means Regulation S promulgated under the Securities Act.

     "REGULATION S GLOBAL BOND" means a Regulation S Temporary Global Bond or
Regulation S Permanent Global Bond, as appropriate.

     "REGULATION S PERMANENT GLOBAL BOND" means a permanent Global Bond in the
form of Exhibit A hereto bearing the Global Bond Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Bond upon
expiration of the Restricted Period.

                                       12
<Page>

     "REGULATION S TEMPORARY GLOBAL BOND" means a temporary Global Bond in the
form of Exhibit E hereto deposited with or on behalf of and registered in the
name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Bonds initially sold in reliance on Rule 903
of Regulation S.

     "RESTRICTED DEFINITIVE BOND" means a Definitive Bond bearing the Private
Placement Legend.

     "RESTRICTED GLOBAL BOND" means a Global Bond bearing the Private Placement
Legend.

     "RESTRICTED PERIOD" means the 40-day distribution compliance period as
defined in Regulation S.

     "RULE 144" means Rule 144 promulgated under the Securities Act.

     "RULE 144A" means Rule 144A promulgated under the Securities Act.

     "RULE 903" means Rule 903 promulgated under the Securities Act.

     "RULE 904" means Rule 904 promulgated the Securities Act.

     "SECURITIES ACT" means the Securities Act of 1933, as amended.

     "SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.

     "UNRESTRICTED GLOBAL BOND" means a permanent global Bond substantially in
the form of Exhibit A1 attached hereto that bears the Global Bond Legend and
that has the "Schedule of Exchange of Interests in the Global Bond" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Bonds that do not bear the Private
Placement Legend.

     "U.S. PERSON" means a U.S. Person as defined in Rule 902(o) under the
Securities Act.

     SECTION 9.  In any case where the date of maturity of interest on or
principal of the bonds of Series MM or the date fixed for redemption of any
bonds of Series MM shall be in the location of the principal office of the
Trustee, a Saturday, Sunday or a legal holiday or a day on which banking
institutions are authorized by law to close in the State of Illinois, then
payment of interest or principal (and premium, if any) need not be made on such
date but may be made on the next succeeding Business Day with the same force and
effect as if made on the date of maturity or the date fixed for redemption, and
no interest shall accrue for the period after such date.

     SECTION 10. The Company reserves the right, without any consent or other

                                       13
<Page>

action by holders of the bonds of Series MM or any subsequent series of bonds,
to amend the Mortgage by inserting the following language as Section 4 of
Article XVI immediately following current Section 3 of Article XVI of the
Mortgage:

     SECTION 4. Anything in Section 1 of this Article to the contrary
     notwithstanding, with the consent of the holders of not less than
     sixty per centum (60%) in aggregate principal amount of the bonds at
     the time outstanding or their attorneys-in-fact duly authorized, or,
     if the rights of the holders of one or more, but not all, series then
     outstanding are affected, the consent of the holders of not less than
     sixty per centum (60%) in aggregate principal amount of the bonds at
     the time outstanding of all affected series, taken together, and not
     any other series, the Company, when authorized by resolution of its
     Board of Directors, and the Trustee, from time to time and at any
     time, subject to the restrictions in this Mortgage contained, may
     enter into an indenture or indentures supplemental hereto for the
     purpose of adding any provisions to or changing in any manner or
     eliminating any of the provisions of this Indenture or of any
     supplemental indenture or modifying the rights and obligations of the
     Company and the rights of the holders of any of the bonds and coupons;
     provided, however, that no such supplemental indenture shall (1)
     extend the maturity of any of the bonds or reduce the rate or extend
     the time of payment of interest thereon, or reduce the amount of the
     principal thereof, or reduce any premium payable on the redemption
     thereof or change the coin or currency in which any bond or interest
     thereon is payable, without the consent of the holder of each bond so
     affected, or (2) permit the creation of any lien, not otherwise
     permitted, prior to or on a parity with the lien of the Mortgage,
     without the consent of the holders of all the bonds then outstanding,
     or (3) reduce the aforesaid percentage of the aggregate principal
     amount of bonds the holders of which are required to approve any such
     supplemental indenture, without the consent of the holders of all the
     bonds then outstanding. For the purposes of this Section 4, bonds
     shall be deemed to be affected by a supplemental indenture if such
     supplemental indenture adversely affects or diminishes the rights of
     holders thereof against the Company or against its property.

     Upon the written request of the Company, accompanied by resolution of
     its Board of Directors authorizing the execution of any such
     supplemental indenture, and upon the filing with the Trustee of
     evidence of the consent of bondholders as aforesaid (the instrument or
     instruments evidencing such consent to be dated within one year of
     such request), the Trustee shall join with the Company in the
     execution of such supplemental indenture unless such supplemental
     indenture affects the Trustee's own rights, duties or immunities under
     this Mortgage or otherwise, in which case the Trustee may in its
     discretion but shall not be obligated to enter into such supplemental
     indenture. The Trustee shall be entitled to receive

                                       14
<Page>

     and, subject to Section 7 of Article XV hereof, may rely upon, an
     opinion of counsel as conclusive evidence that any such supplemental
     indenture is authorized or permitted by the provisions of this
     Section 4.

     It shall not be necessary for the consent of the bondholders under
     this Section 4 to approve the particular form of any proposed
     supplemental indenture, but it shall be sufficient if such consent
     shall approve the substance thereof.

     The Company and the Trustee, if they so elect, and either before or
     after such 60% or greater consent has been obtained, may require the
     holder of any bond consenting to the execution of any such
     supplemental indenture to submit his bond to the Trustee or to such
     bank, banker or trust company as may be designated by the Trustee for
     the purpose, for the notation thereon of the fact that the holder of
     such bond has consented to the execution of such supplemental
     indenture, and in such case such notation, in form satisfactory to the
     Trustee, shall be made upon all bonds so submitted, and such bonds
     bearing such notation shall forthwith be returned to the persons
     entitled thereto. All subsequent holders of bonds bearing such
     notation shall be deemed to have consented to the execution of such
     supplemental indenture, and consent, once given or deemed to be given,
     may not be withdrawn.

     Prior to the execution by the Company and the Trustee of any
     supplemental indenture pursuant to the provisions of this Section 4,
     the Company shall publish a notice, setting forth in general terms the
     substance of such supplemental indenture, at least once in one daily
     newspaper of general circulation in each city in which the principal
     of any of the bonds shall be payable, or, if all bonds outstanding of
     any series shall be registered bonds without coupons or coupon bonds
     registered as to principal, such notice with respect to such series
     shall be mailed first class, postage prepaid, and registered if the
     Company so elects, to each registered holder of bonds of such series
     at the last address of such holder appearing on the registry books,
     such publication or mailing, as the case may be, to be made not less
     than thirty (30) days prior to such execution. Any failure of the
     Company to give such notice, or any defect therein, shall not,
     however, in any way impair or affect the validity of any such
     supplemental indenture.

     SECTION 11. (a) TRANSFER AND EXCHANGE OF GLOBAL BONDS. A Global Bond may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Bonds
will be exchanged by the Company for Definitive Bonds if:

                                       15
<Page>

          (1)  the Company delivers to the Trustee notice from the Depositary
     that it is unwilling or unable to continue to act as Depositary or that it
     is no longer a clearing agency registered under the Exchange Act and, in
     either case, a successor Depositary is not appointed by the Company within
     120 days after the date of such notice from the Depositary; or

          (2)  in the case of a Global Bond held for an account of Euroclear or
     Clearstream, Euroclear or Clearstream, as the case may be, (a) is closed
     for business for a continuous period of 14 days (other than by reason of
     statutory or other holidays), or (b) announces an intention permanently to
     cease business or does in fact do so;

          (3)  the Company in its sole discretion determines that the Global
     Bonds (in whole but not in part) should be exchanged for Definitive Bonds
     and delivers a written notice to such effect to the Trustee; PROVIDED that
     in no event shall the Regulation S Temporary Global Bond be exchanged by
     the Company for the Definitive Bonds prior to (a) the expiration of the
     Restricted Period and (b) the receipt by the Registrar of any certificates
     required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or

          (4)  there has occurred and is continuing a Default or Event of
     Default with respect to the Bonds.

Upon the occurrence of any of the proceeding events in (1) through (4) above,
Definitive Bonds shall be issued in such names as the Depositary shall instruct
the Trustee. Definitive Bonds delivered in exchange for any Global Bonds will be
registered in the names, and issued in any approved denominations, requested by
or on behalf of the Depositary (in accordance with its customary procedures) and
will bear the applicable Private Placement Legend, unless that legend is not
required by applicable law.

     Global Bonds also may be exchanged or replaced, in whole or in part, as
provided in Sections 2 and 7 hereof. Every Bond authenticated and delivered in
exchange for, or in lieu of, a Global Bond or any portion thereof, pursuant to
this Section 11 or Sections 2 and 7 hereof, shall be authenticated and delivered
in the form of, and shall be, a Global Bond. A Global Bond may not be exchanged
for another Bond other than as provided in this Section 11, however, beneficial
interests in a Global Bond may be transferred and exchanged as provided in this
Section 11.

     (b)  TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL BONDS. The
transfer and exchange of beneficial interests in the Global Bonds will be
effected through the Depositary, in accordance with the provisions of this
Supplemental Indenture and the Applicable Procedures. Beneficial interests in
the Restricted Global Bonds will be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Bonds also will require
compliance with either subparagraph (1) or (2) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:

                                       16
<Page>

          (1)  TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL BOND.
     Beneficial interests in any Restricted Global Bond may be transferred to
     Persons who take delivery thereof in the form of a beneficial interest in
     the same Restricted Global Bond in accordance with the transfer
     restrictions set forth in the Private Placement Legend; PROVIDED, HOWEVER,
     that prior to the expiration of the Restricted Period, transfers of
     beneficial interests in the Regulation S Global Bond may not be made to a
     U.S. Person or for the account or benefit of a U.S. Person (other than an
     Initial Purchaser). Beneficial interests in any Unrestricted Global Bond
     may be transferred to Persons who take delivery thereof in the form of a
     beneficial interest in an Unrestricted Global Bond. No written orders or
     instructions shall be required to be delivered to the Registrar to effect
     the transfers described in this Section 11(b)(1).

          (2)  EXCHANGES OF BENEFICIAL INTERESTS IN GLOBAL BONDS. In connection
     with all transfers and exchanges of beneficial interests that are not
     subject to Section 11(b)(1)] above, the transferor of such beneficial
     interest must deliver to the Registrar either:

               (A) both:

                    (i)   a written order from a Participant or an Indirect
               Participant given to the Depositary in accordance with the
               Applicable Procedures directing the Depositary to credit or cause
               to be credited a beneficial interest in another Global Bond in an
               amount equal to the beneficial interest to be transferred or
               exchanged; and

                    (ii)  instructions given in accordance with the Applicable
               Procedures containing information regarding the Participant
               account to be credited with such increase; or

               (B) both:

                    (i)   a written order from a Participant or an Indirect
               Participant given to the Depositary in accordance with the
               Applicable Procedures directing the Depositary to cause to be
               issued a Definitive Bond in an amount equal to the beneficial
               interest to be transferred or exchanged; and

                    (ii)  instructions given by the Depositary to the Registrar
               containing information regarding the Person in whose name such
               Definitive Bond shall be registered to effect the transfer or
               exchange referred to in (1) above; PROVIDED that in no event
               shall Definitive Bonds be issued upon the transfer or exchange of
               beneficial interests in the Regulation S Temporary Global Bond
               prior to (A) the expiration of the Restricted Period

                                       17
<Page>

               and (B) the receipt by the Registrar of any certificates required
               pursuant to Rule 903 under the Securities Act. Upon consummation
               of an Exchange Offer by the Company in accordance with Section
               11(f) hereof, the requirements of this Section 11(b)(2) shall be
               deemed to have been satisfied upon receipt by the Registrar of
               the instructions contained in the Letter of Transmittal delivered
               by the Holder of such beneficial interests in the Restricted
               Global Bonds. Upon satisfaction of all of the requirements for
               transfer or exchange of beneficial interests in Global Bonds
               contained in this Indenture and the Bonds or otherwise applicable
               under the Securities Act, the Trustee shall adjust the principal
               amount of the relevant Global Bond(s) pursuant to Section 11(h)
               hereof.

          (3)  TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER RESTRICTED GLOBAL
     BOND. A beneficial interest in any Restricted Global Bond may be
     transferred to a Person who takes delivery thereof in the form of a
     beneficial interest in another Restricted Global Bond if the transfer
     complies with the requirements of Section 11(b)(2) above and the Registrar
     receives the following:

               (A) if the transferee will take delivery in the form of a
          beneficial interest in the 144A Global Bond, then the transferor must
          deliver a certificate in the form of Exhibit B hereto, including the
          certifications in item (1) thereof; and

               (B) if the transferee will take delivery in the form of a
          beneficial interest in the Regulation S Temporary Global Bond or the
          Regulation S Global Bond, then the transferor must deliver a
          certificate in the form of Exhibit B hereto, including the
          certifications in item (2) thereof.

          (4)  TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN A RESTRICTED
     GLOBAL BOND FOR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL BOND. A
     beneficial interest in any Restricted Global Bond may be exchanged by any
     holder thereof for a beneficial interest in an Unrestricted Global Bond or
     transferred to a Person who takes delivery thereof in the form of a
     beneficial interest in an Unrestricted Global Bond if the exchange or
     transfer complies with the requirements of Section 11(b)(2) above and:

               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the holder of the beneficial interest to be transferred, in the
          case of an exchange, or the transferee, in the case of a transfer,
          certifies in the applicable Letter of Transmittal that it is not (i) a
          Broker-Dealer, (ii) a Person participating in the distribution of the
          Exchange Bonds or (iii) a Person who is an affiliate (as defined in
          Rule 144) of the Company;

                                       18
<Page>

               (B) such transfer is effected pursuant to the Shelf Registration
          Statement in accordance with the Registration Rights Agreement;

               (C) such transfer is effected by a Broker-Dealer pursuant to the
          Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

               (D) the Registrar receives the following:

                    (i)   if the holder of such beneficial interest in a
               Restricted Global Bond proposes to exchange such beneficial
               interest for a beneficial interest in an Unrestricted Global
               Bond, a certificate from such holder in the form of Exhibit C
               hereto, including the certifications in item (1)(a) thereof; or

                    (ii)  if the holder of such beneficial interest in a
               Restricted Global Bond proposes to transfer such beneficial
               interest to a Person who shall take delivery thereof in the form
               of a beneficial interest in an Unrestricted Global Bond, a
               certificate from such holder in the form of Exhibit C hereto,
               including the certifications in item (4) thereof;

          and, in each such case set forth in this subparagraph (D), if the
          Registrar so requests or if the Applicable Procedures so require, an
          opinion of counsel in form reasonably acceptable to the Registrar to
          the effect that such exchange or transfer is in compliance with the
          Securities Act and that the restrictions on transfer contained herein
          and in the Private Placement Legend are no longer required in order to
          maintain compliance with the Securities Act.

     If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Bond has not yet been issued, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section __ hereof, the Trustee shall authenticate one or more Unrestricted
Global Bonds in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above.

     Beneficial interests in an Unrestricted Global Bond cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Bond.

     (c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR DEFINITIVE BONDS.

          (1)  BENEFICIAL INTERESTS IN RESTRICTED GLOBAL BONDS TO RESTRICTED
     DEFINITIVE Bonds. If any holder of a beneficial interest in a Restricted
     Global Bond proposes to exchange such beneficial interest for a Restricted
     Definitive

                                       19
<Page>

     Bond or to transfer such beneficial interest to a Person who takes delivery
     thereof in the form of a Restricted Definitive Bond, then, upon receipt by
     the Registrar of the following documentation:

               (A) if the holder of such beneficial interest in a Restricted
          Global Bond proposes to exchange such beneficial interest for a
          Restricted Definitive Bond, a certificate from such holder in the form
          of Exhibit D hereto, including the certifications in item (2)(a)
          thereof;

               (B) if such beneficial interest is being transferred to a QIB in
          accordance with Rule 144A, a certificate to the effect set forth in
          Exhibit C hereto, including the certifications in item (1) thereof;

               (C) if such beneficial interest is being transferred to a
          Non-U.S. Person in an offshore transaction in accordance with Rule 903
          or Rule 904, a certificate to the effect set forth in Exhibit C
          hereto, including the certifications in item (2) thereof;

               (D) if such beneficial interest is being transferred pursuant to
          an exemption from the registration requirements of the Securities Act
          in accordance with Rule 144, a certificate to the effect set forth in
          Exhibit C hereto, including the certifications in item (3)(a) thereof;

               (E) if such beneficial interest is being transferred to the
          Company, a certificate to the effect set forth in Exhibit C hereto,
          including the certifications in item (3)(b) thereof; or

               (F) if such beneficial interest is being transferred pursuant to
          an effective registration statement under the Securities Act, a
          certificate to the effect set forth in Exhibit C hereto, including the
          certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global
Bond to be reduced accordingly pursuant to Section 11(h) hereof, and the Company
shall execute and the Trustee shall authenticate and deliver to the Person
designated in the instructions a Definitive Bond in the appropriate principal
amount. Any Definitive Bond issued in exchange for a beneficial interest in a
Restricted Global Bond pursuant to this Section 11(c) shall be registered in
such name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant.
The Trustee shall deliver such Definitive Bonds to the Persons in whose names
such Bonds are so registered. Any Definitive Bond issued in exchange for a
beneficial interest in a Restricted Global Bond pursuant to this Section
11(c)(1) shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.

                                       20
<Page>

               (2) BENEFICIAL INTERESTS IN REGULATION S TEMPORARY GLOBAL BOND TO
          DEFINITIVE BONDS. Notwithstanding Sections 11(c)(1)(A) and (C) hereof,
          a beneficial interest in the Regulation S Temporary Global Bond may
          not be exchanged for a Definitive Bond or transferred to a Person who
          takes delivery thereof in the form of a Definitive Bond prior to (A)
          the expiration of the Restricted Period and (B) the receipt by the
          Registrar of any certificates required pursuant to Rule
          903(b)(3)(ii)(B) under the Securities Act, except in the case of a
          transfer pursuant to an exemption from the registration requirements
          of the Securities Act other than Rule 903 or Rule 904.

          (2)  BENEFICIAL INTERESTS IN RESTRICTED GLOBAL BONDS TO UNRESTRICTED
     DEFINITIVE BONDS. A holder of a beneficial interest in a Restricted Global
     Bond may exchange such beneficial interest for an Unrestricted Definitive
     Bond or may transfer such beneficial interest to a Person who takes
     delivery thereof in the form of an Unrestricted Definitive Bond only if:

               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the holder of such beneficial interest, in the case of an
          exchange, or the transferee, in the case of a transfer, certifies in
          the applicable Letter of Transmittal that it is not (i) a
          Broker-Dealer, (ii) a Person participating in the distribution of the
          Exchange Bonds or (iii) a Person who is an affiliate (as defined in
          Rule 144) of the Company;

               (B) such transfer is effected pursuant to the Shelf Registration
          Statement in accordance with the Registration Rights Agreement;

               (C) such transfer is effected by a Broker-Dealer pursuant to the
          Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

               (D) the Registrar receives the following:

                    (i)   if the holder of such beneficial interest in a
               Restricted Global Bond proposes to exchange such beneficial
               interest for a Definitive Bond that does not bear the Private
               Placement Legend, a certificate from such holder in the form of
               Exhibit D hereto, including the certifications in item (1)(b)
               thereof; or

                    (ii)  if the holder of such beneficial interest in a
               Restricted Global Bond proposes to transfer such beneficial
               interest to a Person who shall take delivery thereof in the form
               of a Definitive Bond that does not bear the Private Placement

                                       21
<Page>
               Legend, a certificate from such holder in the form of Exhibit C
               hereto, including the certifications in item (4) thereof;

     and, in each such case set forth in this subparagraph (D), if the Registrar
     so requests or if the Applicable Procedures so require, an opinion of
     counsel in form reasonably acceptable to the Registrar to the effect that
     such exchange or transfer is in compliance with the Securities Act and that
     the restrictions on transfer contained herein and in the Private Placement
     Legend are no longer required in order to maintain compliance with the
     Securities Act.

