WASHINGTON GAS LIGHT CO (Form: 10-Q, Received: 08/09/2007 17:10:19)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q


þ		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2007


o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



			I.R.S.
Commission	Exact name of registrant as specified in its charter	State of	Employer
File Number	and principal office address and telephone number	Incorporation	Identification No.

1-16163	WGL Holdings, Inc. 101 Constitution Ave., N.W. Washington, D.C. 20080 (703) 750-2000	Virginia	52-2210912

0-49807	Washington Gas Light Company 101 Constitution Ave., N.W. Washington, D.C. 20080 (703) 750-4440	District of Columbia and Virginia	53-0162882

Indicate by check mark whether each registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.


WGL Holdings, Inc.	Large Accelerated Filer þ	Accelerated Filer o	Non-Accelerated Filer o
Washington Gas Light Company	Large Accelerated Filer o	Accelerated Filer o	Non-Accelerated Filer þ

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date.

WGL Holdings, Inc. common stock, no par value, outstanding as of July 31, 2007: 49,309,995 shares.

All of the outstanding shares of common stock ($1 par value) of Washington Gas Light Company were held by WGL Holdings, Inc. as of July 31, 2007.

WGL Holdings, Inc.
Washington Gas Light Company

For the Quarter Ended June 30, 2007

Table of Contents


PART I.	Financial Information


Item 1.	Financial Statements
	WGL Holdings, Inc.
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Cash Flows	3

	Washington Gas Light Company
	Balance Sheets	4
	Statements of Income	5
	Statements of Cash Flows	6

	Notes to Consolidated Financial Statements
	WGL Holdings, Inc. and Washington Gas Light Company — Combined	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	WGL Holdings, Inc.	31
	Washington Gas Light Company	51

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61

Item 4.	Controls and Procedures	61

PART II.	Other Information


Item 1A.	Risk Factors	62

Item 5.	Other Information	62

Item 6.	Exhibits	64

Signature		65

WGL Holdings, Inc.
Washington Gas Light Company

INTRODUCTION

FILING FORMAT

This Quarterly Report on Form 10-Q is a combined report being filed by two separate registrants: WGL Holdings, Inc. (WGL Holdings) and Washington Gas Light Company (Washington Gas). Except where the content clearly indicates otherwise, any reference in the report to “WGL Holdings,” “we,” “us” or “our” is to the holding company or the consolidated entity of WGL Holdings and all of its subsidiaries, including Washington Gas which is a distinct registrant that is a wholly owned subsidiary of WGL Holdings.

Part I — Financial Information in this Quarterly Report on Form 10-Q includes separate financial statements (i.e. balance sheets, statements of income and statements of cash flows) for WGL Holdings and Washington Gas. Also included are the Notes to Consolidated Financial Statements that are presented on a combined basis for both WGL Holdings and Washington Gas.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report, excluding historical information, include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the outlook for earnings, revenues and other future financial business performance or strategies and expectations. Forward-looking statements are typically identified by words such as, but not limited to, “estimates,” “expects,” “anticipates,” “intends,” “believes,” “plans” and similar expressions, or future or conditional verbs such as “will,” “should,” “would” and “could.” Although we believe such forward-looking statements are based on reasonable assumptions, they cannot give assurance that every objective will be achieved. Forward-looking statements speak only as of today, and we assume no duty to update them. The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:

	•		the level and rate at which costs and expenses are incurred and the extent to which they are allowed to be recovered from customers through the regulatory process in connection with constructing, operating and maintaining Washington Gas’s natural gas distribution system;

	•		the ability to implement successful approaches to modify the current or future composition of gas delivered to customers or to remediate the effects of the current or future composition of gas delivered to customers, as a result of the introduction of gas from the Cove Point facility to Washington Gas’s natural gas distribution system;

	•		the ability to recover the costs of implementing steps to accommodate delivery of natural gas to customers as a result of the receipt of gas from the Cove Point facility;

	•		variations in weather conditions from normal levels;

	•		the availability of natural gas supply and interstate pipeline transportation and storage capacity;

	•		the ability of natural gas producers, pipeline gatherers and natural gas processors to deliver natural gas into interstate pipelines for delivery by those interstate pipelines to the entrance points of Washington Gas’s natural gas distribution system as a result of factors beyond our control;

	•		changes in economic, competitive, political and regulatory conditions and developments;

	•		changes in capital and energy commodity market conditions;

WGL Holdings, Inc.
Washington Gas Light Company


	•		changes in credit ratings of debt securities of WGL Holdings or Washington Gas that may affect access to capital or the cost of debt;

	•		changes in credit market conditions and creditworthiness of customers and suppliers;

	•		changes in relevant laws and regulations, including tax, environmental and employment laws and regulations;

	•		legislative, regulatory and judicial mandates or decisions affecting business operations or the timing of recovery of costs and expenses;

	•		the timing and success of business and product development efforts and technological improvements;

	•		the pace of deregulation efforts and the availability of other competitive alternatives to our products and services;

	•		changes in accounting principles;

	•		new commodity purchase and sales contracts or financial contracts and modifications in the terms of existing contracts that may materially affect fair value calculations under derivative accounting requirements;

	•		the ability of Washington Gas to implement effectively the outsourcing of several of its business functions;

	•		acts of God and terrorist activities and

	•		other uncertainties.

The outcome of negotiations and discussions that the registrants may hold with other parties from time to time regarding utility and energy-related investments and strategic transactions that are both recurring and non-recurring may also affect future performance. All such factors are difficult to predict accurately and are generally beyond the direct control of the registrants. Accordingly, while we believe that the assumptions are reasonable, we cannot ensure that all expectations and objectives will be realized. Readers are urged to use care and consider the risks, uncertainties and other factors that could affect our business as described in this Quarterly Report on Form 10-Q. All forward-looking statements made in this report rely upon the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995 .

iii

WGL Holdings, Inc.
Consolidated Balance Sheets (Unaudited)
Part I—Financial Information
Item 1—Financial Statements



	June 30,			September 30,
(In thousands)	2007			2006

ASSETS
Property, Plant and Equipment
At original cost	$	3,035,054		$	2,949,951
Accumulated depreciation and amortization		(907,506	)		(882,056	)

Net property, plant and equipment		2,127,548			2,067,895

Current Assets
Cash and cash equivalents		67,170			4,350
Receivables
Accounts receivable		195,138			154,243
Gas costs and other regulatory assets		5,948			14,609
Unbilled revenues		48,121			46,557
Allowance for doubtful accounts		(14,746	)		(17,676	)

Net receivables		234,461			197,733

Materials and supplies—principally at average cost		17,805			18,302
Storage gas—at cost (first-in, first-out)		189,658			296,061
Deferred income taxes		12,787			11,360
Other prepayments—principally taxes		8,195			12,208
Other		14,534			22,008

Total current assets		544,610			562,022

Deferred Charges and Other Assets
Regulatory assets
Gas costs		2,794			11,950
Other		74,634			65,330
Prepaid qualified pension benefits		73,821			76,245
Other		11,060			7,964

Total deferred charges and other assets		162,309			161,489

Total Assets	$	2,834,467		$	2,791,406

CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders’ equity	$	1,008,872		$	921,807
Washington Gas Light Company preferred stock		28,173			28,173
Long-term debt		605,364			576,139

Total capitalization		1,642,409			1,526,119

Current Liabilities
Current maturities of long-term debt		31,075			60,994
Notes payable		33,600			177,376
Accounts payable and other accrued liabilities		250,219			201,401
Wages payable		16,648			13,761
Accrued interest		13,775			3,298
Dividends declared		17,219			16,826
Customer deposits and advance payments		41,446			49,595
Gas costs and other regulatory liabilities		15,535			14,212
Accrued taxes		35,982			8,963
Other		16,022			14,416

Total current liabilities		471,521			560,842

Deferred Credits
Unamortized investment tax credits		12,479			13,151
Deferred income taxes		297,097			295,718
Accrued pensions and benefits		48,986			44,173
Asset retirement obligations		29,012			27,362
Regulatory liabilities
Accrued asset removal costs		280,321			268,922
Other		16,918			17,235
Other		35,724			37,884

Total deferred credits		720,537			704,445

Commitments and Contingencies (Note12)

Total Capitalization and Liabilities	$	2,834,467		$	2,791,406

The accompanying notes are an integral part of these statements.

WGL Holdings, Inc.
Consolidated Statements of Income (Unaudited)
Part I—Financial Information
Item 1—Financial Statements (continued)



	Three Months Ended					Nine Months Ended
	June 30,					June 30,

(In thousands, except per share data)	2007		2006			2007		2006

OPERATING REVENUES
Utility	$	233,107	$	183,595		$	1,363,186	$	1,490,588
Non-utility		234,351		163,326			957,137		823,684

Total Operating Revenues		467,458		346,921			2,320,323		2,314,272

OPERATING EXPENSES
Utility cost of gas		123,486		87,402			822,363		972,351
Non-utility cost of energy-related sales		200,624		148,049			905,471		800,556
Operation and maintenance		65,112		60,964			205,090		193,942
Depreciation and amortization		23,758		23,294			66,973		69,524
General taxes and other assessments		21,862		17,666			84,142		77,708

Total Operating Expenses		434,842		337,375			2,084,039		2,114,081

OPERATING INCOME		32,616		9,546			236,284		200,191
Other Income (Expenses)—Net		2,152		1,813			2,697		2,716
Interest Expense
Interest on long-term debt		9,997		10,059			30,047		30,586
Other—net		1,649		1,568			7,432		5,726

Total Interest Expense		11,646		11,627			37,479		36,312
Dividends on Washington Gas preferred stock		330		330			990		990

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		22,792		(598	)		200,512		165,605
INCOME TAX EXPENSE (BENEFIT)		9,821		(14	)		79,068		63,683

INCOME (LOSS) FROM CONTINUING OPERATIONS		12,971		(584	)		121,444		101,922
Loss from discontinued operations, net of income tax benefit		—		(1,240	)		—		(2,477	)

NET INCOME (LOSS) APPLICABLE TO COMMON STOCK	$	12,971	$	(1,824	)	$	121,444	$	99,445

AVERAGE COMMON SHARES OUTSTANDING
Basic		49,259		48,762			49,131		48,754
Diluted		49,557		48,762			49,313		48,891

EARNINGS (LOSS) PER AVERAGE COMMON SHARE
Basic
Income (loss) from continuing operations	$	0.26	$	(0.01	)	$	2.47	$	2.09
Loss from discontinued operations		—		(0.03	)		—		(0.05	)

Basic earnings (loss) per average common share	$	0.26	$	(0.04	)	$	2.47	$	2.04

Diluted
Income (loss) from continuing operations	$	0.26	$	(0.01	)	$	2.46	$	2.08
Loss from discontinued operations		—		(0.03	)		—		(0.05	)

Diluted earnings (loss) per average common share	$	0.26	$	(0.04	)	$	2.46	$	2.03

DIVIDENDS DECLARED PER COMMON SHARE	$	0.3425	$	0.3375		$	1.0225	$	1.0075

The accompanying notes are an integral part of these statements.

WGL Holdings, Inc.
Consolidated Statements of Cash Flows (Unaudited)
Part I—Financial Information
Item 1—Financial Statements (continued)



	Nine Months Ended
	June 30,

(In thousands)	2007			2006

OPERATING ACTIVITIES
Net income applicable to common stock	$	121,444		$	99,445

ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Loss from discontinued operations, net of income tax benefit		—			2,477
Depreciation and amortization:
Per Consolidated Statements of Income		66,973			69,524
Charged to other accounts		2,710			3,272
Deferred income taxes—net		713			(7,980	)
Amortization of investment tax credits		(672	)		(672	)
Accrued/deferred pension cost		1,141			(1,119	)
Other non-cash charges (credits)—net		3,769			3,668

CHANGES IN ASSETS AND LIABILITIES
Accounts receivable and unbilled revenues—net		(45,389	)		(63,365	)
Gas costs and other regulatory assets/liabilities—net		9,984			(4,608	)
Storage gas		106,403			59,872
Other prepayments—principally taxes		4,013			2,977
Accounts payable and other accrued liabilities		40,824			(27,500	)
Wages payable		2,887			3,219
Customer deposits and advance payments		(8,149	)		(16,135	)
Accrued taxes		27,019			40,606
Accrued interest		10,477			10,117
Other current assets		7,971			17,542
Other current liabilities		1,606			923
Deferred purchased gas costs—net		9,156			(233	)
Deferred assets—other		(11,677	)		2,810
Deferred liabilities—other		1,174			2,044
Other—net		107			1,249

Net Cash Provided by Operating Activities of Continuing Operations		352,484			198,133
Net Cash Provided by Operating Activities of Discontinued Operations		—			449

Net Cash Provided by Operating Activities		352,484			198,582

FINANCING ACTIVITIES
Common stock issued		11,488			—
Long-term debt issued		240			77,650
Long-term debt retired		(1,009	)		(75,105	)
Debt issuance costs		(16	)		(710	)
Notes payable issued (retired)—net		(143,776	)		49,067
Dividends on common stock		(49,930	)		(48,881	)
Other financing activities—net		669			(1,031	)

Net Cash (Used in) Provided by Financing Activities		(182,334	)		990

INVESTING ACTIVITIES
Capital expenditures (excluding Allowance for Funds Used During Construction)		(107,445	)		(113,909	)
Other investing activities—net		115			(2,269	)

Net Cash Used in Investing Activities of Continuing Operations		(107,330	)		(116,178	)
Net Cash Used in Investing Activities of Discontinued Operations		—			(158	)

Net Cash Used in Investing Activities		(107,330	)		(116,336	)

INCREASE IN CASH AND CASH EQUIVALENTS		62,820			83,236
Cash and Cash Equivalents at Beginning of Year		4,350			4,842

Cash and Cash Equivalents at End of Period	$	67,170		$	88,078

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid	$	54,406		$	35,297
Interest paid	$	26,490		$	25,656
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Capital Expenditures included in accounts payable and other accrued liabilities	$	7,994		$	(2,782	)

The accompanying notes are an integral part of these statements.

Washington Gas Light Company
Balance Sheets (Unaudited)
Part I—Financial Information
Item 1—Financial Statements (continued)



	June 30,			September 30,
(In thousands)	2007			2006

ASSETS
Property, Plant and Equipment
At original cost	$	3,004,605		$	2,920,552
Accumulated depreciation and amortization		(888,665	)		(864,310	)

Net property, plant and equipment		2,115,940			2,056,242

Current Assets
Cash and cash equivalents		65,632			4,086
Receivables
Accounts receivable		111,846			55,557
Gas costs and other regulatory assets		5,948			14,609
Unbilled revenues		17,866			18,337
Allowance for doubtful accounts		(13,540	)		(16,543	)

Net receivables		122,120			71,960

Materials and supplies—principally at average cost		17,805			18,302
Storage gas—at cost (first-in, first-out)		137,254			217,242
Deferred income taxes		13,083			11,313
Other prepayments—principally taxes		7,387			11,395
Receivables from associated companies		635			1,140
Other		4,680			10,760

Total current assets		368,596			346,198

Deferred Charges and Other Assets
Regulatory assets
Gas costs		2,794			11,950
Other		74,634			64,833
Prepaid qualified pension benefits		73,452			75,865
Other		8,027			7,899

Total deferred charges and other assets		158,907			160,547

Total Assets	$	2,643,443		$	2,562,987

CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholder’s equity	$	917,158		$	857,353
Preferred stock		28,173			28,173
Long-term debt		604,367			574,139

Total capitalization		1,549,698			1,459,665

Current Liabilities
Current maturities of long-term debt		30,000			60,000
Notes payable		15			72,775
Accounts payable and other accrued liabilities		171,255			133,305
Wages payable		16,430			13,533
Accrued interest		13,775			3,298
Dividends declared		17,219			16,826
Customer deposits and advance payments		41,346			49,495
Gas costs and other regulatory liabilities		15,535			14,212
Accrued taxes		36,563			8,676
Payables to associated companies		21,774			17,332
Other		13,198			9,363

Total current liabilities		377,110			398,815

Deferred Credits
Unamortized investment tax credits		12,471			13,140
Deferred income taxes		296,238			297,213
Accrued pensions and benefits		48,893			44,082
Asset retirement obligations		28,157			26,554
Regulatory liabilities
Accrued asset removal costs		280,321			268,922
Other		16,914			17,205
Other		33,641			37,391

Total deferred credits		716,635			704,507

Commitments and Contingencies (Note 12)

Total Capitalization and Liabilities	$	2,643,443		$	2,562,987

The accompanying notes are an integral part of these statements.

Washington Gas Light Company
Statements of Income (Unaudited)
Part I—Financial Information
Item 1—Financial Statements (continued)



	Three Months Ended						Nine Months Ended
	June 30,						June 30,

(In thousands)	2007			2006			2007		2006

OPERATING REVENUES
Utility	$	236,184		$	185,768		$	1,377,196	$	1,503,562
Non-utility		62			151			208		553

Total Operating Revenues		236,246			185,919			1,377,404		1,504,115

OPERATING EXPENSES
Utility cost of gas		126,563			89,575			836,373		985,325
Operation and maintenance		59,349			56,798			186,715		180,620
Depreciation and amortization		23,361			23,022			65,711		68,706
General taxes and other assessments		20,743			18,035			81,136		78,461

Total Operating Expenses		230,016			187,430			1,169,935		1,313,112

OPERATING INCOME (LOSS)		6,230			(1,511	)		207,469		191,003
Other Income (Expense)—Net		2,025			1,374			2,176		1,423
Interest Expense
Interest on long-term debt		9,972			10,059			29,974		30,586
Other—net		1,063			357			4,158		2,526

Total Interest Expense		11,035			10,416			34,132		33,112

INCOME (LOSS) BEFORE INCOME TAXES		(2,780	)		(10,553	)		175,513		159,314
INCOME TAX EXPENSE (BENEFIT)		(1,190	)		(4,033	)		68,347		60,703

NET INCOME (LOSS) (BEFORE PREFERRED STOCK DIVIDENDS)		(1,590	)		(6,520	)		107,166		98,611
Dividends on preferred stock		330			330			990		990

NET INCOME (LOSS) (APPLICABLE TO COMMON STOCK)	$	(1,920	)	$	(6,850	)	$	106,176	$	97,621

The accompanying notes are an integral part of these statements.

Washington Gas Light Company
Statements of Cash Flows (Unaudited)
Part I—Financial Information
Item 1—Financial Statements (continued)



	Nine Months Ended
	June 30,

(In thousands)	2007			2006

OPERATING ACTIVITIES
Net income (before preferred stock dividends)	$	107,166		$	98,611

ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and amortization:
Per Statements of Income		65,711			68,706
Charged to other accounts		2,638			3,272
Deferred income taxes—net		(1,960	)		(6,673	)
Amortization of investment tax credits		(669	)		(670	)
Accrued/deferred pension cost		1,121			(1,125	)
Other non-cash charges (credits)—net		3,265			3,368

CHANGES IN ASSETS AND LIABILITIES
Accounts receivable, unbilled revenues and receivables from associated companies—net		(58,316	)		(24,966	)
Gas costs and other regulatory assets/liabilities— net		9,984			(4,608	)
Storage gas		79,988			53,697
Other prepayments—principally taxes		4,008			5,030
Accounts payable and other accrued liabilities, including payables to associated companies		34,398			(21,098	)
Wages payable		2,897			3,224
Customer deposits and advance payments		(8,149	)		2,058
Accrued taxes		27,887			49,518
Accrued interest		10,477			10,117
Other current assets		6,577			11,298
Other current liabilities		3,835			544
Deferred purchased gas costs—net		9,156			(233	)
Deferred assets—other		(9,206	)		3,019
Deferred liabilities—other		(454	)		3,212
Other—net		(868	)		1,004

Net Cash Provided by Operating Activities		289,486			257,305

FINANCING ACTIVITIES
Long-term debt issued		240			77,650
Long-term debt retired		(15	)		(75,105	)
Debt issuance costs		(16	)		(710	)
Notes payable issued (retired)—net		(72,760	)		(10,395	)
Dividends on common stock and preferred stock		(50,918	)		(49,871	)
Other financing activities—net		669			(1,031	)

Net Cash Used in Financing Activities		(122,800	)		(59,462	)

INVESTING ACTIVITIES
Capital expenditures (excluding Allowance for Funds Used During Construction)		(105,255	)		(111,357	)
Other investing activities—net		115			(2,269	)

Net Cash Used in Investing Activities		(105,140	)		(113,626	)

INCREASE IN CASH AND CASH EQUIVALENTS		61,546			84,217
Cash and Cash Equivalents at Beginning of Year		4,086			3,054

Cash and Cash Equivalents at End of Period	$	65,632		$	87,271

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid	$	44,142		$	22,996
Interest paid	$	23,215		$	22,456
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Capital expenditures included in accounts payable and other accrued liabilities	$	7,994		$	(2,241	)

The accompanying notes are an integral part of these statements.

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

NOTE 1. ACCOUNTING POLICIES

Basis of Presentation

WGL Holdings, Inc. (WGL Holdings) is a holding company that owns all of the shares of common stock of Washington Gas Light Company (Washington Gas), a regulated natural gas utility, and all of the shares of common stock of Washington Gas Resources Corporation (Washington Gas Resources), Hampshire Gas Company (Hampshire) and Crab Run Gas Company. Washington Gas Resources owns three unregulated subsidiaries that include Washington Gas Energy Services, Inc. (WGEServices), Washington Gas Energy Systems, Inc. (WGESystems) and Washington Gas Credit Corporation. Except where the content clearly indicates otherwise, “WGL Holdings,” “we,” “us” or “our” refers to the holding company or the consolidated entity of WGL Holdings and all of its subsidiaries. Except where otherwise noted, these notes apply equally to WGL Holdings and Washington Gas.

The interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Therefore, certain financial information and footnote disclosures accompanying annual financial statements prepared in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP) are omitted in this interim report pursuant to the SEC rules and regulations. The interim consolidated financial statements and accompanying notes should be read in conjunction with the combined Annual Report on Form 10-K for WGL Holdings and Washington Gas for the fiscal year ended September 30, 2006. Due to the seasonal nature of Washington Gas’s and WGEServices’ businesses, the results of operations for the periods presented in this report do not necessarily represent the expected and actual results for the full fiscal years ending September 30, 2007 and 2006 of either WGL Holdings or Washington Gas.

The accompanying unaudited consolidated financial statements for WGL Holdings and Washington Gas reflect all normal recurring adjustments that are necessary, in our opinion, to present fairly the results of operations in accordance with GAAP.

For a description of our accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements of the combined Annual Report on Form 10-K for WGL Holdings and Washington Gas for the fiscal year ended September 30, 2006. There have been no significant changes to these policies subsequent to September 30, 2006 except for the adoption of two new accounting standards, as discussed below.

Certain reclassifications have been made to the consolidated financial statements of WGL Holdings and the financial statements of Washington Gas for the prior periods presented to conform to the presentation in the current periods of fiscal year 2007. During the fourth quarter of fiscal year 2006, we revised the format of our statements of income, in part, to present our results of operations without sub-captions for both our utility and non-utility operations. The primary effect of this change in format was to combine the operating revenues and expenses for our utility and non-utility operations, thereby resulting in a singular presentation of operating income. The change in format also reflects an increase in operating income as a result of excluding income taxes from utility and non-utility operating expenses. Under the new format, we combined all income taxes into one caption labeled “Income taxes” which is presented below

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

operating income. None of these reclassifications had any effect on the net income or earnings per share of WGL Holdings or the net income of Washington Gas.

Newly Implemented Accounting Standards

Effective October 1, 2006, we adopted Statement of Financial Accounting Standards (SFAS) No. 154, Accounting Changes and Error Corrections , which supersedes Accounting Principles Board Opinion No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements . SFAS No. 154 changes the requirements for the accounting and reporting of a change in accounting principle. SFAS No. 154 requires retrospective application to prior period financial statements of changes in accounting principle, unless the new accounting principle requires a different application or it is impracticable. The adoption of this standard had no effect on our consolidated financial statements for the three and nine months ended June 30, 2007 and 2006.

In June 2006, the Financial Accounting Standards Board (FASB) issued Emerging Issues Task Force (EITF) Issue No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation) . This EITF provides guidance on the income statement presentation of any taxes assessed by a governmental authority on and concurrent with a specific revenue producing transaction between a seller and a customer. The EITF concluded that the presentation of such taxes, on a gross or net basis, is an accounting policy decision that should be disclosed. This EITF is applicable to us effective January 1, 2007.

Revenue taxes such as gross receipts taxes, PSC fees, franchise fees and energy taxes are reported gross in operating revenues. Refer to Note 10— Operating Segment Reporting for amounts recorded related to revenue taxes.

Newly Issued Accounting Standards

Fair Value. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to choose to measure financial assets and liabilities and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 will be effective for us on October 1, 2008. We are currently evaluating the effects of this standard on the consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements, and does not require any new fair value measurements. SFAS No. 157 is effective for us on October 1, 2008. We are currently evaluating the effect of this standard on our consolidated financial statements.

Pension and Other Post-Retirement Benefit Plans. In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans , which amends SFAS No. 87, Employers’ Accounting for Pensions , SFAS No. 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits , SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions and SFAS 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits. SFAS No. 158 requires an employer to recognize the over-funded or under-funded status of a defined benefit postretirement plan as an asset or liability on its balance sheet, and to recognize changes in that funded status in the year in which the changes occur through other comprehensive income. SFAS No. 158 will be effective for us on September 30, 2007. Although we are currently evaluating the effect of

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Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

this new standard, we expect that this new standard will materially affect our balance sheets. We expect that this standard will result in a significant decrease to our asset for “Prepaid qualified pension benefits” and a significant increase to our liability for “Accrued pensions and benefits,” along with a corresponding increase to regulatory assets.

Income Taxes. In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 clarifies the accounting for uncertain events related to income taxes recognized in financial statements. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Additionally, this interpretation provides guidance on the de-recognition and classification of a tax position reflected within the financial statements and the recognition of interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for us on October 1, 2007. We are currently evaluating the effect of this standard on our consolidated financial statements.

In May 2007, the FASB issued FASB Staff Position No. FIN 48-1, Definition of Settlement in FASB Interpretation No. 48 (FSP FIN 48-1) . This FSP amends FIN 48 to provide guidance on how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. We are evaluating the effect of this standard on our financial statements in conjunction with our evaluation of FIN 48.

Other Matters. In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements (SAB 108), which provides interpretive guidance on how the effects of prior year misstatements should be considered in quantifying a current year misstatement. SAB 108 is effective for us on September 30, 2007. This standard is not expected to have a material effect on our consolidated financial statements.

In April 2007, the FASB issued FSP No. FIN 39-1, Amendment of FASB Interpretation No. 39 . This FSP amends FIN 39, Offsetting of Amounts Related to Certain Contracts , to replace the terms “conditional contracts” and “exchange contracts” with the term “derivative instruments” as defined in SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities , as amended (SFAS No. 133). Additionally, it permits a reporting entity to offset cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement. The guidance in this FSP will be effective for us on October 1, 2008. Based on the derivative contracts entered into to date, the adoption of this FSP will not have a material effect on our consolidated financial statements.

NOTE 2. DISCONTINUED OPERATIONS

During the quarter ended June 30, 2006, we completed a plan for the disposition of American Combustion Industries, Inc. (ACI) and, on September 29, 2006, we sold all of the outstanding shares of common stock of ACI to an unrelated party. ACI was previously reported as part of our commercial heating, ventilating and air conditioning (HVAC) business segment. ACI was reported as a discontinued operation of WGL Holdings and, accordingly, its operating results and cash flows for the three and nine months ended June 30, 2006 have been presented separately from our continuing operations in the consolidated financial statements of WGL Holdings. The terms of the sales agreement provide for two post-closing adjustments, one in late 2006 and another in late 2007, to adjust the sales price for issues primarily related to working capital targets and to settle a “hold back” amount of the purchase price which was not conveyed at the closing in September 2006. WGL Holdings has recorded an estimate for these adjustments on its balance sheet to “Accounts receivable.” We have notified the purchaser of our claim for the first working capital adjustment and

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Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

the “hold back” amount due. The purchaser has disputed our claim and submitted a counter claim for different issues. If the actual adjustments to the sales price differ from what we have estimated, these differences will be reflected in the results of discontinued operations in a future period. The amount recorded to “Accounts receivable” is not material to our financial statements.

For the three and nine months ended June 30, 2006, ACI’s net loss from operations is reported as “Loss from discontinued operations, net of income tax benefit” on the Consolidated Statements of Income. The following table summarizes selected financial information related to the operating results of ACI.

Operating Results of Discontinued Operations ^(a)


	Three Months Ended			Nine Months Ended
(In thousands)	June 30, 2006			June 30, 2006

Revenues ^(b)	$	4,712		$	17,673


Loss before income tax benefit (including an impairment charge of $578,000)		(1,549	)		(3,784	)
Income tax benefit		309			1,307

Loss from discontinued operations, net of income tax benefit	$	(1,240	)	$	(2,477	)


^(a)		Subsequent to the September 29, 2006 sale of ACI, there have been no operating results for discontinued operations for the three and nine months ended June 30, 2007.

^(b)		Includes intercompany revenues of $184,000 and $742,000 for the three and nine months ended June 30, 2006, respectively.

NOTE 3. SEVERANCE AND CURTAILMENT COSTS

On June 19, 2007, Washington Gas entered into a 10-year definitive Master Services Agreement with Accenture LLP, an Illinois limited liability partnership (Accenture). Under this agreement, Accenture will provide business process outsourcing services to Washington Gas for certain business processes related to human resources, information technology, consumer services and finance operations. Over the course of the next 18 months, this business process outsourcing (BPO) plan is estimated to eliminate approximately 300 positions, of which 50 are currently vacant. Washington Gas expects to incur approximately $5.8 million for severance and $4.0 million for curtailment costs associated with its pension and other post retirement benefit plans (refer to Note 13— Pension and Other Post-Retirement Benefit Plans ). We believe that substantially all of these costs, along with other costs necessary to implement the BPO plan, will ultimately be recoverable through the ratemaking process.

During the third quarter of fiscal year 2007, Washington Gas recorded a regulatory asset in the amount of $8.5 million related to employee severance and curtailment costs that arose in the third quarter in recognition of organizational changes necessary to implement the BPO plan. All or a portion of these costs could be expensed if the regulators in our jurisdictions do not permit recovery of such costs in pending or future rate cases. We expensed $972,000 of severance costs allocable to the District of Columbia associated with this plan because it is not sufficiently clear when or how the District of Columbia Public Service Commission (PSC of DC) will address the pending rate design proposal concerning the deferral and amortization of these costs. To the extent these costs are not deferred as regulatory assets, they will be recognized in “Operation and maintenance” expense.

NOTE 4. ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

The tables below provide details for the amounts included in “Accounts payable and other accrued liabilities” on the balance sheets for both WGL Holdings and Washington Gas.

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Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

WGL Holdings, Inc.


(In thousands)	Jun. 30, 2007		Sept. 30, 2006

Accounts payable — trade	$	210,640	$	168,144
Employee benefits and payroll accruals		16,816		15,136
Other accrued liabilities		22,763		18,121

Total	$	250,219	$	201,401

Washington Gas Light Company


(In thousands)	Jun. 30, 2007		Sept. 30, 2006

Accounts payable — trade	$	136,717	$	104,650
Employee benefits and payroll accruals		15,808		13,740
Other accrued liabilities		18,730		14,915

Total	$	171,255	$	133,305

NOTE 5. SHORT-TERM DEBT

At June 30, 2007 and September 30, 2006, WGL Holdings and its subsidiaries had outstanding notes payable in the form of commercial paper of $33.6 million and $177.4 million, respectively, at a weighted average cost of 5.46 percent and 5.36 percent, respectively. Substantially all of the outstanding notes payable balance at June 30, 2007, was commercial paper issued by WGL Holdings. Of the outstanding notes payable balance at September 30, 2006, $104.6 million and $72.8 million was commercial paper issued by WGL Holdings and Washington Gas, respectively.

WGL Holdings and Washington Gas each have revolving credit agreements with a group of commercial banks in an amount equal to or greater than our expected maximum commercial paper position. At June 30, 2007, WGL Holdings’ and Washington Gas’s credit facilities permitted borrowings up to $275 million and $225 million, respectively with provisions to permit, with the banks’ approval, additional lines of credit for WGL Holdings and Washington Gas of $50 million and $100 million, respectively. As of June 30, 2007, there were no outstanding borrowings under either the WGL Holdings or Washington Gas credit facilities. On August 3, 2007 WGL Holdings and Washington Gas each amended and restated their existing revolving credit facilities. The amended and restated credit facilities are with a group of commercial banks, and expire on August 3, 2012, with unlimited one-year extension options. Any election by a lender to renew its commitment for the extended period will be at the lender’s sole discretion. The amended and restated credit facility for WGL Holdings permits it to borrow up to $400 million, and further permits, with the banks’ approval, an additional line of credit of $50 million for a maximum potential total of $450 million. The amended and restated credit facility for Washington Gas permits it to borrow up to $300 million, and further permits, with the banks’ approval, an additional line of credit of $100 million for a maximum potential total of $400 million.

Both WGL Holdings and Washington Gas may reduce the amount of the commitments at their option. Depending on the type of borrowing option chosen under the amended and restated credit facilities, loans may bear interest at variable rates based on the Eurodollar rate, the higher of the prime lending rate or the Fed Funds effective rate, or at a competitive rate determined through auction. WGL Holdings and Washington Gas may elect to have the principal balance of the loans outstanding at maturity continue as non-revolving term loans for a period of one year from the maturity date. An additional 0.25 percent premium shall be applied to the pricing of the non-revolving term loans.

Facility fees related to the amended and restated credit facilities for both companies are based on the long-term debt ratings of Washington Gas. In the event the long-term debt of Washington Gas is

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Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

downgraded below certain levels, WGL Holdings and Washington Gas would be required to pay higher facility fees. Under the terms of the amended and restated credit facilities, the ratio of consolidated financial indebtedness to consolidated total capitalization can not exceed 0.65 to 1.0 (65.0 percent). In addition, WGL Holdings and Washington Gas are required to inform lenders of changes in corporate existence, financial conditions, litigation and environmental warranties that might have a material adverse effect. The failure to inform the lenders’ agent of changes in these areas deemed material in nature might constitute default under the agreements. A default, if not remedied, may lead to a suspension of further loans and/or acceleration in which obligations become immediately due and payable.

NOTE 6. COMMON SHAREHOLDERS’ EQUITY

The tables below reflect the components of “Common shareholders’ equity” for WGL Holdings and Washington Gas as of June 30, 2007 and September 30, 2006.

WGL Holdings, Inc.
Components of Common Shareholders’ Equity


(In thousands, except shares)	Jun. 30, 2007			Sept. 30, 2006

Common stock, no par value, 120,000,000 shares authorized, 49,309,995 and 48,878,499 shares issued, respectively	$	490,081		$	477,671
Paid-in capital		11,322			8,178
Retained earnings		511,708			440,587
Accumulated other comprehensive loss, net of taxes		(4,239	)		(4,629	)

Total	$	1,008,872		$	921,807


Washington Gas Light Company Components of Common Shareholder’s Equity
(In thousands, except shares)	Jun. 30, 2007			Sept. 30, 2006

Common stock, $1 par value, 80,000,000 shares authorized, 46,479,536 shares issued	$	46,479		$	46,479
Paid-in capital		462,467			458,907
Retained earnings		412,451			356,596
Accumulated other comprehensive loss, net of taxes		(4,239	)		(4,629	)

Total	$	917,158		$	857,353

NOTE 7. COMPREHENSIVE INCOME (LOSS)

The tables below reflect the components of “Comprehensive income (loss)” for the three and nine months ended June 30, 2007 and 2006 for WGL Holdings and Washington Gas. Items that are excluded from “Net income (loss)” and charged directly to “Common shareholders’ equity” are accumulated in “Other comprehensive income (loss), net of taxes.” The amount of “Accumulated other comprehensive loss, net of taxes” is included in “Common shareholders’ equity” (refer to Note 6— Common Shareholders’ Equity ).

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Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

WGL Holdings, Inc.
Components of Comprehensive Income (Loss)


	Three Months Ended						Nine Months Ended
	June 30,						June 30,

(In thousands)	2007			2006			2007		2006

Net income (loss) applicable to common stock	$	12,971		$	(1,824	)	$	121,444	$	99,445
Other comprehensive income (loss), net of taxes—minimum pension liability adjustment		—			—			390		(856	)

Comprehensive income (loss)	$	12,971		$	(1,824	)	$	121,834	$	98,589


Washington Gas Light Company Components of Comprehensive Income (Loss)
	Three Months Ended						Nine Months Ended
	June 30,						June 30,

(In thousands)	2007			2006			2007		2006

Net income (loss) (before preferred stock dividends)	$	(1,590	)	$	(6,520	)	$	107,166	$	98,611
Other comprehensive income (loss), net of taxes—minimum pension liability adjustment		—			—			390		(856	)

Comprehensive income (loss)	$	(1,590	)	$	(6,520	)	$	107,556	$	97,755

NOTE 8. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share (EPS) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reported period. Diluted EPS assumes the issuance of common shares pursuant to stock-based compensation plans at the beginning of the applicable period unless the effect of such issuance would be anti-dilutive. The following table reflects the computation of our basic and diluted EPS for WGL Holdings for the three and nine months ended June 30, 2007 and 2006.

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Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

Basic and Diluted EPS


	Three Months Ended					Nine Months Ended
	June 30,					June 30,
(in thousands, except per share data)	2007		2006			2007		2006

Basic earnings (loss) per average common share:
Income (loss) from continuing operations	$	12,971	$	(584	)	$	121,444	$	101,922
Loss from discontinued operations, net of income tax benefit		—		(1,240	)		—		(2,477	)

Net income (loss) applicable to common stock	$	12,971	$	(1,824	)	$	121,444	$	99,445


Average common shares outstanding—basic		49,259		48,762			49,131		48,754


Basic earnings (loss) per average common share:
Income (loss) from continuing operations	$	0.26	$	(0.01	)	$	2.47	$	2.09
Loss from discontinued operations		—		(0.03	)		—		(0.05	)

Basic earnings (loss) per average common share	$	0.26	$	(0.04	)	$	2.47	$	2.04


Diluted earnings (loss) per average common share:
Income (loss) from continuing operations	$	12,971	$	(584	)	$	121,444	$	101,922
Loss from discontinued operations, net of income tax benefit		—		(1,240	)		—		(2,477	)

Net income (loss) applicable to common stock	$	12,971	$	(1,824	)	$	121,444	$	99,445

Average common shares outstanding—basic		49,259		48,762			49,131		48,754
Stock-based compensation plans		298		—			182		137

Total average common shares outstanding—diluted		49,557		48,762			49,313		48,891


Diluted earnings (loss) per average common share:
Income (loss) from continuing operations	$	0.26	$	(0.01	)	$	2.46	$	2.08
Loss from discontinued operations		—		(0.03	)		—		(0.05	)

Diluted earnings (loss) per average common share	$	0.26	$	(0.04	)	$	2.46	$	2.03

For the three months ended June 30, 2007, we did not exclude any weighted average outstanding stock options from the calculation of diluted EPS. For the nine months ended June 30, 2007, we had certain weighted average outstanding stock options of 531,000 shares that were excluded from the calculation of diluted EPS as their effect would be anti-dilutive. We incurred a net loss for the three months ended June 30, 2006; therefore, all common shares issuable pursuant to stock-based compensation plans, which included weighted average stock options and performance shares of 1.6 million shares and 61,000 shares, respectively, were not considered in the diluted loss per share calculations due to the anti-dilutive effect of such shares. For the nine months ended June 30, 2006, we had weighted average stock options outstanding of 364,000 shares that were excluded from the calculation of diluted EPS as their effect would be anti-dilutive.

NOTE 9. DERIVATIVE AND WEATHER-RELATED INSTRUMENTS

DERIVATIVE INSTRUMENTS

Regulated Utility Operations

Washington Gas enters into certain contracts related to the sale and purchase of natural gas that qualify as derivative instruments and are accounted for under SFAS No. 133. Gains and losses associated with these derivative instruments are principally deferred as regulatory liabilities and assets, respectively, with a portion recorded to revenue or expense, respectively. At June 30, 2007 and September 30, 2006, such derivative instruments had unrealized net fair value losses of $8.9 million and $490,000, respectively. The June 30, 2007 unrealized net fair value loss was comprised of $15.0 million that was recorded on the balance sheet as a derivative liability and $6.1 million that was recorded as a derivative asset. The September 30, 2006 unrealized net fair value loss was

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Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

comprised of $14.4 million that was recorded on the balance sheet as a derivative liability and $13.9 million that was recorded as a derivative asset. In connection with these derivative instruments, Washington Gas recorded to income a pre-tax loss of $253,000 and a pre-tax gain of $486,000 for the three and nine months ended June 30, 2007, respectively. For both the three and nine months ended June 30, 2006, Washington Gas recorded to income a pre-tax loss of $1,000 associated with these instruments. These gains and losses are recorded in accordance with regulatory treatment for recoverable or refundable costs.

Non-Utility Operations

Natural Gas. Our non-regulated retail energy-marketing subsidiary, WGEServices, enters into contracts related to the sale and purchase of natural gas that qualify as derivative instruments that are accounted for under SFAS No. 133. These derivative instruments are recorded at fair value on our consolidated balance sheets. Changes in the fair value of these various derivative instruments are reflected in the earnings of our retail energy-marketing segment. At June 30, 2007 and September 30, 2006, these derivative instruments had an unrealized net fair value loss of $2.4 million and an unrealized net fair value gain of $386,000, respectively. The June 30, 2007 unrealized net fair value loss was comprised of $2.9 million that was recorded on the balance sheet as a derivative liability and $512,000 that was recorded as a derivative asset. The September 30, 2006 unrealized net fair value gain was comprised of $3.3 million that was recorded on the balance sheet as a derivative asset and $2.9 million that was recorded as a derivative liability. In connection with these derivative instruments, WGEServices recorded pre-tax gains of $77,000 and pre-tax losses of $5.5 million for the three and nine months ended June 30, 2007, respectively, and a pre-tax gain of $661,000 and a pre-tax loss of $4.2 million for the three and nine months ended June 30, 2006, respectively.

Electricity. The PJM Interconnection (PJM) is a regional transmission organization that regulates and coordinates the movement of wholesale electricity in all or parts of the states and jurisdictions in which WGEServices operates. Thus, WGEServices is buying wholesale and selling retail electricity in the PJM market territory and is subject to their rules and regulations.

PJM requires that its market participants have load capacity in sufficient volume to serve the market participants’ customer load. As such, WGEServices has entered into contracts with multiple electric generators to purchase its electric capacity needs. These contracts cover various periods ranging from one month to several years into the future. Prior to the second quarter of fiscal year 2007, these contracts were exempt from fair value accounting under SFAS No. 133. However, due to changes by the PJM in its operations and regulations, these contracts were converted into financial derivatives during the second quarter of fiscal year 2007 and are now subject to fair value accounting under SFAS No. 133. The valuation of these contracts at June 30, 2007 was based on a combination of actual auction prices established by PJM and quotes received from third-party brokers. The fair value of these contracts increased in the third quarter based on the PJM auction prices established in April for the first year charges. Broker quotes and other market based pricing indicators are the basis for fair value pricing of capacity applicable to periods beyond the first year, until the PJM establishes fixed annual prices for those years beyond the first year. The second year pricing auction occurred in July 2007, and auctions for future years will occur at regular intervals as determined by PJM.

As of June 30, 2007, these derivative instruments described above had an unrealized fair value gain of $7.6 million that was recorded on the balance sheet as a derivative asset. WGEServices recorded a pre-tax gain of $6.0 million and $8.5 million for the three and nine months ended June 30, 2007, respectively, related to these derivatives.

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Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

Consolidated Operations

The following table summarizes the balance sheet classification for all derivative instruments with open positions for both WGL Holdings and Washington Gas.

Balance Sheet Classification of Open Positions on Derivative Instruments


	WGL Holdings				Washington Gas
	Jun. 30,		Sept. 30,		Jun. 30,		Sept. 30,
(In millions)	2007		2006		2007		2006

Assets
Other current assets	$	9.9	$	14.1	$	4.2	$	10.8
Deferred charges and other assets—other		4.3		3.1		1.9		3.1

Total assets	$	14.2	$	17.2	$	6.1	$	13.9


Liabilities
Other current liabilities	$	13.7	$	11.9	$	12.1	$	9.0
Deferred credits — other		4.2		5.4		2.9		5.4

Total liabilities	$	17.9	$	17.3	$	15.0	$	14.4

WEATHER-RELATED INSTRUMENTS

Regulated Utility Operations

Washington Gas has a weather insurance policy designed to mitigate the negative financial effects of warmer-than-normal weather during the heating season in the District of Columbia. This policy has a three-year term that expires on September 30, 2008. For both the 2006-2007 and 2005-2006 winter heating seasons, Washington Gas also had a heating degree day (HDD) derivative to provide protection against warmer-than-normal weather in Virginia. The HDD derivative purchased for the 2006-2007 winter heating season covered the period October 15, 2006 through April 30, 2007. The HDD derivative purchased for the 2005-2006 heating season covered the period December 18, 2005 through May 31, 2006. These weather protection instruments are accounted for under the guidelines of EITF Issue No. 99-2, Accounting for Weather Derivatives . Benefits are recognized to the extent actual cumulative HDDs fall below the contracted cumulative HDDs for each instrument in the coverage period. Expenses of the products are amortized based on the pattern of normal HDDs over the period of the terms of the respective weather-related instruments. The expenses and any benefits that are derived from the weather insurance policy and HDD derivatives are not considered in establishing the retail rates of Washington Gas.

During the three and nine months ended June 30, 2007, Washington Gas recorded pre-tax expense of $255,000 and $3.6 million, respectively, related to both its weather insurance policy and weather derivative. Due to the colder-than-normal weather experienced during the 2006-2007 winter heating season, Washington Gas is not entitled to a payment related to this period under either its weather insurance policy or weather derivative. Washington Gas recorded pre-tax accrued benefits, net of premium costs, of $1.5 million and $4.7 million during the three and nine months ended June 30, 2006, respectively, related to both its weather insurance and weather derivative.

Non-Utility Operations

WGEServices utilizes HDD derivatives for managing weather risks related to its natural gas operations. These hedges cover a portion of WGEServices’ estimated revenue or gas cost exposure to variations in HDDs. These contracts may pay WGEServices a fixed dollar amount for every HDD over or under specific levels during the calculation period dependent upon the type of contract executed. Similar to Washington Gas’s weather-related instruments, these contracts are accounted for under the guidelines issued by EITF Issue No. 99-2. For the nine months ended June 30, 2007 WGEServices

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Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

recorded a pre-tax net amortization expense of $1.0 million related to these hedges. For the three months ended June 30, 2007, WGEServices had no amortization expense related to these hedges. For the three and nine months ended June 30, 2006, WGEServices recorded a pre-tax loss of $47,000 and $2.1 million, respectively, related to these hedges.

In June 2007, WGEServices entered into a cooling degree day (CDD) hedge to manage extreme weather risks related to its electricity sales during the summer cooling season. These contracts are accounted for under the guidelines of EITF Issue No. 99-2. This CDD hedge provides benefits when the average temperature exceeds a contractually stated level during a period from July 2007 through September 2007. WGEServices did not record any amortization expense or accrue any benefits associated with this hedge during either the three or nine months ended June 30, 2007.

NOTE 10. OPERATING SEGMENT REPORTING

WGL Holdings reports three operating segments: (i) regulated utility; (ii) retail energy-marketing and (iii) commercial HVAC.

With approximately 94 percent of WGL Holdings’ consolidated total assets, the regulated utility segment is our core business and comprises Washington Gas and Hampshire. The regulated utility segment, through Washington Gas, provides regulated gas distribution services (including the sale and delivery of natural gas, meter reading, responding to customer inquiries, bill preparation and the construction and maintenance of its natural gas distribution system) to customers primarily in Washington, D.C. and the surrounding metropolitan areas in Maryland and Virginia. In addition to the regulated operations of Washington Gas, the regulated utility segment includes the operations of Hampshire, an underground natural gas storage company that is regulated under a cost of service tariff by the Federal Energy Regulatory Commission (FERC) and provides services exclusively to Washington Gas.

Through WGEServices, the retail energy-marketing segment sells natural gas and electricity directly to retail customers, both inside and outside of Washington Gas’s traditional service territory, principally in competition with unregulated gas and electricity marketers. Through WGESystems, the commercial HVAC segment designs, renovates and services mechanical heating, ventilating and air conditioning systems for commercial and governmental customers.

Transactions that are not significant enough on a stand-alone basis to warrant treatment as an operating segment, and that do not fit into one of our three operating segments, are aggregated as “Other Activities” and included as part of non-utility operations as presented below in the Operating Segment Financial Information.

The same accounting policies applied in preparing our consolidated financial statements also apply to the reported segments. While net income or loss is the primary criterion for measuring a segment’s performance, we also evaluate our operating segments based on other relevant factors, such as penetration into their respective markets and return on equity. The following tables present operating segment information for the three and nine months ended June 30, 2007 and 2006.