          (3)  BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL BONDS TO UNRESTRICTED
     DEFINITIVE BONDS. If any holder of a beneficial interest in an Unrestricted
     Global Bond proposes to exchange such beneficial interest for a Definitive
     Bond or to transfer such beneficial interest to a Person who takes delivery
     thereof in the form of a Definitive Bond, then, upon satisfaction of the
     conditions set forth in Section 11(b)(2) hereof, the Trustee will cause the
     aggregate principal amount of the applicable Global Bond to be reduced
     accordingly pursuant to Section 11(h) hereof, and the Company will execute
     and the Trustee will authenticate and deliver to the Person designated in
     the instructions a Definitive Bond in the appropriate principal amount. Any
     Definitive Bond issued in exchange for a beneficial interest pursuant to
     this Section 11(c)(3) will be registered in such name or names and in such
     authorized denomination or denominations as the holder of such beneficial
     interest requests through instructions to the Registrar from or through the
     Depositary and the Participant or Indirect Participant. The Trustee will
     deliver such Definitive Bonds to the Persons in whose names such Bonds are
     so registered. Any Definitive Bond issued in exchange for a beneficial
     interest pursuant to this Section 11(c)(3) will not bear the Private
     Placement Legend.

     (d) TRANSFER AND EXCHANGE OF DEFINITIVE BONDS FOR BENEFICIAL INTERESTS.

          (1)  RESTRICTED DEFINITIVE BONDS TO BENEFICIAL INTERESTS IN RESTRICTED
     GLOBAL Bonds. If any Holder of a Restricted Definitive Bond proposes to
     exchange such Bond for a beneficial interest in a Restricted Global Bond or
     to transfer such Restricted Definitive Bonds to a Person who takes delivery
     thereof in the form of a beneficial interest in a Restricted Global Bond,
     then, upon receipt by the Registrar of the following documentation:

               (A) if the Holder of such Restricted Definitive Bond proposes to
          exchange such Bond for a beneficial interest in a Restricted Global
          Bond, a certificate from such Holder in the form of Exhibit D hereto,
          including the certifications in item (2)(b) thereof;

               (B) if such Restricted Definitive Bond is being transferred to a
          QIB in accordance with Rule 144A, a certificate to the effect set
          forth in Exhibit C hereto, including the certifications in item (1)
          thereof;

                                       22
<Page>

               (C) if such Restricted Definitive Bond is being transferred to a
          Non-U.S. Person in an offshore transaction in accordance with Rule 903
          or Rule 904, a certificate to the effect set forth in Exhibit C
          hereto, including the certifications in item (2) thereof;

               (D) if such Restricted Definitive Bond is being transferred
          pursuant to an exemption from the registration requirements of the
          Securities Act in accordance with Rule 144, a certificate to the
          effect set forth in Exhibit C hereto, including the certifications in
          item (3)(a) thereof;

               (E) if such Restricted Definitive Bond is being transferred to
          the Company or any of its Subsidiaries, a certificate to the effect
          set forth in Exhibit C hereto, including the certifications in item
          (3)(b) thereof; or

               (F) if such Restricted Definitive Bond is being transferred
          pursuant to an effective registration statement under the Securities
          Act, a certificate to the effect set forth in Exhibit C hereto,
          including the certifications in item (3)(c) thereof,

     the Trustee will cancel the Restricted Definitive Bond, increase or cause
     to be increased the aggregate principal amount of, in the case of clause
     (A) above, the appropriate Restricted Global Bond, in the case of clause
     (B) above, the 144A Global Bond, in the case of clause (C) above, the
     Regulation S Global Bond.

          (2)  RESTRICTED DEFINITIVE BONDS TO BENEFICIAL INTERESTS IN
     UNRESTRICTED GLOBAL BONDS. A Holder of a Restricted Definitive Bond may
     exchange such Bond for a beneficial interest in an Unrestricted Global Bond
     or transfer such Restricted Definitive Bond to a Person who takes delivery
     thereof in the form of a beneficial interest in an Unrestricted Global Bond
     only if:

               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the Holder, in the case of an exchange, or the transferee, in the
          case of a transfer, certifies in the applicable Letter of Transmittal
          that it is not (i) a Broker-Dealer, (ii) a Person participating in the
          distribution of the Exchange Bonds or (iii) a Person who is an
          affiliate (as defined in Rule 144) of the Company;

               (B) such transfer is effected pursuant to the Shelf Registration
          Statement in accordance with the Registration Rights Agreement;

               (C) such transfer is effected by a Broker-Dealer pursuant to the
          Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

                                       23
<Page>

               (D) the Registrar receives the following:

                    (i)   if the Holder of such Definitive Bonds proposes to
               exchange such Bonds for a beneficial interest in the Unrestricted
               Global Bond, a certificate from such Holder in the form of
               Exhibit C hereto, including the certifications in item (1)(c)
               thereof; or

                    (ii)  if the Holder of such Definitive Bonds proposes to
               transfer such Bonds to a Person who shall take delivery thereof
               in the form of a beneficial interest in the Unrestricted Global
               Bond, a certificate from such Holder in the form of Exhibit B
               hereto, including the certifications in item (4) thereof;

          and, in each such case set forth in this subparagraph (D), if the
          Registrar so requests or if the Applicable Procedures so require, an
          opinion of counsel in form reasonably acceptable to the Registrar to
          the effect that such exchange or transfer is in compliance with the
          Securities Act and that the restrictions on transfer contained herein
          and in the Private Placement Legend are no longer required in order to
          maintain compliance with the Securities Act.

          Upon satisfaction of the conditions of any of the subparagraphs in
     this Section 11(d)(2), the Trustee will cancel the Definitive Bonds and
     increase or cause to be increased the aggregate principal amount of the
     Unrestricted Global Bond.

          (3)  UNRESTRICTED DEFINITIVE BONDS TO BENEFICIAL INTERESTS IN
     UNRESTRICTED GLOBAL BONDS. A Holder of an Unrestricted Definitive Bond may
     exchange such Bond for a beneficial interest in an Unrestricted Global Bond
     or transfer such Definitive Bonds to a Person who takes delivery thereof in
     the form of a beneficial interest in an Unrestricted Global Bond at any
     time. Upon receipt of a request for such an exchange or transfer, the
     Trustee will cancel the applicable Unrestricted Definitive Bond and
     increase or cause to be increased the aggregate principal amount of one of
     the Unrestricted Global Bonds.

          If any such exchange or transfer from a Definitive Bond to a
     beneficial interest is effected pursuant to subparagraphs (2)(B), (2)(D) or
     (3) above at a time when an Unrestricted Global Bond has not yet been
     issued, the Company will issue and, upon receipt of an Authentication Order
     in accordance with Section __ hereof, the Trustee will authenticate one or
     more Unrestricted Global Bonds in an aggregate principal amount equal to
     the principal amount of Definitive Bonds so transferred.

     (e)  TRANSFER AND EXCHANGE OF DEFINITIVE BONDS FOR DEFINITIVE BONDS. Upon
request by a Holder of Definitive Bonds and such Holder's compliance with the
provisions of this Section 11(e), the Registrar will register the transfer or
exchange of

                                       24
<Page>

Definitive Bonds. Prior to such registration of transfer or exchange, the
requesting Holder must present or surrender to the Registrar the Definitive
Bonds duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar duly executed by such Holder or by its attorney,
duly authorized in writing. In addition, the requesting Holder must provide any
additional certifications, documents and information, as applicable, required
pursuant to the following provisions of this Section 11(e).

          (1)  RESTRICTED DEFINITIVE BONDS TO RESTRICTED DEFINITIVE BONDS. Any
     Restricted Definitive Bond may be transferred to and registered in the name
     of Persons who take delivery thereof in the form of a Restricted Definitive
     Bond if the Registrar receives the following:

               (A) if the transfer will be made pursuant to Rule 144A under the
          Securities Act, then the transferor must deliver a certificate in the
          form of Exhibit B hereto, including the certifications in item (1)
          thereof;

               (B) if the transfer will be made pursuant to Rule 903 or Rule
          904, then the transferor must deliver a certificate in the form of
          Exhibit C hereto, including the certifications in item (2) thereof;
          and

               (C) if the transfer will be made pursuant to any other exemption
          from the registration requirements of the Securities Act, then the
          transferor must deliver a certificate in the form of Exhibit B hereto,
          including the certifications, certificates and opinion of counsel
          required by item (3) thereof, if applicable.

          (2)  RESTRICTED DEFINITIVE BONDS TO UNRESTRICTED DEFINITIVE BONDS. Any
     Restricted Definitive Bond may be exchanged by the Holder thereof for an
     Unrestricted Definitive Bond or transferred to a Person or Persons who take
     delivery thereof in the form of an Unrestricted Definitive Bond if:

               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the Holder, in the case of an exchange, or the transferee, in the
          case of a transfer, certifies in the applicable Letter of Transmittal
          that it is not (i) a broker-dealer, (ii) a Person participating in the
          distribution of the Exchange Bonds or (iii) a Person who is an
          affiliate (as defined in Rule 144) of the Company;

               (B) any such transfer is effected pursuant to the Shelf
          Registration Statement in accordance with the Registration Rights
          Agreement;

                                       25
<Page>

               (C) any such transfer is effected by a Broker-Dealer pursuant to
          the Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

               (D) the Registrar receives the following:

                    (i)   if the Holder of such Restricted Definitive Bonds
               proposes to exchange such Bonds for an Unrestricted Definitive
               Bond, a certificate from such Holder in the form of Exhibit C
               hereto, including the certifications in item (1)(d) thereof; or

                    (ii)  if the Holder of such Restricted Definitive Bonds
               proposes to transfer such Bonds to a Person who shall take
               delivery thereof in the form of an Unrestricted Definitive Bond,
               a certificate from such Holder in the form of Exhibit B hereto,
               including the certifications in item (4) thereof;

          and, in each such case set forth in this subparagraph (D), if the
          Registrar so requests, an opinion of counsel in form reasonably
          acceptable to the Company to the effect that such exchange or transfer
          is in compliance with the Securities Act and that the restrictions on
          transfer contained herein and in the Private Placement Legend are no
          longer required in order to maintain compliance with the Securities
          Act.

          (3)  UNRESTRICTED DEFINITIVE BONDS TO UNRESTRICTED DEFINITIVE BONDS. A
     Holder of Unrestricted Definitive Bonds may transfer such Bonds to a Person
     who takes delivery thereof in the form of an Unrestricted Definitive Bond.
     Upon receipt of a request to register such a transfer, the Registrar shall
     register the Unrestricted Definitive Bonds pursuant to the instructions
     from the Holder thereof.

     (f) EXCHANGE OFFER. Upon the occurrence of the Exchange Offer in accordance
with the Registration Rights Agreement, the Company will issue and, upon receipt
of an Authentication Order in accordance with the Mortgage hereof, the Trustee
will authenticate:

          (1) one or more Unrestricted Global Bonds in an aggregate principal
     amount equal to the principal amount of the beneficial interests in the
     Restricted Global Bonds tendered into the Exchange Offer by Persons that
     certify in the applicable Letters of Transmittal that (A) they are not
     Broker-Dealers, (B) they are not participating in a distribution of the
     Exchange Bonds and (z) they are not affiliates (as defined in Rule 144) of
     the Company; and

          (2) Unrestricted Definitive Bonds in an aggregate principal amount
     equal to the principal amount of the Restricted Definitive Bonds accepted
     for exchange in the Exchange Offer.

                                       26
<Page>

     Concurrently with the issuance of such Bonds, the Trustee will cause the
aggregate principal amount of the applicable Restricted Global Bonds to be
reduced accordingly, and the Company will execute and the Trustee will
authenticate and deliver to the Persons designated by the Holders of Definitive
Bonds so accepted Unrestricted Definitive Bonds in the appropriate principal
amount.

     (g) LEGENDS. The following legends will appear on the face of all Global
Bonds and Definitive Bonds issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.

          (1)  Private Placement Legend.

               (A) Except as permitted by subparagraph (B) below, each Global
          Bond and each Definitive Bond (and all Bonds issued in exchange
          therefor or substitution thereof) shall bear the legend in
          substantially the following form:

     "THIS OFFERED BOND (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
     TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933,
     AS AMENDED (THE "SECURITIES ACT"), AND THIS OFFERED BOND MAY NOT BE
     OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
     OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS OFFERED BOND
     IS HEREBY NOTIFIED THAT THE SELLER OF THIS OFFERED BOND MAY BE RELYING ON
     THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
     PROVIDED BY RULE 144A THEREUNDER.

     THE HOLDER OF THIS OFFERED BOND AGREES FOR THE BENEFIT OF THE COMPANY THAT
     (A) THIS OFFERED BOND MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
     TRANSFERRED ONLY (I) TO THE COMPANY, (II) INSIDE THE UNITED STATES TO A
     PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
     BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
     MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN A
     TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 904 UNDER THE SECURITIES
     ACT AND SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH REOFFER, RESALE OR
     TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR
     OTHER INFORMATION REASONABLY SATISFACTORY TO IT THAT SUCH REOFFER, RESALE
     OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE
     LAWS, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
     ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN
     EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES
     (II) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
     STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
     HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS OFFERED BOND FROM IT OF
     THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."

                                       27
<Page>

               (B) Notwithstanding the foregoing, any Global Bond or Definitive
          Bond issued pursuant to subparagraphs (b)(4), (c)(3), (c)(4), (d)(2),
          (d)(3), (e)(2), (e)(3) or (f) of this Section 11 (and all Bonds issued
          in exchange therefor or substitution thereof) will not bear the
          Private Placement Legend.

          (2)  GLOBAL BOND LEGEND. Each Global Bond will bear a legend in
     substantially the following form:

     "THIS GLOBAL BOND IS HELD BY THE DEPOSITARY (AS DEFINED IN THE SUPPLEMENTAL
     INDENTURE GOVERNING THIS BOND) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
     THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER
     ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS
     HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 11 OF ARTICLE I OF THE
     SUPPLEMENTAL INDENTURE, (2) THIS GLOBAL BOND MAY BE EXCHANGED IN WHOLE BUT
     NOT IN PART PURSUANT TO SECTION 11(a) OF ARTICLE I OF THE SUPPLEMENTAL
     INDENTURE, (3) THIS GLOBAL BOND MAY BE DELIVERED TO THE TRUSTEE FOR
     CANCELLATION AND (IV) THIS GLOBAL BOND MAY BE TRANSFERRED TO A SUCCESSOR
     DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR BONDS IN
     DEFINITIVE FORM, THIS BOND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
     DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY
     TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY
     OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
     SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
     REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
     NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
     TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
     THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN
     AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
     SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
     DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
     TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
     CO., HAS AN INTEREST HEREIN."

                                       28
<Page>

          (3)  REGULATION S TEMPORARY GLOBAL BOND LEGEND. The Regulation S
     Temporary Global Bond will bear a legend in substantially the following
     form:

     "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL BOND, AND THE
     CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED BONDS,
     ARE AS SPECIFIED IN THE SUPPLEMENTAL INDENTURE (AS DEFINED HEREIN). NEITHER
     THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL
     BOND SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."

     (h)  CANCELLATION AND/OR ADJUSTMENT OF GLOBAL BONDS. At such time as all
beneficial interests in a particular Global Bond have been exchanged for
Definitive Bonds or a particular Global Bond has been redeemed, repurchased or
canceled in whole and not in part, each such Global Bond will be returned to or
retained and canceled by the Trustee. At any time prior to such cancellation, if
any beneficial interest in a Global Bond is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Bond or for Definitive Bonds, the principal amount of Bonds
represented by such Global Bond will be reduced accordingly and an endorsement
will be made on such Global Bond by the Trustee or by the Depositary at the
direction of the Trustee to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Bond,
such other Global Bond will be increased accordingly and an endorsement will be
made on such Global Bond by the Trustee or by the Depositary at the direction of
the Trustee to reflect such increase.

                                   ARTICLE II

                            COVENANTS OF THE COMPANY

     SECTION 1.  The Company covenants and agrees, so long as any of the bonds
of Series MM are outstanding or until provision shall have been made for the
redemption or payment thereof by the deposit with the Trustee of money necessary
to effect such redemption or payment, as follows:

          (a) The Company, during or at the close of the calendar year 2003,
     and during or at the close of each calendar year thereafter, shall charge
     against the income for such calendar year and place to the credit of a
     "depreciation reserve account" to be kept on its books, the greater of the
     following two amounts: (i) the amount of $1,550,000, or (ii) an amount
     equal to 2 1/2% of the sum of

               (i)    the aggregate principal amount of all bonds which, at the
          time such credit is placed to said "depreciation reserve account",
          shall be outstanding and shall have been outstanding under the
          Mortgage as supplemented for a

                                       29
<Page>

          period of not less than six (6) months, or which at such time shall
          have been outstanding under the Mortgage as supplemented for less than
          six (6) months, if such bonds shall have been issued, or the proceeds
          thereof shall have been used, directly or indirectly, for or on
          account of the pledge, acquisition, exchange, cancellation, payment,
          refundment, redemption or discharge at, before or after maturity of
          the bonds of any series theretofore issued under the Mortgage or of
          any "underlying bonds" or "specified obligations" as defined in
          Section 4 of Article III of the Mortgage; and

               (ii)   the aggregate principal of all indebtedness of the Company
          secured by a mortgage lien upon the properties or assets of the
          Company, which is a lien superior to the lien of the Mortgage, except
          (A) any such mortgage indebtedness the evidences of which shall then
          be pledged with the Trustee under the provisions of the Mortgage or
          pledged with the Trustee under any mortgage constituting a lien
          superior to the lien of the Mortgage on any part of the properties or
          assets of the Company, and (B) any such mortgage indebtedness for the
          payment or redemption of which the necessary moneys shall have been
          deposited with the Trustee under the Mortgage securing the same;
          provided, however, that (1) the amount required by this subparagraph
          (a) to be placed to the credit of such "depreciation reserve account"
          in or for any calendar year shall be deemed to include and not to be
          in addition to amounts which, by the provisions of the Mortgage, the
          Company is required to add to any depreciation reserve account for
          such year, (2) nothing in this subparagraph (a) shall prevent the
          Company from crediting to such "depreciation reserve account", during
          or at the close of any calendar year, an amount greater than the
          amount required by this subparagraph (a) for such year, and (3) the
          Company may, from time to time, during each such calendar year, charge
          against such "depreciation reserve account" the cost of depreciable
          property retired by it during such year, including the cost, if any,
          of dismantling such retired property, less any salvage credits
          applicable thereto.

          (b) The Company, after it shall have issued any of the bonds of Series
     MM-1 and bonds of Series MM-2, shall not request the Trustee

               (i)    to authenticate bonds of any series under the Mortgage

                         (A) pursuant to Section 2 of Article III of the
             Mortgage for or on account of the acquisition and cancellation, or
             of the payment, cancellation, redemption or other discharge at,
             before or after maturity, affected prior to January 1, 1951, of any
             bonds of any series theretofore issued under the Mortgage, or

                         (B) pursuant to Section 4 of Article III of the
             Mortgage, for or on account of the pledge, acquisition, exchange,
             cancellation, payment, refundment, redemption or discharge effected

                                       30
<Page>

              prior to January 1, 1951, of "underlying bonds" or "specified
              obligations" mentioned in said Section 4, or

                         (C) pursuant to Section 5 of Article III of the
             Mortgage, for or in respect of expenditures made prior to January
             1, 1951, for or on account of "permanent property", or

               (ii)   to pay to the Company any cash pursuant to Section 6
          of said Article III for or on account of any transactions mentioned in
          clause (A) or clause (B) of subdivision (i) of this subparagraph (b)
          or for or in respect of any expenditures mentioned in clause (C) of
          subdivision (i) of this subparagraph (b).

     Neither shall the Company request the Trustee to authenticate bonds of any
     series under the provisions of Section 4 of Article III of the Mortgage or
     to pay the Company any moneys under Section 6 of said Article III or under
     Article IX of the Mortgage for or on account of the payment, discharge and
     cancellation effected on or after January 1, 1944, at, before or after
     maturity of any of the Refunding Mortgage Five Per Cent Gold Bonds of the
     Company, dated September 1, 1897, due September 1, 1947.

          (c) The Company shall not request the Trustee to authenticate bonds of
     any series under the Mortgage or to pay to the Company any cash deposited
     with or received by the Trustee under the Mortgage (except cash deposited
     with or received by the Trustee as and for a sinking fund for any series of
     bonds which have been or may hereafter be issued under the Mortgage),
     unless the Company as a part of such request, and in addition to all other
     documents required by the Mortgage to be delivered to the Trustee in
     connection with such request, shall deliver to the Trustee a certificate or
     certificates, signed by the President or the Executive Vice President or
     the Chief Financial Officer or a Vice President and by the Treasurer or an
     Assistant Treasurer of the Company

               (i)    showing, in case such request is for the authentication of
          bonds pursuant to Section 5 of Article III of the Mortgage or for the
          payment of cash pursuant to Section 6 of said Article III for or in
          respect of expenditures made by the Company on or after January 1,
          1951, for or on account of "permanent property":

                         (A) the total amount of expenditures (reduced to the
             extent required, if any, by the provisions of clause (G) of this
             subdivision (i)) made on or after January 1, 1951, for or on
             account of "permanent property";

                         (B) the original cost of all properties, subject to the
             lien of the Mortgage at any time on or after January 1, 1951,
             replaced or retired on or after January 1, 1951, less, if any such
             property shall

                                       31
<Page>

             have been released from the lien of the Mortgage pursuant to any
             applicable provision of the Mortgage and to obtain such release
             cash shall have been deposited with the Trustee, the amount of such
             cash;

                         (C) an amount equal to the sum of (1) 133-1/3% of the
             aggregate principal amount of bonds which have been authenticated
             after January 1, 1951, pursuant to Section 5 of Article III of the
             Mortgage for or on account of such expenditures made on or after
             January 1, 1951, plus (2) 133-1/3% of the aggregate amount of
             deposited cash withdrawn after January 1, 1951, pursuant to the
             provisions of Section 6 of Article III of the Mortgage for or in
             respect of such expenditures made on or after January 1, 1951, plus
             (3) 133-1/3% of the aggregate amount of excess of the nature
             described in subdivision (2) of Section 4 of Article III of the
             Mortgage eliminated or compensated, as in said subdivision (2)
             provided, for or in respect of expenditures of the Company for or
             on account of "permanent property" during said period commencing
             January 1, 1951;

                         (D) an amount equal to 100% of the aggregate amount of
             moneys withdrawn by the Company pursuant to the provisions of
             Article IX of the Mortgage on or after January 1, 1951, for or in
             respect of expenditures made for or on account of "permanent
             property";

                         (E) an amount equal to the excess, if any, of the
             amount shown pursuant to clause (A) above over the sum of the
             amounts shown pursuant to clauses (B), (C) and (D) above;

                         (F) that, for a period of twelve (12) consecutive
             calendar months (to be selected by the Company) ending within
             ninety (90) days next preceding such request, the "net earnings of
             the Company" shall have been at least twice the amount of the
             annual interest requirement of all "mortgage and prior lien debt of
             the Company";

                         (G) that the amount of the expenditure, if any,
             included in the expenditures set forth in clause (A) above in
             respect of any particular "permanent property", which at the time
             of its acquisition was subject to the lien of any mortgage existing
             or placed thereon at the time of its acquisition, does not exceed
             an amount equal to the excess, if any, of the value (determined as
             provided in the first paragraph of Section 8 of Article III of the
             Mortgage) of such particular "permanent property" at the time of
             acquisition of such property over 133-1/3% of the principal amount
             of all indebtedness secured by all such mortgages existing or
             placed on such particular property at the time of the acquisition
             thereof, and that the amount of

                                       32
<Page>

             the expenditure, if any, included in the expenditures set forth in
             clause (A) above in respect of any particular "permanent property",
             which at the time of its acquisition was not subject to any such
             lien, does not exceed an amount equal to the value (determined as
             provided in the first paragraph of Section 8 of Article III of the
             Mortgage) of such particular "permanent property" at the time of
             acquisition of such property;

               (ii)   showing, in case such request is for the authentication of
          bonds pursuant to Section 4 of Article III of the Mortgage or for the
          payment of cash pursuant to Section 6 of said Article III for or on
          account of the pledge, acquisition, exchange, cancellation, payment,
          refundment, redemption or discharge effected on or after January 1,
          1951, at, before or after maturity of any "specified obligations"
          mentioned in said Section 4, that at the time such "specified
          obligations" became "specified obligations" or at some later date the
          Company, pursuant to the provisions of Section 5 of Article III of the
          Mortgage, as limited by the provisions of this Section I, shall have
          obtained, or shall have had the right to obtain, the authentication
          and delivery of bonds in any principal amount for or in respect of
          expenditures made on or after January 1, 1951, for or on account of
          "permanent property";

               (iii)  showing, in case such request shall be for the payment of
          moneys pursuant to Article IX of the Mortgage for or in respect of
          expenditures made for or on account of "permanent property", that none
          of such expenditures were made (1) prior to January 1, 1951, or (2)
          for or on account of "permanent property" acquired more than six
          months prior to the date when the Trustee received the moneys so to be
          paid (or in case of moneys representing the proceeds of obligations,
          referred to in said Article IX, the date when the Trustee received
          such obligations); and

               (iv)   showing, in case such request is for the application of
          any moneys pursuant to Article IX of the Mortgage to the payment,
          redemption or purchase of any "specified obligations", that such
          "specified obligations", if pledged under the Mortgage, would permit
          the Company to obtain the authentication of bonds in a principal
          amount equal to the principal amount of such "specified obligations"
          pursuant to the provisions of Section 4 of Article III of the Mortgage
          as limited by the provisions of this Section 1.

          (d) In connection with any request for the authentication of bonds
     pursuant to Section 5 of Article III of the Mortgage or the payment of cash
     pursuant to Section 6 of said Article III of Mortgage, for or in respect of
     expenditures made by the Company on or after January 1, 1951, the Company
     shall not obtain the authentication of bonds of any series under the
     Mortgage or the payment of any cash in excess of 75% of the amount shown in
     the certificate delivered as a part

                                       33
<Page>

     of such request pursuant to clause (E) of subdivision (i) of subparagraph
     (c) of this Section 1; and the Company shall not obtain the authentication
     of any bonds or the payment of any cash deposited with or received by the
     Trustee under the Mortgage otherwise than in accordance with the provisions
     of the Mortgage as supplemented.

          (e) Wherever used in this Supplemental Indenture

               (i)    "mortgage and prior lien debt of the Company", as of the
          date of any request to the Trustee for the authentication of bonds or
          the payment of cash, shall mean:

                         (A) all the bonds then outstanding under the Mortgage,
             less the amount of any of such bonds which shall then be held by or
             be delivered to the Trustee for cancellation under any of the
             provisions of the Mortgage, and less the amount of any such bonds
             for the payment or redemption of which the necessary moneys shall
             have been deposited under the Mortgage with the Trustee to effect
             such payment or redemption;

                         (B) the bonds then requested to be authenticated under
             the Mortgage; and

                         (C) all mortgage indebtedness secured by a lien
             superior to the lien of the Mortgage on any part of the properties
             and assets of the Company, except any such mortgage indebtedness
             the evidences of which shall then be pledged with the Trustee under
             the provisions of the Mortgage or pledged with the Trustee under
             any mortgage constituting a lien superior to the lien of the
             Mortgage on any part of the properties and assets of the Company,
             and except any such mortgage indebtedness for the payment or
             redemption of which the necessary moneys shall have been deposited
             with the trustee under the mortgage securing the same to effect
             such payment or redemption;

               (ii)   "net earnings of the Company" for any twelve (12) months'
          period shall mean the amount remaining after deducting from the sum of

                         (A) the gross operating revenues of the Company for
             such period derived from its property subject to the lien of the
             Mortgage, including but not limited to revenues derived from
             electrical energy, gas or steam purchased by the Company and resold
             by it, and the net income derived by the Company from its
             merchandising and jobbing operations; and

                         (B) other income of the Company for such period derived
             from interest on bank balances and from current working capital

                                       34
<Page>

             invested in unpledged obligations of the United States of America
             or of any state or of any municipality or subdivision thereof, and
             other currently earned income of the Company derived from the
             ownership of securities, in the treasury of the Company and
             unpledged, of operating electric, gas or steam companies (including
             natural or mixed gas production, storage, transportation or
             distribution companies) or from unpledged advances to such
             companies any of the securities of which are so owned, the sum of
             the following:

                         (C) operating expenses of the Company for such period,
             including maintenance and repairs, rentals, taxes (except taxes
             based upon net income), insurance and the cost of electrical
             energy, gas or steam purchased for resale, but excepting expenses
             in connection with operations, the net income only of which is
             included in clause (A) of subdivision (ii) of this subparagraph
             (e), and excepting all reserves or charges for amortization of debt
             discount and expense; and

                         (D) an amount, if such period shall end with the close
             of a calendar year, equal to the amount which the Company is
             required by subparagraph (a) of this Section 1 to place, during or
             at the close of such calendar year, to the credit of the
             "depreciation reserve account", mentioned in said subparagraph (a)
             (all determined without deduction for any charge made to the
             "depreciation reserve account" permitted by clause (3) of the
             proviso of subparagraph (a) of this Section 1), or, if such period
             shall include parts of two (2) calendar years, then an amount which
             shall be determined by (1) prorating, on a monthly basis over the
             portion of the earlier year thus included, the amount which the
             Company shall have been so required to credit to the "depreciation
             reserve account" during or at the close of such earlier year, and
             (2) prorating, on a monthly basis over the portion of the later of
             said two (2) years thus included, the amount which the Company
             would be required to credit to such "depreciation reserve account"
             if such credit were placed to such account at the close of such
             period;

        provided, however, that the amount of other income of the Company,
        referred to in clause (B) of subdivision (ii) of this subparagraph (e),
        shall not exceed 10% of said net earnings; and income in the form of
        dividends received by the Company upon stock of any class owned by it
        shall be considered as currently earned under the provisions of said
        clause (B) to the extent that during such period the earnings of the
        paying company shall be sufficient for the payment of dividends upon all
        stock of such class during such period; and income in the form of
        interest received by the Company upon evidences of indebtedness of any
        class owned by it shall be considered as currently earned under the
        provisions of said clause (B) to the extent that during such period the
        earnings of the paying company shall be available for the payment of the

                                       35
<Page>

        interest accruing during such period upon all indebtedness of such
        class, after deducting from such earnings all interest charges accruing
        during such period upon obligations secured by prior liens; and, in case
        any property owned by the Company at the date of the request to the
        Trustee for the authentication of bonds or payment or withdrawal of cash
        shall not have been owned by it during any part of any such period, or
        shall have been owned by it during a part only of such period, then and
        in every such case the net earnings (or net losses) of such property
        (ascertained in like manner as above provided) during said period, or
        during such part thereof as shall have preceded the acquisition of such
        property by the Company, shall be considered and treated as net earnings
        (or net losses) of the Company for such period, and shall be included in
        (or, if a net loss, deducted in determining) such net earnings of the
        Company;

               (iii)  "permanent property" shall mean any and all plants,
          equipment, additions, improvements, betterments, facilities, or other
          property of any kind (and includes "extensions" and "purchased
          property" as those terms are used in the Mortgage) acquired through
          construction, purchase, consolidation, exchange or otherwise, as and
          for a part of the permanent or fixed investment for the business of
          the Company and used or useful in connection with the generation and
          conversion of electrical energy or in the manufacture of gas or steam
          or in the distribution or transmission of electrical energy or gas or
          steam in the territory in which the Company is now operating its
          present properties, or in territory contiguous thereto, or in
          territory capable of economic interconnection therewith, but
          "permanent property" shall not include cash, accounts or bills
          receivable, securities, supplies, fuel or other assets ordinarily
          classed as quick assets, or leasehold estates;

               (iv)   "original cost" of property shall mean the original cost
          of such property to the Company if ascertainable from its records or,
          if such original cost is not ascertainable, the value of such property
          at the time of its acquisition, such value to be determined by an
          engineer or firm of engineers to be selected by the Company and to be
          acceptable to the Trustee, and the Trustee under such circumstances
          shall be furnished with a certificate of such value signed by such
          engineer or firm of engineers.

          (f) In connection with any request to the Trustee for the
     authentication of bonds pursuant to the provisions of Section 5 of Article
     III of the Mortgage or the payment of cash pursuant to the provisions of
     Section 6 of said Article III or the provisions of Article IX of the
     Mortgage or the elimination or compensation of any excess of the nature
     described in subdivision (2) of Section 4 of said Article III, for or on
     account of expenditures for "permanent property", the Company shall furnish
     to the Trustee, in addition to the certificates and other documents
     required to be delivered by the provisions of the Mortgage and the
     provisions of other subparagraphs of this Section 1, the following:

                                       36
<Page>

               (i)    An opinion of counsel (who may be counsel for the
          Company), selected by the Company and satisfactory to the Trustee,
          stating that the Company has acquired good title to the property for
          or on account of the expenditures for which additional bonds are
          requested to be authenticated and that such property is subject to the
          Mortgage as a direct lien thereon, subject only to the lien of any
          mortgages or easements existing or placed on any of such property at
          the time of its acquisition, liens for taxes and assessments not due
          or, if due, in the course of contest, judgments in the course of
          appeal or otherwise in contest and secured by sufficient bond, liens
          arising out of proceedings in court in the course of contest and
          undetermined liens charges (if any) incidental to current
          construction; and

               (ii)   A certificate signed by the President or the Executive
          Vice President or the Chief Financial Officer or a Vice President and
          also by the Treasurer or an Assistant Treasurer of the Company
          certifying that the property for or on account of the expenditures for
          which bonds are requested to be authenticated or cash is requested to
          be paid is "permanent property".

          (g) The Company shall not hereafter issue any bonds under any
     "underlying mortgage" as defined in Section 4 of Article III of the
     Mortgage, or under any mortgage which could become such an "underlying
     mortgage" upon compliance with clause (b) of the proviso of subdivision (2)
     of said Section 4.

          (h) The Company shall not request the Trustee to authenticate any
     bonds under the provisions of Section 2 or Section 3 or Section 4 of
     Article III of the Mortgage and shall not apply for the payment of cash
     under Section 6 of said Article or under Article IX of the Mortgage (i) for
     or on account of bonds of Series J deposited by the Company with the
     Trustee in lieu of cash under the provisions of the sinking fund provided
     for in the supplemental indenture, dated as of May 1, 1961, or for or on
     account of bonds of Series J redeemed through the operation of said sinking
     fund, or (ii) for or on account of bonds of Series K redeemed through the
     operation of the sinking fund provided for in the supplemental indenture
     dated as of July 15, 1966, or (iii) for or on account of bonds of Series L
     redeemed through the operation of the sinking fund provided for in the
     supplemental indenture dated as of August 15, 1967, or (iv) for or on
     account of bonds of Series M redeemed through the operation of the sinking
     fund provided for in the supplemental indenture dated as of September 15,
     1970, or (v) for or on account of bonds of Series N redeemed through the
     operation of the sinking fund provided for in the supplemental indenture
     dated as of April 1, 1972, or (vi) for or on account of bonds of Series 0
     redeemed through the operation of the sinking fund provided for in the
     supplemental indenture dated as of July 15, 1973, or (vii) for or on
     account of bonds of Series T redeemed through the operation of the sinking
     fund provided for in the supplemental indenture dated as of August 15,
     1980, or (viii) on account of any cancelled or

                                       37
<Page>

     uncancelled underlying bonds (or any uncancelled underlying bonds deposited
     as collateral under Section 4 of Article III of the Mortgage) which shall
     have been deposited under the provisions of the supplemental indenture,
     dated as of August 1, 1941, in lieu of cash.

          (i) The Company shall promptly classify as "property replaced or
     retired", for the purposes of clause (B) of subdivision (i) of subparagraph
     (c) of this Section 1 during any period all property which has been
     replaced or has permanently ceased to be used or useful in the business of
     the Company, but the Company shall not, in making such classification, be
     bound by determinations, rulings or orders made by regulatory authorities
     for rate-making or other purposes.

          (j) The Company shall not consolidate with or merge into any other
     corporation or transfer or lease all or substantially all the mortgaged
     property as an entirety to any other corporation, unless the corporation
     resulting from such consolidation or the corporation into which the Company
     shall have been merged or the corporation to which such transfer or lease
     shall have been made shall, by an instrument executed and delivered to the
     Trustee, assume the due and punctual payment of the principal of and
     premium, if any, and interest on all the bonds of all series according to
     their tenor at the time outstanding under the Mortgage and the due and
     punctual performance and observance of all the covenants and conditions of
     the Mortgage and all indentures supplemental thereto to be performed or
     observed by the Company.

          (k) The Company will pay all Additional Interest, if any, in the
     manner on the dates and in the amounts as set forth in the Registration
     Rights Agreement.

     SECTION 2.  The Company covenants and agrees that any and all property
hereafter acquired by the Company and any and all improvements, extensions,
betterments or additions to property of the Company, which by the Original
Mortgage or any indenture supplemental thereto are to become subject to the
Mortgage, immediately upon the acquisition thereof by the Company or upon such
improvements, extension, betterments, or addition being made, as the case may
be, and without any further conveyance, mortgage, assignment or act on the part
of the Company or the Trustee, or either of them shall become and be subject to
the lien of the Mortgage fully and completely as though owned by the Company at
the date of the execution of the Original Mortgage and at the date of the
Indenture dated the first day of March, 1928, mentioned in the second paragraph
of the recitals of this Supplemental Indenture and at the dates of the
supplemental indentures dated May 20, 1936, May 10, 1950, as of June 1, 1951, as
of August 15, 1967, as of September 15, 1970, as of March 1, 1985, as of April
1, 1993, as of December 1, 1993, as of December 1, 1993, as of June 1, 1995, as
of March 1, 2000, as of March 1, 2000, as of March 1, 2000, as of March 1, 2000,
as of February 1, 2003 and as of February 1, 2003 respectively, mentioned in the
fourth paragraph of the recitals of this Supplemental Indenture, and at the date
of this Supplemental Indenture, and specifically described in the granting
clauses of the Original Mortgage or said

                                       38
<Page>

Indenture or said supplemental indentures, but the provisions of this Section 2
shall not limit the generality of the provisions of Sections 12 and 13 of
Article IV of the Original Mortgage.