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

Operating Segment Financial Information


				Non-Utility Operations
	Regulated			Retail Energy-						Other			Discontinued
(In thousands)	Utility				Marketing			HVAC		Activities			Operations			Eliminations			Consolidated

Three Months Ended June 30, 2007

Operating Revenues	$	236,184			$	231,633		$	2,689	$	29		$	—		$	(3,077	)	$	467,458

Operating Expenses:
Cost of Energy-Related Sales		126,563				198,526			2,098		—			—			(3,077	)		324,110
Operation		48,666				5,243			451		715			—			—			55,075
Maintenance		10,037				—			—		—			—			—			10,037
Depreciation and Amortization		23,597				154			7		—			—			—			23,758
General Taxes and Other Assessments:
Revenue Taxes		11,156				207			—		—			—			—			11,363
Other		9,673				801			21		4			—			—			10,499

Total Operating Expenses		229,692				204,931			2,577		719			—			(3,077	)		434,842

Operating Income (Loss)		6,492				26,702			112		(690	)		—			—			32,616
Other Income (Expenses) — Net		2,040				25			107		370			—			(390	)		2,152
Interest Expense		11,059				386			—		591			—			(390	)		11,646
Dividends on Washington Gas Preferred Stock		330				—			—		—			—			—			330
Income Tax Expense (Benefit)		(876	)			10,319			182		196			—			—			9,821

Income (Loss) from Continuing Operations		(1,981	)			16,022			37		(1,107	)		—			—			12,971
Loss from Discontinued Operations, Net of Tax		—				—			—		—			—			—			—

Net Income (Loss) Applicable to Common Stock	$	(1,981	)		$	16,022		$	37	$	(1,107	)	$	—		$	—		$	12,971

Total Assets	$	2,654,434			$	196,954		$	11,713	$	44,505		$	—		$	(73,139	)	$	2,834,467

Capital Expenditures/Investments	$	33,249			$	1,758		$	—	$	—		$	—		$	—		$	35,007



Three Months Ended June 30, 2006

Operating Revenues	$	185,768			$	159,911		$	3,276	$	139		$	—		$	(2,173	)	$	346,921

Operating Expenses:
Cost of Energy-Related Sales		89,575				145,673			2,376		—			—			(2,173	)		235,451
Operation		47,136				3,520			485		579			—			—			51,720
Maintenance		9,244				—			—		—			—			—			9,244
Depreciation and Amortization		23,210				84			—		—			—			—			23,294
General Taxes and Other Assessments:
Revenue Taxes		9,268				—			—		—			—			—			9,268
Other		8,818				(432	)		7		5			—			—			8,398

Total Operating Expenses		187,251				148,845			2,868		584			—			(2,173	)		337,375

Operating Income (Loss)		(1,483	)			11,066			408		(445	)		—			—			9,546
Other Income (Expenses) — Net		1,396				—			102		1,202			—			(887	)		1,813
Interest Expense		10,416				917			—		1,181			—			(887	)		11,627
Dividends on Washington Gas Preferred Stock		330				—			—		—			—			—			330
Income Tax Expense (Benefit)		(4,008	)			4,025			305		(336	)		—			—			(14	)

Income (Loss) from Continuing Operations		(6,825	)			6,124			205		(88	)		—			—			(584	)
Loss from Discontinued Operations, Net of Tax		—				—			—		—			(1,240	)		—			(1,240	)

Net Income (Loss) Applicable to Common Stock	$	(6,825	)		$	6,124		$	205	$	(88	)	$	(1,240	)	$	—		$	(1,824	)

Total Assets	$	2,541,919			$	187,609		$	11,813	$	99,996		$	6,711		$	(131,250	)	$	2,716,798

Capital Expenditures/Investments ^(a)	$	40,683			$	680		$	—	$	—		$	—		$	—		$	41,363

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

Operating Segment Financial Information


			Non-Utility Operations
	Regulated		Retail Energy-						Other			Discontinued
(In thousands)	Utility		Marketing			HVAC			Activities			Operations			Eliminations			Consolidated

Nine Months Ended June 30, 2007

Operating Revenues	$	1,377,196	$	950,342		$	6,682		$	113		$	—		$	(14,010	)	$	2,320,323

Operating Expenses:
Cost of Energy-Related Sales		836,373		900,210			5,261			—			—			(14,010	)		1,727,834
Operation		155,269		15,998			1,390			2,877			—			—			175,534
Maintenance		29,556		—			—			—			—			—			29,556
Depreciation and Amortization		66,487		470			16			—			—			—			66,973
General Taxes and Other Assessments:
Revenue Taxes		49,266		588			—			—			—			—			49,854
Other		31,943		2,268			60			17			—			—			34,288

Total Operating Expenses		1,168,894		919,534			6,727			2,894			—			(14,010	)		2,084,039

Operating Income (Loss)		208,302		30,808			(45	)		(2,781	)		—			—			236,284
Other Income (Expenses) — Net		2,220		39			332			2,824			—			(2,718	)		2,697
Interest Expense		34,204		2,701			—			3,292			—			(2,718	)		37,479
Dividends on Washington Gas Preferred Stock		990		—			—			—			—			—			990
Income Tax Expense (Benefit)		68,689		11,037			112			(770	)		—			—			79,068

Income (Loss) from Continuing Operations		106,639		17,109			175			(2,479	)		—			—			121,444
Loss from Discontinued Operations, Net of Tax		—		—			—			—			—			—			—

Net Income (Loss) Applicable to Common Stock	$	106,639	$	17,109		$	175		$	(2,479	)	$	—		$	—		$	121,444

Total Assets	$	2,654,434	$	196,954		$	11,713		$	44,505		$	—		$	(73,139	)	$	2,834,467

Capital Expenditures/Investments	$	105,566	$	1,794		$	85		$	—		$	—		$	—		$	107,445



Nine Months Ended June 30, 2006

Operating Revenues	$	1,503,562	$	812,762		$	10,358		$	564		$	—		$	(12,974	)	$	2,314,272

Operating Expenses:
Cost of Energy-Related Sales		985,325		791,817			8,739			—			—			(12,974	)		1,772,907
Operation		151,451		11,031			1,356			2,150			—			—			165,988
Maintenance		27,954		—			—			—			—			—			27,954
Depreciation and Amortization		69,267		246			11			—			—			—			69,524
General Taxes and Other Assessments:
Revenue Taxes		46,721		1,267			—			—			—			—			47,988
Other		31,862		(2,201	)		36			23			—			—			29,720

Total Operating Expenses		1,312,580		802,160			10,142			2,173			—			(12,974	)		2,114,081

Operating Income (Loss)		190,982		10,602			216			(1,609	)		—			—			200,191
Other Income (Expenses) — Net		1,489		—			250			3,087			—			(2,110	)		2,716
Interest Expense		33,112		2,397			—			2,913			—			(2,110	)		36,312
Dividends on Washington Gas Preferred Stock		990		—			—			—			—			—			990
Income Tax Expense (Benefit)		60,770		3,254			142			(483	)		—			—			63,683

Income (Loss) from Continuing Operations		97,599		4,951			324			(952	)		—			—			101,922
Loss from Discontinued Operations, Net of Tax		—		—			—			—			(2,477	)		—			(2,477	)

Net Income (Loss) Applicable to Common Stock	$	97,599	$	4,951		$	324		$	(952	)	$	(2,477	)	$	—		$	99,445

Total Assets	$	2,541,919	$	187,609		$	11,813		$	99,996		$	6,711		$	(131,250	)	$	2,716,798

Capital Expenditures/Investments ^(a)	$	112,594	$	1,313		$	2		$	—		$	—		$	—		$	113,909


^(a)		Excludes capital expenditures of discontinued operations totaling $47,000 and $158,000 for the three and nine months ended June 30, 2006, respectively.

NOTE 11. RELATED PARTY TRANSACTIONS

WGL Holdings and its subsidiaries engage in transactions among each other during the ordinary course of business. Intercompany transactions and balances have been eliminated from the consolidated financial statements of WGL Holdings.

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

Washington Gas provides accounting, treasury, legal and other administrative and general support to affiliates, and files consolidated tax returns that include affiliated taxable transactions. The actual costs of these services are billed to the appropriate affiliates and to the extent such billings are not yet paid, they are reflected in “Receivables from associated companies” on Washington Gas’s balance sheets. Washington Gas assigns or allocates these costs directly to its affiliates and, therefore, does not recognize revenues or expenses associated with providing these services.

In connection with billing for unregulated third-party marketers and with other miscellaneous billing processes, Washington Gas collects cash on behalf of affiliates and transfers the cash as quickly as reasonably possible. Cash collected by Washington Gas on behalf of its affiliates but not yet transferred is recorded in “Payables to associated companies” on Washington Gas’s balance sheets. These transactions recorded by Washington Gas impact the balance sheet only.

At June 30, 2007 and September 30, 2006, the Washington Gas Balance Sheets reflected a receivable from associated companies of $635,000 and $1.1 million, respectively. At June 30, 2007 and September 30, 2006, the Washington Gas Balance Sheets reflected a payable to associated companies of $21.8 million and $17.3 million, respectively, related to the activities described above.

Additionally, Washington Gas provides gas balancing services related to storage, injections, withdrawals and deliveries to all energy marketers participating in the sale of natural gas on an unregulated basis through the customer choice programs that operate in its service territory. These balancing services include the sale of natural gas supply commodities related to various peaking arrangements contractually supplied to Washington Gas and then partially allocated and assigned by Washington Gas to the energy marketers, including WGEServices. Washington Gas records revenues for these balancing services pursuant to tariffs approved by the appropriate regulatory bodies. In conjunction with such services and the related sales and purchases of natural gas, Washington Gas charged WGEServices, an affiliated energy marketer, $3.1 million and $2.2 million for the three months ended June 30, 2007 and 2006, respectively. In the nine months ended June 30, 2007 and 2006, the charges were $14.0 and $13.0 million, respectively. These related party amounts have been eliminated in the consolidated financial statements of WGL Holdings.

As a result of these balancing services, an imbalance is created for volumes of natural gas received by Washington Gas that are not equal to the volumes of natural gas delivered to customers of the energy marketers. WGEServices has recognized an accounts receivable from Washington Gas in the amount of $1.9 million and $10.3 million at June 30, 2007 and September 30, 2006, respectively, related to an imbalance in gas volumes. Due to regulatory treatment, these receivables are not eliminated in the consolidated financial statements of WGL Holdings. These imbalances are typically settled by adjusting natural gas deliveries in subsequent periods.

NOTE 12. COMMITMENTS AND CONTINGENCIES

REGULATED UTILITY OPERATIONS

Operating Issues in Prince George’s County, Maryland

On April 1, 2005, Washington Gas announced that it would address a significant increase in the number of natural gas leaks on its distribution system in a portion of Prince George’s County, Maryland. Washington Gas retained a consultant to determine the reason for the increase in leaks in the affected area of Prince George’s County. Based on the work conducted by the consultant, it is our opinion that the reason for the higher incidence of leaks in the affected area of Prince George’s County is the composition of the gas resulting from the reactivation of the Cove Point liquefied natural

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

gas (LNG) terminal owned by Dominion Resources, Inc. Additionally, a Hearing Examiner of the Maryland Public Service Commission (PSC of MD), in a proposed order issued April 2, 2007, concluded that available evidence shows that the gas flowing from the Cove Point terminal is a contributing factor to the increased number of leaks experienced on Washington Gas’s distribution system in the affected area (refer to the section entitled “ Rates and Regulatory Matters ” under Management’s Discussion for Washington Gas for a further discussion of this proposed order).

The Cove Point gas contains a lower concentration of heavy hydrocarbons (HHCs) than domestic natural gas. When gas, such as the gas from the Cove Point terminal, is introduced to Washington Gas’s distribution system, the seals on certain mechanical couplings within the distribution system shrink in size and there is a greater propensity for those seals to cause the couplings to leak.

Given the increase in the number of natural gas leaks experienced in the affected area of Prince George’s County, Maryland in fiscal year 2005, Washington Gas announced in that year that it would replace gas service lines and replace or rehabilitate gas mains that contain the applicable mechanical couplings in the affected area of the distribution system in Prince George’s County (the rehabilitation project). Additionally, laboratory tests have shown that the injection of HHCs into the type of gas coming from the Cove Point terminal can be effective in re-swelling the seals in couplings which increases their sealing force and, thus, reduces the propensity for the couplings to leak. Based upon the scientific evidence available to date, Washington Gas constructed a facility to inject HHCs into the gas stream at the gate station that exclusively receives gas from the Cove Point terminal and serves the affected area. This facility became operational in January 2006 at a cost of approximately $3.2 million.

The original cost estimate of the rehabilitation project was $144 million. To date, leak rates in the affected area have dramatically declined to a level that has allowed Washington Gas to return to normal evaluation procedures to address maintenance and repair decisions. This decline has benefited from the extensive replacements that have occurred in the affected area, as well as the effects of HHC injections. As a result of this decline in leak rates, we have reduced the overall scope of the rehabilitation project. After considering this reduction in scope, along with lower costs incurred than originally estimated, we have reduced the total estimated cost of the rehabilitation project from the original $144 million to a new cost estimate of $88.8 million. We estimate that this project will be substantially complete by September 30, 2007. As a result of the receipt of an Accounting Order dated June 1, 2005 from the PSC of MD, we are capitalizing all costs of encapsulating certain couplings on mains with respect to this rehabilitation project. This phase represents less than ten percent of the total estimated cost of the rehabilitation project. However, the receipt of the order from the PSC of MD is not determinative of the ratemaking treatment and the PSC of MD retains jurisdiction over the ratemaking treatment it deems appropriate.

Since the HHC injection facility became operational in January 2006, Washington Gas has been evaluating the effectiveness of this HHC injection process on the couplings under field conditions. Our evaluation of the role of these HHC injections as a preventative and remedial measure was filed in a report to the PSC of MD on June 29, 2007. Based on this evaluation, Washington Gas will continue its gas conditioning operations.

At June 30, 2007, Washington Gas had incurred $4.7 million of HHC commodity purchase costs for HHCs injected into our system since February 2006. Of this amount, $896,000 is being collected from customers through Washington Gas’s Purchased Gas Cost (PGC) provision, $934,000 was

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

deferred on the balance sheet as a regulatory asset to be recovered from customers in the future, and $2.9 million has been charged to expense. This treatment is consistent with regulatory accounting requirements of various jurisdictions in Virginia, Maryland and the District of Columbia. We have requested cost recovery for both past and future HHC costs in all three jurisdictions as we continue our efforts to recover all HHC costs (refer to the section entitled “ Regulatory Contingencies ”).

Regulatory Contingencies

Certain legal and administrative proceedings incidental to our business, including regulatory contingencies, involve WGL Holdings and/or its subsidiaries. In our opinion, we have recorded an adequate provision for probable losses or refunds to customers for regulatory contingencies related to these proceedings in accordance with SFAS No. 5 , Accounting for Contingencies .

District of Columbia Jurisdiction

Recovery of HHC Costs. On May 1, 2006, Washington Gas filed two tariff applications with the PSC of DC requesting approval of proposed revisions to the balancing charge provisions of its firm and interruptible delivery service tariffs that would permit the utility to recover from its delivery service customers the costs of HHCs that are being injected into Washington Gas’s natural gas distribution system. Washington Gas has been recovering the costs of HHCs from sales customers in the District of Columbia through its PGC provision in this jurisdiction. On October 2, 2006, the PSC of DC issued an order rejecting Washington Gas’s proposed tariff revisions until the PSC of MD issues a final order related to this matter (refer to “Maryland Jurisdiction” below) . On October 12, 2006, Washington Gas filed a Motion for Clarification requesting that the PSC of DC affirm that Washington Gas can continue collecting HHC costs from sales customers through its PGC provision or to record such HHC costs incurred as a regulatory asset pending a ruling by the PSC of DC on future cost recovery. On May 11, 2007, the PSC of DC directed Washington Gas to cease prospective recovery of the cost of HHCs through the PGC provision, with future HHC costs to be recorded as a “pending” regulatory asset.

Maryland Jurisdiction

Disallowance of Purchased Gas Charges. Each year, the PSC of MD reviews the annual gas costs collected from customers in Maryland to determine if Washington Gas’s purchased gas costs are not justified because it failed to support that the charges incurred were based solely on increased costs of natural gas, or it failed to follow competitive and reasonable practices in procuring and purchasing natural gas. On March 14, 2006, in connection with the PSC of MD’s annual review of Washington Gas’s gas costs that were billed to customers in Maryland from September 2003 through August 2004, a Hearing Examiner of the PSC of MD issued a proposed order approving purchased gas charges of Washington Gas for the twelve-month period ending August 2004 except for $4.6 million of such charges that the Hearing Examiner recommended be disallowed because, in the opinion of the Hearing Examiner, they were not reasonably and prudently incurred. Washington Gas filed a Notice of Appeal on April 12, 2006 and a Memorandum on Appeal on April 21, 2006 with the PSC of MD, asserting that the Hearing Examiner’s recommendation is without merit. A reply memorandum was filed on May 11, 2006. After consideration of these issues, we expect the PSC of MD to issue a Final Order. Over the past ten years, Washington Gas has incurred similar purchased gas charges which the PSC of MD has reviewed and approved as being reasonably and prudently incurred and therefore subject to recovery from customers. Among other issues included in the appeal, we reminded the PSC of MD of this prior recovery and requested that similar treatment be granted for this matter. During the fiscal year ended September 30, 2006, Washington Gas accrued a liability of $4.6 million (pre-tax) related to the proposed disallowance of these purchased gas charges. If the PSC of MD rules in Washington Gas’s favor, the liability recorded in fiscal year 2006 for this issue will be reversed to income.

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

Recovery of HHC Costs. In March 2006, Washington Gas began recovering the costs of HHCs that are being injected into its natural gas distribution system from Maryland sales customers through its PGC provision in Maryland. On April 28, 2006, Washington Gas filed an application with the PSC of MD requesting approval of proposed revisions to the balancing charge provisions of its firm and interruptible delivery service tariffs that would permit the utility to recover the cost of HHCs from its delivery service customers, as well as from its sales customers. On June 27, 2006, the PSC of MD issued an order that rejected Washington Gas’s proposed tariff revisions until an evidentiary hearing was held to further consider matters relating to the efficacy of the HHC injections in addressing existing leaks or in preventing additional leaks on Washington Gas’s distribution system (refer to the section entitled “Operating Issues in Prince George’s County, Maryland” ). In addition to ordering an evidentiary hearing, the PSC of MD directed Washington Gas to cease recovering HHC costs being recovered through the PGC provision and to record costs that will be incurred in the future in a “pending” regulatory asset account for future regulatory disposition following the conclusion of the evidentiary hearing which was held on February 6, 2007.

On April 2, 2007, a Hearing Examiner of the PSC of MD issued a Proposed Order granting Washington Gas full recovery of the cost of HHC injections related to Maryland sales and delivery service customers. Additionally, the Proposed Order allowed for full recovery of costs that were included in the “pending” regulatory asset account. In the Proposed Order, the Hearing Examiner concluded that based on available evidence, the injection of HHCs was a reasonable measure for which Washington Gas should be compensated. On May 2, 2007, the Maryland Office of People’s Counsel filed a Notice of Appeal of the Proposed Order and we are awaiting a final decision by the PSC of MD on this matter.

Virginia Jurisdiction

Annual Earnings Test. In connection with a December 18, 2003 Final Order, the Virginia State Corporation Commission (SCC of VA) ordered Washington Gas to reduce its rate base related to net utility plant by $28 million, which was net of accumulated deferred income taxes of $14 million, and to establish an equivalent regulatory asset that Washington Gas had done for regulatory accounting purposes only. This regulatory asset, which was presented within “Accumulated depreciation and amortization” on the balance sheets, represented the difference between the accumulated reserve for depreciation recorded on the books of Washington Gas and a theoretical reserve that was derived by the Staff of the SCC of VA (VA Staff) as part of its review of Washington Gas’s depreciation rates, and was being amortized as a component of depreciation expense over 32 years pursuant to the Final Order. The SCC of VA further ordered that an annual “earnings test” be performed to determine if Washington Gas had earned in excess of its allowed rate of return on common equity for its Virginia operations. In connection with a depreciation study filed by Washington Gas with the SCC of VA, the VA Staff concluded on December 27, 2006 that it was no longer necessary for Washington Gas to recognize this regulatory asset or perform annual earnings test calculations (refer to “Depreciation Study” below for a further discussion of this matter).

Provision for Rate Refund based on July 30, 2007 Stipulation. On September 15, 2006, Washington Gas filed an application with the SCC of VA to increase its annual delivery service revenues in Virginia by $23.0 million, subsequently revised to $17.2 million on November 8, 2006 due to a reduction in depreciation rates as further discussed in the section below entitled “Depreciation Study” . Among other things the application requested an overall rate of return of 9.12 percent and a return on common equity of 11.25 percent. On July 30, 2007, Washington Gas, the Staff of the SCC of VA (VA Staff) and one other participant entered into and submitted a Stipulation to the SCC of VA related to this rate case. The Stipulation is not opposed by any of the parties to the proceedings. We expect the SCC of VA to issue a final order approving this Stipulation prior to September 30, 2007.

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

Among other things, this Stipulation includes an annual rate increase of $3.9 million and the implementation of a Weather Normalization Adjustment mechanism and a Performance-Based Rate (PBR) mechanism. The PBR mechanism includes a four-year rate freeze and provisions for sharing earnings that exceed a 10.50 percent return on equity target, after the recovery, over a four-year amortization schedule, of Washington Gas’s initial start-up costs allocable to Virginia associated with achieving Washington Gas’s BPO initiatives.

On February 13, 2007, under the regulations of the SCC of VA, Washington Gas implemented the proposed general revenue increase, subject to refund, pending the SCC of VA’s final decision approving the Stipulation. Accordingly, Washington Gas’s financial statements reflect increased revenues in accordance with the proposed increase and a provision for rate refunds consistent with the Stipulation.

Depreciation Study

In October 2006, Washington Gas completed a depreciation rate study based on its property, plant and equipment balances as of December 31, 2005. The results of the depreciation study concluded that Washington Gas’s depreciation rates should be reduced due to asset lives being extended beyond previously estimated lives. Under regulatory requirements, these depreciation rates must be approved before they are placed into effect. In the District of Columbia and Maryland, regulatory requirements prescribe that whenever depreciation rates are revised, there must be a corresponding revision to customer billing rates. Accordingly, the new depreciation rates in the District of Columbia and Maryland will not be placed into effect until a rate case proposal is approved enabling this change.

On April 13, 2007, Washington Gas filed the portion of the depreciation study related to the Maryland jurisdiction. The impact of the newly proposed depreciation rates are reflected in Washington Gas’s cost of service study that is included as part of an April 20, 2007 rate application. It is expected that the new depreciation rates will be approved and placed into effect when the revised customer billing rates for revenues are approved to reflect the corresponding change in depreciation rates.

In connection with a December 21, 2006 rate application filed with the PSC of DC, Washington Gas included that portion of the depreciation study related to the District of Columbia jurisdiction. The impact of the newly proposed depreciation rates are reflected in Washington Gas’s cost of service study that is included as part of the rate application. The new depreciation rates will be placed into effect when the revised customer billing rates for revenues are approved to reflect the corresponding change in depreciation rates.

In connection with Washington Gas’s September 15, 2006 rate application filed with the SCC of VA, on November 8, 2006, Washington Gas included that portion of the depreciation study related to the Virginia jurisdiction. Based on the results of the depreciation study, Washington Gas reduced the requested $23.0 million rate increase in the September 15, 2006 SCC of VA application to $17.2 million. In December 2006, the VA Staff approved the reduction in Washington Gas’s depreciation rates. In accordance with Virginia regulatory policy, Washington Gas implemented the new depreciation rates retroactive to January 1, 2006 which coincides with the date of the approved depreciation study. Accordingly, our depreciation and amortization expense for the current nine-month period included a benefit totaling $7.9 million (pre-tax), of which $3.9 million (pre-tax) was applicable to the period from January 1, 2006 through September 30, 2006 and $4.0 million (pre-tax) was related to the current nine-month period. Of this $4.0 million current period benefit, approximately $2.0 million was recorded prior to the implementation of new rates in Virginia. When new rates were put into effect in Virginia, both annual revenues and annual depreciation expense

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (continued)
Notes to Consolidated Financial Statements (Unaudited)

were reduced by equivalent amounts; therefore, subsequent to February 13, 2007, there will be no further impact on annual operating income for this reduction.

NON-UTILITY OPERATIONS

As discussed below, WGL Holdings is a party to financial guarantees related to the energy-marketing activities of WGEServices. WGEServices also is exposed to the risk of non-performance associated with its electric and natural gas suppliers, and from other third parties associated with hedging its cost of natural gas. WGEServices has a credit policy in place that is designed to mitigate these credit risks through a requirement for credit enhancements including, but not limited to, letters of credit and parental guarantees. In accordance with this policy, WGEServices has obtained credit enhancements from certain of its counterparties. If certain counterparties or their guarantors meet the policy’s creditworthiness criteria, WGEServices grants limited amounts of unsecured credit to those counterparties or their guarantors, and continuously monitors these unsecured amounts.

Financial Guarantees

WGL Holdings has guaranteed payments primarily for certain purchases of natural gas and electricity made by WGEServices. At June 30, 2007, these guarantees totaled $269.6 million. Termination of these guarantees is coincident with the satisfaction of all obligations of WGEServices covered by the guarantees. WGL Holdings also issued guarantees totaling $3.0 million at June 30, 2007 that were made on behalf of certain of its non-utility subsidiaries associated with their banking transactions. Of the total guarantees of $272.6 million, $3.1 million, $605,000 and $29.0 million are due to expire on December 31, 2007, February 29, 2008 and June 30, 2008, respectively. The remaining guarantees of $239.9 million do not have specific maturity dates. For all of its financial guarantees, WGL Holdings may cancel any or all future obligations imposed by the guarantees upon written notice to the counterparty, but WGL Holdings would continue to be responsible for the obligations that had been created under the guarantees prior to the effective date of the cancellation.

NOTE 13. PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS

The following tables show the components of net periodic benefit costs (income) recognized in our financial statements during the three and nine months ended June 30, 2007 and 2006:

Components of Net Periodic Benefit Costs (Income)


	Three Months Ended June 30,
	2007						2006
	Pension			Health and			Pension			Health and
(In thousands)	Benefits			Life Benefits			Benefits			Life Benefits

Components of net periodic benefit costs (income)
Service cost	$	2,990		$	2,656		$	2,626		$	2,559
Interest cost		9,758			6,310			9,293			5,455
Expected return on plan assets		(12,684	)		(3,879	)		(12,659	)		(3,570	)
Recognized prior service cost		576			—			576			—
Recognized actuarial loss		922			2,883			840			2,579
Amortization of transition obligation		—			363			—			363
Curtailment loss		2,400			1,640			—			—

Net periodic benefit cost		3,962			9,973			676			7,386

Amount allocated to construction projects		(95	)		(990	)		11			(845	)
Amount deferred as regulatory asset/liability—net		(3,553	)		(1,552	)		(1,011	)		(180	)
Other		(26	)		—			(25	)		—

Amount charged (credited) to expense	$	288		$	7,431		$	(349	)	$	6,361

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 1—Financial Statements (concluded)
Notes to Consolidated Financial Statements (Unaudited)

Components of Net Periodic Benefit Costs (Income)


	Nine Months Ended June 30,
	2007						2006
	Pension			Health and			Pension			Health and
(In thousands)	Benefits			Life Benefits			Benefits			Life Benefits

Components of net periodic benefit costs (income)
Service cost	$	8,971		$	7,969		$	7,879		$	7,675
Interest cost		29,274			18,930			27,878			16,367
Expected return on plan assets		(38,051	)		(11,636	)		(37,977	)		(10,710	)
Recognized prior service cost		1,728			—			1,728			—
Recognized actuarial loss		2,765			8,648			2,519			7,738
Amortization of transition obligation		—			1,089			—			1,089
Curtailment loss		2,400			1,640			—			—

Net periodic benefit cost		7,087			26,640			2,027			22,159

Amount allocated to construction projects		(307	)		(3,185	)		30			(2,582	)
Amount deferred as regulatory asset/liability—net		(5,857	)		(1,376	)		(3,035	)		(534	)
Other		(68	)		—			(92	)		—

Amount charged (credited) to expense	$	855		$	22,079		$	(1,070	)	$	19,043

The “Curtailment loss” included in the table above relates to our BPO plan (refer to Note 3— Severance and Curtailment Costs ). Amounts included in the line item “Amount deferred as regulatory asset/liability-net,” represent the difference between the cost of the applicable Pension Benefits and the Health and Life Benefits, including the curtailment loss, and the amount that Washington Gas is permitted to recover in rates that it charges to customers.

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations


ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (Management’s Discussion) analyzes the financial condition, results of operations and cash flows of WGL Holdings, Inc. (WGL Holdings) and its subsidiaries. Except where the content clearly indicates otherwise, “WGL Holdings,” “we,” “us” or “our” refers to the holding company or the consolidated entity of WGL Holdings and all of its subsidiaries.

Management’s Discussion is divided into the following two major sections:

	•		*WGL Holdings* —This section describes the financial condition and results of operations of WGL Holdings and its subsidiaries on a consolidated basis. It includes discussions of our regulated and unregulated operations. The majority of WGL Holdings’ operations are derived from the results of Washington Gas Light Company (Washington Gas) and, to a much lesser extent, the results of our non-utility operations. These unregulated, non-utility operations are wholly owned by Washington Gas Resources Corporation (Washington Gas Resources), a wholly owned subsidiary of WGL Holdings.

	•		*Washington Gas* —This section describes the financial condition and results of operations of Washington Gas, a wholly owned subsidiary that comprises the majority of our regulated utility segment.

Both of the major sections of Management’s Discussion—WGL Holdings and Washington Gas—should be read to obtain an understanding of our operations and financial performance. Management’s Discussion also should be read in conjunction with the respective company’s financial statements and the combined Notes to Consolidated Financial Statements.

Unless otherwise noted, earnings per share amounts are presented on a diluted basis and are based on weighted average common and common equivalent shares outstanding. Our operations are seasonal and, accordingly, our operating results for the interim periods presented are not indicative of the results to be expected for the full fiscal year. The earnings (loss) per share of any segment does not represent a direct legal interest in the assets and liabilities allocated to any one segment, but rather represents a direct equity interest in our assets and liabilities as a whole.

EXECUTIVE OVERVIEW

Introduction

WGL Holdings, through its wholly owned subsidiaries, sells and delivers natural gas and provides a variety of energy-related products and services to customers primarily in Washington, D.C. and the surrounding metropolitan areas in Maryland and Virginia. At June 30, 2007, we had 1,679 employees comprising 1,600 utility and 79 non-utility employees. WGL Holdings has three operating segments that are described below.

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Regulated Utility. Our regulated utility segment consists of Washington Gas and Hampshire Gas Company (Hampshire). Washington Gas delivers natural gas to retail customers in accordance with tariffs approved by the regulatory commissions that have jurisdiction over Washington Gas’s rates. Washington Gas also sells natural gas to customers who have not elected to purchase natural gas from unregulated third-party marketers. Washington Gas does not earn a profit or incur a loss when it sells the natural gas commodity because utility customers are charged for the natural gas commodity at the same cost that Washington Gas incurs. Hampshire, a wholly owned subsidiary of WGL Holdings, operates an underground natural gas storage facility that is regulated by the Federal Energy Regulatory Commission (FERC). Washington Gas purchases all of the storage services of Hampshire and includes the cost of these services in the bills sent to its customers.

Retail Energy-Marketing. The retail energy-marketing segment includes the operations of Washington Gas Energy Services, Inc. (WGEServices). WGEServices competes principally with other unregulated third-party marketers by selling natural gas and electricity directly to residential, commercial and industrial customers in Maryland, Virginia, Delaware and the District of Columbia. WGEServices does not own or operate any natural gas or electric generation, production, transmission or distribution assets. WGEServices buys and resells natural gas and electricity with the objective of earning a profit through competitively-priced contracts. These commodities are delivered to retail customers through the assets owned by regulated utilities such as Washington Gas or other unaffiliated natural gas or electric utilities.

Commercial Heating, Ventilating and Air Conditioning (HVAC). Our commercial HVAC segment, which consists of the operations of Washington Gas Energy Systems, Inc. (WGESystems), manages design-build and renovation projects, and provides maintenance services to the commercial and government markets.

Key Indicators of Financial Condition and Operating Performance

The following are key indicators for monitoring our financial condition and operating performance:

Return on Average Common Equity. This measure is calculated by dividing twelve months ended net income (applicable to common stock) by average common shareholders’ equity. For Washington Gas, we compare the actual return on common equity with the return on common equity that is allowed to be earned by regulators and the return on equity that is necessary for us to compensate investors sufficiently and be able to continue to attract capital.

Common Equity Ratio. This ratio is calculated by dividing total common shareholders’ equity by the sum of common shareholders’ equity, preferred stock and long-term debt (including current maturities). Maintaining this ratio in the mid-50 percent range affords us financial flexibility and access to long-term capital at relatively low costs. Refer to the section entitled “ Liquidity and Capital Resources—General Factors Affecting Liquidity ” for a discussion of our capital structure.

PRIMARY FACTORS AFFECTING WGL HOLDINGS AND WASHINGTON GAS

The principal business, economic and other factors that affect our operations and/or financial performance include:

	•		weather conditions and weather patterns;

	•		regulatory environment and regulatory decisions;

	•		availability of natural gas supplies and interstate pipeline transportation and storage capacity;

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

	•		natural gas prices and the prices of competing energy products;

	•		changes in customers’ natural gas usage resulting from improved appliance efficiencies and the effect of changing natural gas prices;

	•		the safety and reliability of the natural gas distribution system;

	•		availability of electricity supply;

	•		the level of capital expenditures for adding new customers and replacing facilities worn beyond economic repair;

	•		our ability to manage and control the effects of receiving gas from the Cove Point liquefied natural gas terminal into Washington Gas’s natural gas distribution system;

	•		new or changed laws and regulations;

	•		competitive environment;

	•		environmental matters;

	•		industry consolidation;

	•		economic conditions and interest rates;

	•		inflation/deflation;

	•		our ability to effectively transition and manage the delivery of certain functions that are part of the ten-year business process outsourcing agreement;

	•		labor contracts, including labor and benefit costs and

	•		changes in accounting principles.

For a further discussion of our business, operating segments and the factors listed above, refer to Management’s Discussion within the combined Annual Report on Form 10-K for WGL Holdings and Washington Gas for the fiscal year ended September 30, 2006. Also, refer to the section entitled “Safe Harbor for Forward-Looking Statements” included in this quarterly report for a listing of forward-looking statements related to factors affecting WGL Holdings and Washington Gas.

CRITICAL ACCOUNTING POLICIES

Preparation of financial statements and related disclosures in compliance with Generally Accepted Accounting Principles in the United States of America (GAAP) requires the selection and the application of appropriate technical accounting rules to the relevant facts and circumstances of our operations, as well as our use of estimates to compile the consolidated financial statements. The application of these accounting policies involves judgment regarding estimates and projected outcomes of future events, including the likelihood of success of particular regulatory initiatives, the likelihood of realizing estimates for legal and environmental contingencies and the probability of recovering costs and investments in both the regulated utility and non-utility business segments.

We have identified the following critical accounting policies that require our judgment and estimation where the resulting estimates have a material effect on our financial statements:

	•		accounting for unbilled revenue and cost of gas recognition;

	•		accounting for regulatory operations — regulatory assets and liabilities;

	•		accounting for income taxes;

	•		accounting for contingencies;

	•		accounting for derivative instruments and

	•		accounting for pension and other post-retirement benefit costs.

For a description of these critical accounting policies, refer to Management’s Discussion within the combined Annual Report on Form 10-K for WGL Holdings and Washington Gas for the fiscal year ended September 30, 2006.

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

BUSINESS PROCESS OUTSOURCING

During the third quarter of fiscal year 2007, Washington Gas executed a ten-year business process outsourcing (BPO) agreement which is designed to improve customer service and reduce costs. At the inception of the contract, Washington Gas purchased $14.2 million of software and licenses. Additionally, during fiscal years 2007 and 2008, Washington Gas expects to incur and pay total, initial costs of approximately $29 million to implement this agreement. We believe that substantially all of these costs necessary to implement the BPO plan will ultimately be recoverable through the ratemaking process. Washington Gas seeks to amortize these costs over various periods specified in pending rate cases which include Performance-Based Rate (PBR) mechanisms (refer to the section entitled “Rates and Regulatory Matters” ). This proposed treatment will match these amortized costs with expected savings. This net savings will be shared through the proposed PBR mechanisms when earnings exceed a targeted level. During the third quarter of fiscal year 2007, Washington Gas recorded a regulatory asset in the amount of $10.5 million for costs incurred associated with its BPO plan allocable to Virginia and Maryland which would be amortized over a recovery period to be established and approved in pending rate cases. Of this $10.5 million, $8.5 million was related to employee severance and benefit costs that arose in the third quarter in recognition of organization changes necessary to implement the BPO plan. The remaining $2.0 million was incurred in prior periods and related to consulting and legal fees necessary to implement the plan. All or a portion of these costs to achieve the outsourcing effort could be expensed if the regulators in our jurisdictions do not permit recovery of such costs as part of PBR mechanisms in pending or future rate cases. We expensed $972,000 (pre-tax), or $0.01 per share, of costs allocable to the District of Columbia associated with this plan because it is not sufficiently clear when or how the Public Service Commission of the District of Columbia (PSC of DC) will address the pending rate design proposal concerning the deferral and amortization of these costs.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

WGL HOLDINGS, INC.

RESULTS OF OPERATIONS — Three Months Ended June 30, 2007 vs. June 30, 2006

Summary Results

WGL Holdings, Inc. reported net income of $13.0 million, or $0.26 per share, for the three months ended June 30, 2007, the third quarter of fiscal year 2007. This represents a $14.8 million, or $0.30 per share, increase over a net loss of $1.8 million, or $0.04 per share, reported for the three months ended June 30, 2006. For the twelve-month periods ended June 30, 2007 and 2006, we earned a return on average common equity of 11.2 percent and 9.4 percent, respectively.

Income from continuing operations was $13.0 million, or $0.26 per share, for the three months ended June 30, 2007, an increase of $13.6 million or $0.27 per share, over a loss from continuing operations of $584,000, or $0.01 per share, reported for the three months ended June 30, 2006. The loss from continuing operations for the three months ended June 30, 2006 excluded an after-tax loss of $1.2 million, or $0.03 per share, from discontinued operations.

The increase in results from continuing operations for the three months ended June 30, 2007 over the same period of the prior fiscal year primarily reflects $0.19 per share of higher earnings from our retail energy-marketing segment as well as $0.10 per share of higher earnings from our regulated utility segment.

Regulated Utility Operating Results

The following table summarizes the regulated utility segment’s operating results for the three months ended June 30, 2007 and 2006.

Regulated Utility Operating Results



	Three Months Ended
	June 30,
(In thousands)	2007			2006			Variance

Operating revenues	$	236,184		$	185,768		$	50,416

Operating expenses:
Cost of gas		126,563			89,575			36,988
Operation and maintenance		58,703			56,380			2,323
Depreciation and amortization		23,597			23,210			387
General taxes and other assessments:
Revenue taxes		11,156			9,268			1,888
Other		9,673			8,818			855

Total operating expenses		229,692			187,251			42,441

Operating income		6,492			(1,483	)		7,975
Interest expense		11,059			10,416			643
Other (income) expenses—net, including preferred stock dividends		(1,710	)		(1,066	)		(644	)
Income tax expense (benefit)		(876	)		(4,008	)		3,132

Net Loss	$	(1,981	)	$	(6,825	)	$	4,844

Reporting a net loss for quarters ending June 30 is typical due to the seasonal nature of our utility operations and the corresponding reduced demand for natural gas during this period. The regulated utility segment reported a seasonal net loss of $2.0 million, or $0.04 per share, for the three months ended June 30, 2007, an improvement of $4.8 million, or $0.10 per share, over the net loss of $6.8 million, or $0.14 per share, reported for the third quarter of the prior fiscal year. This improvement primarily reflects: (i) increased deliveries of natural gas to firm customers; (ii) a favorable adjustment related to lost-and-accounted for gas and (iii) new rates that went into effect in Virginia on February 13, 2007.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Natural gas deliveries to firm customers totaled 199.7 million therms during the third quarter of fiscal year 2007, an increase of 53.6 million therms, or 36.7 percent, over the third quarter of fiscal year 2006. The increase in firm therm deliveries was driven by 59.2 percent colder weather in the current quarter when compared to the same quarter in fiscal year 2006. Weather, when measured by heating degree days (HDDs), was 31.8 percent colder than normal in the third quarter of fiscal year 2007, as compared to 16.7 percent warmer than normal for the same quarter of fiscal year 2006. In Maryland, the application of our Revenue Normalization Adjustment (RNA) billing mechanism offsets the benefits from the colder-than-normal weather. In the District of Columbia and Virginia, our weather protection strategies are designed to retain the benefits of colder-than-normal weather while neutralizing the estimated effects of warmer-than-normal weather. Including the effects of our weather protection strategies, in the third quarter of fiscal year 2007, net income was enhanced by an estimated $2 million (after-tax), or $0.04 per share, from the 31.8 percent colder-than-normal weather. There were no effects from weather during the third quarter of fiscal year 2006. Expenses and net benefits associated with our weather-related instruments in the District of Columbia and Virginia for the third quarter of fiscal years 2007 and 2006 are reflected in “Operation and maintenance” expenses, as discussed below (refer to the section entitled “Weather Risk” for a further discussion of our RNA and weather-related instruments).

Also contributing to the increase in earnings were: (i) the addition of 14,718 active customer meters since the end of the same quarter of the prior fiscal year; (ii) a favorable adjustment related to a true-up of lost-and-unaccounted-for gas for the recently completed winter season and (iii) new rates that went into effect in Virginia on February 13, 2007 related to a rate case that was filed on September 15, 2006. This rate increase went into effect pursuant to the regulations of the State Corporation Commission of Virginia (SCC of VA), and is subject to refund pending the SCC of VA’s final order approving an unopposed Stipulation that was executed and submitted to the SCC of VA on July 30, 2007 by Washington Gas and two other participants in the rate case (refer to the section entitled “Rates and Regulatory Matters” under Management’s Discussion for Washington Gas). Our financial results reflect a provision for rate refunds to customers consistent with this Stipulation.

Earnings of the regulated utility segment for the third quarter of fiscal year 2007 were affected by a $2.3 million (pre-tax), increase in operation and maintenance expenses when compared to the corresponding period of the prior fiscal year. Operation and maintenance expenses for the prior period were reduced by a $1.8 million (pre-tax) benefit related to our weather-related instruments due to the warmer-than-normal weather. No such benefits were recognized in the current period due to the colder-than-normal weather. Other increases in operation and maintenance expenses include higher pension and post-retirement benefit costs and $972,000 (pre-tax) of severance costs related to the implementation of the BPO plan. Partially offsetting these increases in operation and maintenance expenses were lower uncollectible accounts expense and the reversal of $2.0 million (pre-tax), related to costs previously expensed for the start-up activities associated with achieving Washington Gas’s business outsourcing initiatives.

Non-Utility Operating Results

Our non-utility operations comprise two business segments: (i) retail energy-marketing and (ii) commercial HVAC. Transactions that are not significant enough on a stand-alone basis to warrant treatment as an operating segment, and that do not fit into one of our three operating segments, are aggregated as “Other Activities” and included as part of non-utility operations. Total net income from our continuing non-utility operations was $15.0 million, or $0.30 per share, for the three months ended June 30, 2007, as compared to a net income of $6.2 million, or $0.13 per share, for the same three-month period of the prior fiscal year. The following table compares the financial results from non-utility activities for the three months ended June 30, 2007 and 2006.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Composition of Non-Utility Net Income (Loss) and Other Statistics



	Three Months Ended
	June 30,
	2007			2006			Variance

Non-Utility Net Income (Loss) (in thousands)
Retail energy-marketing	$	16,022		$	6,124		$	9,898
Commercial HVAC		37			205			(168	)

Total major non-utility		16,059			6,329			9,730
Other activities		(1,107	)		(88	)		(1,019	)

Total non-utility	$	14,952		$	6,241		$	8,711


Retail Energy-Marketing Statistics
Natural gas
Therm sales (thousands of therms)		130,988			114,750			16,238
Number of customers (end of period)		143,100			144,900			(1,800	)


Electricity
Electricity sales (thousands of kWhs)		985,558			471,255			514,303
Number of accounts (end of period)		62,400			49,100			13,300

Retail Energy-Marketing. WGEServices reported net income of $16.0 million, or $0.32 per share, for the three months ended June 30, 2007, an increase of $9.9 million or $0.19 per share, over net income of $6.1 million or $0.13 per share, reported for the same three-month period of the prior fiscal year. Results in the current quarter improved due to higher gross margins (revenues less costs of energy) from the sale of both electricity and natural gas, partially offset by higher selling, general and administrative expenses that resulted from certain adjustments that occurred in the prior period that did not recur in the current period. Excluding these prior period adjustments, selling, general and administrative expenses were relatively unchanged

Gross margins from electric sales increased significantly in the third quarter of fiscal year 2007 compared to the same quarter of fiscal year 2006, reflecting a substantial rise in customers, electric sales volumes and the gross margin per kilowatt hour sold. At the end of the third quarter of fiscal year 2007, the number of electric customers had increase by 27.1 percent when compared to the end of the same quarter of the prior fiscal year. This customer growth was principally the result of new competitive opportunities that emerged during the second half of fiscal year 2006 as a result of a sharp increase in competing rates offered by electric utilities in Maryland and Delaware. Also favorably affecting the gross margins from electric sales were unrealized mark-to-market gains associated with derivatives that enhanced current period earnings by $5.1 million (pre-tax).

Gross margins from natural gas sales in the current quarter increased over the same quarter of the prior period reflecting an increase in natural gas sales volumes and the gross margin per therm sold. Natural gas sales volumes increased 14.2 percent due to colder weather experienced in the third quarter of fiscal year 2007 over the same quarter of the prior fiscal year. Partially offsetting the increase in gross margin per therm sold were lower unrealized mark-to-market gains from natural gas related derivatives that reduced earnings by $349,000.

Interest Expense

The following table depicts the components of interest expense for the quarters ended June 30, 2007 and 2006.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Composition of Interest Expense



	Three Months Ended
	June 30,
(In thousands)	2007		2006		Variance

Long-term debt	$	9,997	$	10,059	$	(62	)
Short-term debt		586		1,212		(626	)
Other (includes AFUDC) ^(a)		1,063		356		707

Total	$	11,646	$	11,627	$	19


^(a)		Represents the debt component of Allowance for Funds Used During Construction.

WGL Holdings’ interest expense of $11.6 million for the third quarter of fiscal year 2007 was relatively unchanged from the same quarter last year. Lower interest costs on short-term debt reflect a lower average balance of short-term debt outstanding. This decrease in short-term interest costs was more than offset by higher interest costs associated with customer deposits and other items.

RESULTS OF OPERATIONS — Nine Months Ended June 30, 2007 vs. June 30, 2006

Summary Results

For the first nine months of fiscal year 2007, we reported net income of $121.4 million, or $2.46 per share, an increase of $22.0 million, or $0.43 per share, over net income of $99.4 million, or $2.03 per share, reported for the corresponding period of the prior fiscal year.

We reported income from continuing operations of $121.4 million, or $2.46 per share, for the first nine months of fiscal year 2007, an increase of $19.5 million, or $0.38 per share, over income from continuing operations of $101.9 million, or $2.08 per share, for the corresponding period of the prior fiscal year. Income from continuing operations for the nine months ended June 30, 2006 excluded an after-tax loss of $2.5 million, or $0.05 per share, from discontinued operations.

The increase in income from continuing operations for the first nine months of fiscal year 2007 over the same period in fiscal year 2006 reflects $0.25 per share of increased earnings from our retail energy-marketing segment, coupled with $0.16 per share of increased earnings from our regulated utility segment.

Regulated Utility Operating Results

The following table summarizes the regulated utility segment’s operating results for the nine months ended June 30, 2007 and 2006.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Regulated Utility Operating Results



	Nine Months Ended
	June 30,
(In thousands)	2007			2006			Variance

Operating revenues	$	1,377,196		$	1,503,562		$	(126,366	)

Operating expenses:
Cost of gas		836,373			985,325			(148,952	)
Operation and maintenance		184,825			179,405			5,420
Depreciation and amortization		66,487			69,267			(2,780	)
General taxes and other assessments:
Revenue taxes		49,266			46,721			2,545
Other		31,943			31,862			81

Total operating expenses		1,168,894			1,312,580			(143,686	)

Operating income		208,302			190,982			17,320
Interest expense		34,204			33,112			1,092
Other (income) expenses—net, including preferred stock dividends		(1,230	)		(499	)		(731	)
Income tax expense		68,689			60,770			7,919

Net Income	$	106,639		$	97,599		$	9,040

Our regulated utility segment reported net income of $106.6 million, or $2.16 per share, for the first nine months ended June 30, 2007, an increase of $9.0 million, or $0.16 per share, over the net income of $97.6 million, or $2.00 per share, reported for the first nine months of fiscal year 2006. The year-over-year increase in net income primarily reflects: (i) increased deliveries of natural gas to firm customers; (ii) the favorable comparison in this year’s earnings of a charge recorded in the prior fiscal year related to a proposed disallowance of certain natural gas costs; (iii) lower depreciation and amortization expense associated with a regulatory order in Virginia; (iv) a favorable adjustment related to a true-up of lost-and-unaccounted-for gas for the recently completed winter season and (v) new rates that went into effect in Virginia on February 13, 2007, subject to refund. Partially offsetting the year-over-year increase in net income were reduced revenues from recoverable carrying costs on lower average storage gas inventory balances.