     SECTION 3.  The Company covenants and agrees that in the furtherance
of, but without limiting the generality of, the provisions of Sections 12 and 13
of Article IV of the Mortgage or of Section 2 of this Article II, the Company
will furnish to the Trustee on November 1, 1944, and thereafter within sixty
(60) days after and as often as the Company shall have acquired, subsequent to
September 3, 1944, any additional land or lands or interest or interests in
land, or any new plant or plants, not included in any certificate theretofore
furnished pursuant to this Section 3, the aggregate cost of which shall equal or
exceed $500,000, and at such other times as thirty-six (36) months shall have
elapsed since the date of furnishing the last preceding certificate to the
Trustee pursuant to this Section 3, the following:

         (a) a certificate, signed by the President or the Executive Vice
     President or the Chief Financial Officer or a Vice President and by the
     Treasurer or an Assistant Treasurer of the Company and dated as of a date
     not more than sixty (60) days preceding the date as of which such
     certificate is required to be filed pursuant to this Section 3, briefly
     describing any additional land or interest in land and any new plant which
     the Company may have acquired since the date of the most recent Certificate
     furnished to the Trustee pursuant to this Section, or, in the case of the
     first such certificate, since the date of the execution and delivery of the
     Indenture dated the first day of March, 1928 mentioned in the second
     paragraph of the recitals of this Supplemental Indenture, which is required
     by the provisions of the Mortgage and this Supplemental Indenture to be
     subjected to the lien of the Mortgage;

         (b) the mortgages, deeds, covenants, assignments, transfers and
     instruments of further assurance, if any, specified in the opinion of
     counsel referred to in the following subparagraph (c); and

         (c) an opinion of counsel, who may be counsel for the Company,
     specifying the mortgages, deeds, covenants, assignments, transfers and
     instruments of further assurance which will be sufficient to subject to the
     direct lien of the Mortgage (so far as permitted by law) all the Company's
     right, title and interest in and to the land and interest in land and any
     plant described in said certificate, or stating that no such mortgage,
     deed, conveyance, assignment, transfer or instrument of further assurance
     is necessary for such purpose, and that, upon the recordation or filing or
     registering, in the manner stated in such opinion, of the instruments so
     specified, if any, and upon the recordation and filing and registering of
     the Mortgage or any supplemental indenture in the manner stated in such
     opinion, or without any such recordation or filing or registering if such
     opinion shall so state, the Mortgage will (so far as permitted by law)
     constitute a valid lien upon all the Company's right, title and interest in
     and to such land, interest in land or plant as against all creditors and
     subsequent purchasers, subject

                                       39
<Page>

     only to the lien of any mortgages or easements existing or placed on such
     property at the time of its acquisition by the Company, liens for taxes and
     assessments not due, or, if due, in the course of appeal or otherwise in
     contest, liens arising out of proceedings in court in the course of contest
     and undetermined liens and charges (if any) incidental to current
     construction.

     For the purposes of this Section 3, any certificate heretofore or hereafter
delivered to the Trustee pursuant to Section 3 of Article III of Division B of
the supplemental indenture dated as of June 1, 1951, or pursuant to Section 3 of
Article II of the Supplemental Indenture dated as of July 1, 1954, or pursuant
to Section 3 of Article III of the supplemental indenture dated as of May 1,
1961, or pursuant to Section 3 of Article III of the supplemental indenture
dated as of July 15, 1966, or pursuant to Section 3 of Article III of the
supplemental indenture dated as of August 15, 1967, or pursuant to Section 3 of
Article III of the supplemental indenture dated as of September 15, 1970, or
pursuant to Section 3 of Article III of the supplemental indenture dated as of
April 1, 1972, or pursuant to Section 3 of Article III of the supplemental
indenture dated as of July 15, 1973, or pursuant to Section 3 of Article II of
the Supplemental Indenture dated as of October 1, 1973, or pursuant to Section 3
of Article II of the Supplemental Indenture dated as of October 1, 1974, or
pursuant to Section 3 of Article II of the Supplemental Indenture dated as of
December 1, 1974, or pursuant to Section 3 of Article II of the Supplemental
Indenture dated as of April 1, 1975, or pursuant to Section 3 of Article III of
the Supplemental Indenture dated as of August 15, 1980, or pursuant to Section 3
of Article II of the supplemental indenture dated as of June 1, 1984, or
pursuant to Section 3 of Article II of the supplemental indenture dated as of
June 1, 1984, or pursuant to Section 3 of Article II of the supplemental
indenture dated as of October 1, 1984, or pursuant to Section 3 of Article II of
the supplemental indenture dated as of March 1, 1985, or pursuant to Section 3
of Article II of the supplemental indenture dated as of March 1, 1985, or
pursuant to Section 3 of Article II of the supplemental indenture dated as of
March 1, 1985, or pursuant to Section 3 of Article II of the supplemental
indenture dated as of March 1, 1985, or pursuant to Section 3 of Article II of
the supplemental indenture dated as of May 1, 1990, or pursuant to Section 3 of
Article II of the supplemental indenture dated as of April 1, 1993, or pursuant
to Section 3 of Article II of the supplemental indenture dated as of December 1,
1993, or pursuant to Section 3 of Article II of the supplemental indenture dated
as of December 1, 1993, or pursuant to Section 3 of Article II of the
supplemental indenture dated as of June 1, 1995, or pursuant to Section 3 of
Article II of the supplemental indenture dated as of March 1, 2000, or pursuant
to Section 3 of Article II of the supplemental indenture dated as of March 1,
2000, or pursuant to Section 3 of Article II of the supplemental indenture dated
as of March 1, 2000, or pursuant to Section 3 of Article II of the supplemental
indenture dated as of March 1, 2000 or pursuant to Section 3 of Article II of
the supplemental indenture dated as of February 1, 2003 or pursuant to Section 3
of Article II of the supplemental indenture dated as of February 1, 2003 shall
be deemed to have been delivered in compliance with this Section 3.

     SECTION 4.  The Company covenants and agrees that, upon cancellation and
discharge of any "prior lien", the Company shall cause all cash or obligations
then held

                                       40
<Page>

by the trustee or other holder of such prior lien, which were received by such
trustee or other holder by reason of the release of, or which represent the
proceeds of the taking by eminent domain or any disposition of, or the proceeds
of insurance on, any of the properties at any time subject to the lien of the
Mortgage (including all proceeds of or substitutions for any thereof), to be
paid to or deposited and pledged with the Trustee, subject to any lien or charge
prior to the lien of the Mortgage, such cash to be held and paid over or applied
by the Trustee, and such obligations to be held and disposed of, as provided in
Article IX of the Mortgage; provided, however, that in lieu of taking or
delivering to the Trustee all or any part of such cash or obligations, the
Company may deliver to the Trustee a certificate of the trustee or such other
holder of such prior lien, stating that a specified amount thereof has been
deposited with such trustee or other holder pursuant to the requirements of such
other prior lien, in which case there shall also be delivered to the Trustee an
opinion of counsel, who may be counsel for the Company, stating that such
deposit is required by such other prior lien. The term "prior lien" as used in
this Section 4 shall mean and include any "underlying mortgage" and shall also
mean and include any other lien (except liens for taxes and assessments not due,
or, if due, in the course of appeal or otherwise in contest, liens arising out
of proceedings in court in course of contest and undetermined liens and charges,
if any, incidental to current construction) prior to the lien of the Mortgage
upon property acquired by the Company after the execution and delivery of the
Indenture, dated the first day of March, 1928, referred to in the second
paragraph of the recitals of this Supplemental Indenture, existing on said
property or placed thereon to secure unpaid portions of the purchase price, at
the time of such acquisition.

                                   ARTICLE III

                              AMENDMENT OF MORTGAGE

Section 1 of Article X of the Mortgage is hereby amended by inserting in said
section immediately preceding the words "then, and in each and every such case,
the Trustee", the following:

     "or in case the Company shall be adjudicated a bankrupt by any court of
     competent jurisdiction or shall file a voluntary petition in bankruptcy or
     shall make an assignment for the benefit of creditors or shall admit in
     writing its inability to pay its debts as they become due; or in case the
     Company shall consent to the appointment of a receiver or trustee of all or
     a substantial part of the mortgaged property; or in case the Company shall
     file a petition under the federal bankruptcy laws, or any other applicable
     law or statute of the United States of

                                       41
<Page>

     America or of any state thereof; or in case the Company shall file a
     petition or take advantage of any insolvency act; or in case, during a
     period of sixty (60) days following (1) the entry of an order approving a
     petition of some person other than the Company, seeking reorganization of
     the Company under the federal bankruptcy laws or any other applicable
     statute of the United States of America or any state thereof, or (2) the
     appointment of a trustee or a receiver of all or a substantial part of the
     mortgaged property, such order or appointment of a trustee or receiver
     shall not be vacated or shall not be stayed on appeal or otherwise shall
     not have otherwise ceased to continue in effect;"

The amendment to Section 1 of Article X of the Mortgage which is contained in
this Article III shall survive the redemption, retirement, cancellation or
defeasance of all of the bonds of Series MM.

                                   ARTICLE IV

                                  MISCELLANEOUS

     SECTION 1.  The Trustee hereby accepts the trusts hereunder and agrees to
perform the same upon the terms and subject to the applicable provisions of the
Mortgage and the indentures supplemental thereto now in effect.

     SECTION 2.  This Supplemental Indenture is executed by the parties hereto
pursuant to the provisions of Article XVI of the Mortgage, and so long as any of
the bonds of Series MM are or shall be outstanding the terms and conditions of
this Supplemental Indenture shall be deemed to be a part of the terms and
conditions of the Mortgage for any and all purposes. The provisions of this
Supplemental Indenture shall be inapplicable and shall terminate and become void
and of no effect upon the payment or redemption of all of the bonds of Series MM
in accordance with the provisions of the Mortgage and of the bonds of Series MM.

     SECTION 3.  All covenants, conditions and provisions contained in this
Supplemental Indenture by or on behalf of the Company shall bind its successors
and assigns, whether so expressed or not, legally or equitably under or by
reason of this Supplemental Indenture.

     SECTION 4.  Although this Supplemental Indenture is dated as of February
15, 2003, it shall be effective only from the actual time of its execution and
delivery by the Company and the Trustee on the date indicated by their
respective acknowledgments hereto annexed.

     This Supplemental Indenture may be simultaneously executed in any number of
counterparts and all such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument entered into by the
parties hereto pursuant to the provisions of Article XVI of the Mortgage.

                                       42
<Page>

     IN WITNESS WHEREOF, THE PEOPLES GAS LIGHT AND COKE COMPANY has caused this
instrument to be executed in its corporate name by its Chairman, President, the
Executive Vice President, the Chief Financial Officer or a Vice President, and
its corporate seal to be hereunto affixed and attested by its Secretary or an
Assistant Secretary all as of the day and year first above written.

                 THE PEOPLES GAS LIGHT AND COKE COMPANY

                           By /s/ Thomas A. Nardi
                              --------------------------------------------------
                              Thomas A. Nardi
                              Senior Vice President, Chief Financial Officer and
                              Treasurer

ATTEST:

/s/  J.G. Nassos
------------------------
     J.G. Nassos
     Assistant Secretary

                                       43
<Page>

     IN WITNESS WHEREOF, U.S. Bank National Association, as Trustee under the
Mortgage, has caused this instrument to be executed in its corporate name by one
of its Assistant Vice Presidents and attested by any Assistant Vice President,
all as of the day and year first above written.

                 U.S. BANK NATIONAL ASSOCIATION

                           By /s/ Lori-Ann Rosenberg
                              ---------------------------
                              Lori-Ann Rosenberg
                              ---------------------------
                              Assistant Vice President
                              ---------------------------

ATTEST:

/s/ Julie Eddingtor
------------------------------
  Julie Eddingtor
------------------------------
  Assistant Vice President
------------------------------

                                       44
<Page>

STATE OF ILLINOIS   )
                    )  ss.
COUNTY OF COOK      )

     I, Suzanna Nowaczy, a Notary Public in and for said County and State
aforesaid, DO HEREBY CERTIFY that THOMAS A. NARDI, the Senior Vice President,
Chief Financial Officer and Treasurer of The Peoples Gas Light and Coke Company,
an Illinois corporation, and JOHN G. NASSOS, Assistant Secretary of said
corporation, who are both personally known to me to be the same persons whose
names are subscribed to the foregoing instrument as such Senior Vice President,
Chief Financial Officer and Treasurer and Assistant Secretary, respectively, and
who are both personally known to me to be the Senior Vice President, Chief
Financial Officer and Treasurer and Assistant Secretary, respectively, of said
corporation, appeared before me this day in person and severally acknowledged
that they signed, sealed and delivered said instrument as their free and
voluntary act as such Senior Vice President, Chief Financial Officer and
Treasurer and Assistant Secretary, respectively, of said corporation, and as the
free and voluntary act of said corporation, for the uses and purposes therein
set forth.

     GIVEN under my hand and notarial seal this 26 day of February, 2003.

                              /s/ Suzanna Nowaczyk
                              -------------------------------
                                  Suzanna Nowaczyk
                                  ---------------------------
                                  Notary Public

My commission expires on the 29 day of February, 2004

                                        1
<Page>

STATE OF ILLINOIS   )
                    )  ss.
COUNTY OF COOK      )

     I, Molly K. Beane a Notary Public in and for said County and State
aforesaid, DO HEREBY CERTIFY that Lori-Ann Rosenberg, an Assistant Vice
President of U.S. Bank National Association, a corporation organized under the
laws of the United States of America, and Julie Eddington, an Assistant Vice
President of said corporation, who are both personally known to me to be the
same persons whose names are subscribed to the foregoing instrument as such
Assistant Vice President, respectively, and who are both personally known to me
to be an Assistant Vice President of said corporation, appeared before me this
day in person and severally acknowledged that they signed, sealed and delivered
said instrument as their free and voluntary act as Assistant Vice President,
respectively, of said corporation, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.

     GIVEN under my hand and notarial seal this 25th day of February, 2003.

                              /s/ Molly K. Beane
                              -------------------------------
                                  Molly K. Beane
                                  ---------------------------
                                  Notary Public

My commission expires January 31, 2005

                                        2
<Page>

                                   SCHEDULE 1

                      EASEMENTS AND OTHER INTERESTS IN LAND

     1.   All rights of way, easements, franchises, licenses, permits,
privileges, leases, leaseholds and other authority granted to the Company for
the purpose of constructing, installing, operating, using, maintaining,
renewing, replacing or relocating gas mains, pipelines, services and other
facilities on, over or in private property owned by others and situated in the
County of Cook in the State of Illinois, including, without limiting the
generality of the foregoing, those certain easements granted to the Company by
the grantors hereinafter named and filed for record and recorded as hereinafter
set forth, to wit:

<Table>
<Caption>
                                                             PERMANENT            DATE
                                     FILE      DOCUMENT        INDEX                OF           DATE
          GRANTOR                   NUMBER      NUMBER         NUMBER           INSTRUMENT     RECORDED
-----------------------------       ------     --------   ------------------    ----------     --------
<S>                                 <C>        <C>        <C>                    <C>           <C>
Weitendorf Enterprises, Inc.                              Portions of            02/20/03
                                                          11-07-100-013-0010
                                                          11-07-100-013-0020
                                                          11-07-200-009-0010
</Table>

<Page>

                                    EXHIBIT A

              (Form of Series MM-1 Registered Bond Without Coupons)

   ICC Identification No. 6204

   No. R__________                                             $_______

                     THE PEOPLES GAS LIGHT AND COKE COMPANY

                      FIRST AND REFUNDING MORTGAGE 4% BOND,

                                   SERIES MM-1

                                DUE March 1, 2010

   THE PEOPLES GAS LIGHT AND COKE COMPANY, an Illinois corporation (hereinafter
called the "Company"), for value received, hereby promises to pay to . . . . . .
 . . . . . . . . . . . . . . . . . . ., or registered assigns on March 1, 2010,
unless this Bond shall have been called for redemption and payment of the
redemption price shall have been duly made or provided for in accordance with
the hereinafter described Mortgage, the principal sum of . . . . . . . . . . . .
Dollars ($__________), and to pay interest on the balance of said principal sum
from time to time remaining unpaid from the March 1 or September 1 to which
interest has been paid next preceding the date of authentication of this Bond,
unless this Bond is authenticated on a March 1 or September 1 to which interest
has been paid, in which event this Bond shall bear interest from such March 1 or
September 1, or unless no interest has been paid on this Bond, in which event
this Bond shall bear interest from the date hereof, at the rate of four percent
(4%) per annum (calculated on the basis of a year of 360 days consisting of
twelve 30-day months), payable at or before 9:00 a.m., Chicago time, on March 1
and September 1 of each year, commencing September 1, 2003 until payment in full
of such principal sum PROVIDED, however, that if a Registration Default (as
defined in the Registration Rights Agreement by and among the Company and the
Initial Purchaser (as defined therein), dated as of February 19, 2003) occurs,
additional interest will accrue on this Bond at a rate of 0.25% per annum
(increasing by an additional 0.25% per annum after each consecutive 90-day
period that occurs, after the date on which such Registration Default occurs up
to a maximum additional interest rate of 1.00% per annum) from and including the
date on which any such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured. Interest shall also
accrue on any overdue principal, premium, if any, and (to the extent that such
interest shall be legally enforceable) on any overdue installment of interest
until paid at the same rate per annum. The interest so payable on any interest
payment date will, subject to certain exceptions provided in the Mortgage, be
paid to the person who is the registered owner of this Bond at the close of
business on the applicable record date next preceding such interest payment
date. Principal of, premium, if any, and

                                       A-1
<Page>

interest on this Bond shall be payable in lawful money of the United States of
America at the principal corporate office or agency of the Company in Chicago,
Illinois.

     This Bond is one of the First and Refunding Mortgage Bonds of the Company,
all issued and to be issued in series, from time to time, under and in
accordance with and, irrespective of the time of issue or of the series in which
issued or the designation thereof, equally secured by an Indenture, dated the
second day of January, 1926, executed by Chicago By-Product Coke Company, a
Delaware corporation, to Illinois Merchants Trust Company, as trustee, and
recorded on January 19, 1926, as Document No. 9154395 in Book 22219 of Records,
at page 283, in the Recorder's Office of Cook County, Illinois, which Indenture
was assumed by the Company as a successor corporation, as defined therein, by an
indenture, dated the first day of March, 1928, executed by the Company to said
trustee, and recorded on April 7, 1928, as Document No. 9980547 in Book 25701 of
Records, at page 599, in the Recorder's Office of Cook County, Illinois, and has
heretofore been, and from time to time hereafter may be, amended and
supplemented by indentures supplemental thereto, including the Supplemental
Indenture dated as of February 15, 2003 relating to the hereinafter described
Series MM-1 Bonds (the "Supplemental Indenture"). Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings ascribed
thereto in the Supplemental Indenture. The word "Mortgage", as used in this
Bond, shall mean said Indenture, as amended and supplemented from time to time
by indentures supplemental thereto, including the Supplemental Indenture. The
word "Company", as used in this Bond, shall be construed to include any
successor corporation, as defined in the Mortgage. The word "Trustee", as used
in this Bond, shall be construed to mean and include U.S. Bank National
Association (successor to Illinois Merchants Trust Company), as trustee under
the Mortgage, and any successor trustee thereunder. Reference is hereby made to
the Mortgage and all indentures supplemental thereto for a description of the
property mortgaged and pledged (except that certain parcels described in the
Mortgage and in said supplemental indentures have been released from the lien of
the Mortgage pursuant to the terms thereof), the nature and extent of the
security and the terms and conditions governing the issuance and security of the
bonds issued or to be issued under the Mortgage. As provided in the Mortgage,
the bonds may be for various principal sums, are issuable in series, may bear
interest at different rates and may otherwise vary as provided therein. This
Bond is one of the series of such First and Refunding Mortgage Bonds designated
as "The Peoples Gas Light and Coke Company First and Refunding Mortgage 4%
Bonds, Series MM-1", hereinafter called the "Series MM-1 Bonds".