Natural gas deliveries to firm customers totaling 1.2 billion therms during the nine months ended June 30, 2007, increased 84.8 million therms, or 7.7 percent, over the same period last year. The increase in therm deliveries was driven by 7.0 percent colder weather when compared to the same period last year as well as by the addition of 14,718 active customer meters since the end of the same period of the prior fiscal year.

Including the effects of our weather protection strategies during the nine months ended June 30, 2007, net income was enhanced by an estimated $3 million (after-tax), or $0.06 per share, from the colder-than-normal weather. For the comparable nine-month period in fiscal year 2006, net income was enhanced in relation to normal weather by an estimated $2.5 million (after-tax), or $0.05 per share, driven primarily from colder-than-normal weather experienced during the first quarter of fiscal year 2006.

Also contributing to the increase in earnings were: (i) the favorable comparison in the current year’s earnings of a $4.6 million charge recorded in the second quarter of fiscal year 2006 related to a proposed regulatory order to disallow certain natural gas costs incurred by Washington Gas and billed to Maryland customers; (ii) new rates that went into effect in Virginia on February 13, 2007, subject to refund, associated with the rate case proceeding and (iii) a favorable adjustment related to lost-and-unaccounted for gas from the recently completed winter season. These increases were partially offset by 4.3 million (pre-tax) of decreased earnings from recoverable carrying costs on storage gas inventories.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Operation and maintenance expenses increased $5.4 million (pre-tax) during the nine months ended June 30, 2007 when compared to the corresponding period of the prior year. Operation and maintenance expenses for the prior period were reduced by an $8.3 million (pre-tax), benefit related to our weather-related instruments due to warmer-than-normal weather. Excluding these prior period benefits, operation and maintenance expenses decreased due to $8.7 million of lower expenses for uncollectible accounts, partially offset by $4.7 million (pre-tax) of higher pension and post-retirement benefit costs primarily due to the effect of using updated mortality assumptions commencing in fiscal year 2007.

Depreciation and amortization expense for the regulated utility segment decreased $2.8 million (pre-tax) during the nine months ended June 30, 2007 when compared to the same period of the prior fiscal year. The lower expense was attributable to a reduction in Washington Gas’s depreciation rates on fixed assets related to the Virginia jurisdiction, partially offset by the effect of increased investment in depreciable property, plant and equipment. The reduction in Washington Gas’s depreciation rates was approved by the staff of the SCC of VA (VA Staff) during the first quarter of fiscal year 2007. In accordance with Virginia regulatory policy, we implemented the new depreciation rates retroactive to January 1, 2006, which coincides with the date of the approved depreciation study. Accordingly, our depreciation and amortization expense for the current nine-month period included a benefit totaling $7.9 million (pre-tax), of which $3.9 million (pre-tax) was applicable to the period from January 1, 2006 through September 30, 2006 and $4.0 million (pre-tax) was related to the current nine-month period. Of this $4.0 million current period benefit, approximately $2.0 million was recorded prior to the implementation of new rates in Virginia. When new rates were put into effect in Virginia, both annual revenues and annual depreciation expense were reduced by equivalent amounts; therefore, subsequent to February 13, 2007, there will be no further impact on annual operating income for this reduction. For a further discussion of our depreciation study, refer to the section entitled “Rates and Regulatory Matters—Depreciation Study” included under Management’s Discussion for Washington Gas.

Non-Utility Operating Results

Our continuing non-utility operations reported net income of $14.8 million, or $0.30 per share, for the nine months ended June 30, 2007, over net income of $4.3 million, or $0.08 per share, for the same nine-month period of the prior fiscal year. The following table compares the financial results from non-utility activities for the nine months ended June 30, 2007 and 2006.


Composition of Non-Utility Net Income (Loss) and Other Statistics

	Nine Months Ended
	June 30,
	2007			2006			Variance
Non-Utility Net Income (Loss) (in thousands)
Retail energy-marketing	$	17,109		$	4,951		$	12,158
Commercial HVAC		175			324			(149	)

Total major non-utility		17,284			5,275			12,009
Other activities		(2,479	)		(952	)		(1,527	)

Total non-utility	$	14,805		$	4,323		$	10,482


Retail Energy-Marketing Statistics
Natural gas
Therm sales (thousands of therms)		651,635			615,538			36,097
Number of customers (end of period)		143,100			144,900			(1,800	)


Electricity
Electricity sales (thousands of kWhs)		2,892,539			1,390,160			1,502,379
Number of accounts (end of period)		62,400			49,100			13,300

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Retail Energy-Marketing. WGEServices reported net income of $17.1 million, or $0.35 per share, for the nine months ended June 30, 2007, an increase in earnings of $12.1 million, or $0.25 per share, over net income of $5.0 million, or $0.10 per share, reported for the same nine-month period in fiscal year 2006. The year-over-year improvement in earnings for this business primarily reflects higher gross margins from the sale of electricity, partially offset by lower gross margins from the sale of natural gas. Further tempering the improved earnings were higher selling, general and administrative expenses due to increased costs associated with growing our electric customer base and increased labor and benefits expenses. Additionally, results from the prior fiscal year benefited from the reversal of expenses of $3.1 million (pre-tax) related to certain fees assessed by the PSC of DC that were accrued in prior fiscal years.

Gross margins from electric sales increased significantly in the current nine-month period, reflecting a substantial rise in both electric sales volumes and the gross margin per kilowatt hour sold resulting from new competitive opportunities that emerged in the second half of fiscal year 2006. Also favorably affecting the gross margins from electric sales were unrealized mark-to-market gains in the current nine-month period resulting from derivatives that enhanced current period earnings by $7.6 million (pre-tax).

Partially offsetting this increase in earnings were lower gross margins from natural gas sales stemming from higher gas costs in relation to retail sales prices, slightly offset by a 5.9 percent increase in natural gas sales volumes. The decrease in gross margins was partially offset by lower unrealized mark-to-market losses from natural gas derivatives that enhanced earnings by $1.7 million (pre-tax), over the prior period.

Interest Expense

The following table depicts the components of interest expense for the nine months ended June 30, 2007 and 2006.


Composition of Interest Expense

	Nine Months Ended
	June 30,
(In thousands)	2007		2006		Variance

Long-term debt	$	30,047	$	30,586	$	(539	)
Short-term debt		5,206		4,680		526
Other (includes AFUDC) ^(a)		2,226		1,046		1,180

Total	$	37,479	$	36,312	$	1,167


^(a)		Represents the debt component of Allowance for Funds Used During Construction.

WGL Holdings’ interest expense of $37.5 million for the first nine months of fiscal year 2007 increased $1.2 million over the same period last year. This increase reflects higher interest costs associated with short-term debt due to an increase in the weighted average cost of these borrowings, coupled with higher interest costs associated with customer deposits and other items. These increases were partially offset by lower interest costs on long-term debt resulting from a lower weighted average cost of these borrowings and a lower average balance of long-term debt outstanding.

LIQUIDITY AND CAPITAL RESOURCES

General Factors Affecting Liquidity

It is important for us to have access to short-term debt markets to maintain satisfactory liquidity to operate our businesses on a near-term basis. Acquisition of natural gas, electricity, pipeline capacity and the need to finance accounts receivable and storage gas inventory are our most significant short-term financing requirements. The need for long-term capital is driven primarily by capital expenditures and maturities of long-term debt.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Our ability to obtain such financing depends on our credit ratings which are greatly affected by our financial performance. Also potentially affecting access to short-term debt capital is the liquidity of financial markets, as well as the nature of any restrictions that might be placed upon us, such as ratings triggers or a requirement to provide creditors with additional credit support in the event of a determination of insufficient creditworthiness. The ability to procure sufficient levels of long-term capital at reasonable costs is determined by the level of our capital expenditure requirements, our financial performance and the effect of these factors on our credit ratings and investment alternatives available to investors.

We have a goal to maintain our common equity ratio in the mid-50 percent range of total consolidated capital. The level of this ratio varies during the fiscal year due to the seasonal nature of our business. This seasonality is also evident in the variability of our short-term debt balances which are typically higher in the fall and winter months, and substantially lower in the spring when a significant portion of our current assets is converted into cash at the end of the winter heating season. Accomplishing this capital structure objective and maintaining sufficient cash flow are necessary to maintain attractive credit ratings for WGL Holdings and Washington Gas, and to allow access to capital at reasonable costs. As of June 30, 2007, total consolidated capitalization, including current maturities of long-term debt and excluding notes payable, comprised 60.3 percent common equity, 1.7 percent preferred stock and 38.0 percent long-term debt. Our cash flow requirements and our ability to provide satisfactory resources to satisfy those requirements are primarily influenced by the activities of Washington Gas and, to a lesser extent, our non-utility operations.

Our plans provide for sufficient liquidity to satisfy our financial obligations. At June 30, 2007, we did not have any restrictions on our cash balances that would affect the payment of common or preferred stock dividends by WGL Holdings or Washington Gas.

Short-Term Cash Requirements and Related Financing

Washington Gas’s business is weather sensitive and seasonal, causing short-term cash requirements to vary significantly during the year. Over 75 percent of the total therms delivered in Washington Gas’s service area (excluding deliveries to two electric generation facilities) occur during the first and second fiscal quarters. Accordingly, Washington Gas typically generates more net income in the first six months of the fiscal year than it does for the entire fiscal year. During the first six months of our fiscal year, Washington Gas generates large sales volumes and its cash requirements peak when accounts receivable, unbilled revenues and storage gas inventories are at their highest levels. During the last six months of our fiscal year, after the winter heating season, Washington Gas will typically experience a seasonal net loss due to reduced demand for natural gas. During this period, many of Washington Gas’s assets are converted into cash which Washington Gas generally uses to reduce and sometimes eliminate short-term debt and to acquire storage gas for the next heating season.

Washington Gas and WGEServices have seasonal short-term cash requirements resulting from their need to purchase storage gas inventory in advance of the winter heating periods in which the storage gas is sold. Washington Gas generally collects the cost of its gas under gas cost recovery mechanisms. WGEServices collects revenues that are designed to reimburse for its cost of gas used to supply its retail customer contracts. Variations in the timing of cash receipts from customers under these collection methods can significantly affect short-term cash requirements. In addition, both

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Washington Gas and WGEServices pay their respective commodity suppliers before collecting the accounts receivable balances resulting from these sales. WGEServices derives its funding to finance these activities from short-term debt issued by WGL Holdings. Additionally, WGL Holdings may be required to post collateral on behalf of WGEServices for certain purchases of natural gas and electricity that are above the amount guaranteed by WGL Holdings (refer to the section entitled “Financial Guarantees” below).

WGL Holdings and Washington Gas utilize short-term debt in the form of commercial paper or unsecured short-term bank loans to fund seasonal cash requirements. Our policy is to maintain back-up bank credit facilities in an amount equal to or greater than our expected maximum commercial paper position. At June 30, 2007, WGL Holdings and Washington Gas each had revolving credit agreements with a group of commercial banks that permitted, with the banks’ approval, credit up to $325 million to each company. As of June 30, 2007, there were no outstanding borrowings under either the WGL Holdings or Washington Gas credit facilities. On August 3, 2007, WGL Holdings and Washington Gas each amended and restated their existing revolving credit facilities to permit the companies, with the banks’ approval, to borrow up to $450 million and $400 million, respectively. These amended and restated credit facilities expire on August 3, 2012, with unlimited extension options. (refer to Note 5 of the Notes to Consolidated Financial Statements in this Form 10-Q).

At June 30, 2007 and September 30, 2006, WGL Holdings and its subsidiaries had outstanding notes payable in the form of commercial paper of $33.6 million and $177.4 million, respectively. Substantially all of the outstanding notes payable balance at June 30, 2007 was commercial paper issued by WGL Holdings. Of the outstanding notes payable balance at September 30, 2006, $104.6 million and $72.8 million was commercial paper issued by WGL Holdings and Washington Gas, respectively.

To manage credit risk, both Washington Gas and WGEServices may require deposits from certain customers and suppliers. At June 30, 2007 and September 30, 2006, “Customer deposits and advance payments” totaled $41.4 million and $49.6 million, respectively. For both periods, substantially all of these deposits related to customer deposits for Washington Gas. These deposits are reported as current liabilities, and may be refunded to the depositor-customer at various times throughout the year based on the customer’s payment habits. At the same time, other customers make new deposits that enable the balance of customer deposits to remain relatively steady. Refer to the section entitled “ Credit Risk” for a further discussion of our management of credit risk.

Long-Term Cash Requirements and Related Financing

Our long-term cash requirements primarily depend upon the level of capital expenditures, long-term debt maturities and decisions to refinance long-term debt. Historically, we have devoted the majority of our capital expenditures to adding new Washington Gas customers in our existing service area. However, as a result of operating issues in Prince George’s County, Maryland that are described later in Management’s Discussion, a higher proportion of our total capital expenditures incurred throughout fiscal year 2006 and in the nine months ended June 30, 2007 was related to asset replacements rather than to new business; such expenditures are projected to be substantially completed by the end of fiscal year 2007 (refer to the section entitled “Capital Expenditures” below).

At June 30, 2007, Washington Gas had the capacity, under a shelf registration that was declared effective by the Securities and Exchange Commission on June 8, 2006, to issue up to $300.0 million of Medium-Term Notes (MTNs).

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Security Ratings

The table below reflects the current credit ratings for the outstanding debt instruments of WGL Holdings and Washington Gas. Changes in credit ratings may affect WGL Holdings’ and Washington Gas’s cost of short-term and long-term debt and their access to the capital markets. Credit ratings can change at any time.


Credit Ratings for Outstanding Debt Instruments

	WGL Holdings		Washington Gas
	Unsecured		Unsecured
	Medium-Term Notes	Commercial	Medium-Term	Commercial
Rating Service	(Indicative) ^(a)	Paper	Notes	Paper

Fitch Ratings	A+	F1	AA-	F1+
Moody’s Investors Service	Not Rated	Not Prime	A2	P-1
Standard & Poor’s Ratings Services ^(b)	AA-	A-1	AA-	A-1


^(a)		Indicates the ratings that may be applicable if WGL Holdings were to issue unsecured MTNs.

^(b)		On June 27, 2007, Standard & Poor’s Ratings Services revised its outlook on the long-term debt ratings of WGL Holdings and Washington Gas from negative to stable.

Cash Flows Provided by Operating Activities

The primary drivers for our operating cash flows are cash payments received from natural gas and electricity customers, offset by our payments for natural gas and electricity costs, operation and maintenance expenses, taxes and interest costs. Although long-term interest rates remain relatively low and we have been able to take advantage of refinancing certain of our long-term debt at lower interest rates, interest expense for the nine months ended June 30, 2007 and 2006 reflects the effect of a rise in short-term interest rates.

Net cash provided by operating activities totaled $352.5 million for the nine months ended June 30, 2007. Net cash provided by operating activities reflects net income applicable to common stock, as adjusted for non-cash earnings and charges, as well as changes in working capital. Certain changes in working capital from September 30, 2006 to June 30, 2007 are described below:

	•		Accounts receivable and unbilled revenues—net increased $45.4 million from September 30, 2006, primarily due to increased sales volumes associated with our winter heating season.

	•		Storage gas inventory levels decreased $106.4 million from September 30, 2006 due to seasonal withdrawals.

	•		Accounts payable and other accrued liabilities increased $40.8 million, largely attributable to seasonal natural gas purchases.

Cash Flows Used in Financing Activities

Cash flows used in financing activities totaled $182.3 million for the nine months ended June 30, 2007. Driving this use of cash was a decrease in our notes payable balance of $143.8 million, and common stock dividend payments totaling $49.9 million. Partially offsetting these uses was $11.5 million in cash proceeds from the issuance of common stock pursuant to our stock-based compensation plan.

Cash Flows Used in Investing Activities

During the nine months ended June 30, 2007, cash flows used in investing activities totaled $107.3 million, $105.3 million of which were for capital expenditures made on behalf of Washington Gas.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Capital Expenditures

We have revised our five-year capital expenditures budget from $786.7 million as reported in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006, to a revised total of $748.4 million to be expended during fiscal years 2007-2011. The revised projection primarily reflects a decrease in projected expenditures related to a rehabilitation project in Prince George’s County, Maryland, as well as a projected reduction due to savings that are expected to result from the BPO plan. The following table depicts our revised capital expenditures budget for fiscal years 2007 through 2011.


Projected Capital Expenditures

	Fiscal Year Ending September 30,
(in millions)	2007		2008		2009		2010		2011		Total

New business	$	51.0	$	54.9	$	53.9	$	64.8	$	58.6	$	283.2
Replacements
Rehabilitation project		31.1		1.7		—		—		—		32.8
Other		25.8		27.8		28.3		26.2		25.3		133.4
LNG storage facility		1.1		1.5		44.5		60.0		20.0		127.1
Other		47.6		44.4		39.5		21.3		19.1		171.9

Total-accrual basis ^(a)	$	156.6	$	130.3	$	166.2	$	172.3	$	123.0	$	748.4


^(a)		Excludes Allowance for Funds Used During Construction. Includes capital expenditures accrued and capital expenditure adjustments recorded in the fiscal year.

The 2007 to 2011 projected periods include $283.2 million for continued growth to serve new customers and $166.2 million primarily related to the replacement and betterment of existing capacity. In connection with a rehabilitation project in Prince George’s County, Maryland, a total of $56.0 million was expended in fiscal years 2005 and 2006, and up to $32.8 million is projected to be expended between fiscal years 2007 through 2008, representing a total of $88.8 million. This represents a decrease in total estimated expenditures for this rehabilitation project of $55.2 million, or 38.3 percent, from the original estimate of $144 million. As explained in the section entitled ’’Operating Issues in Prince George’s County, Maryland,” the amount that will be expended on this rehabilitation project has been reduced to reflect the modification of the project’s scope.

Projected expenditures also reflect $171.9 million of other expenditures, which include general plant. These expenditures include $8.1 million of net savings related to the BPO agreement. This net savings is comprised of $22.3 million of savings for the projected five-year period, partially offset by an initial payment of $14.2 million for software and licenses in fiscal year 2007. Over the ten-year term of this agreement, we expect to save approximately $51 million in capital expenditures versus the level of costs without the BPO agreement. Additionally, the projected period contains capital expenditures to construct a necessary, new source of peak day capacity within the boundaries of the natural gas distribution system to support customer growth and pressure requirements on the entire natural gas distribution system. Specifically, these estimated expenditures are expected to be used to construct a one billion cubic foot LNG storage facility on the land used for former storage facilities by Washington Gas in Chillum, Maryland. This new storage facility is currently estimated to cost a total of $148.6 million, of which $127.1 million is included in the Projected Capital Expenditures table as costs that are expected to be incurred between fiscal years 2007 through 2011. The constructed facility is currently expected to be completed and in service by the 2011-2012 winter heating season, subject to certain zoning and other legal challenges. Until such time when these legal challenges are resolved and the LNG plant is built, Washington Gas has planned for alternative sources of supply to meet its customers’ peak day requirements. These plans include capital expenditures related to infrastructure improvements which are expected to be completed by fiscal year 2011, and are reflected in the above table for the projected periods shown.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

CONTRACTUAL OBLIGATIONS, OFF-BALANCE SHEET ARRANGEMENTS AND OTHER COMMERCIAL COMMITMENTS

Contractual Obligations

We have revised our “Estimated Contractual Obligations and Commercial Commitments” table that was included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006. The revision to this table primarily reflects $363.1 million related to payments that are due to be paid to the service-provider over the 10-year life of the contract related to the BPO plan, as well as other adjustments as necessary due to revised estimates and other new contracts. The estimated obligations as of June 30, 2007 for the remaining three months of fiscal year 2007 and for future fiscal years are shown below.


Estimated Contractual Obligations and Commercial Commitments

	Year Ended September 30,
			4 ^th Q
(in millions)	Total		2007		2008		2009		2010		2011		Thereafter


Pipeline and storage contracts ^(a)	$	1,416.9	$	40.7	$	164.7	$	151.1	$	137.9	$	129.1	$	793.4
Medium-term notes ^(b)		634.1		30.0		20.1		75.0		32.5		30.0		446.5
Other long-term debt ^(b)		2.4		—		1.1		1.3		—		—		—
Interest expense ^(c)		394.5		—		36.9		33.7		30.0		27.1		266.8
Gas purchase commitments—Washington Gas ^(d)		426.0		21.0		160.6		98.1		96.4		49.9		—
Gas purchase commitments—WGEServices ^(e)		596.6		97.3		350.4		108.6		32.5		7.8		—
Electric Purchase Commitments ^(f)		361.9		84.5		192.5		55.4		24.7		4.8		—
Operating leases		39.6		1.3		4.5		4.2		3.0		3.0		23.6
Business Process Outsourcing ^(g)		363.1		24.7		43.7		40.4		38.7		32.9		182.7
Other long-term commitments ^(h)		19.7		6.2		6.0		3.5		1.5		1.4		1.1

Total	$	4,254.8	$	305.7	$	980.5	$	571.3	$	397.2	$	286.0	$	1,714.1


^(a)		Represents minimum payments under natural gas transportation, storage and peaking contracts which have expiration dates through fiscal year 2028. These contracts were entered into based on current estimates of growth of the Washington Gas system, together with current expectations of the timing and extent of unbundling initiatives in the Washington Gas service territory. Additionally, includes minimum payments for WGEServices pipeline contracts.

^(b)		Represents scheduled repayment of principal including the assumed exercise of a put option by the debt holders of $30.0 million in 2007 and $8.5 million in 2010.

^(c)		Represents the scheduled interest payments associated with MTNs and other long-term debt.

^(d)		Includes short-term commitments to purchase fixed volumes of natural gas under Washington Gas’s regulatory-approved hedging program, as well as long-term gas purchase commitments that contain fixed volume purchase requirements. Commitment estimates are based on both forward market prices and option premiums for prices or fixed volume purchases under these purchase commitments.

^(e)		Represents commitments based on a combination of market prices at June 30, 2007 and fixed price contract commitments for natural gas delivered to various city gate stations, including the cost of transportation to that point, which is bundled in the purchase price.

^(f)		Represents electric purchase commitments which are based on existing fixed price and fixed volume contracts.

^(g)		Represents fixed costs to the service provider related to the 10-year contract for business process outsourcing. These payments do not reflect potential inflationary adjustments included in the contract. Including these inflationary adjustments, required payments to the service provider could total $426.5 million.

^(h)		Includes certain Information Technology service contracts. Also includes committed payments related to certain environmental response costs.

Reference is made to the “Contractual Obligations, Off-Balance Sheet Arrangements and Other Commercial Commitments” section of Management’s Discussion in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006, for a detailed discussion of our contractual obligations. Note 6 of the Notes to Consolidated Financial Statements in our 2006 Annual Report on Form 10-K includes a discussion of long-term debt, including debt maturities. Reference is made to Note 15 of the Notes to Consolidated Financial Statements in our 2006 Annual Report on Form 10-K that reflects information about the various contracts of Washington Gas and WGEServices. Additionally, refer to Note 12 of the Notes to Consolidated Financial Statements in this Form 10-Q.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Financial Guarantees

WGL Holdings has guaranteed payments primarily for certain purchases of natural gas and electricity on behalf of the retail energy-marketing segment. At June 30, 2007, these guarantees totaled $269.6 million. Termination of these guarantees is coincident with the satisfaction of all obligations of WGEServices covered by the guarantees. WGL Holdings also issued guarantees totaling $3.0 million at June 30, 2007 that were made on behalf of certain of our non-utility subsidiaries associated with their banking transactions. For all of its financial guarantees, WGL Holdings may cancel any or all future obligations imposed by the guarantees upon written notice to the counterparty, but WGL Holdings would continue to be responsible for the obligations that had been created under the guarantees prior to the effective date of the cancellation.

Operating Issues in Prince George’s County, Maryland

Description of Operating Issues and Related Causes. On April 1, 2005, Washington Gas announced that it would address a significant increase in the number of natural gas leaks on its distribution system in a portion of Prince George’s County, Maryland. Washington Gas retained a consultant to determine the reason for the increase in leaks in the affected area of Prince George’s County. Based on the work conducted by the consultant, it is our opinion that the reason for the higher incidence of leaks in the affected area of Prince George’s County is the composition of the gas resulting from the reactivation of the Cove Point liquefied natural gas (LNG) terminal owned by Dominion Resources, Inc. Additionally, a Hearing Examiner of the Maryland Public Service Commission (PSC of MD), in a proposed order issued April 2, 2007, concluded that available evidence shows that the gas flowing from the Cove Point terminal is a contributing factor to the increased number of leaks experienced on Washington Gas’s distribution system in the affected area (refer to the section entitled “ Rates and Regulatory Matters ” under Management’s Discussion for Washington Gas for a further discussion of this proposed order).