     The Series MM-1 Bonds shall be deliverable in the form of registered Bonds
without coupons in the denominations of $1,000 and any integral multiple
thereof.

     As more fully described in the Supplemental Indenture, the Company reserves
the right, without any consent or other action by holders of the Series MM-1
Bonds or the bonds of any subsequent series, to amend the Mortgage to provide
that the Mortgage, the rights and obligations of the Company and the rights of
the bondholders may be modified with the consent of the holders of not less than
60% in aggregate principal

                                       A-2
<Page>

amount of the bonds adversely affected; provided, however, that no modification
shall (1) extend the time, or reduce the amount, of any payment on any bond,
without the consent of the holder of each bond so affected, (2) permit the
creation of any lien, not otherwise permitted, prior to or on a parity with the
lien of the Mortgage, without the consent of the holders of all bonds then
outstanding, or (3) reduce the above percentage of the principal amount of bonds
the holders of which are required to approve any such modification without the
consent of the holders of all bonds then outstanding.

     The Series MM-1 Bonds are subject to optional redemption by the Company, in
whole but not in part, at any time, at a redemption price of 100% of the
principal amount thereof, plus accrued interest, if any, to the redemption date,
upon the occurrence of certain events described in the Supplemental Indenture
(relating to unreasonable burdens or excessive liabilities imposed upon the
Company; changes in the economic availability of raw materials, operating
supplies, fuel or other energy sources or supplies or technological or other
changes rendering its property uneconomic; court order or decree preventing
operations at its property or rendering the continuation of its operations
economically unfeasible).

     All of the outstanding Series MM-1 Bonds may be redeemed at any time by the
Company, by the payment of the principal amount thereof and accrued interest
thereon to the date of redemption, without the payment of any premium, in the
event of the acquisition by any federal, state or municipal authority of any
substantial portion (which shall be not less than one-third as determined by
book values) of the income-producing properties of the Company which are subject
to the lien of the Mortgage.

     All of the outstanding bonds under the Mortgage shall be redeemed by the
Company by the payment of the respective applicable redemption price or prices
and accrued interest thereon to the date of redemption, without the payment of
any premium, in the event of the acquisition by any federal, state or municipal
authority of all or substantially all of the income-producing properties of the
Company which are subject to the lien of the Mortgage.

     Notice of any redemption of the Series MM-1 Bonds shall be given by mailing
by first-class mail, postage prepaid, at least thirty (30) days and not more
than sixty (60) days prior to the redemption date, to the holders of all such
bonds to be redeemed at their last addresses that shall appear upon the registry
book, all as more fully provided in the Mortgage. Notice of redemption having
been duly given, the bonds called for redemption shall become due and payable
upon the redemption date and, if the redemption price shall have been deposited
with the Trustee, interest thereon shall cease to accrue on and after the
redemption date, and whenever the redemption price thereof shall have been
deposited with the Trustee and notice of redemption shall have been duly given
or provision therefore made, such bonds shall no longer be entitled to any lien
or benefit of the Mortgage.

     In case of certain events of default specified in the Mortgage, the
principal of all bonds issued and outstanding thereunder may be declared or may
become due and

                                       A-3
<Page>

payable in the manner and with the effect provided in the Mortgage.

     No recourse shall be had for the payment of the principal of or interest on
this Bond, or for any claim based hereon, or otherwise in respect hereof or of
the Mortgage, to or against any incorporator, stockholder, director or officer,
past, present or future, of the Company, either directly or through the Company,
under any constitution or statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability of incorporators,
stockholders, directors and officers being released by the holder hereof by the
acceptance of this Bond, and being likewise waived and released by the terms of
the Mortgage.

     This Bond is transferable by the registered holder hereof in person or by a
duly authorized attorney at the office or agency of the Company in the City of
Chicago, State of Illinois, upon surrender and cancellation of this Bond, and
thereupon a new registered bond or bonds, without coupons, of the same series
and for the same aggregate principal amount will be issued to the transferee in
exchange herefor. In the manner provided in the Mortgage, registered Bonds
without coupons of this series may, at the option of the registered owner and
upon surrender at said office or agency of the Company, be exchanged for
registered Bonds without coupons of this series of the same aggregate principal
amount of other authorized denominations.

     The Company and the Trustee and any paying agent may deem and treat the
person in whose name this Bond is registered as the absolute owner hereof for
the purpose of receiving payment and for all other purposes and neither the
Company nor the Trustee nor any paying agent shall be affected by any notice to
the contrary.

     In addition to the rights provided to Holders of Bonds under the Mortgage,
Holders of Restricted Global Bonds and Restricted Definitive Bonds will have all
the rights set forth in the Registration Rights Agreement dated as of February
19, 2003, between the Company and the Initial Purchaser.

     This Bond shall not be entitled to any security or benefit under the
Mortgage, and shall not become valid or obligatory for any purpose, until this
Bond shall have been authenticated by the execution of the certificate, hereon
endorsed, by the Trustee or its successor in trust under the Mortgage.

                                       A-4
<Page>

     IN WITNESS WHEREOF, the Company has caused this Bond to be executed in its
name by its President, Executive Vice President, Chief Financial Officer,
Treasurer or a Vice President manually or in facsimile, and has caused its
corporate seal manually or in facsimile to be hereto affixed, attested by the
manual or facsimile signature of its Secretary or of an Assistant Secretary.

   Dated:
          ---------------

          THE PEOPLES GAS LIGHT AND COKE COMPANY

             By:
                 ------------------------
             Its:
                 ------------------------

   Attest:

By:
    -------------------
Its:
    -------------------

                         (Form of Trustee's Certificate)

     This bond is one of the bonds of the series designated, referred to and
described in the within-mentioned Mortgage.

                         U.S. BANK NATIONAL ASSOCIATION

          By
             -------------------
                  Authorized Officer.

                                       A-5
<Page>

                                   ASSIGNMENT

For value received, the undersigned hereby sell(s) and transfer(s) unto:

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE:_____________________________
____________________________________________________________
____________________________________________________________
(Please print or typewrite name and address, including zip code of assignee)

the within Bond and all rights thereunder, hereby irrevocably constituting and
appointing __________________ Attorney to transfer said Note on the books of the
Trustee with full power of substitution in the premises.

Dated:
      ------------------------                --------------------------
                                                    Notice:  The  signature  to
                                              this  Assignment  must  correspond
                                              with  the  name as written upon
                                              the face of the within instrument
                                              in every particular, without
                                              alteration or enlargement, or any
                                              changes whatever.

                                       A-6
<Page>

                                    EXHIBIT B

              (Form of Series MM-2 Registered Bond Without Coupons)

   ICC Identification No. 6204

   No. R__________                                             $_______

                     THE PEOPLES GAS LIGHT AND COKE COMPANY

                      FIRST AND REFUNDING MORTGAGE 4% BOND,

                                   SERIES MM-2

                                DUE March 1, 2010

   THE PEOPLES GAS LIGHT AND COKE COMPANY, an Illinois corporation (hereinafter
called the "Company"), for value received, hereby promises to pay to. . . . . .
.. . . . . . . . . . . . . . . . . . . ., or registered assigns on March 1, 2010,
unless this Bond shall have been called for redemption and payment of the
redemption price shall have been duly made or provided for in accordance with
the hereinafter described Mortgage, the principal sum of . . . . . . . . . . . .
Dollars ($__________), and to pay interest on the balance of said principal sum
from time to time remaining unpaid from the March 1 or September 1 to which
interest has been paid next preceding the date of authentication of this Bond,
unless this Bond is authenticated on a March 1 or September 1 to which interest
has been paid, in which event this Bond shall bear interest from such March 1 or
September 1, or unless no interest has been paid on this Bond, in which event
this Bond shall bear interest from the date hereof, at the rate of four percent
(4%) per annum (calculated on the basis of a year of 360 days consisting of
twelve 30-day months), payable at or before 9:00 a.m., Chicago time, on March 1
or September 1 of each year, commencing September 1, 2003 until payment in full
of such principal sum. Interest shall also accrue on any overdue principal,
premium, if any, and (to the extent that such interest shall be legally
enforceable) on any overdue installment of interest until paid at the same rate
per annum. The interest so payable on any interest payment date will, subject to
certain exceptions provided in the Mortgage, be paid to the person who is the
registered owner of this Bond at the close of business on the applicable record
date next preceding such interest payment date (February 15 or August 15, as the
case may be). Principal of, premium, if any, and interest on this Bond shall be
payable in lawful money of the United States of America at the principal
corporate office or agency of the Company in Chicago, Illinois.

     This Bond is one of the First and Refunding Mortgage Bonds of the Company,
all issued and to be issued in series, from time to time, under and in
accordance with

                                       B-1
<Page>

and, irrespective of the time of issue or of the series in which issued or the
designation thereof, equally secured by an Indenture, dated the second day of
January, 1926, executed by Chicago By-Product Coke Company, a Delaware
corporation, to Illinois Merchants Trust Company, as trustee, and recorded on
January 19, 1926, as Document No. 9154395 in Book 22219 of Records, at page 283,
in the Recorder's Office of Cook County, Illinois, which Indenture was assumed
by the Company as a successor corporation, as defined therein, by an indenture,
dated the first day of March, 1928, executed by the Company to said trustee, and
recorded on April 7, 1928, as Document No. 9980547 in Book 25701 of Records, at
page 599, in the Recorder's Office of Cook County, Illinois, and has heretofore
been, and from time to time hereafter may be, amended and supplemented by
indentures supplemental thereto, including the Supplemental Indenture dated as
of February 15, 2003 relating to the hereinafter described Series MM-2 Bonds
(the "Supplemental Indenture"). Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings ascribed thereto in the Supplemental
Indenture. The word "Mortgage", as used in this Bond, shall mean said Indenture,
as amended and supplemented from time to time by indentures supplemental
thereto, including the Supplemental Indenture. The word "Company", as used in
this Bond, shall be construed to include any successor corporation, as defined
in the Mortgage. The word "Trustee", as used in this Bond, shall be construed to
mean and include U.S. Bank National Association (successor to Illinois Merchants
Trust Company), as trustee under the Mortgage, and any successor trustee
thereunder. Reference is hereby made to the Mortgage and all indentures
supplemental thereto for a description of the property mortgaged and pledged
(except that certain parcels described in the Mortgage and in said supplemental
indentures have been released from the lien of the Mortgage pursuant to the
terms thereof), the nature and extent of the security and the terms and
conditions governing the issuance and security of the bonds issued or to be
issued under the Mortgage. As provided in the Mortgage, the bonds may be for
various principal sums, are issuable in series, may bear interest at different
rates and may otherwise vary as provided therein. This Bond is one of the series
of such First and Refunding Mortgage Bonds designated as "The Peoples Gas Light
and Coke Company First and Refunding Mortgage 4% Bonds, Series MM-2",
hereinafter called the "Series MM-2 Bonds".

     The Series MM-2 Bonds shall be deliverable in the form of registered Bonds
without coupons in the denominations of $1,000 and any integral multiple
thereof.

     As more fully described in the Supplemental Indenture, the Company reserves
the right, without any consent or other action by holders of the Series MM-2
Bonds or the bonds of any subsequent series, to amend the Mortgage to provide
that the Mortgage, the rights and obligations of the Company and the rights of
the bondholders may be modified with the consent of the holders of not less than
60% in aggregate principal amount of the bonds adversely affected; provided,
however, that no modification shall (1) extend the time, or reduce the amount,
of any payment on any bond, without the consent of the holder of each bond so
affected, (2) permit the creation of any lien, not otherwise permitted, prior to
or on a parity with the lien of the Mortgage, without the consent of the holders
of all bonds then outstanding, or (3) reduce the above percentage

                                       B-2
<Page>

of the principal amount of bonds the holders of which are required to approve
any such modification without the consent of the holders of all bonds then
outstanding.

     The Series MM-2 Bonds are subject to optional redemption by the Company, in
whole but not in part, at any time, at a redemption price of 100% of the
principal amount thereof, plus accrued interest, if any, to the redemption date,
upon the occurrence of certain events described in the Supplemental Indenture
(relating to unreasonable burdens or excessive liabilities imposed upon the
Company; changes in the economic availability of raw materials, operating
supplies, fuel or other energy sources or supplies or technological or other
changes rendering its property uneconomic; court order or decree preventing
operations at its property or rendering the continuation of its operations
economically unfeasible).

     All of the outstanding Series MM-2 Bonds may be redeemed at any time by the
Company, by the payment of the principal amount thereof and accrued interest
thereon to the date of redemption, without the payment of any premium, in the
event of the acquisition by any federal, state or municipal authority of any
substantial portion (which shall be not less than one-third as determined by
book values) of the income-producing properties of the Company which are subject
to the lien of the Mortgage.

     All of the outstanding bonds under the Mortgage shall be redeemed by the
Company by the payment of the respective applicable redemption price or prices
and accrued interest thereon to the date of redemption, without the payment of
any premium, in the event of the acquisition by any federal, state or municipal
authority of all or substantially all of the income-producing properties of the
Company which are subject to the lien of the Mortgage.

     Notice of any redemption of the Series MM-2 Bonds shall be given by mailing
by first-class mail, postage prepaid, at least thirty (30) days and not more
than sixty (60) days prior to the redemption date, to the holders of all such
bonds to be redeemed at their last addresses that shall appear upon the registry
book, all as more fully provided in the Mortgage. Notice of redemption having
been duly given, the bonds called for redemption shall become due and payable
upon the redemption date and, if the redemption price shall have been deposited
with the Trustee, interest thereon shall cease to accrue on and after the
redemption date, and whenever the redemption price thereof shall have been
deposited with the Trustee and notice of redemption shall have been duly given
or provision therefore made, such bonds shall no longer be entitled to any lien
or benefit of the Mortgage.

     In case of certain events of default specified in the Mortgage, the
principal of all bonds issued and outstanding thereunder may be declared or may
become due and payable in the manner and with the effect provided in the
Mortgage.

     No recourse shall be had for the payment of the principal of or interest on
this Bond, or for any claim based hereon, or otherwise in respect hereof or of
the Mortgage, to or against any incorporator, stockholder, director or officer,
past, present or future, of

                                       B-3
<Page>

the Company, either directly or through the Company, under any constitution or
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability of incorporators, stockholders, directors and
officers being released by the holder hereof by the acceptance of this Bond, and
being likewise waived and released by the terms of the Mortgage.

     This Bond is transferable by the registered holder hereof in person or by a
duly authorized attorney at the office or agency of the Company in the City of
Chicago, State of Illinois, upon surrender and cancellation of this Bond, and
thereupon a new registered bond or bonds, without coupons, of the same series
and for the same aggregate principal amount will be issued to the transferee in
exchange herefor. In the manner provided in the Mortgage, registered Bonds
without coupons of this series may, at the option of the registered owner and
upon surrender at said office or agency of the Company, be exchanged for
registered Bonds without coupons of this series of the same aggregate principal
amount of other authorized denominations.

     The Company and the Trustee and any paying agent may deem and treat the
person in whose name this Bond is registered as the absolute owner hereof for
the purpose of receiving payment and for all other purposes and neither the
Company nor the Trustee nor any paying agent shall be affected by any notice to
the contrary.

     In addition to the rights provided to Holders of Bonds under the Mortgage,
Holders of Restricted Global Bonds and Restricted Definitive Bonds will have all
the rights set forth in the Registration Rights Agreement dated as of February
19, 2003, between the Company and the Initial Purchaser.

     This Bond shall not be entitled to any security or benefit under the
Mortgage, and shall not become valid or obligatory for any purpose, until this
Bond shall have been authenticated by the execution of the certificate, hereon
endorsed, by the Trustee or its successor in trust under the Mortgage.

                                       B-4
<Page>

     IN WITNESS WHEREOF, the Company has caused this Bond to be executed in its
name by its President, Executive Vice President, Chief Financial Officer,
Treasurer or a Vice President manually or in facsimile, and has caused its
corporate seal manually or in facsimile to be hereto affixed, attested by the
manual or facsimile signature of its Secretary or of an Assistant Secretary.

   Dated:
         ---------------

           THE PEOPLES GAS LIGHT AND COKE COMPANY

              By:
                  -----------------------
              Its:
                  -----------------------

   Attest:

By:
    --------------------
Its:
    --------------------

                         (Form of Trustee's Certificate)

     This bond is one of the bonds of the series designated, referred to and
described in the within-mentioned Mortgage.

                         U.S. BANK NATIONAL ASSOCIATION

          By
             ------------------
                   Authorized Officer.

                                       B-5
<Page>

                                   ASSIGNMENT

For value received, the undersigned hereby sell(s) and transfer(s) unto:

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE:  _____________________________________
___________________________________________________________________
___________________________________________________________________
(Please print or typewrite name and address, including zip code of assignee)

the within Bond and all rights thereunder, hereby irrevocably constituting and
appointing _____________ Attorney to transfer said Note on the books of the
Trustee with full power of substitution in the premises.

Dated:
      ----------------                        --------------------------
                                                     Notice:  The  signature  to
                                              this  Assignment  must  correspond
                                              with  the  name as written upon
                                              the face of the within instrument
                                              in every particular, without
                                              alteration or enlargement, or any
                                              changes whatever.

                                       B-6
<Page>

                                    EXHIBIT C

                         FORM OF CERTIFICATE OF TRANSFER

The Peoples Gas Light and Coke Company
130 East Randolph Drive
Chicago, Illinois  60601

U.S. Bank National Association
U.S. Bank Trust Center
180 East Fifth Street, 2nd Floor
St. Paul, Minnesota  55101

     Re: 4% First and Refunding Mortgage Bonds, Series MM-1 due March 1, 2010

     Reference is hereby made to the Supplemental Indenture dated as of February
15, 2003, between The Peoples Gas Light and Coke Company, as issuer (the
"COMPANY") and U.S. Bank National Association, as trustee (the "INDENTURE").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

     ___________________, (the "TRANSFEROR") owns and proposes to transfer the
Bond[s] or interest in such Bond[s] specified in Annex A hereto, in the
principal amount of $___________ in such Bond[s] or interests (the "TRANSFER"),
to ___________________________ (the "TRANSFEREE"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:

                             [CHECK ALL THAT APPLY]

     1. CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
144A GLOBAL BOND OR A DEFINITIVE BOND PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), and, accordingly, the Transferor
hereby further certifies that the beneficial interest or Definitive Bond is
being transferred to a Person that the Transferor reasonably believed and
believes is purchasing the beneficial interest or Definitive Bond for its own
account, or for one or more accounts with respect to which such Person exercises
sole investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Transfer is in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Bond will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Bond and/or the Definitive Bond and in the
Indenture and the Securities Act.

                                       C-1
<Page>

     2. CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
REGULATION S TEMPORARY GLOBAL BOND, THE REGULATION S PERMANENT GLOBAL BOND OR A
DEFINITIVE BOND PURSUANT TO REGULATION S. The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly, the Transferor hereby further certifies that (i) the Transfer
is not being made to a Person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Bond will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Permanent Global Bond,
the Regulation S Temporary Global Bond and/or the Definitive Bond and in the
Indenture and the Securities Act.