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

effects of HHC injections. As a result of this decline in leak rates, we have reduced the overall scope of the rehabilitation project. After considering this reduction in scope, along with lower costs incurred than originally estimated, we have reduced the total estimated cost of the rehabilitation project from the original $144 million to a new cost estimate of $88.8 million. We estimate that this project will be substantially complete by September 30, 2007.

We consider the cost of the rehabilitation project as necessary to provide safe and reliable utility service. Therefore, we have asked for recovery of these costs in a rate case filed with the PSC of MD on April 20, 2007. A decision in this case is expected in November 2007 (refer to the section entitled “ Rates and Regulatory Matters ” under Management’s Discussion for Washington Gas).

Cove Point Expansion Project and the related HHC treatment. As further discussed below, on June 16, 2006, the FERC issued an order approving a request by Dominion to expand the capacity and output of its Cove Point LNG terminal by the end of 2008. This expansion is expected to result in a substantial increase of Cove Point gas introduced into the Washington Gas distribution system in areas that have distribution and service lines constructed of similar materials and in a similar manner to those in the affected area of Prince George’s County. Additionally, on December 22, 2006, Dominion placed certain incremental facilities at its Cove Point LNG terminal into service, resulting in the opportunity for increased year-round shipments of LNG from the Cove Point terminal. The Cove Point expansion project and the operation of these incremental facilities could increase the risk that other areas of the Washington Gas distribution system may be exposed to Cove Point gas that may be either minimally blended with domestic natural gas pipeline supply or completely unblended with any other gas, thereby potentially causing an increase in leaks on couplings in additional parts of the Washington Gas distribution system. To address this potential risk, Washington Gas has begun efforts to construct two additional HHC injection facilities at gate stations. Washington Gas anticipates that both of these gate station injection facilities will be operational prior to the Cove Point LNG expansion in 2008. The estimated cost of each of the additional HHC injection facilities will range from $3 million to $4 million. Washington Gas has asked for recovery of a portion of these costs in its recently filed rate cases in all jurisdictions and believes that the cost of these facilities should be includible in the rate base upon which Washington Gas is allowed to earn an allowed rate of return.

The estimated cost of these facilities does not include the cost of the HHCs which are injected into the gas stream at the gate stations. At June 30, 2007, Washington Gas had incurred $4.7 million of HHC commodity purchase costs for HHCs injected into our system since February 2006. Of this amount, $896,000 is being collected from customers through Washington Gas’s Purchased Gas Cost (PGC) provision, $934,000 was deferred on the balance sheet as a regulatory asset to be recovered from customers in the future, and $2.9 million has been charged to expense. This treatment is consistent with regulatory accounting requirements of various jurisdictions in Virginia, Maryland and the District of Columbia. We have requested cost recovery for both past and future HHC costs in all three jurisdictions as we continue our efforts to recover all HHC costs (refer to the section below entitled “Rates and Regulatory Matters” under Management’s Discussion for Washington Gas).

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Washington Gas continues to gather and evaluate field and laboratory evidence to determine the extent to which the injection of HHCs into the gas distribution system will be effective in preventing additional leaks or retarding the rate at which additional leaks may occur in the gas distribution system if additional volumes from the Cove Point terminal are introduced. Our construction of the two additional HHC injection facilities may not be timely, permitted or feasible. If the facilities are constructed but the injection of additional HHCs into the gas distribution system is not effective or only partially effective in preventing additional leaks on couplings and we are unable to determine a satisfactory alternative solution on a timely basis, then additional operating expenses and capital expenditures may be necessary to contend with the receipt of increased volumes of gas from the Cove Point LNG terminal into Washington Gas’s distribution system.

Notwithstanding Washington Gas’s current and potential future actions before its local regulatory commissions with respect to the recovery of costs related to the construction of the injection facilities and the purchase of HHCs, Washington Gas is pursuing remedies to assure that its customers are only paying their appropriate share of the costs of the remediation to maintain the safety of the Washington Gas distribution system.

Request for FERC Action. In November 2005, Washington Gas requested the FERC to invoke its authority to require Dominion to demonstrate that the increased volumes of the Cove Point gas would flow safely and reliably through the Washington Gas distribution system. Washington Gas specifically requested that the proposed expansion of the Cove Point LNG terminal be denied until Dominion has shown that the Cove Point gas: (i) is of such quality that it is fully interchangeable with the natural gas historically received by Washington Gas and (ii) will not cause harm to its customers or to the infrastructure of Washington Gas’s distribution system.

On June 16, 2006, the FERC issued an order authorizing Dominion’s request to expand the capacity and output of its Cove Point LNG terminal and, thereby, denying Washington Gas’s request to require Dominion to demonstrate the safety and reliability of the Cove Point gas flowing through the Washington Gas distribution system. On July 17, 2006, Washington Gas filed a Request for Rehearing with the FERC to seek modification of the FERC’s June 16, 2006 order that authorized the Cove Point expansion. Washington Gas pursued the rehearing because specific scientific evidence, points of law and potentially serious safety issues were not adequately addressed by the FERC in its June 16, 2006 order on the Cove Point expansion. Washington Gas was one of several entities requesting such a rehearing. Filings by the PSC of MD and other organizations, such as KeySpan Corporation (KeySpan), state that the FERC order failed, in some way, to protect a wide range of consumers’ interests. On January 4, 2007, the FERC rejected Washington Gas’s Request for Rehearing. The FERC also denied the PSC of MD’s and KeySpan’s requests for rehearing. KeySpan and the Maryland Office of People’s Counsel (MD OPC) each subsequently filed a Request for Rehearing of the January 4, 2007 FERC order. On January 26, 2007, Washington Gas filed a notice of appeal with the United States Court of Appeals for the District of Columbia Circuit (the Court). Washington Gas requested the Court to reverse the June 16, 2006 FERC order that authorized the Cove Point expansion, as well as the January 4, 2007 FERC order that denied Washington Gas’s rehearing request. The Court placed Washington Gas’s notice of appeal on hold pending the FERC’s decision on the KeySpan and the MD OPC Request for Rehearing. On June 13, the FERC rejected these Requests for Rehearing allowing the notice of appeal filed with the Court to proceed.

Washington Gas is committed to the use of natural gas from the Cove Point terminal to satisfy the needs of its customers. Washington Gas is willing to work with Dominion Cove Point LNG, the shippers who bring LNG into the Cove Point terminal and the interstate pipelines that deliver gas to Washington Gas in order to achieve and implement an appropriate solution to the issue of gas interchangeability affecting its system.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

CREDIT RISK

Regulated Utility Segment

Certain suppliers that sell natural gas to Washington Gas have either relatively low credit ratings or are not rated by major credit rating agencies. In the event of a supplier’s failure to deliver contracted volumes of gas, Washington Gas may need to replace those volumes at prevailing market prices which may be higher than the original transaction prices, and pass these costs through to its sales customers under the purchased gas cost adjustment mechanisms. Additionally, Washington Gas enters into contracts with third parties to buy and sell natural gas for the purpose of maximizing the value of its long-term capacity and storage assets, as well as for hedging natural gas costs and interest costs. In the event of a default by these third parties, Washington Gas may be at risk for financial loss to the extent these costs are not passed through to its customers. To manage these various credit risks, Washington Gas has a credit policy in place that is designed to mitigate these credit risks through a requirement for credit enhancements including, but not limited to, letters of credit and parent guarantees. In accordance with this policy, Washington Gas has obtained credit enhancements from certain of its counterparties.

Washington Gas is also exposed to the risk of non-payment of utility bills by certain of its customers. To manage this customer credit risk, Washington Gas may require cash deposits from its high risk customers to cover payment of their bills. The deposits are held for varying periods of time, typically a minimum of one year and, as defined by regulatory tariffs, must be refunded if the customer makes satisfactory payments to Washington Gas during the holding period of the customer deposit. There are no restrictions on Washington Gas’s use of these customer deposits. Washington Gas pays interest to its customers on these deposits in accordance with the requirements of its regulatory commissions.

Retail Energy-Marketing Segment

Certain suppliers that sell natural gas or electricity to WGEServices have either relatively low credit ratings or are not rated by major credit rating agencies. Depending on the ability of these suppliers to deliver natural gas or electricity under existing contracts, WGEServices could be financially exposed for the difference between the price at which WGEServices has contracted to buy these commodities and their replacement cost. Additionally, WGEServices enters into contracts with third parties to hedge the costs of natural gas and electricity. Depending on the ability of the third parties to fulfill their commitments, WGEServices could be at risk for financial loss. WGEServices has a credit policy in place that is designed to mitigate these credit risks through a requirement for credit enhancements including, but not limited to, letters of credit and parent guarantees. In accordance with this policy, WGEServices has obtained credit enhancements from certain of its counterparties. If certain counterparties or their guarantors meet the policy’s creditworthiness criteria, WGEServices grants limited amounts of unsecured credit to those counterparties or their guarantors and continuously monitors these unsecured amounts.

WGEServices is also exposed to the risk of non-payment of bills by certain of its retail customers. WGEServices manages this risk by evaluating the credit quality of new customers as well as by monitoring collections from existing customers. To the extent necessary, WGEServices can obtain collateral from, or terminate service to, its customers. Due to the active management of WGEServices’ customer base, it has relatively low uncollectible expense and a change in the level of collections is not likely to have a material impact on our financial statements.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

MARKET RISK

We are exposed to various forms of market risk including commodity price risk, weather risk and interest-rate risk. The following discussion describes these risks and our management of them.

Price Risk Related to the Regulated Utility Segment

Washington Gas actively manages its gas supply portfolio to balance its sales and delivery obligations. Washington Gas includes the cost of the natural gas commodity and pipeline services in the purchased gas costs that it includes in firm customers’ rates, as permitted by its jurisdictional tariffs and subject to regulatory review.

In order to mitigate commodity price risk for its firm customers, Washington Gas has specific regulatory approval in the District of Columbia, Maryland and Virginia to hedge transactions for a limited portion of its natural gas purchases. Washington Gas also mitigates price risk by injecting natural gas into storage during the summer months when prices are generally lower and less volatile, and withdraws that gas during the winter heating season when prices are generally higher and more volatile. Pursuant to a pilot program, Washington Gas has specific regulatory approval in Maryland and Virginia to hedge the cost of natural gas purchased for storage injection.

Certain of the transactions discussed above, as well as other contracts Washington Gas has entered into for the purchase or sale of natural gas, are considered derivative instruments and are required to be recorded at fair value. Gains and losses associated with these derivative instruments are principally deferred as regulatory liabilities and assets, respectively, with a portion recorded to revenue or expense, respectively. At June 30, 2007 and September 30, 2006, such derivative instruments had unrealized net fair value losses of $8.9 million and $490,000, respectively. The June 30, 2007 unrealized net fair value loss was comprised of $15.0 million that was recorded on the balance sheet as a derivative liability and $6.1 million that was recorded as a derivative asset. The September 30, 2006 unrealized net fair value loss was comprised of $14.4 million that was recorded on the balance sheet as a derivative liability and $13.9 million that was recorded as a derivative asset. In connection with these derivative instruments, Washington Gas recorded to income a pre-tax loss of $253,000 and a pre-tax gain of $486,000 for the three and nine months ended June 30, 2007, respectively. For both the three and nine months ended June 30, 2006, Washington Gas recorded to income a pre-tax loss of $1,000. These gains and losses are recorded in accordance with regulatory treatment for recoverable or refundable costs.

Price Risk Related to the Retail Energy-Marketing Segment

Our retail energy-marketing subsidiary, WGEServices, sells natural gas and electricity to retail customers at both fixed and indexed prices. We must manage daily and seasonal demand fluctuations for these products. The volume and price risks are evaluated and measured separately for natural gas and electricity.

WGEServices is exposed to market risk to the extent it does not closely match the timing and volume of natural gas and electricity it purchases with the related fixed price or indexed sales commitments. WGEServices’ risk management policies and procedures are designed to minimize these risks.

Natural Gas. WGEServices faces risk in that over 50 percent of its annual natural gas sales volumes are subject to some variations in customer demand associated with fluctuations in weather and customer conservation. Purchases of natural gas to fulfill retail sales commitments are made

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

generally under fixed-volume contracts that are based on normal weather assumptions. If there is a significant deviation from normal weather that causes purchase commitments to differ significantly from sales levels, WGEServices may be required to purchase incremental natural gas or sell excess natural gas at prices that negatively impact gross margins. WGEServices manages this volumetric risk by using storage gas inventory and peaking services offered to marketers by the regulated utilities that provide delivery service for WGEServices’ customers. WGEServices may also manage price risk through the use of derivative instruments that include financial options contracts and wholesale supply contracts that provide for volumetric variability. WGEServices also uses derivative instruments to minimize the price volatility from retail sales contracts which provide customers flexibility on both the price and volumes of natural gas being sold. At June 30, 2007 and September 30, 2006, these derivative instruments had an unrealized net fair value loss of $2.4 million and an unrealized net fair value gain of $386,000, respectively. The June 30, 2007 unrealized net fair value loss was comprised of $2.9 million that was recorded on the balance sheet as a derivative liability and $512,000 that was recorded as a derivative asset. The September 30, 2006 unrealized net fair value gain was comprised of $3.3 million that was recorded on the balance sheet as a derivative asset and $2.9 million that was recorded as a derivative liability. In connection with these derivative instruments, WGEServices recorded pre-tax gains of $77,000 and pre-tax losses of $5.5 million for the three and nine months ended June 30, 2007, respectively, and a pre-tax gain of $661,000 and a pre-tax loss of $4.2 million for the three and nine months ended June 30, 2006, respectively.

Electricity. WGEServices procures electricity supply under contract structures in which WGEServices assumes the responsibility of matching its customer requirements with its supply purchases. WGEServices assembles the various components of supply, including electric energy, capacity, ancillary services and transmission service from multiple suppliers to match its customer requirements in accordance with its risk management policy.

To the extent WGEServices has not matched its customer requirements with its supply purchases; it could be exposed to electricity commodity price risk. WGEServices may manage this risk through the use of derivative instruments, including financial contracts. As of June 30, 2007, WGEServices’ derivative instruments related to the purchase of electric capacity had a fair value gain of $7.6 million that was recorded on the balance sheet as a derivative asset. At September 30, 2006, WGEServices had no such derivative instruments. In connection with its derivative instruments related to the purchase of electric capacity, WGEServices recorded a pre-tax gain of $6.0 million and $8.5 for the three and nine months ended June 30, 2007, respectively. WGEServices had no such derivative instruments during the three and nine months ended June 30, 2006.

WGEServices’ electric business is also exposed to fluctuations in weather. Its purchases generally are made under fixed-volume contracts that are based on certain weather assumptions. If there are significant deviations in weather from these assumptions, WGEServices may incur price and volume variances that could negatively impact its expected gross margins.

Value-at-Risk. WGEServices measures the market risk of its energy commodity portfolio by determining its value-at-risk. Value-at-risk is an estimate of the maximum loss that can be expected at some level of probability if a portfolio is held for a given time period. The value-at-risk calculation for natural gas and electric portfolios include assumptions for normal weather, new customers and renewing customers for which supply commitments have been secured. Based on a 95 percent confidence interval for a one-day holding period, WGEServices’ value-at-risk at June 30, 2007 was approximately $229,000 and $210,000 related to its natural gas and electric portfolios, respectively.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Weather Risk

We are exposed to various forms of weather risk in both our regulated utility and unregulated business segments. For Washington Gas, a large portion of its revenues is volume driven and its current rates are based upon an assumption of normal weather. Without weather protection strategies, variations from normal weather will cause our earnings to increase or decrease depending on the weather pattern. As discussed below, Washington Gas has ratemaking provisions in Maryland that are designed to moderate the volatility of its revenues and customers’ monthly bills due to variations in usage from factors such as weather and conservation. For the 2006-2007 winter heating season, Washington Gas did not have similar ratemaking provisions in the District of Columbia or Virginia. Therefore, Washington Gas relied on a weather insurance policy and a weather derivative, respectively, that were originally designed to fully neutralize the estimated negative financial effects of warmer-than-normal weather in these jurisdictions, as discussed below. During the three and nine months ended June 30, 2007, Washington Gas recorded pre-tax net amortization expense, of $255,000 and $3.6 million, respectively, related to both its weather insurance policy and weather derivative. Due to the colder-than-normal weather experienced during the 2006-2007 winter heating season, Washington Gas is not entitled to a payment under these instruments for the current fiscal year. Washington Gas recorded pre-tax accrued benefits, net of premium costs of $1.5 million and $4.7 million during the three and nine months ended June 30, 2006, respectively, related to the two weather products.

The financial results of our non-regulated energy-marketing business, WGEServices, are also affected by variations from normal weather primarily in the winter relating to its natural gas sales, and throughout the fiscal year relating to its electricity sales. WGEServices manages these weather risks with, among other things, weather hedges.

Billing Adjustment Mechanisms. Effective October 1, 2005, Washington Gas implemented a RNA billing mechanism that is designed to stabilize the level of net revenues collected from Maryland customers by eliminating the effect of deviations in customer usage caused by variations in weather from normal levels and other factors such as conservation. Periods of colder-than-normal weather generally would cause Washington Gas to reduce its revenues and establish a refund liability to customers, while the opposite would generally result during periods of warmer-than-normal weather. Due to the RNA billing mechanism, the colder-than-normal weather during the second quarter of fiscal year 2007 resulted in a decrease in revenues and the recording of a payable to Maryland customers.

On July 30, 2007, Washington Gas submitted an unopposed Stipulation to the SCC of VA related to a pending rate case application in Virginia. The Stipulation, among other things, provides for the implementation of a Weather Normalization Adjustment (WNA) mechanism which is a billing adjustment mechanism that is designed to eliminate the effect of variations in weather on utility net revenues. If the Stipulation is approved, this WNA would be effective October 1, 2007. Washington Gas also has a pending rate case application filed with the PSC of DC requesting, among other things, to implement an RNA billing mechanism. For a further discussion of these regulatory matters, refer to the section entitled “Rates and Regulatory Matters” included under Management’s Discussion for Washington Gas.

Weather Insurance. Washington Gas has a weather insurance policy designed to mitigate the negative effects of warmer-than-normal weather during the heating season in the District of Columbia. The policy was effective October 1, 2005, and has a three-year term that expires on September 30, 2008. In connection with the policy, Washington Gas recorded pre-tax net amortization expense totaling $87,000 and $1.1 million for the three and nine months ended June 30, 2007, respectively. Washington Gas recorded a pre-tax accrued benefit, net of amortization expense of the related insurance premium, totaling $380,000 and $288,000 for the three and nine months ended June 30, 2006.

WGL Holdings, Inc.
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Weather Derivatives. For both the 2005-2006 and the 2006-2007 winter heating seasons, Washington Gas utilized a HDD derivative designed to fully neutralize the estimated effects of warmer-than-normal weather in Virginia during the covered period. For the 2006-2007 winter heating season, Washington Gas purchased a HDD derivative effective during the period October 15, 2006 through April 30, 2007. During the three and nine months ended June 30, 2007, Washington Gas recorded pre-tax amortization expense totaling $168,000 and $2.5 million, respectively, in connection with this weather derivative. Washington Gas recorded pre-tax accrued benefits, net of amortization expense of the related premiums, of $1.1 million and $4.4 million during the three and nine months ended June 30, 2006, respectively, related to a weather derivative that was effective during the 2005-2006 winter heating season.

WGEServices utilizes HDD derivatives for managing weather risks related to its natural gas sales. These hedges cover a portion of WGEServices’ estimated net revenue exposure to variations in HDDs. For the nine months ended June 30, 2007, we recorded pre-tax net amortization expense of $1.0 million related to these hedges. For the quarter ended June 30, 2007, WGEServices had no amortization expense related to these hedges. For the three and nine months ended June 30, 2006, WGEServices recorded a pre-tax loss of $47,000 and $2.1 million, respectively, related to these hedges.

In June 2007, WGEServices entered into a cooling degree day (CDD) derivative to manage extreme weather risks related to its electricity sales during the summer cooling season. This CDD hedge provides benefits when the average temperature exceeds a contractually stated level during a period from July 2007 through September 2007. WGEServices did not record any amortization expense or accrue any benefits associated with this hedge during either the three or nine months ended June 30, 2007.

Interest-Rate Risk

We are exposed to interest-rate risk associated with our debt financing costs. Washington Gas utilizes derivative instruments from time to time in order to minimize its exposure to the risk of interest-rate volatility. During the three and nine months ended June 30, 2007, Washington Gas did not utilize derivative instruments associated with its debt financing costs. For a further discussion of our management of interest-rate risk, refer to Management’s Discussion within our Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

WASHINGTON GAS LIGHT COMPANY

This section of Management’s Discussion focuses on the financial position and results of operations of Washington Gas for the reported periods. In many cases, explanations for the changes in financial position and results of operations for both WGL Holdings and Washington Gas are substantially the same.

RESULTS OF OPERATIONS — Three Months Ended June 30, 2007 vs. June 30, 2006

Summary Results

Washington Gas reported a seasonal net loss applicable to common stock of $1.9 million for the three months ended June 30, 2007, an improvement of $5.0 million over a net loss of $6.9 million reported for the same three months of the prior fiscal year.

Utility Net Revenues

We analyze Washington Gas’s financial performance based on its utility net revenues. As discussed below, Washington Gas includes the cost of the natural gas commodity and revenue taxes in its rates charged to customers. Both the cost of the natural gas commodity and revenue taxes are reflected in operating revenues. Accordingly, changes in the cost of natural gas and revenue taxes associated with sales made to customers have no direct effect on Washington Gas’s utility net revenues or net income. The following table presents utility net revenues for the three months ended June 30, 2007 and 2006.


Utility Net Revenues
	Three Months Ended
	June 30,
(In thousands)	2007		2006		Variance

Operating revenues	$	236,184	$	185,768	$	50,416
Less: Cost of gas		126,563		89,575		36,988
Revenue taxes		11,156		9,268		1,888

Utility net revenues	$	98,465	$	86,925	$	11,540

Utility net revenues for Washington Gas were $98.5 million for the three months ended June 30, 2007, an increase of $11.5 million over the same three-month period in fiscal year 2006. The higher net revenues reflect an increase in deliveries to firm customers as a result of colder weather in the third quarter of fiscal year 2007 than in the same quarter of the prior fiscal year. In Maryland, the application of our RNA billing mechanism offsets the benefits from the colder-than-normal weather. In the District of Columbia and Virginia, our weather protection strategy allows us to retain the benefits of colder-than-normal weather. The expenses and net benefits associated with our weather-related instruments are reflected in “Operation and maintenance” expense, as discussed below. Also contributing to the increase in utility net revenues for the third quarter of fiscal year 2007 were: (i) the addition of 14,718 active customers since the end of the same quarter of the prior fiscal year; (ii) a favorable adjustment related to lost-and-accounted for gas and (iii) new rates that went into effect in Virginia on February 13, 2007, subject to refund, pending the outcome of a rate case proceeding.

Key gas delivery, weather and meter statistics are shown in the table below for the three months ended June 30, 2007 and 2006.

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)


Gas Deliveries, Weather and Meter Statistics
	Three Months Ended									Percent
	June 30,									Increase
	2007			2006			Variance			(Decrease)

Gas Sales and Deliveries (thousands of therms)
Firm
Gas Sold and Delivered		123,884			86,660			37,224			43.0
Gas Delivered for Others		75,854			59,458			16,396			27.6

Total Firm		199,738			146,118			53,620			36.7

Interruptible
Gas Sold and Delivered		1,133			1,511			(378	)		(25.0	)
Gas Delivered for Others		54,471			48,912			5,559			11.4

Total Interruptible		55,604			50,423			5,181			10.3

Electric Generation—Delivered for Others		18,331			21,916			(3,585	)		(16.4	)

Total deliveries		273,673			218,457			55,216			25.3

Degree Days
Actual		406			255			151			59.2
Normal		308			306			2			0.7
Percent Colder (Warmer) Than Normal		31.8	%		(16.7	)%		n/a			n/a
Active Customer Meters (end of period)		1,046,916			1,032,198			14,718			1.4
New Customer Meters Added		4,077			5,308			(1,231	)		(23.2	)

Gas Service to Firm Customers. The level of gas delivered to firm customers is highly sensitive to weather variability as a large portion of the natural gas delivered by Washington Gas is used for space heating. Washington Gas’s rates are based on normal weather. The tariffs in the Maryland jurisdiction also include the effects of the RNA billing mechanism. The tariffs for the remaining two jurisdictions in which Washington Gas operates do not yet have an approved weather normalization mechanism. Nonetheless, the combination of declining block rates in the utility’s Virginia jurisdiction and the existence of a fixed demand charge in all jurisdictions to collect a portion of revenues reduces the effect that variations from normal weather have on utility net revenues.