     3. CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN A DEFINITIVE BOND PURSUANT TO ANY PROVISION OF THE SECURITIES ACT
OTHER THAN REGULATION S. The Transfer is being effected in compliance with the
transfer restrictions applicable to beneficial interests in Restricted Global
Bonds and Restricted Definitive Bonds and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):

          (a) such Transfer is being effected pursuant to and in accordance with
     Rule 144 under the Securities Act;

                                       or

          (b) such Transfer is being effected to the Company or a subsidiary
     thereof;

                                       or

          (c) such Transfer is being effected pursuant to an effective
     registration statement under the Securities Act and in compliance with the
     prospectus delivery requirements of the Securities Act.

     4. Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Bond or of an Unrestricted Definitive Bond.

          (a) CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
     being effected pursuant to and in accordance with Rule 144 under the
     Securities Act and in

                                       C-2
<Page>

     compliance with the transfer restrictions contained in the Indenture and
     any applicable blue sky securities laws of any state of the United States
     and (ii) the restrictions on transfer contained in the Indenture and the
     Private Placement Legend are not required in order to maintain compliance
     with the Securities Act. Upon consummation of the proposed Transfer in
     accordance with the terms of the Indenture, the transferred beneficial
     interest or Definitive Bond will no longer be subject to the restrictions
     on transfer enumerated in the Private Placement Legend printed on the
     Restricted Global Bonds, on Restricted Definitive Bonds and in the
     Indenture.

          (b) CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is
     being effected pursuant to and in accordance with Rule 903 or Rule 904
     under the Securities Act and in compliance with the transfer restrictions
     contained in the Indenture and any applicable blue sky securities laws of
     any state of the United States and (ii) the restrictions on transfer
     contained in the Indenture and the Private Placement Legend are not
     required in order to maintain compliance with the Securities Act. Upon
     consummation of the proposed Transfer in accordance with the terms of the
     Indenture, the transferred beneficial interest or Definitive Bond will no
     longer be subject to the restrictions on transfer enumerated in the Private
     Placement Legend printed on the Restricted Global Bonds, on Restricted
     Definitive Bonds and in the Indenture.

          (c) CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
     is being effected pursuant to and in compliance with an exemption from the
     registration requirements of the Securities Act other than Rule 144, Rule
     903 or Rule 904 and in compliance with the transfer restrictions contained
     in the Indenture and any applicable blue sky securities laws of any State
     of the United States and (ii) the restrictions on transfer contained in the
     Indenture and the Private Placement Legend are not required in order to
     maintain compliance with the Securities Act. Upon consummation of the
     proposed Transfer in accordance with the terms of the Indenture, the
     transferred beneficial interest or Definitive Bond will not be subject to
     the restrictions on transfer enumerated in the Private Placement Legend
     printed on the Restricted Global Bonds or Restricted Definitive Bonds and
     in the Indenture.

     This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                           -------------------------------------
                                             [Insert Name of Transferor]

                                             By:
                                                --------------------------------
                                              Name:
                                              Title:

Dated:
      --------------------

                                       C-3
<Page>

                       ANNEX A TO CERTIFICATE OF TRANSFER

     1. The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (A) OR (B)]

          (a)  "  a beneficial interest in the:

               (i)   "  144A Global Bond or

              (ii)   "  Regulation S Permanent Global Bond, or

             (iii)   "  Regulation S Temporary Global Bond, or

          (b)  "  a Restricted Definitive Bond.

     2. After the Transfer the Transferee will hold:

                                   [CHECK ONE]

          (a)  "  a beneficial interest in the:

               (i)   "  144A Global Bond, or

              (ii)   "  Regulation S Permanent Global Bond, or

             (iii)   "  Regulation S Temporary Global Bond, or

              (iv)   "  Unrestricted Global Bond; or

          (b)  "  a Restricted Definitive Bond; or

          (c)  "  an Unrestricted Definitive Bond,

         in accordance with the terms of the Indenture.

                                       C-4
<Page>

                                    EXHIBIT D

                         FORM OF CERTIFICATE OF EXCHANGE

The Peoples Gas Light and Coke Company
130 East Randolph Drive
Chicago, Illinois  60601

U.S. Bank National Association
U.S. Bank Trust Center
180 East Fifth Street, 2nd Floor
St. Paul, Minnesota  55101

     Re: 4% First and Refunding Mortgage Bonds, Series MM-1 due March 1, 2010

     Reference is hereby made to the Supplemental Indenture dated as of February
15, 2003, between The Peoples Gas Light and Coke Company, as issuer (the
"COMPANY") and U.S. Bank National Association, as trustee (the "INDENTURE").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

     __________________________, (the "OWNER") owns and proposes to exchange the
Bond[s] or interest in such Bond[s] specified herein, in the principal amount of
$____________ in such Bond[s] or interests (the "EXCHANGE"). In connection with
the Exchange, the Owner hereby certifies that:

     1. EXCHANGE OF RESTRICTED DEFINITIVE BONDS OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL BOND FOR UNRESTRICTED DEFINITIVE BONDS OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL BOND

          (a) CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
     GLOBAL BOND TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL BOND. In
     connection with the Exchange of the Owner's beneficial interest in a
     Restricted Global Bond for a beneficial interest in an Unrestricted Global
     Bond in an equal principal amount, the Owner hereby certifies (i) the
     beneficial interest is being acquired for the Owner's own account without
     transfer, (ii) such Exchange has been effected in compliance with the
     transfer restrictions applicable to the Global Bonds and pursuant to and in
     accordance with the Securities Act of 1933, as amended (the "SECURITIES
     ACT"), (iii) the restrictions on transfer contained in the Indenture and
     the Private Placement Legend are not required in order to maintain
     compliance with the Securities Act and (iv) the beneficial interest in an
     Unrestricted Global Bond is being acquired in compliance with any
     applicable blue sky securities laws of any state of the United States.

          (b) CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
     GLOBAL BOND TO UNRESTRICTED DEFINITIVE BOND. In connection with the
     Exchange of the

                                       D-1
<Page>

     Owner's beneficial interest in a Restricted Global Bond for an Unrestricted
     Definitive Bond, the Owner hereby certifies (i) the Definitive Bond is
     being acquired for the Owner's own account without transfer, (ii) such
     Exchange has been effected in compliance with the transfer restrictions
     applicable to the Restricted Global Bonds and pursuant to and in accordance
     with the Securities Act, (iii) the restrictions on transfer contained in
     the Indenture and the Private Placement Legend are not required in order to
     maintain compliance with the Securities Act and (iv) the Definitive Bond is
     being acquired in compliance with any applicable blue sky securities laws
     of any state of the United States.

          (c) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE BOND TO BENEFICIAL
     INTEREST IN AN UNRESTRICTED GLOBAL Bond. In connection with the Owner's
     Exchange of a Restricted Definitive Bond for a beneficial interest in an
     Unrestricted Global Bond, the Owner hereby certifies (i) the beneficial
     interest is being acquired for the Owner's own account without transfer,
     (ii) such Exchange has been effected in compliance with the transfer
     restrictions applicable to Restricted Definitive Bonds and pursuant to and
     in accordance with the Securities Act, (iii) the restrictions on transfer
     contained in the Indenture and the Private Placement Legend are not
     required in order to maintain compliance with the Securities Act and (iv)
     the beneficial interest is being acquired in compliance with any applicable
     blue sky securities laws of any state of the United States.

          (d) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE BOND TO
     UNRESTRICTED DEFINITIVE BOND. In connection with the Owner's Exchange of a
     Restricted Definitive Bond for an Unrestricted Definitive Bond, the Owner
     hereby certifies (i) the Unrestricted Definitive Bond is being acquired for
     the Owner's own account without transfer, (ii) such Exchange has been
     effected in compliance with the transfer restrictions applicable to
     Restricted Definitive Bonds and pursuant to and in accordance with the
     Securities Act, (iii) the restrictions on transfer contained in the
     Indenture and the Private Placement Legend are not required in order to
     maintain compliance with the Securities Act and (iv) the Unrestricted
     Definitive Bond is being acquired in compliance with any applicable blue
     sky securities laws of any state of the United States.

     2. EXCHANGE OF RESTRICTED DEFINITIVE BONDS OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL BONDS FOR RESTRICTED DEFINITIVE BONDS OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL BONDS

          (a) CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
     GLOBAL BOND TO RESTRICTED DEFINITIVE BOND. In connection with the Exchange
     of the Owner's beneficial interest in a Restricted Global Bond for a
     Restricted Definitive Bond with an equal principal amount, the Owner hereby
     certifies that the Restricted Definitive Bond is being acquired for the
     Owner's own account without transfer. Upon consummation of the proposed
     Exchange in accordance with the terms of the Indenture, the Restricted
     Definitive Bond issued will continue to be subject to the restrictions on
     transfer enumerated in the Private Placement Legend printed on the
     Restricted Definitive Bond and in the Indenture and the Securities Act.

                                       D-2
<Page>

          (b) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE BOND TO BENEFICIAL
     INTEREST IN A RESTRICTED GLOBAL BOND. In connection with the Exchange of
     the Owner's Restricted Definitive Bond for a beneficial interest in the
     [CHECK ONE] 144A Global Bond, Regulation S Global Bond with an equal
     principal amount, the Owner hereby certifies (i) the beneficial interest is
     being acquired for the Owner's own account without transfer and (ii) such
     Exchange has been effected in compliance with the transfer restrictions
     applicable to the Restricted Global Bonds and pursuant to and in accordance
     with the Securities Act, and in compliance with any applicable blue sky
     securities laws of any state of the United States. Upon consummation of the
     proposed Exchange in accordance with the terms of the Indenture, the
     beneficial interest issued will be subject to the restrictions on transfer
     enumerated in the Private Placement Legend printed on the relevant
     Restricted Global Bond and in the Indenture and the Securities Act.

     This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                          --------------------------------------
                                            [Insert Name of Transferor]

                                            By:
                                               ---------------------------------
                                             Name:
                                             Title:

Dated:
      -------------------

                                       D-3
<Page>

                                    EXHIBIT E

                  [FACE OF REGULATION S TEMPORARY GLOBAL BOND]

    ICC Identification No. 6204

    No. R_____________                                       $__________

                     THE PEOPLES GAS LIGHT AND COKE COMPANY

                      FIRST AND REFUNDING MORTGAGE 4% BOND,

                                   SERIES MM-2

                                DUE March 1, 2010

    THE PEOPLES GAS LIGHT AND COKE COMPANY, an Illinois corporation (hereinafter
called the "Company"), for value received, hereby promises to pay to. . . . . .
.. . . . . . . . . . . . . . . . . . . . . ., or registered assigns on March 1,
2010, unless this Bond shall have been called for redemption and payment of the
redemption price shall have been duly made or provided for in accordance with
the hereinafter described Mortgage, the principal sum of . . . . . . . . . . . .
Dollars ($__________), and to pay interest on the balance of said principal sum
from time to time remaining unpaid from the March 1 or September 1 to which
interest has been paid next preceding the date of authentication of this Bond,
unless this Bond is authenticated on a March 1 or September 1 to which interest
has been paid, in which event this Bond shall bear interest from such March 1 or
September 1, or unless no interest has been paid on this Bond, in which event
this Bond shall bear interest from the date hereof, at the rate of four percent
(4%) per annum (calculated on the basis of a year of 360 days consisting of
twelve 30-day months), payable at or before 9:00 a.m., Chicago time, on March 1
or September 1 of each year, commencing September 1, 2003 until payment in full
of such principal sum. Interest shall also accrue on any overdue principal,
premium, if any, and (to the extent that such interest shall be legally
enforceable) on any overdue installment of interest until paid at the same rate
per annum. The interest so payable on any interest payment date will, subject to
certain exceptions provided in the Mortgage, be paid to the person who is the
registered owner of this Bond at the close of business on the applicable record
date next preceding such interest payment date (February 15 or August 15, as the
case may be). Principal of, premium, if any, and interest on this Bond shall be
payable in lawful money of the United States of America at the principal
corporate office or agency of the Company in Chicago, Illinois.

                                       E-1
<Page>

                  [BACK OF REGULATION S TEMPORARY GLOBAL BOND]

     4% FIRST AND REFUNDING MORTGAGE BONDS, SERIES MM-1 DUE MARCH 1, 2010 THE
RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL BOND, AND THE CONDITIONS
AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE BONDS (AS DEFINED IN THE
SUPPLEMENTAL SUPPLEMENTAL INDENTURE GOVERNING THIS BOND), ARE AS SPECIFIED IN
THE SUPPLEMENTAL INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL BOND SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.

THIS GLOBAL BOND IS HELD BY THE DEPOSITARY (AS DEFINED IN THE SUPPLEMENTAL
INDENTURE GOVERNING THIS BOND) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 11 OF ARTICLE I OF THE SUPPLEMENTAL INDENTURE,
(2) THIS GLOBAL BOND MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO
SECTION 11(a) OF ARTICLE I OF THE SUPPLEMENTAL INDENTURE, (3) THIS GLOBAL BOND
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 11 OF
ARTICLE I OF THE SUPPLEMENTAL INDENTURE AND (4) THIS GLOBAL BOND MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR DEFINITIVE BONDS (AS
DEFINED IN THE SUPPLEMENTAL INDENTURE GOVERNING THIS BOND), THIS BOND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE

                                       E-2
<Page>

TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.

EACH HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO (A) OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO THE COMPANY, (2) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (5) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL IF THE COMPANY OR THE TRUSTEE
SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(B) THAT IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."

Capitalized terms used herein have the meanings assigned to them in the
Supplemental Indenture referred to below unless otherwise indicated.

     This Bond is one of the First and Refunding Mortgage Bonds of the Company,
all issued and to be issued in series, from time to time, under and in
accordance with and, irrespective of the time of issue or of the series in which
issued or the designation thereof, equally secured by an Supplemental Indenture,
dated the second day of January, 1926, executed by Chicago By-Product Coke
Company, a Delaware corporation, to Illinois Merchants Trust Company, as
trustee, and recorded on January 19, 1926, as Document No. 9154395 in Book 22219
of Records, at page 283, in the Recorder's Office of Cook County, Illinois,
which Supplemental Indenture was assumed by the Company as a successor
corporation, as defined therein, by an Supplemental Indenture, dated the first
day of March, 1928, executed by the Company to said trustee, and recorded on
April 7, 1928, as Document No. 9980547 in Book 25701 of Records, at page 599, in
the Recorder's Office of Cook County, Illinois, and has heretofore been, and
from time to time hereafter may be, amended and supplemented by Supplemental
Indentures supplemental thereto, including the Supplemental Indenture dated as
of February 15, 2003 relating to the hereinafter described Series MM-2 Bonds
(the "Supplemental Indenture"). Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings ascribed thereto in the Supplemental
Indenture. The word "Mortgage", as used in this Bond, shall mean said
Supplemental Indenture, as amended and supplemented from time to time by
Supplemental Indentures supplemental thereto, including the Supplemental
Indenture. The word "Company", as used in this Bond, shall be construed to
include any successor corporation, as defined in the Mortgage. The word
"Trustee", as used in this Bond, shall be construed to mean and include U.S.
Bank National Association (successor to Illinois Merchants Trust Company), as
trustee under the Mortgage, and

                                       E-3

any successor trustee thereunder. Reference is hereby made to the Mortgage and
all Supplemental Indentures supplemental thereto for a description of the
property mortgaged and pledged (except that certain parcels described in the
Mortgage and in said Supplemental Indentures have been released from the lien of
the Mortgage pursuant to the terms thereof), the nature and extent of the
security and the terms and conditions governing the issuance and security of the
bonds issued or to be issued under the Mortgage. As provided in the Mortgage,
the bonds may be for various principal sums, are issuable in series, may bear
interest at different rates and may otherwise vary as provided therein. This
Bond is one of the series of such First and Refunding Mortgage Bonds designated
as "The Peoples Gas Light and Coke Company First and Refunding Mortgage 4%
Bonds, Series MM-2", hereinafter called the "Series MM-2 Bonds".

     The Series MM-2 Bonds shall be deliverable in the form of registered Bonds
without coupons in the denominations of $1,000 and any integral multiple
thereof.

     As more fully described in the Supplemental Indenture, the Company reserves
the right, without any consent or other action by holders of the Series MM-2
Bonds or the bonds of any subsequent series, to amend the Mortgage to provide
that the Mortgage, the rights and obligations of the Company and the rights of
the bondholders may be modified with the consent of the holders of not less than
60% in aggregate principal amount of the bonds adversely affected; provided,
however, that no modification shall (1) extend the time, or reduce the amount,
of any payment on any bond, without the consent of the holder of each bond so
affected, (2) permit the creation of any lien, not otherwise permitted, prior to
or on a parity with the lien of the Mortgage, without the consent of the holders
of all bonds then outstanding, or (3) reduce the above percentage of the
principal amount of bonds the holders of which are required to approve any such
modification without the consent of the holders of all bonds then outstanding.

     The Series MM-2 Bonds are subject to optional redemption by the Company, in
whole but not in part, at any time, at a redemption price of 100% of the
principal amount thereof, plus accrued interest, if any, to the redemption date,
upon the occurrence of certain events described in the Supplemental Indenture
(relating to unreasonable burdens or excessive liabilities imposed upon the
Company; changes in the economic availability of raw materials, operating
supplies, fuel or other energy sources or supplies or technological or other
changes rendering its property uneconomic; court order or decree preventing
operations at its property or rendering the continuation of its operations
economically unfeasible).

     All of the outstanding Series MM-2 Bonds may be redeemed at any time by the
Company, by the payment of the principal amount thereof and accrued interest
thereon to the date of redemption, without the payment of any premium, in the
event of the acquisition by any federal, state or municipal authority of any
substantial portion (which shall be not less than one-third as determined by
book values) of the income-producing properties of the Company which are subject
to the lien of the Mortgage.

     All of the outstanding bonds under the Mortgage shall be redeemed by the
Company by the payment of the respective applicable redemption price or prices
and accrued interest thereon to the date of redemption, without the payment of
any premium, in the event of the acquisition

                                       E-4
<Page>

by any federal, state or municipal authority of all or substantially all of the
income-producing properties of the Company which are subject to the lien of the
Mortgage.

     Notice of any redemption of the Series MM-2 Bonds shall be given by mailing
by first-class mail, postage prepaid, at least thirty (30) days and not more
than sixty (60) days prior to the redemption date, to the holders of all such
bonds to be redeemed at their last addresses that shall appear upon the registry
book, all as more fully provided in the Mortgage. Notice of redemption having
been duly given, the bonds called for redemption shall become due and payable
upon the redemption date and, if the redemption price shall have been deposited
with the Trustee, interest thereon shall cease to accrue on and after the
redemption date, and whenever the redemption price thereof shall have been
deposited with the Trustee and notice of redemption shall have been duly given
or provision therefore made, such bonds shall no longer be entitled to any lien
or benefit of the Mortgage.

     In case of certain events of default specified in the Mortgage, the
principal of all bonds issued and outstanding thereunder may be declared or may
become due and payable in the manner and with the effect provided in the
Mortgage.

     No recourse shall be had for the payment of the principal of or interest on
this Bond, or for any claim based hereon, or otherwise in respect hereof or of
the Mortgage, to or against any incorporator, stockholder, director or officer,
past, present or future, of the Company, either directly or through the Company,
under any constitution or statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability of incorporators,
stockholders, directors and officers being released by the holder hereof by the
acceptance of this Bond, and being likewise waived and released by the terms of
the Mortgage.

     This Bond is transferable by the registered holder hereof in person or by a
duly authorized attorney at the office or agency of the Company in the City of
Chicago, State of Illinois, upon surrender and cancellation of this Bond, and
thereupon a new registered bond or bonds, without coupons, of the same series
and for the same aggregate principal amount will be issued to the transferee in
exchange herefor. In the manner provided in the Mortgage, registered Bonds
without coupons of this series may, at the option of the registered owner and
upon surrender at said office or agency of the Company, be exchanged for
registered Bonds without coupons of this series of the same aggregate principal
amount of other authorized denominations.

     The Company and the Trustee and any paying agent may deem and treat the
person in whose name this Bond is registered as the absolute owner hereof for
the purpose of receiving payment and for all other purposes and neither the
Company nor the Trustee nor any paying agent shall be affected by any notice to
the contrary.

     This Bond shall not be entitled to any security or benefit under the
Mortgage, and shall not become valid or obligatory for any purpose, until this
Bond shall have been authenticated by the execution of the certificate, hereon
endorsed, by the Trustee or its successor in trust under the Mortgage.

                                       E-5<Page>

                                                                     EXHIBIT 4.5

                                   $50,000,000

                     The Peoples Gas Light and Coke Company

                 First and Refunding Mortgage Bonds, Series MM-1

                                Due March 1, 2010

                          REGISTRATION RIGHTS AGREEMENT

                                                               February 19, 2003

Banc One Capital Markets, Inc.
1 Bank One Plaza
Suite IL1-0595
Chicago, IL  60670

Ladies and Gentlemen:

     The Peoples Gas Light and Coke Company, an Illinois corporation (the
"COMPANY"), proposes to issue and sell to Banc One Capital Markets, Inc. (the
"INITIAL PURCHASER"), upon the terms set forth in a purchase agreement of even
date herewith (the "PURCHASE AGREEMENT"), $50,000,000 aggregate principal amount
of its First and Refunding Mortgage Bonds, Series MM-I due March 1, 2010 (the
"INITIAL SECURITIES"). The Initial Securities will be issued under the Mortgage,
dated January 2, 1926, from Chicago By-Product Coke Company to Illinois
Merchants Trust Company (succeeded through consolidation, merger or sale by U.S.
Bank, National Association), as Trustee (the "TRUSTEE"), which Mortgage was
assumed by the Company by Indenture, dated March 1, 1928, and has heretofore
been amended and supplemented by various supplemental indentures thereto,
including the Supplemental Indenture dated as of February 15, 2003 providing for
the issuance of the Initial Securities (the "SUPPLEMENTAL INDENTURE"). As used
herein, "MORTGAGE" shall mean such Mortgage as heretofore amended and
supplemented, including the Supplemental Indenture. As an inducement to the
Initial Purchaser to enter into the Purchase Agreement, the Company agrees with
the Initial Purchaser, for the benefit of the Initial Purchaser and the holders
of the Securities (as defined below) (collectively the "HOLDERS"), as follows:

     1.  REGISTERED EXCHANGE OFFER. Unless not permitted by applicable law
(after the Company has complied with the ultimate paragraph of this Section 1)
or the policy of the Securities and Exchange Commission (the "COMMISSION"), the
Company shall prepare and, not later than 60 days (such 60th day being a "FILING
DEADLINE") after the date on which the Initial Purchaser purchases the Initial
Securities pursuant to the Purchase Agreement (the "CLOSING

<Page>

DATE"), file with the Commission a registration statement (the "EXCHANGE OFFER
REGISTRATION STATEMENT") on an appropriate form under the Securities Act of
1933, as amended (the "SECURITIES ACT"), with respect to a proposed offer (the
"REGISTERED EXCHANGE OFFER") to the Holders of Transfer Restricted Securities
(as defined in Section 6 hereof), who are not prohibited by any law or policy of
the Commission from participating in the Registered Exchange Offer, to issue and
deliver to such Holders, in exchange for the Initial Securities, a like
aggregate principal amount of debt securities of the Company issued under the
Mortgage, identical in all material respects to the Initial Securities and
registered under the Securities Act (the "EXCHANGE SECURITIES"). The Company
shall use its reasonable best efforts to (i) cause such Exchange Offer
Registration Statement to become effective under the Securities Act within 200
days after the Closing Date (such 200th day being an "EFFECTIVENESS DEADLINE")
and (ii) keep the Exchange Offer Registration Statement effective for not less
than 30 days (or longer, if required by applicable law) after the date notice of
the Registered Exchange Offer is mailed to the Holders (such period being called
the "EXCHANGE OFFER REGISTRATION PERIOD").

     If the Company commences the Registered Exchange Offer, the Company (i)
will be entitled to consummate the Registered Exchange Offer 30 days after such
commencement (PROVIDED that the Company has accepted all the Initial Securities
theretofore validly tendered in accordance with the terms of the Registered
Exchange Offer) and (ii) will be required to consummate the Registered Exchange
Offer no later than 40 days after the date on which the Exchange Offer
Registration Statement is declared effective (such 40th day being the
"CONSUMMATION DEADLINE").

     Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities electing to exchange the
Initial Securities for Exchange Securities (assuming that such Holder is not an
affiliate of the Company within the meaning of the Securities Act, acquires the
Exchange Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the Exchange
Securities and is not prohibited by any law or policy of the Commission from
participating in the Registered Exchange Offer) to trade such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and without material restrictions under the securities
laws of the several states of the United States.

     The Company acknowledges that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "EXCHANGING DEALER"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto on the cover, (b)
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section, and (c) Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) the Initial Purchaser that elects to sell
Securities (as defined below) acquired in exchange for Initial Securities
constituting any portion of an unsold

                                       -2-
<Page>

allotment, is required to deliver a prospectus containing the information
required by Items 507 or 508 of Regulation S-K under the Securities Act, as
applicable, in connection with such sale.

     The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
prospectus contained therein, in order to permit such prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; PROVIDED, HOWEVER, that
(i) in the case where such prospectus and any amendment or supplement thereto
must be delivered by an Exchanging Dealer or the Initial Purchaser, such period
shall be the lesser of 180 days and the date on which all Exchanging Dealers and
the Initial Purchaser have sold all Exchange Securities held by them (unless
such period is extended pursuant to Section 3(j) below) and (ii) the Company
shall make such prospectus and any amendment or supplement thereto available to
any broker-dealer for use in connection with any resale of any Exchange
Securities for a period of not less than 180 days after the consummation of the
Registered Exchange Offer.

     If, upon consummation of the Registered Exchange Offer, the Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
the Initial Purchaser upon the written request of the Initial Purchaser, in
exchange (the "PRIVATE EXCHANGE") for the Initial Securities held by the Initial
Purchaser, a like principal amount of debt securities of the Company issued
under the Mortgage and identical in all material respects to the Initial
Securities (the "PRIVATE EXCHANGE SECURITIES"). The Initial Securities, the
Exchange Securities and the Private Exchange Securities are herein collectively
called the "SECURITIES."

     In connection with the Registered Exchange Offer, the Company shall:

          (a)  mail to each Holder a copy of the prospectus forming part of the
     Exchange Offer Registration Statement, together with an appropriate letter
     of transmittal and related documents;

          (b)  keep the Registered Exchange Offer open for not less than 30 days
     (or longer, if required by applicable law) after the date notice thereof is
     mailed to the Holders;

          (c)  utilize the services of a depositary for the Registered Exchange
     Offer with an address in the Borough of Manhattan, The City of New York,
     which may be the Trustee or an affiliate of the Trustee;

          (d)  permit Holders to withdraw tendered Securities at any time prior
     to the close of business, New York time, on the last business day on which
     the Registered Exchange Offer shall remain open; and

          (e)  otherwise comply with all applicable laws.

                                       -3-
<Page>

     As soon as practicable after the close of the Registered Exchange Offer or
the Private Exchange, as the case may be, the Company shall:

          (x)  accept for exchange all the Securities validly tendered and not
     withdrawn pursuant to the Registered Exchange Offer and the Private
     Exchange;

          (y)  deliver to the Trustee for cancellation all the Initial
     Securities so accepted for exchange; and

          (z)  cause the Trustee to authenticate and deliver promptly to each
     Holder of the Initial Securities, Exchange Securities or Private Exchange
     Securities, as the case may be, equal in principal amount to the Initial
     Securities of such Holder so accepted for exchange.

     The Mortgage will provide that the Exchange Securities will not be subject
to the transfer restrictions set forth in the Mortgage and that all the
Securities will vote and consent together on all matters as one class and that
none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.

     Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.

     Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such Holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.

     Notwithstanding any other provisions hereof, the Company will ensure that
(i) any Exchange Offer Registration Statement and any amendment thereto and any
prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer

                                       -4-
<Page>

Registration Statement, and any supplement to such prospectus, does not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

     If following the date hereof there has been announced a change in
Commission policy with respect to exchange offers that in the reasonable opinion
of counsel to the Company raises a substantial question as to whether the
Registered Exchange Offer is permitted by applicable federal law, the Company
will seek a no-action letter or other favorable decision from the Commission
allowing the Company to consummate the Registered Exchange Offer. The Company
will pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company will take all such other actions as
may be requested by the Commission or otherwise required in connection with the
issuance of such decision, including without limitation (i) participating in
telephonic conferences with the Commission, (ii) delivering to the Commission
staff an analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that the Registered
Exchange Offer should be permitted and (iii) diligently pursuing a resolution
(which need not be favorable) by the Commission staff.

     2.  SHELF REGISTRATION. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated by the
240th day after the Closing Date, (iii) the Initial Purchaser so requests with
respect to the Initial Securities (or the Private Exchange Securities) not
eligible to be exchanged for Exchange Securities in the Registered Exchange
Offer and held by it following consummation of the Registered Exchange Offer or
(iv) any Holder (other than an Exchanging Dealer) is not eligible to participate
in the Registered Exchange Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registered Exchange Offer, such
Holder does not receive freely tradeable Exchange Securities on the date of the
exchange and any such Holder so requests, the Company shall take the following
actions (the date on which any of the conditions described in the foregoing
clauses (i) through (iv) occur, including in the case of clauses (iii) or (iv)
the receipt of the required notice, being a "TRIGGER DATE"):

          (a)  The Company shall promptly (but in no event more than 60 days
     after the Trigger Date (such 60th day being a "FILING DEADLINE")) file with
     the Commission and thereafter use its reasonable best efforts to cause to
     be declared effective no later than 180 days after the Trigger Date (such
     180th day being an "EFFECTIVENESS DEADLINE") a registration statement (the
     "SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer
     Registration Statement, a "REGISTRATION STATEMENT") on an appropriate form
     under the Securities Act relating to the offer and sale of the Transfer
     Restricted Securities by the Holders thereof from time to time in
     accordance with the methods of distribution set forth in the Shelf
     Registration Statement and Rule 415 under the Securities Act (hereinafter,
     the "SHELF REGISTRATION"); PROVIDED, HOWEVER, that no Holder (other than
     the Initial Purchaser) shall be entitled to have the Securities held by it
     covered by such Shelf Registration Statement unless such Holder agrees in
     writing to be bound by all the provisions of this Agreement applicable to
     such Holder.

                                       -5-
<Page>

          (b)  The Company shall use its reasonable best efforts to keep the
     Shelf Registration Statement continuously effective in order to permit the
     prospectus included therein to be lawfully delivered by the Holders of the
     relevant Securities, for a period (the "SHELF REGISTRATION PERIOD") of two
     years (or for such longer period if extended pursuant to Section 3(j)
     below) from the date of its effectiveness or such shorter period that will
     terminate when all the Securities covered by the Shelf Registration
     Statement (i) have been sold pursuant thereto or (ii) are no longer
     restricted securities (as defined in Rule 144 under the Securities Act, or
     any successor rule thereof). The Company shall be deemed not to have used
     its reasonable best efforts to keep the Shelf Registration Statement
     effective during the requisite period if it voluntarily takes any action
     that would result in Holders of Securities covered thereby not being able
     to offer and sell such Securities during that period, unless such action is
     required by applicable law, rules, regulations or administrative or
     judicial order.

          (c)  Notwithstanding any other provisions of this Agreement to the
     contrary, the Company shall cause the Shelf Registration Statement and the
     related prospectus and any amendment or supplement thereto, as of the
     effective date of the Shelf Registration Statement, amendment or
     supplement, (i) to comply in all material respects with the applicable
     requirements of the Securities Act and the rules and regulations of the
     Commission and (ii) not to contain any untrue statement of a material fact
     or omit to state a material fact required to be stated therein or necessary
     in order to make the statements therein, in light of the circumstances
     under which they were made, not misleading.

     3.  REGISTRATION PROCEDURES. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:

          (a)  The Company shall (i) furnish to the Initial Purchaser, prior to
     the filing thereof with the Commission, a copy of the Registration
     Statement and each amendment thereof and each supplement, if any, to the
     prospectus included therein and, in the event that the Initial Purchaser
     (with respect to any portion of an unsold allotment from the original
     offering) is participating in the Registered Exchange Offer or the Shelf
     Registration Statement, the Company shall use its reasonable best efforts
     to reflect in each such document, when so filed with the Commission, such
     comments as the Initial Purchaser reasonably may propose; (ii) include the
     information set forth in Annex A hereto on the cover, in Annex B hereto in
     the "Exchange Offer Procedures" section and the "Purpose of the Exchange
     Offer" section and in Annex C hereto in the "Plan of Distribution" section
     of the prospectus forming a part of the Exchange Offer Registration
     Statement and include the information set forth in Annex D hereto in the
     Letter of Transmittal delivered pursuant to the Registered Exchange Offer;
     (iii) if requested by the Initial Purchaser, include the information
     required by Item 507 or 508 of Regulation S-K under the Securities Act, as
     applicable, in the prospectus forming a part of the Exchange Offer
     Registration Statement; (iv) include within the prospectus contained in the
     Exchange Offer Registration Statement a section entitled "Plan of
     Distribution," reasonably acceptable to the Initial Purchaser, which shall
     contain a summary statement of the positions taken or policies made by the
     staff of the Commission with respect to the

                                       -6-
<Page>

     potential "underwriter" status of any broker-dealer that is the beneficial
     owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
     as amended (the "EXCHANGE ACT")) of Exchange Securities received by such
     broker-dealer in the Registered Exchange Offer (a "PARTICIPATING
     BROKER-DEALER"), whether such positions or policies have been publicly
     disseminated by the staff of the Commission or such positions or policies,
     in the reasonable judgment of the Initial Purchaser based upon advice of
     counsel (which may be in-house counsel), represent the prevailing views of
     the staff of the Commission; and (v) in the case of a Shelf Registration
     Statement, include the names of the Holders who propose to sell Securities
     pursuant to the Shelf Registration Statement as selling securityholders.

          (b)  The Company shall give written notice to the Initial Purchaser,
     the Holders of the Securities and any Participating Broker-Dealer from whom
     the Company has received prior written notice that it will be a
     Participating Broker-Dealer in the Registered Exchange Offer (which notice
     pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction
     to suspend the use of the prospectus until the requisite changes have been
     made):

                (i)   when the Registration Statement or any amendment thereto
          has been filed with the Commission and when the Registration Statement
          or any post-effective amendment thereto has become effective;

               (ii)   of any request by the Commission for amendments or
          supplements to the Registration Statement or the prospectus included
          therein or for additional information;

              (iii)   of the issuance by the Commission of any stop order
          suspending the effectiveness of the Registration Statement or the
          initiation of any proceedings for that purpose;

               (iv)   of the receipt by the Company or its legal counsel of any
          notification with respect to the suspension of the qualification of
          the Securities for sale in any jurisdiction or the initiation or
          threatening of any proceeding for such purpose; and

                (v)   of the happening of any event that requires the Company to
          make changes in the Registration Statement or the prospectus in order
          that the Registration Statement or the prospectus do not contain an
          untrue statement of a material fact nor omit to state a material fact
          required to be stated therein or necessary to make the statements
          therein (in the case of the prospectus, in light of the circumstances
          under which they were made) not misleading.

          (c)  The Company shall use its reasonable best efforts to obtain the
     withdrawal at the earliest possible time, of any order suspending the
     effectiveness of the Registration Statement.

                                       -7-
<Page>

          (d)  The Company shall furnish to each Holder of Securities included
     within the coverage of the Shelf Registration, without charge, at least one
     copy of the Shelf Registration Statement and any post-effective amendment
     thereto, including financial statements and schedules, and, if the Holder
     so requests in writing, all exhibits thereto (including those, if any,
     incorporated by reference).

          (e)  The Company shall deliver to each Exchanging Dealer and the
     Initial Purchaser, and to any other Holder who so requests, without charge,
     at least one copy of the Exchange Offer Registration Statement and any
     post-effective amendment thereto, including financial statements and
     schedules, and, if the Initial Purchaser or any such Holder requests, all
     exhibits thereto (including those incorporated by reference).

          (f)  The Company shall, during the Shelf Registration Period, deliver
     to each Holder of Securities included within the coverage of the Shelf
     Registration, without charge, as many copies of the prospectus (including
     each preliminary prospectus) included in the Shelf Registration Statement
     and any amendment or supplement thereto as such person may reasonably
     request. The Company consents, subject to the provisions of this Agreement,
     to the use of the prospectus or any amendment or supplement thereto by each
     of the selling Holders of the Securities in connection with the offering
     and sale of the Securities covered by the prospectus, or any amendment or
     supplement thereto, included in the Shelf Registration Statement.

          (g)  The Company shall deliver to the Initial Purchaser, any
     Exchanging Dealer, any Participating Broker-Dealer and such other persons
     required to deliver a prospectus following the Registered Exchange Offer,
     without charge, as many copies of the final prospectus included in the
     Exchange Offer Registration Statement and any amendment or supplement
     thereto as such persons may reasonably request. The Company consents,
     subject to the provisions of this Agreement, to the use of the prospectus
     or any amendment or supplement thereto by the Initial Purchaser, if
     necessary, any Participating Broker-Dealer and such other persons required
     to deliver a prospectus following the Registered Exchange Offer in
     connection with the offering and sale of the Exchange Securities covered by
     the prospectus, or any amendment or supplement thereto, included in such
     Exchange Offer Registration Statement.

          (h)  Prior to any public offering of the Securities pursuant to any
     Registration Statement the Company shall register or qualify or cooperate
     with the Holders of the Securities included therein and their respective
     counsel in connection with the registration or qualification of the
     Securities for offer and sale under the securities or "blue sky" laws of
     such states of the United States as any Holder of the Securities reasonably
     requests in writing and do any and all other acts or things necessary or
     advisable to enable the offer and sale in such jurisdictions of the
     Securities covered by such Registration Statement; PROVIDED, HOWEVER, that
     the Company shall not be required to (i) qualify generally to do business
     in any jurisdiction where it is not then so qualified or (ii) take any
     action which would subject it to general service of process or to taxation
     in any jurisdiction where it is not then so subject.

                                       -8-
<Page>

          (i)  The Company shall cooperate with the Holders of the Securities to
     facilitate the timely preparation and delivery of certificates representing
     the Securities to be sold pursuant to any Registration Statement free of
     any restrictive legends and in such denominations and registered in such
     names as the Holders may request a reasonable period of time prior to sales
     of the Securities pursuant to such Registration Statement.

          (j)  Upon the occurrence of any event contemplated by paragraphs (ii)
     through (v) of Section 3(b) above during the period for which the Company
     is required to maintain an effective Registration Statement, the Company
     shall promptly prepare and file a post-effective amendment to the
     Registration Statement or a supplement to the related prospectus and any
     other required document so that, as thereafter delivered to Holders of the
     Securities or purchasers of Securities, the prospectus will not contain an
     untrue statement of a material fact or omit to state any material fact
     required to be stated therein or necessary to make the statements therein,
     in light of the circumstances under which they were made, not misleading.
     If the Company notifies the Initial Purchaser, the Holders of the
     Securities and any known Participating Broker-Dealer in accordance with
     paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the
     prospectus until the requisite changes to the prospectus have been made,
     then the Initial Purchaser, the Holders of the Securities and any such
     Participating Broker-Dealers shall suspend use of such prospectus, and the
     period of effectiveness of the Shelf Registration Statement provided for in
     Section 2(b) above and the Exchange Offer Registration Statement provided
     for in Section 1 above shall each be extended by the number of days from
     and including the date of the giving of such notice to and including the
     date when the Initial Purchaser, the Holders of the Securities and any
     known Participating Broker-Dealer shall have received such amended or
     supplemented prospectus pursuant to this Section 3(j).