During the quarter ended June 30, 2007, total natural gas deliveries to firm customers increased 53.6 million therms, or 36.7 percent, to 199.7 million therms delivered during the third quarter of fiscal year 2007. The increase in therm deliveries was driven by 59.2 percent colder weather. Weather for the third quarter of fiscal year 2007 was 31.8 percent colder than normal as compared to 16.7 percent warmer than normal for the comparable quarter of the prior fiscal year.

Gas Service to Interruptible Customers. Washington Gas curtails or interrupts service to this class of customer when the demand by firm customers exceeds specified levels. Therm deliveries to interruptible customers increased by 5.2 million therms, or 10.3 percent, during the third quarter of fiscal year 2007 when compared to the same quarter last year, reflecting increased demand due to colder weather. The effect on net income of any changes in delivered volumes and prices to the interruptible class is limited by margin-sharing arrangements that are included in Washington Gas’s rate designs in the District of Columbia and, to a much smaller extent, in Virginia. Under the Maryland RNA billing mechanism, rates for interruptible customers in Maryland are based on a traditional cost of service approach, and Washington Gas retains a defined amount above a pre-approved margin threshold level.

Gas Service for Electric Generation. Washington Gas sells and/or delivers natural gas for use at two electric generation facilities in Maryland that are each owned by companies independent of WGL Holdings. During the third quarter of fiscal year 2007, deliveries to these customers decreased 16.4 percent to 18.3 million therms over the same quarter of fiscal year 2006. Washington Gas shares with firm customers a significant majority of the margins earned from natural gas deliveries to these customers. Therefore, changes in the volume of interruptible gas deliveries to these customers do not materially affect either net revenues or net income.

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Utility Operating Expenses

Operation and Maintenance Expenses. Operation and maintenance expenses of $59.3 million (pre-tax) for the three months ended June 30, 2007 were $2.6 million higher than the same three-month period of the prior fiscal year. This increase primarily reflects: (i) the unfavorable comparison in the current quarter of a $1.8 million (pre-tax), benefit recorded in the prior period related to our weather-related instruments due to warmer-than-normal weather; (ii) $1.6 million (pre-tax) of higher pension and post-retirement benefit costs and (iii) $972,000 (pre-tax) of severance costs allocable to the District of Columbia related to the implementation of the BPO plan. Partially offsetting the increase in these expenses were $1.5 million (pre-tax) of lower uncollectible accounts expense and the reversal of $2.0 million (pre-tax) related to costs previously expensed for start-up activities associated with achieving Washington Gas’s BPO initiatives.

Depreciation and Amortization. Depreciation and amortization expense was $23.4 million (pre-tax) for the third quarter of fiscal year 2007, an increase of $339,000 over the same three-month period of the prior fiscal year. This increase is primarily due to $1.6 million (pre-tax) of additional depreciation on an increased balance in property, plant and equipment, partially offset by a $1.3 million (pre-tax) decrease in these expenses due to a reduction in Washington Gas’s depreciation rates on fixed assets related to the Virginia jurisdiction.

RESULTS OF OPERATIONS — Nine Months Ended June 30, 2007 vs. June 30, 2006

Summary Results

For the first nine months of fiscal year 2007, Washington Gas reported net income applicable to common stock of $106.2 million, an increase of $8.6 million over net income of $97.6 million reported for the same period of the prior fiscal year.

Utility Net Revenues

The following table presents utility net revenues for the nine months ended June 30, 2007 and 2006.


Utility Net Revenues
	Nine Months Ended
	June 30,
(In thousands)	2007		2006		Variance

Operating revenues	$	1,377,196	$	1,503,562	$	(126,366	)
Less: Cost of gas		836,373		985,325		(148,952	)
Revenue taxes		49,266		46,721		2,545

Utility net revenues	$	491,557	$	471,516	$	20,041

Utility net revenues for Washington Gas were $491.6 million for the nine months ended June 30, 2007, an increase of $20.1 million over net revenues of $471.5 million reported for the corresponding period in the prior fiscal year 2006. The increase in utility net revenues reflects higher natural gas deliveries to firm customers in the first nine months of fiscal year 2007 when compared to the same period of the prior fiscal year. The increase in therm deliveries was driven by colder weather when compared to the same period of the prior year. Including the effects of our weather protection strategies during the nine months ended June 30, 2007, net revenues were enhanced by an estimated $3 million (after-tax) from the colder-than-normal weather. For the comparable nine-month period in fiscal year 2006, net revenues were enhanced in relation to normal weather by an estimated $2.5 million (after-tax), driven primarily from colder-than-normal weather experienced during the first quarter of fiscal year 2006.

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Also contributing to the increase in utility net revenues for the first nine months of fiscal year 2007 were: (i) the addition of 14,718 active customers since the end of the same quarter of the prior fiscal year; (ii) a charge recorded in the second quarter of fiscal year 2006 of $4.6 million (pre-tax), related to a proposed regulatory order to disallow certain natural gas costs incurred by Washington Gas and billed to Maryland customers; (iii) a favorable adjustment related to lost-and-unaccounted-for gas from the recently completed winter season and (iv) new rates that went into effect in Virginia on February 13, 2007, subject to refund, pending the outcome of a rate case proceeding. These increases were partially offset by decreased earnings from recoverable carrying costs on storage gas inventories.

Key gas delivery, weather and meter statistics are shown in the table below for the nine months ended June 30, 2007 and 2006.


Gas Deliveries, Weather and Meter Statistics
	Nine Months Ended									Percent
	June 30,									Increase
	2007			2006			Variance			(Decrease)

Gas Sales and Deliveries (thousands of therms)
Firm
Gas Sold and Delivered		796,724			745,459			51,265			6.9
Gas Delivered for Others		391,993			358,492			33,501			9.3

Total Firm		1,188,717			1,103,951			84,766			7.7

Interruptible
Gas Sold and Delivered		4,335			4,781			(446	)		(9.3	)
Gas Delivered for Others		221,865			207,064			14,801			7.1

Total Interruptible		226,200			211,845			14,355			6.8

Electric Generation—Delivered for Others		45,444			47,775			(2,331	)		(4.9	)

Total deliveries		1,460,361			1,363,571			96,790			7.1

Degree Days
Actual		3,945			3,688			257			7.0
Normal		3,799			3,791			8			0.2
Percent Colder (Warmer) Than Normal		3.8	%		(2.7	)%		n/a			n/a
Active Customer Meters (end of period)		1,046,916			1,032,198			14,718			1.4
New Customer Meters Added		14,174			19,359			(5,185	)		(26.8	)

Gas Service to Firm Customers. During the nine months ended June 30, 2007, total natural gas deliveries to firm customers increased 84.8 million therms, or 7.7 percent, to 1.2 billion therms delivered as of the third quarter of fiscal year 2007. The increase in therm deliveries was driven by colder weather during the current year when compared to the prior year.

Gas Service to Interruptible Customers. Therm deliveries to interruptible customers increased by 14.4 million therms, or 6.8 percent, during the nine months ended June 30, 2007 when compared to the same period last year, reflecting increased demand due to colder weather.

Gas Service for Electric Generation. During the first nine months of fiscal year 2007, deliveries to the electric generation facilities decreased 4.9 percent to 45.4 million therms as compared to the same period of fiscal year 2006, primarily reflecting the decreased use by these customers of natural gas rather than alternative fuels.

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Utility Operating Expenses

Operation and Maintenance Expenses. Operation and maintenance expenses increased $6.1 million (pre-tax) during the nine months ended June 30, 2007 when compared to the corresponding period of the prior year. This increase reflects: (i) the unfavorable comparison in the current quarter of an $8.3 million (pre-tax), benefit recorded in the prior period related to our weather-related instruments due to warmer-than-normal weather; (ii) $4.7 million (pre-tax) of higher pension and post-retirement benefit costs and (iii) $972,000 (pre-tax) of severance costs allocable to the District of Columbia related to the implementation of the BPO plan. Partially offsetting the increase in these expenses was $8.7 million (pre-tax) of lower uncollectible accounts.

Depreciation and Amortization. Depreciation and amortization expense was $65.7 million (pre-tax) for the first nine months of fiscal year 2007, a decrease of $3.0 million, or 4.4 percent, from the same period in the prior fiscal year. The lower expense was attributable to an adjustment recorded in the first quarter of fiscal year 2007 to reflect a reduction in Washington Gas’s depreciation rates on fixed assets related to the Virginia jurisdiction. The reduction in Washington Gas’s depreciation rates was approved by the staff of the SCC of VA during the first quarter of fiscal year 2007. In accordance with Virginia regulatory policy, we implemented the new depreciation rates retroactive to January 1, 2006, which coincides with the date of the approved depreciation study. Accordingly, our depreciation and amortization expense for the current nine-month period included a benefit totaling $7.9 million (pre-tax), of which $3.9 million (pre-tax) was applicable to the period from January 1, 2006 through September 30, 2006. Partially offsetting the effect of reduced depreciation rates was the effect of additional depreciation on an increased balance in property, plant and equipment.

RATES AND REGULATORY MATTERS

District of Columbia Jurisdiction

Application for Rate Increase. On December 21, 2006, Washington Gas filed an application with the PSC of DC requesting to increase its annual delivery service revenues in the District of Columbia by approximately $20.0 million. The application seeks an overall rate of return of 8.89 percent and a return on common equity of 11.08 percent. This compares to the current overall rate of return of 8.42 percent and return on common equity of 10.60 percent as authorized by the PSC of DC in its Final Order issued to Washington Gas on November 10, 2003.

Washington Gas also requests approval of various billing, rate design and other proposals, including: (i) the implementation of an RNA billing mechanism; (ii) the implementation of a PBR plan; (iii) the implementation of a Gas Administrative Charge (GAC) and (iv) the implementation of lower depreciation rates. These proposals are discussed further below.

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Washington Gas proposes to implement a tariff provision for an RNA billing adjustment mechanism in the District of Columbia similar to the RNA mechanism implemented in Maryland. For a further description of the Maryland RNA, refer to the section entitled “Weather Risk” included under Management’s Discussion for WGL Holdings.

Washington Gas also proposes to implement a PBR plan that is designed to benefit all firm customers in the District of Columbia through the incentives given to the utility to improve its performance while preserving service quality and the reliability and safety of its natural gas distribution system. The key features of the proposed PBR plan are: (i) a three-year base rate freeze; (ii) identified key service quality measures to determine Washington Gas’s progress in maintaining a safe and reliable natural gas distribution system while striving to control operating costs and (iii) an earnings sharing mechanism that would enable Washington Gas to share with both its District of Columbia customers and shareholders earnings in excess of a threshold return on equity defined as 50 basis points above the return on equity approved in this rate case proceeding.

Washington Gas also proposes to implement a GAC that would remove the cost of uncollectible account expense related to gas costs from base rates and, instead, would permit the utility to collect an amount for this expense through its PGC provision. This would more appropriately enable the recovery of such costs only from sales customers and the matching of this expense with changes in gas costs.

Additionally, Washington Gas requested recovery of the cost allocable to customers in the District of Columbia for Washington Gas’s investment in three HHC injection facilities (refer to the section entitled “Operating Issues in Prince George’s County, Maryland” for a further discussion of these expenditures). Washington Gas requested recovery of these costs incurred up to the date the new rates are effective; however, the PSC of DC has required Washington Gas to remove the investment in these facilities from this rate case. We believe these expenditures will be recoverable in a future proceeding.

On June 12, 2007, intervenors filed direct testimony and exhibits in this rate case proceeding. Washington Gas filed rebuttal testimony on July 3, 2007. Hearings in the rate case, originally scheduled for the week of July 23, 2007, have been postponed which may delay the date of a final order from the PSC of DC, initially targeted for September 21, 2007.

Maryland Jurisdiction

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

filed on May 11, 2006. After consideration of these issues, we expect the PSC of MD to issue a Final Order. Over the past ten years, Washington Gas has incurred similar purchased gas charges which the PSC of MD has reviewed and approved as being reasonably and prudently incurred and therefore subject to recovery from customers. Among other issues included in the appeal, we reminded the PSC of MD of this prior recovery and requested that similar treatment be granted for this matter. During the fiscal year ended September 30, 2006, Washington Gas accrued a liability of $4.6 million (pre-tax) related to the proposed disallowance of these purchased gas charges. If the PSC of MD rules in Washington Gas’s favor, the liability recorded in fiscal year 2006 for this issue will be reversed to income.

On April 2, 2007, a Hearing Examiner of the PSC of MD issued a Proposed Order granting Washington Gas full recovery of the cost of HHC injections related to Maryland sales and delivery service customers. Additionally, the Proposed Order allowed for full recovery of costs that were included in the “pending” regulatory asset account. In the Proposed Order, the Hearing Examiner concluded that based on available evidence, the injection of HHCs was a reasonable measure for which Washington Gas should be compensated. On May 2, 2007, the MD OPC filed a Notice of Appeal of the Proposed Order and we are awaiting a final decision by the PSC of MD on this matter.

Application for Rate Increase. On April 20, 2007, Washington Gas filed an application with the PSC of MD requesting to increase its annual delivery service revenues in Maryland by $33.8 million. The application seeks an overall rate of return of 8.88 percent and a return on common equity of 11.00 percent. This compares to the current overall rate of return of 8.61 percent and return on common equity of 10.75 percent as authorized by the PSC of MD in its Final Order issued to Washington Gas on October 31, 2003. The filing proposes an equity ratio of 56.02% for the capital structure associated with Washington Gas’s Maryland operations. The level of revenues requested also includes a $3.2 million reduction resulting from proposed new depreciation rates. A request to implement these new depreciation rates has been filed by Washington Gas with the PSC of MD in a separate proceeding and it is expected that the new depreciation rates would be put into place commensurate with a final decision on this application (refer to the section entitled “Depreciation Study” ).

Included in its rate application, Washington Gas requests recovery of its investment in replacement plant associated with the Prince George’s County rehabilitation project as well as a request for the recovery of the cost allocable to Maryland customers for Washington Gas’s investment in three HHC injection facilities (refer to the section entitled “Operating Issues in Prince George’s County, Maryland” for a further discussion of these expenditures). Washington Gas requests recovery of all expenditures related to these items incurred up to the date the new rates are effective.

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

Washington Gas also seeks approval for the implementation of a PBR plan. The key features of the proposed PBR plan are: (i) a three-year base rate freeze; (ii) service quality measures to determine Washington Gas’s progress in maintaining a safe and reliable natural gas distribution system while striving to control operating costs and (iii) an earnings sharing mechanism that would enable Washington Gas to share with both its Maryland customers and shareholders earnings in excess of a threshold return on equity defined as 50 basis points above the return on equity approved in this rate case proceeding.

In its rate application with the PSC of MD, Washington Gas proposes the new rates and the PBR plan be implemented in November 2007.

Intervenor testimony was filed on July 3, 2007 and rebuttal testimony was filed on July 30, 2007. Hearings are scheduled for August 20 — 22, 2007, and a final order from the PSC of MD is expected in November 2007.

Virginia Jurisdiction

Annual Earnings Test. In connection with a December 18, 2003 Final Order, the SCC of VA ordered Washington Gas to reduce its rate base related to net utility plant by $28 million, which was net of accumulated deferred income taxes of $14 million, and to establish an equivalent regulatory asset that Washington Gas had done for regulatory accounting purposes only. This regulatory asset, which was presented within “Accumulated depreciation and amortization” on the balance sheets, represented the difference between the accumulated reserve for depreciation recorded on the books of Washington Gas and a theoretical reserve that was derived by the Staff of the SCC of VA as part of its review of Washington Gas’s depreciation rates, and was being amortized as a component of depreciation expense over 32 years pursuant to the Final Order. The SCC of VA further ordered that an annual “earnings test” be performed to determine if Washington Gas had earned in excess of its allowed rate of return on common equity for its Virginia operations. In connection with a depreciation study filed by Washington Gas with the SCC of VA, the Staff of the SCC of VA concluded on December 27, 2006 that it was no longer necessary for Washington Gas to recognize this regulatory asset or perform annual earnings test calculations (refer to “Depreciation Study” below for a further discussion of this matter).

Application for Rate Increase and July 30, 2007 Stipulation. On September 15, 2006, Washington Gas filed an application with the SCC of VA to increase its annual delivery service revenues in Virginia by approximately $23.0 million, subsequently revised to $17.2 million on November 8, 2006 due to a reduction in depreciation rates as further discussed in the section below entitled “Depreciation Study .” Among other things, the application requested an overall rate of return of 9.12 percent and a return on common equity of 11.25 percent. This compares to the previous overall rate of return of 8.44 percent and return on common equity of 10.50 percent as authorized by the SCC of VA in its Final Order issued to Washington Gas on December 18, 2003.

On July 30, 2007, Washington Gas, the VA Staff, and one other participant entered into and submitted a Stipulation to the SCC of VA related to this rate case application. The Stipulation was not opposed by any of the parties to the proceedings. The Stipulation includes an annual rate increase of $3.9 million and allows for a rate of return on common equity of 10.0 percent and an overall rate of return of 8.41 percent. The Stipulation also provides for various billing, rate design and other proposals requested by Washington Gas in the rate case application, including:

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

	(i)		the implementation of a WNA mechanism, a billing adjustment mechanism that is designed to eliminate the effect of variations in weather on utility net revenues. The Stipulation leaves in place the declining-block-rate structure which has the effect of mitigating the volatility in Washington Gas’s revenues associated with changes in customer consumption for either weather or customer usage;

	(ii)		the implementation of a PBR plan, which includes:

	•		a four-year delivery service base rate freeze,

	•		service quality standards to be upheld by Washington Gas for maintaining a safe and reliable natural gas distribution system while striving to control operating costs,

	•		an earnings sharing mechanism that enables Washington Gas to share with shareholders and Virginia customers the earnings that exceed a target of 10.5 percent return on equity and

	•		recovery of initial start-up costs associated with achieving Washington Gas’s BPO initiatives. As a result of this PBR plan and certain other terms of the Stipulation, Washington Gas will defer initial costs to achieve the BPO initiatives as a regulatory asset and subsequently amortize those costs over the recovery period;

	(iii)		the recovery of the costs of HHCs as a gas cost from both sales and delivery service customers. The PGC provision for sales customers and the Balancing Charge for delivery service customers provide for the full recovery of the heating value equivalent of HHCs that have been injected into Washington Gas’s natural gas distribution system since February 2006. HHC costs in excess of the heating value equivalent will generally be recovered through distribution charges on a prospective basis;

	(iv)		the implementation of a GAC as of September 2007, which removes the cost of uncollectible accounts expense related to gas costs from base rates and instead, permits the utility to collect an amount for this expense through its PGC provision;

	(v)		the implementation of sharing for asset management revenues between customers and shareholders for those revenues above an annual threshold level and

	(vi)		the implementation of a long-term capital replacement project to address mechanical couplings in Virginia.

On February 13, 2007, under the regulations of the SCC of VA, Washington Gas implemented the proposed general increase, subject to refund, pending the SCC of VA’s final decision in this rate case proceeding. Although the rate design features are generally not effective until October 1, 2007, Washington Gas has been recording a reserve to reflect this estimated refund and the refund will be issued upon approval of the Stipulation by the SCC of VA.

Depreciation Study

Washington Gas Light Company
Part I—Financial Information
Item 2—Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)

On April 13, 2007, Washington Gas filed the portion of the depreciation study related to the Maryland jurisdiction. The impact of the newly proposed depreciation rates are reflected in Washington Gas’s cost of service study that is included as part of the April 20, 2007 rate application. It is expected that the new depreciation rates will be approved and placed into effect when the revised customer billing rates for revenues are approved to reflect the corresponding change in depreciation rates.

In connection with Washington Gas’s December 21, 2006 rate application filed with the PSC of DC, Washington Gas included that portion of the depreciation study related to the District of Columbia jurisdiction. The impact of the newly proposed depreciation rates are reflected in Washington Gas’s cost of service study that is included as part of the rate application. The new depreciation rates will be placed into effect when the revised customer billing rates for revenues are approved to reflect the corresponding change in depreciation rates.

In connection with Washington Gas’s September 15, 2006 rate application filed with the SCC of VA, on November 8, 2006, Washington Gas included that portion of the depreciation study related to the Virginia jurisdiction. Based on the results of the depreciation study, Washington Gas reduced the requested $23.0 million rate increase in the September 15, 2006 SCC of VA application to $17.2 million. In December 2006, the Staff of the SCC of VA approved the reduction in Washington Gas’s depreciation rates. In accordance with Virginia regulatory policy, Washington Gas implemented the new depreciation rates retroactive to January 1, 2006 which coincides with the date of the approved depreciation study. Accordingly, our depreciation and amortization expense for the current nine-month period included a benefit totaling $7.9 million (pre-tax), of which $3.9 million (pre-tax) was applicable to the period from January 1, 2006 through September 30, 2006 and $4.0 million (pre-tax) was related to the current nine-month period. Of this $4.0 million current period benefit, approximately $2.0 million was recorded prior to the implementation of new rates in Virginia. When new rates were put into effect in Virginia, both annual revenues and annual depreciation expense were reduced by equivalent amounts; therefore, subsequent to February 13, 2007, there will be no further impact on annual operating income for this reduction.

OTHER MATTERS

New Asset Manager Agreements. Washington Gas enters into contracts with asset managers to manage a portion of Washington Gas’s long-term gas transportation and storage capacity. Management of this capacity includes: (i) assisting in the acquisition and delivery of gas supply to Washington Gas’s service territory and (ii) making off-system sales when such capacity is under-utilized. Additionally the asset managers may utilize the capacity for their own purposes in exchange for a fee paid to Washington Gas. From May 1, 2006 through April 30, 2007, Washington Gas had a contract with an individual asset manager to manage a portion of its long-term transportation and storage capacity. On May 1, 2007, this contract expired, and Washington Gas entered into new agreements with two new asset managers that expire on April 30, 2008. Under these new agreements, Washington Gas has divided the right to manage a portion of its capacity into two sub-sets, with each of the asset managers taking on responsibility for certain transportation and storage capacity. The remainder of Washington Gas’s interstate transportation and storage capacity has been retained by Washington Gas to manage. Washington Gas accounts for the fees paid by the asset managers as revenues. A portion of these fees are shared with customers through the regulated margin-sharing arrangements as a reduction in natural gas costs, otherwise recoverable from firm customers. Washington Gas will manage a greater portion of its capacity under these new agreements in order to maximize the potential value of its capacity resources and subsequently lower the cost of gas to its sales service customers. These transactions include fixed-priced and market-priced purchases and sales which Washington Gas has matched with the purchase of derivative instruments that simultaneously fix the economic gain on these transactions.

New Labor Contract. Washington Gas has entered a new five-year labor contract with the Teamsters Local Union No. 96 (Local 96), a local union affiliated with the International Brotherhood of Teamsters. The contract covers approximately 600 employees. The Teamsters ratified the contract on May 11, 2007 and is effective through May 31, 2012. The contract includes, among other things: (i) annual wage increases ranging from three to four percent; (ii) employment protection for each Local 96 employee employed at the date of ratification; (iii) discontinuance of the defined benefit pension plan for Local 96 employees hired after December 31, 2008 and (iv) an increase in Washington Gas’s contribution to its defined-contribution savings plan for Local 96 employees.

WGL Holdings, Inc.
Washington Gas Light Company
Part I—Financial Information

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following issues related to our market risks are included under Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations , and are incorporated by reference into this discussion.

	•		Price Risk Related to the Regulated Utility Segment

	•		Price Risk Related to the Retail Energy-Marketing Segment

	•		Weather Risk

	•		Interest-Rate Risk

ITEM 4. CONTROLS AND PROCEDURES

Senior management, including the Chairman and Chief Executive Officer and the Vice President and Chief Financial Officer, evaluated the effectiveness of WGL Holdings’ and Washington Gas’s disclosure controls and procedures as of June 30, 2007. Based on this evaluation process, the Chairman and Chief Executive Officer and the Vice President and Chief Financial Officer have concluded that WGL Holdings’ and Washington Gas’s disclosure controls and procedures are effective. There have been no changes in the Registrants’ internal control over financial reporting during the quarter ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, the Registrants’ internal control over financial reporting.

WGL Holdings, Inc.
Washington Gas Light Company
Part II—Other Information

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

We are updating our risk factors that were disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2006. Reflected in this update are risks associated with our Business Process Outsourcing plan.

Washington Gas will incur significant initial start-up costs in connection with the outsourcing of a portion of its business functions. If it is unable to recover these costs, this could have an adverse effect on Washington Gas’s financial condition, results of operations and cash flows.