          (k)  Not later than the effective date of the applicable Registration
     Statement, the Company will provide a CUSIP number for the Initial
     Securities, the Exchange Securities or the Private Exchange Securities, as
     the case may be, and provide the applicable trustee with printed
     certificates for the Initial Securities, the Exchange Securities or the
     Private Exchange Securities, as the case may be, in a form eligible for
     deposit with The Depository Trust Company.

          (l)  The Company will comply with all rules and regulations of the
     Commission to the extent and so long as they are applicable to the
     Registered Exchange Offer or the Shelf Registration and will make generally
     available to its security holders (or otherwise provide in accordance with
     Section 11(a) of the Securities Act) an earnings statement satisfying the
     provisions of Section 11(a) of the Securities Act, no later than 45 days
     after the end of a 12-month period (or 90 days, if such period is a fiscal
     year) beginning with the first month of the Company's first fiscal quarter
     commencing after the effective date of the Registration Statement, which
     statement shall cover such 12-month period.

          (m)  The Company shall cause the Mortgage to be qualified under the
     Trust Indenture Act of 1939, as amended, in a timely manner and containing
     such changes, if any, as shall be necessary for such qualification. In the
     event that such qualification

                                       -9-
<Page>

     would require the appointment of a new trustee under the Mortgage, the
     Company shall appoint a new trustee thereunder pursuant to the applicable
     provisions of the Mortgage.

          (n)  The Company may require each Holder of Securities to be sold
     pursuant to the Shelf Registration Statement to furnish to the Company such
     information regarding the Holder and the distribution of the Securities as
     the Company may from time to time reasonably require for inclusion in the
     Shelf Registration Statement, and the Company may exclude from such
     registration the Securities of any Holder that unreasonably fails to
     furnish such information within a reasonable time after receiving such
     request.

          (o)  The Company shall enter into such customary agreements
     (including, if requested, an underwriting agreement in customary form) and
     take all such other action, if any, as any Holder of the Securities shall
     reasonably request in order to facilitate the disposition of the Securities
     pursuant to any Shelf Registration.

          (p)  In the case of any Shelf Registration, the Company shall (i) make
     reasonably available for inspection by the Holders of the Securities, any
     underwriter participating in any disposition pursuant to the Shelf
     Registration Statement and any attorney, accountant or other agent retained
     by the Holders of the Securities or any such underwriter all relevant
     financial and other records, pertinent corporate documents and properties
     of the Company and (ii) cause the Company's officers, directors, employees,
     accountants and auditors to supply all relevant information reasonably
     requested by the Holders of the Securities or any such underwriter,
     attorney, accountant or agent in connection with the Shelf Registration
     Statement, in each case, as shall be reasonably necessary to enable such
     persons, to conduct a reasonable investigation within the meaning of
     Section 11 of the Securities Act; PROVIDED, HOWEVER, that the foregoing
     inspection and information gathering shall be coordinated by you as the
     Initial Purchaser and on behalf of the other parties, by one counsel
     designated by and on behalf of such other parties as described in Section 4
     hereof.

          (q)  In the case of any Shelf Registration, the Company, if requested
     by any Holder of Securities covered thereby, shall cause (i) its counsel to
     deliver an opinion and updates thereof relating to the Securities in
     customary form addressed to such Holders and the managing underwriters, if
     any, thereof and dated, in the case of the initial opinion, the effective
     date of such Shelf Registration Statement (it being agreed that the matters
     to be covered by such opinion shall include, without limitation, the due
     incorporation and good standing of the Company and its subsidiaries; the
     qualification of the Company and its subsidiaries to transact business as
     foreign corporations; the due authorization, execution and delivery of the
     relevant agreement of the type referred to in Section 3(o) hereof; the due
     authorization, execution, authentication and issuance, and the validity and
     enforceability, of the applicable Securities; the absence of material legal
     or governmental proceedings involving the Company and its subsidiaries,
     other than as set forth in the Shelf Registration Statement or the
     documents incorporated by reference therein; the absence of governmental
     approvals required to be obtained in connection with the Shelf Registration
     Statement, the offering and sale of the applicable Securities, or any
     agreement of the type referred to in Section 3(o) hereof; the compliance as
     to form

                                      -10-
<Page>

     of such Shelf Registration Statement and any documents incorporated by
     reference therein and of the Mortgage with the requirements of the
     Securities Act and the Trust Indenture Act, respectively; and, as of the
     date of the opinion and as of the effective date of the Shelf Registration
     Statement or most recent post-effective amendment thereto, as the case may
     be, the absence from such Shelf Registration Statement and the prospectus
     included therein, as then amended or supplemented, and from any documents
     incorporated by reference therein of an untrue statement of a material fact
     or the omission to state therein a material fact required to be stated
     therein or necessary to make the statements therein not misleading (in the
     case of any such documents, in the light of the circumstances existing at
     the time that such documents were filed with the Commission under the
     Exchange Act)); (ii) its officers to execute and deliver all customary
     documents and certificates and updates thereof requested by any
     underwriters of the applicable Securities; and (iii) its independent public
     accountants to provide to the selling Holders of the applicable Securities
     and any underwriter therefor a comfort letter in customary form and
     covering matters of the type customarily covered in comfort letters in
     connection with primary underwritten offerings, subject to receipt of
     appropriate documentation as contemplated, and only if permitted, by
     Statement of Auditing Standards No. 72.

          (r)  In the case of the Registered Exchange Offer, if requested by the
     Initial Purchaser or any known Participating Broker-Dealer, the Company
     shall cause (i) its counsel to deliver to the Initial Purchaser or such
     Participating Broker-Dealer a signed opinion in the form set forth in
     Section 6(b) of the Purchase Agreement with such changes as are customary
     in connection with the preparation of a Registration Statement and (ii) its
     independent public accountants to deliver to the Initial Purchaser or such
     Participating Broker-Dealer a comfort letter, in customary form, meeting
     the requirements as to the substance thereof as set forth in Section 6(e)
     of the Purchase Agreement, with appropriate date changes.

          (s)  If a Registered Exchange Offer or a Private Exchange is to be
     consummated, upon delivery of the Initial Securities by Holders to the
     Company (or to such other Person as directed by the Company) in exchange
     for the Exchange Securities or the Private Exchange Securities, as the case
     may be, the Company shall mark, or caused to be marked, on the Initial
     Securities so exchanged that such Initial Securities are being canceled in
     exchange for the Exchange Securities or the Private Exchange Securities, as
     the case may be; in no event shall the Initial Securities be marked as paid
     or otherwise satisfied.

          (t)  The Company will use its reasonable best efforts to (a) if the
     Initial Securities have been rated prior to the initial sale of such
     Initial Securities, confirm such ratings will apply to the Securities
     covered by a Registration Statement, or (b) if the Initial Securities were
     not previously rated, cause the Securities covered by a Registration
     Statement to be rated with the appropriate rating agencies, if so requested
     by Holders of a majority in aggregate principal amount of Securities
     covered by such Registration Statement, or by the managing underwriters, if
     any.

                                      -11-
<Page>

          (u)  In the event that any broker-dealer registered under the Exchange
     Act shall underwrite any Securities or participate as a member of an
     underwriting syndicate or selling group or "assist in the distribution"
     (within the meaning of the Conduct Rules (the "RULES") of the National
     Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a
     Holder of such Securities or as an underwriter, a placement or sales agent
     or a broker or dealer in respect thereof, or otherwise, the Company will
     assist such broker-dealer in complying with the requirements of such Rules,
     including, without limitation, by (i) if such Rules, including Rule 2720,
     shall so require, engaging a "qualified independent underwriter" (as
     defined in Rule 2720) to participate in the preparation of the Registration
     Statement relating to such Securities, to exercise usual standards of due
     diligence in respect thereto and, if any portion of the offering
     contemplated by such Registration Statement is an underwritten offering or
     is made through a placement or sales agent, to recommend the yield of such
     Securities, (ii) indemnifying any such qualified independent underwriter to
     the extent of the indemnification of underwriters provided in Section 5
     hereof and (iii) providing such information to such broker-dealer as may be
     required in order for such broker-dealer to comply with the requirements of
     the Rules.

          (v)  The Company shall use its reasonable best efforts to take all
     other steps necessary to effect the registration of the Securities covered
     by a Registration Statement contemplated hereby.

     4.  REGISTRATION EXPENSES. (a) All expenses incident to the Company's
performance of and compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement is ever filed or becomes
effective, including without limitation;

            (i)   all registration and filing fees and expenses;

           (ii)   all fees and expenses of compliance with federal securities
     and state "blue sky" or securities laws;

          (iii)   all expenses of printing (including printing certificates for
     the Securities to be issued in the Registered Exchange Offer and the
     Private Exchange and printing of Prospectuses), messenger and delivery
     services and telephone;

           (iv)   all fees and disbursements of counsel for the Company;

            (v)   all application and filing fees in connection with listing the
     Exchange Securities on a national securities exchange or automated
     quotation system pursuant to the requirements hereof; and

           (vi)   all fees and disbursements of independent certified public
     accountants of the Company (including the expenses of any special audit and
     comfort letters required by or incident to such performance).

                                      -12-
<Page>

     The Company will bear its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.

     (b)  In connection with any Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchaser and the Holders of
Transfer Restricted Securities who are tendering Initial Securities in the
Registered Exchange Offer and/or selling or reselling Securities pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Chapman and Cutler,
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.

     5.  INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless
each Holder of the Securities, any Participating Broker-Dealer and each person,
if any, who controls such Holder or such Participating Broker-Dealer within the
meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to
collectively as the "INDEMNIFIED PARTIES") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any reasonable legal fees or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action in respect thereof;
PROVIDED, HOWEVER, that (i) the Company shall not be liable in any such case to
the extent that such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in a Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a Shelf
Registration in reliance upon and in conformity with written information
pertaining to such Holder and furnished to the Company by or on behalf of such
Holder specifically for inclusion therein and (ii) with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus relating to a Shelf Registration Statement, the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Holder or Participating Broker-Dealer from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned, to
the extent that a prospectus relating to such Securities was required to be
delivered by such Holder or Participating Broker-Dealer under the Securities Act
in connection with such purchase and any such loss, claim, damage or liability
of such Holder or Participating Broker-Dealer results from the fact that there
was not sent or given to such person, at or prior to the written confirmation of
the sale of such Securities to such person, a copy of the final prospectus if
the Company had

                                      -13-
<Page>

previously furnished copies thereof to such Holder or Participating
Broker-Dealer; PROVIDED FURTHER, HOWEVER, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.

     (b)  Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act from
and against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Company or any such controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.

     (c)  Promptly after receipt by an indemnified party under this Section 5 of
notice of the commencement of any action or proceeding (including a governmental
investigation), such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 5, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 5 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that

                                      -14-
<Page>

are the subject matter of such action, and does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.

     (d)  If the indemnification provided for in this Section 5 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above in such proportion as is appropriate to reflect the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or such Holder or such other indemnified party, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 5(d), the Holders of the Securities shall not be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the Securities pursuant to a
Registration Statement exceeds the amount of damages which such Holders have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls such indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company.

     (e)  The agreements contained in this Section 5 shall survive the sale of
the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.

     6.  ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES. (a) Additional
interest (the "ADDITIONAL INTEREST") with respect to the Securities shall be
assessed as follows if any of the following events occur (each such event in
clauses (i) through (iv) below being herein called a "REGISTRATION DEFAULT"):

            (i)   any Registration Statement required by this Agreement is not
     filed with the Commission on or prior to the applicable Filing Deadline;

                                      -15-
<Page>

           (ii)   any Registration Statement required by this Agreement is not
     declared effective by the Commission on or prior to the applicable
     Effectiveness Deadline;

          (iii)   the Registered Exchange Offer has not been consummated on or
     prior to the Consummation Deadline; or

           (iv)   any Registration Statement required by this Agreement has been
     declared effective by the Commission but (A) such Registration Statement
     thereafter ceases to be effective or (B) such Registration Statement or the
     related prospectus ceases to be usable in connection with resales of
     Transfer Restricted Securities during the periods specified herein because
     either (1) any event occurs as a result of which the related prospectus
     forming part of such Registration Statement would include any untrue
     statement of a material fact or omit to state any material fact necessary
     to make the statements therein in the light of the circumstances under
     which they were made not misleading, or (2) it shall be necessary to amend
     such Registration Statement or supplement the related prospectus, to comply
     with the Securities Act or the Exchange Act or the respective rules
     thereunder.

     Each of the foregoing will constitute a Registration Default whatever the
reason for any such event and whether it is voluntary or involuntary or is
beyond the control of the Company or pursuant to operation of law or as a result
of any action or inaction by the Commission.

     Additional Interest shall accrue on the Securities over and above the
interest set forth in the title of the Securities from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all such Registration Defaults have been cured, at a rate of 0.25% per
annum (the "ADDITIONAL INTEREST RATE") for the first 90-day period immediately
following the occurrence of such Registration Default. The Additional Interest
Rate shall increase by an additional 0.25% per annum with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum Additional Interest Rate of 1.0% per annum.

     (b)  A Registration Default referred to in Section 6(a)(iv) hereof shall be
deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Shelf Registration Statement and related prospectus to describe such events;
PROVIDED, HOWEVER, that in any case if such Registration Default occurs for a
continuous period in excess of 30 days, Additional Interest shall be payable in
accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured.

     (c)  Any amounts of Additional Interest due pursuant to Section 6(a) will
be payable in cash on the regular interest payment dates with respect to the
Securities. The amount of

                                      -16-
<Page>

Additional Interest will be determined by multiplying the applicable Additional
Interest Rate by the principal amount of the Securities and further multiplied
by a fraction, the numerator of which is the number of days such Additional
Interest Rate was applicable during such period (determined on the basis of a
360-day year comprised of twelve 30-day months), and the denominator of which is
360.

     (d)  "TRANSFER RESTRICTED SECURITIES" means each Security until (i) the
date on which such Security has been exchanged by a person other than a
broker-dealer for a freely transferable Exchange Security in the Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered
Exchange Offer of the Initial Security for an Exchange Note, the date on which
such Exchange Note is sold to a purchaser who receives from such broker-dealer
on or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.

     (e)  The parties hereto agree that the Additional Interest shall constitute
a reasonable estimate of the damages that may be incurred by the Holders (other
than the Initial Purchaser) for a Registration Default and shall constitute
liquidated damages; the actual damages that the Holders might sustain as a
result of a Registration Default would be difficult to ascertain; and the
payment of Additional Interest would be reasonable and just compensation for a
Registration Default.

     7.  RULES 144 AND 144A. The Company shall use its reasonable best efforts
to file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder of Securities,
make publicly available other information so long as necessary to permit sales
of their securities pursuant to Rules 144 and 144A. The Company covenants that
it will take such further action as any Holder of Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including the
requirements of Rule 144A(d)(4)). The Company will provide a copy of this
Agreement to prospective purchasers of Initial Securities identified to the
Company by the Initial Purchaser upon request. Upon the request of any Holder of
Initial Securities, the Company shall deliver to such Holder a written statement
as to whether it has complied with such requirements. Notwithstanding the
foregoing, nothing in this Section 7 shall be deemed to require the Company to
register any of its securities pursuant to the Exchange Act.

     8.  UNDERWRITTEN REGISTRATIONS. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("MANAGING UNDERWRITERS") will be selected by
the Holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering.

                                      -17-
<Page>

     No person may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such person's Transfer Restricted Securities on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.

     9.   MISCELLANEOUS.

     (a)  NO INCONSISTENT AGREEMENTS. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.

     (b)  AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.

     (c)  NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:

             (1)  if to a Holder of the Securities, at the most current address
     given by such Holder to the Company.

             (2)  if to the Initial Purchaser:

                          Banc One Capital Markets, Inc.
                          1 Bank One Plaza
                          Suite IL1-0595
                          Chicago, IL  60670
                          Fax No.: (312) 732-4773
                          Attention: Structuring & Execution

                  with a copy to:

                          Chapman and Cutler
                          111 West Monroe Street
                          Chicago, IL 60603
                          Fax No.: (312)701-2361
                          Attention: Paul Kosin

                                      -18-
<Page>

             (3)  if to the Company, at its address as follows:

                          The Peoples Gas Light and Coke Company
                          130 East Randolph Drive
                          Chicago, IL 60601
                          Attention: Treasurer

                  with a copy to:

                          The Peoples Gas Light and Coke Company
                          130 East Randolph Drive
                          Chicago, IL 60601
                          Attention: General Counsel

     All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.

     (d)  THIRD PARTY BENEFICIARIES. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchaser, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.

     (e)  SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment or assumption, subsequent Holders; PROVIDED that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of the Initial
Securities in violation of the terms of the Purchase Agreement. If any
transferees of any Holder shall acquire Initial Securities, in any manner,
whether by operation of law or otherwise, such Initial Securities, shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Initial Securities such person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement and
such person shall be entitled to receive the benefits hereof. The Initial
Purchaser shall have no liability or obligation to the Company with respect to
any failure by a Holder to comply with, or any breach by any Holder of, the
obligations of such Holder under this Agreement.

     (f)  COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (g)  HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

                                      -19-
<Page>

     (h)  GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.

     (i)  SEVERABILITY. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

     (j)  SECURITIES HELD BY THE COMPANY. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.

     (k)  SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITIES. By the execution and
delivery of this Agreement, the Company submits to the nonexclusive jurisdiction
of any federal or state court in the State of New York in any suit or proceeding
brought under federal or state securities laws. To the extent that the Company
may acquire any immunity from jurisdiction of any such court or from any legal
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of this
Agreement, to the fullest extent permitted by law.

                                      -20-
<Page>

     If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Initial Purchaser and the Company, in accordance with its terms.

                                Very truly yours,

                                THE PEOPLES GAS LIGHT AND COKE COMPANY

                                By /S/  DOUGLAS M. RASCHAU
                                  ----------------------------------------------
                                   Name: Douglas M. Raschau
                                        ----------------------------------------
                                   Title: Vice President and Assistant Treasurer
                                         ---------------------------------------

                                      -21-
<Page>

The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above written.

BANC ONE CAPITAL  MARKETS, INC.

By /S/ C. VICTOR MANNY
  -------------------------------
Name: C. Victor Manny
     ----------------------------
Title: Managing Director
      ---------------------------

                                      -22-
<Page>

                                                                         ANNEX A

     Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."

                                      -23-
<Page>

                                                                         ANNEX B

     Each broker-dealer that receives Exchange Securities for its own account in
exchange for Initial Securities, where such Initial Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."

                                      -24-
<Page>

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

     Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until ___________________,
200__, all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus.(1)

     The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.

     For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.

----------
(1)   In addition, the legend required by Item 502(e) of Regulation S-K will
      appear on the back cover page of the Exchange Offer prospectus.

                                      -25-
<Page>

                                                                         ANNEX D

/ /  CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
     COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
     THERETO.

          Name:
               -------------------------------------------------

          Address:
                  ----------------------------------------------

     If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Securities. If the undersigned is a broker-dealer that will receive
Exchange Securities for its own account in exchange for Initial Securities that
were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection with
any resale of such Exchange Securities; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.

                                      -26-

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