Washington Gas entered into a ten-year agreement with Accenture, LLP effective on June 19, 2007. Under this agreement, Washington Gas will outsource certain business processes related to human resources, information technology, consumer services and finance operations. If Washington Gas is unable to recover the initial start-up costs relating to the BPO during the term of the agreement, this may adversely affect our financial condition, results of operations and cash flows.

ITEM 5. OTHER INFORMATION

The following disclosure relates to a material contract that was entered into on August 3, 2007 related to amended and restated credit agreements for both WGL Holdings, Inc. and Washington Gas Light Company. This event is a required disclosure under “ Item 1.01 Entry into a Material Definitive Agreement ,” of the current report on Form 8-K, and is being filed in this quarterly report to meet that disclosure requirement.

On August 3, 2007, WGL Holdings and Washington Gas each amended and restated their existing revolving credit agreements. The amended and restated credit agreements, which expire on August 3, 2012, are with a group of commercial banks, including Wachovia Bank, National Association; Bank of Tokyo-Mitsubishi Trust Company; Citibank, N.A.; SunTrust Bank; Wells Fargo Bank, National Association; The Bank of New York; JPMorgan Chase Bank, N.A.; Bank of America, N.A.; PNC Bank, National Association; Branch Banking & Trust Company; The Bank of Nova Scotia; and The Northern Trust Company (collectively the Lenders). The amended and restated credit facilities support any outstanding commercial paper and permit short-term borrowing flexibility. The amended and restated credit facility for WGL Holdings permits it to borrow up to $400 million, and further permits, with the banks’ approval, an additional line of credit of $50 million, for a maximum potential total of $450 million. The amended and restated credit facility for Washington Gas permits it to borrow up to $300 million, and further permits with the banks’ approval, an additional line of credit of $100 million, for a maximum potential total of $400 million.

WGL Holdings, Inc.
Washington Gas Light Company
Part II—Other Information

The amended and restated credit facilities replaced revolving credit agreements that were originally entered into by WGL Holdings and Washington Gas dated September 30, 2005 with a group of commercial banks, including Wachovia Bank, National Association; The Bank of New York; Bank of Tokyo-Mitsubishi Trust Company; Citibank, N.A.; SunTrust Bank, N.A.; JPMorgan Chase Bank, N.A.; Wells Fargo Bank, National Association; Bank of America, N.A.; PNC Bank, National Association; and KBC Bank, N.V. These facilities permitted WGL Holdings and Washington Gas to borrow up to $275 million and $225 million, respectively and would have expired on September 30, 2010. These facilities further permitted, with the banks’ approval, additional lines of credit of $50 million and $100 million, respectively.

WGL Holdings, Inc.
Washington Gas Light Company
Part II—Other Information
Item 6—Exhibits

ITEM 6. EXHIBITS

Exhibits:


			3(ii).1			Bylaws of WGL Holdings, Inc. as amended on June 28, 2007.

			3(ii).2			Bylaws of Washington Gas Light Company as amended on June 28, 2007.

			10.1			Master Services Agreement, effective June 19, 2007, with Accenture LLP, related to business process outsourcing, and service and technology enhancements. Portions of this exhibit have been omitted pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

			10.2			Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders, Wachovia Bank, National Association, as administrative agent; Bank of Tokyo-Mitsubishi Trust Company, as syndication agent; Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as documentation agents; and Wachovia Capital Markets, LLC, as lead arranger and book runner.

			10.3			Amended and Restated Credit Agreement dated as of August 3, 2007 among Washington Gas Light Company, the Lenders, Wachovia Bank, National Association, as administrative agent; Bank of Tokyo-Mitsubishi Trust Company, as syndication agent; Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as documentation agents; and Wachovia Capital Markets, LLC, as lead arranger and book runner.

			31.1			Certification of James H. DeGraffenreidt, Jr., the Chairman and Chief Executive Officer of WGL Holdings, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

			31.2			Certification of Vincent L. Ammann, Jr., the Vice President and Chief Financial Officer of WGL Holdings, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

			31.3			Certification of James H. DeGraffenreidt, Jr., the Chairman and Chief Executive Officer of Washington Gas Light Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

			31.4			Certification of Vincent L. Ammann, Jr., the Vice President and Chief Financial Officer of Washington Gas Light Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

			32			Certification of James H. DeGraffenreidt, Jr., the Chairman and Chief Executive Officer, and Vincent L. Ammann, Jr., the Vice President and Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

			99.1			Computation of Ratio of Earnings to Fixed Charges—WGL Holdings, Inc.

			99.2			Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends—WGL Holdings, Inc.

			99.3			Computation of Ratio of Earnings to Fixed Charges—Washington Gas Light Company.

			99.4			Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends—Washington Gas Light Company.

WGL Holdings, Inc.
Washington Gas Light Company

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.


	WGL HOLDINGS, INC. and WASHINGTON GAS LIGHT COMPANY (Co-Registrants)

Date: August 9, 2007	/s/ Mark P. O’Flynn
	Mark P. O’Flynn
	Controller (Principal Accounting Officer)

Exhibit 3(ii).1

As amended on June 28, 2007

WGL HOLDINGS, INC.

BYLAWS

ARTICLE I

Shareholders.

SECTION 1. Annual Meeting. The annual meeting of shareholders of WGL Holdings, Inc. (the “Company”) shall be held at such time and place within or without the state of Virginia as shall be determined by the Board of Directors and as shall be stated in the notice of the meeting. The meeting shall be held for the purpose of electing directors and for the transaction of such other business as properly may come before such meeting.

SECTION 2. Special Meetings. Special meetings of shareholders may be held upon call by the Chairman of the Board, the President, the Secretary, a majority of the Board of Directors, or a majority of the Executive Committee, and shall be called by the Chairman of the Board, the President or Secretary upon the request in writing of the holders of record of not less than one-tenth of all the outstanding shares of stock entitled by its terms to vote at such meeting, at such time and at such place within or without the state of Virginia as may be fixed in the call and stated in the notice setting forth such call. Such request by the shareholders and such notice shall state the purpose of the proposed meeting.

SECTION 3. Notice of Meetings. Notice of the time, place and purpose of every meeting of the shareholders, shall, except as otherwise required by law, be delivered personally or mailed at least ten (10) but not more than sixty (60) days prior to the date of such meeting to each shareholder of record entitled to vote at the meeting at his or her address as it appears on the records of the Company. Any meeting may be held without notice if all of the shareholders entitled to vote thereat are present in person or by proxy at the meeting, or if notice is waived by those not so present in person or by proxy.

SECTION 4. Quorum. At every meeting of the shareholders, the holders of record of a majority of the shares entitled to vote at the meeting, represented in person or by proxy, shall constitute a quorum. The vote of the majority of such quorum shall be necessary for the transaction of any business, unless otherwise provided by law or the articles of incorporation. If the meeting cannot be organized because a quorum has not attended, those present in person or by proxy may adjourn the meeting from time to time until a quorum is present when any business may be transacted that might have been transacted at the meeting as originally called.

SECTION 5. Voting and Proxies. Unless otherwise provided by law or the articles of incorporation, every shareholder of record entitled to vote at any meeting of shareholders shall be entitled to one vote for every share of stock standing in his or her name on the records of the Company on the record date fixed as provided in these Bylaws. In the election of directors, all votes shall be cast by ballot and the persons having the greatest number of votes shall be the directors. On matters other than election of directors, votes may be cast in such manner as the Chairman of the meeting may designate.

Shareholders of record and entitled to vote may vote at any meeting held, in person or by proxy, authorized by any means permitted by the Virginia Stock Corporation Act or other applicable law.

SECTION 6. Inspectors. The Board of Directors shall annually appoint two or more persons to act as inspectors or judges at any election of directors or vote conducted by ballot at any meeting of shareholders. Such inspectors or judges of election shall take charge of the polls and after the balloting shall make a certificate of the result of the vote taken. In case of a failure to appoint inspectors, or in case an inspector shall fail to attend, or refuse or be unable to serve, the Chairman of the meeting may appoint, or the shareholders may elect, an inspector or inspectors to act at such meeting. Such inspector or inspectors shall make a certificate of the result of the vote taken.

SECTION 7. Conduct of Shareholders’ Meeting. The following persons, in the order named, shall be entitled to call each shareholders’ meeting to order: (1) the Chairman of the Board, (2) the President of the Company, (3) a Vice President, or (4) any person elected by the shareholders. The shareholders shall have the right to elect a Chairman of the meeting.

The Secretary of the Company, or in his or her absence any person appointed by the Chairman, shall act as Secretary of the meeting for organization purposes. The shareholders shall have the right to elect a secretary of the meeting.

SECTION 8. Record Date. In lieu of closing the stock transfer books, the Board of Directors, in order to make a determination of shareholders entitled to notice of or to vote at any meeting, or to receive payment of any dividends or for any other proper purpose, may fix in advance a date, but not more than seventy days in advance, as a record date for such determination, and in such case only shareholders of record on the date so fixed shall be entitled to notice of, and to vote at, such meeting, or to receive payment of such dividend, or to exercise such other rights, as the case may be, notwithstanding any transfer of stock on the books of the Company after such date. If the Board of Directors does not fix a record date as aforesaid, such date shall be as provided by law.

SECTION 9. Notice of Business. At any meeting of the shareholders, only such business shall be conducted as shall have been brought before the meeting (1) by or at the direction of the Board of Directors or (2) by any shareholder of the Company who is a shareholder of record at the time of giving of the notice as provided for in this Section 9, who shall be entitled to vote at such meeting and who complies with the following procedures:

Requirement of Timely Notice. For business to be properly brought before a meeting of shareholders by a shareholder, the business shall be a proper subject of shareholder action and the shareholder shall have given timely notice thereof in writing to the Secretary. To be timely, a shareholder’s notice shall be delivered to or mailed and received by the Secretary at the principal executive office of the Company not less than sixty (60) days prior to the scheduled date of the meeting (regardless of any postponements, deferrals or adjournments of the meeting to a later date); provided, however, if no notice is given and no public announcement is made to the shareholders regarding the date of the meeting at least 75 days prior to the meeting, the shareholder’s notice shall be valid if delivered to or mailed and received by the Secretary at the principal executive office of the Company not less than fifteen (15) days following the day on which the notice or public announcement of the date of the meeting was given or made.

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Contents of Notice. Such shareholder’s notice to the Secretary shall set forth as to each item of business the shareholder proposes to bring before the meeting (1) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and, in the event that such business includes a proposal to amend either the articles of incorporation or these Bylaws, the language of the proposed amendment, (2) the name and address, as they appear on the Company’s books, of the shareholder proposing such business, (3) the class and number of shares of capital stock of the Company that are beneficially owned by such shareholder, and (4) any material interest (financial or other) of such shareholder in such business.

Compliance with Bylaws. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at a shareholders’ meeting except in accordance with the procedures set forth in this Section 9. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that the business was not properly brought before the meeting and in accordance with the provisions of these Bylaws, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted at the meeting. Notwithstanding the foregoing provisions of this Section 9, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section 9.

Effective Date of Shareholder Business. Notwithstanding anything in these Bylaws to the contrary, no business brought before a meeting of the shareholders by a shareholder shall become effective until the final termination of any proceeding which may have been commenced in any court of competent jurisdiction for an adjudication of any legal issues incident to determining the validity of such business and the procedure pursuant to which it was brought before the shareholders, unless and until such court shall have determined that such proceedings are not being pursued expeditiously and in good faith.

ARTICLE II

Board of Directors.

SECTION 1. Number, Powers, Term of Office, Quorum, Presiding Director. The Board of Directors of the Company shall consist of one or more individuals as may be fixed from time to time by the Board of Directors. The Board of Directors may exercise all the powers of the Company and do all acts and things which are proper to be done by the Company which are not by law or by these Bylaws directed or required to be exercised or done by the shareholders. The members of the Board of Directors shall be elected at the annual meeting of shareholders and shall hold office until the next succeeding annual meeting, or until their successors shall be elected and shall qualify. A majority of the number of directors shall constitute a quorum for the transaction of business. The action of a majority of the directors present at any lawful meeting at which there is a quorum shall, except as otherwise provided by law or by these Bylaws, be the action of the Board. The Board of Directors shall have a Presiding Director, who shall be an independent director, not an employee of the Company. The powers and responsibilities of the Presiding Director shall be established by the Board of Directors and shall be set forth in the

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Corporate Governance Guidelines of the Company. The powers and responsibilities of the Presiding Director may be modified from time to time at the discretion of the Board of Directors.

SECTION 2. Election. Except as provided in Section 3 hereof, directors shall be elected by the shareholders of the Company pursuant to the procedures enumerated below:

Eligible Persons. Only persons who are nominated in accordance with the following procedures shall be eligible for election by the shareholders as directors of the Company.

Nominations. Nominations of persons for election as directors of the Company may be made at a meeting of shareholders (1) by or at the direction of the Board of Directors, (2) by any committee or person appointed by the Board of Directors or (3) by any shareholder of the Company entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 2.

Nomination by Directors or Committee. Nominations made by or at the direction of the Board of Directors or the committee or person appointed by the Board of Directors may be made at any time prior to the shareholders’ meeting. The Board of Directors must send notice of nominations to the shareholders together with the notice of the meeting of the shareholders; provided, however, if the nominations are made after the notice of the meeting has been mailed, the Board of Directors must send notice of its nominations to the shareholders as soon as practicable.

Nomination by Shareholders. Nominations, other than those made by or at the direction of the Board of Directors or the committee or person appointed by the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary. To be timely, a shareholder’s notice shall be delivered to or mailed and received by the Secretary at the principal executive office of the Company not less than sixty (60) days prior to the scheduled date of the meeting (regardless of any postponements, deferrals or adjournments of the meeting to a later date); provided, however, if no notice is given and no public announcement is made to the shareholders regarding the date of the meeting at least 75 days prior to the meeting, the shareholder’s notice shall be valid if delivered to or mailed and received by the Secretary at the principal executive office of the Company not less than fifteen (15) days following the day on which the notice or public announcement of the date of the meeting was given or made.

Contents of Notice. Nominations, other than those made by or at the direction of the Board of Directors or the committee or person appointed by the Board of Directors, shall set forth:

(1) as to each person whom the shareholder proposes to nominate for election or reelection as a director, (a) the name, age, business address and residential address of the person, (b) the principal occupation or employment of the person (c) the class and number of shares of capital stock of the Company that are beneficially owned by the person, (d) written consent by the person, agreeing to serve as director if elected, (e) a description of all arrangements or understandings between the person and the shareholder regarding the nomination, (f) a description of all arrangements or understandings between the person and any other person or persons (naming such persons) regarding the nomination, (g) all information relating to the person that is required to be

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disclosed in solicitations for proxies for election of directors pursuant to Rule 14a under the Securities Exchange Act of 1934, as amended, and (h) such other information as the Company may reasonably request to determine the eligibility of such proposed nominee to serve as director of the Company; and (2) as to the shareholder giving the notice, (a) the name, business address and residential address of the shareholder giving the notice, (b) the class and number of shares of capital stock of the Company that are beneficially owned by such shareholder, (c) a description of all arrangements or understandings between the shareholder and the nominee regarding the nomination, and (d) a description of all arrangements or understandings between the shareholder and any other person or persons (naming such persons) regarding the nomination.

Compliance with Bylaws. No person shall be eligible for election by the shareholders as a director of the Company unless nominated in accordance with the procedures set forth in this section of the Bylaws. The Chairman of the Board of Directors shall, if the facts warrant, determine and declare prior to the meeting of shareholders that the nomination was not made in accordance with the foregoing procedure, and if he or she should so determine, he or she shall so inform the nominee and the shareholder who nominated the nominee as soon as practicable and the defective nomination shall be disregarded.

Effective Date of Election of Director. Notwithstanding anything in these Bylaws to the contrary, no election of a director nominated by a shareholder shall become effective until the final termination of any proceeding which may have been commenced in any court of competent jurisdiction for an adjudication of any legal issues incident to determining the procedure pursuant to which the nomination of such director was brought before the shareholders, unless and until such court shall have determined that such proceedings are not being pursued expeditiously and in good faith.

SECTION 3. Vacancies. If a vacancy occurs on the board of directors, including a vacancy resulting from an increase in the number of directors:

(a) the shareholders may fill the vacancy;

(b) the board of directors may fill the vacancy; or

(c) if the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of directors remaining in office.

A vacancy that will occur at a specific later date, by reason of a resignation effective at a later date, may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.

A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office. A director filling a position resulting from an increase in the number of directors shall hold office until the next annual meeting of shareholders and until his or her successor is elected and qualified.

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SECTION 4. Meetings. Regular meetings of the Board shall be held at such time and place as provided by resolution of the Board of Directors or as stated in the notice of the meeting.

Special meetings of the Board may be called by the Chairman of the Board, the President of the Company, the Presiding Director or by any two directors. The Presiding Director may call meetings of the independent directors, who shall not be employees of the Company. At least two days’ notice of all special meetings of the Board shall be given to each director personally by telegraphic, electronic or written notice. Any meeting may be held without notice if all of the directors are present, or if those not present waive notice of the meeting by telegram, electronic communication or in writing. Special meetings of the Board of Directors may be held within or without the state of Virginia.

SECTION 5. Committees. The Board of Directors shall, by resolution or resolutions passed by a majority of the whole Board, designate an Executive Committee, to consist of the Chief Executive Officer of the Company who may be the Chairman of the Board, or the President and three additional members, and not fewer than three alternates to serve at the call of the Chief Executive Officer in case of the unavoidable absence of one of the regular members, to be elected from the Board of Directors. The Executive Committee shall, when the Board is not in session, have and may exercise all of the authority of the Board of Directors in the management of the business and affairs of the Company.

The Board of Directors may appoint other committees, standing or special, from time to time, from among their own number, or otherwise, and confer powers on such committees, and revoke such powers and terminate the existence of such committees at its pleasure.

A majority of the members of any such committee shall constitute a quorum for the purpose of fixing the time and place of its meetings, unless the Board shall otherwise provide. All action taken by any such committee shall be reported to the Board at its meeting next succeeding such action.

SECTION 6. Compensation of Directors. The Board of Directors shall fix the fee to be paid to each director for attendance at any meeting of the Board or of any committee thereof, and may, in its discretion, authorize payment to directors of traveling expenses incurred in attending any such meeting.

SECTION 7. Removal. Any director may be removed from office at any time, with or without cause, and another be elected in his or her place, by the vote of the holders of record of a majority of the outstanding shares of stock of the Company (of the class or classes by which such director was elected) entitled to vote thereon, at a special meeting of shareholders called for such purpose.

ARTICLE III

Officers.

SECTION 1. Officers. The officers of the Company shall be elected by the Board of Directors and shall consist of a Chairman of the Board, a President, a Secretary, a Treasurer, and one or more Vice Presidents, and such other officers as the Board from time to time shall elect, with such duties as the Board shall deem necessary to conduct the business of the Company. Any officer may hold two or more offices (including those of the Chairman of the Board and President) except that the offices of President and Secretary may not be held by the

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same person. The Chairman of the Board shall be a director; other officers, including any Vice Chairman and the President, may be, but are not required to be, Directors.

SECTION 2. Term of Office. Removal. In the absence of a special contract, all officers shall hold their respective offices for one year or until their successors shall have been duly elected and qualified, but they or any of them may be removed from their respective offices on a vote by a majority of the Board.

SECTION 3. Powers and Duties. The officers of the Company shall have such powers and duties as generally pertain to their offices, respectively, as well as such powers and duties as from time to time shall be conferred by the Board of Directors and/or by the Executive Committee. In the absence of the Chairman of the Board, if any, the President shall preside at the meetings of the Board of Directors. In the absence of both the Chairman of the Board and the President, and provided a quorum is present, the senior member of the Board present, in terms of service on the Board, shall serve as Chairman pro tem of the meeting.

SECTION 4. Salaries. The salaries of all executive officers of the Company shall be determined and fixed by the Board of Directors, or pursuant to such authority as the Board may from time to time prescribe.

ARTICLE IV

Indemnification of Directors and Officers.

SECTION 1. Any indemnification (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstance because the person was not finally adjudged in any threatened, pending or completed action, suit or proceeding (an “Action”) to have knowingly violated criminal law or was not liable for willful misconduct in the performance of the person’s duty to the Company. In the case of any director, such determination shall be made: (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such Action; or (2) if such a quorum is not obtainable, by majority vote of a committee duly designated by the Board of Directors (in which designation directors who are parties may participate) consisting solely of two or more directors not at the time parties to the proceeding; or (3) by special legal counsel selected by the Board of Directors or its committee in the manner prescribed by clause (1) or (2) of this paragraph, or if such a quorum is not obtainable and such a committee cannot be designated, by majority vote of the Board of Directors, in which selection directors who are parties may participate; or (4) by vote of the shareholders, in which vote shares owned by or voted under the control of directors, officers and employees who are at the time parties to the Action may not be voted. In the case of any officer, employee, or agent other than a director, such determination may be made (i) by the Board of Directors or a committee thereof; (ii) by the Chairman of the Board of the Company or, if the Chairman is a party to such Action, the President of the Company, or (iii) such other officer of the Company, not a party to such Action, as such person specified in clause (i) or (ii) of this paragraph may designate. Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled hereunder to select such legal counsel.

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It is the intention of the Company that the indemnification set forth in this Section of Article IV, shall be applied to no less extent than the maximum indemnification permitted by law. In the event that any right to indemnification or other right hereunder may be deemed to be unenforceable or invalid, in whole or in part, such unenforceability or invalidity shall not affect any other right hereunder, or any right to the extent that is not deemed to be unenforceable. The indemnification provided herein shall be in addition to, and not exclusive of, any other rights to which those indemnified may be entitled under the articles of incorporation, any Bylaw, agreement, vote of shareholders, or otherwise, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and inure to the benefit of such person’s heirs, executors, and administrators.

ARTICLE V

Checks, Notes, Etc.

SECTION 1. All checks and drafts on the Company’s bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, agent or agents, as shall be thereunto authorized from time to time by the Board of Directors.

SECTION 2. Shares of stock and other interests in other corporations or associations shall be voted by such officer or officers as the Board of Directors may designate.

SECTION 3. Except as the Board of Directors shall otherwise provide, all contracts expressly approved by the Board shall be signed on behalf of the Company by the Chairman of the Board, the President, or a Vice President.

ARTICLE VI

Capital Stock.

SECTION 1. Certificates for shares . Unless otherwise authorized by the Board of Directors, the interest of each stockholder of the Company shall be evidenced by a certificate or certificates for shares of stock in such form as required by law and as the Board of Directors may from time to time prescribe. The Board of Directors may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. The certificates of stock shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary and sealed with the seal of the Company. Such seal may be a facsimile.

Where any such certificate is countersigned by a transfer agent other than the Company, or an employee of the Company, or is countersigned by a transfer clerk and is registered by a registrar, the signatures of the President or Vice President and the Secretary or Assistant Secretary may be facsimiles.

In case any officer who has signed, or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer before such certificate is issued, it may nevertheless be issued by the Company with the same effect as if such officer had not ceased to hold such office at the date of its issue .

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SECTION 2. Transfer of Shares. The shares of stock of the Company shall be transferable on the books of the Company by the holders thereof in person or by duly authorized attorney, upon surrender and cancellation of certificates for a like number of shares, with duly executed assignment and power of transfer endorsed thereon or attached thereto, and with such proof of the authenticity of the signatures as the Company or its agents may reasonably require.

SECTION 3. Lost, Stolen or Destroyed Certificates. No certificate of stock claimed to have been lost, destroyed or stolen shall be replaced by the Company with a new certificate of stock until the holder thereof has produced evidence of such loss, destruction or theft, and has furnished indemnification to the Company and its agents to such extent and in such manner as the proper officers or the Board of Directors may from time to time prescribe.

ARTICLE VII

Corporate Records.

SECTION 1. Records. The Company shall keep such books and records as may be required by applicable law.

SECTION 2. Inspection. Shareholders of the Company shall have the right to inspect the books and records of the Company as provided by the law of the state of Virginia.

ARTICLE VIII

Fiscal Year.

The fiscal year of the Company shall begin on the 1st day of October in each year and shall end on the 30th day of September following.

ARTICLE IX

Corporate Seal.

The seal of the Company shall be circular in form and there shall be inscribed thereon — WGL Holdings, Inc. — a Corporation of Virginia — 2000.

ARTICLE X

Amendments.

The Board of Directors may amend or repeal the Company’s Bylaws except to the extent that (i) The Company’s articles of incorporation or Virginia state law reserves this power to the stockholders, or (ii) the shareholders in adopting or amending particular bylaws provide expressly that the board of directors may not amend or repeal that bylaw. The Company’s shareholders may amend or repeal the Company’s bylaws even though the bylaws may also be amended or repealed by the Board of Directors.

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Exhibit 3(ii).2

As amended on June 28, 2007

WASHINGTON GAS LIGHT COMPANY

BYLAWS

ARTICLE I

Stockholders.

SECTION 1. Annual Meeting. The annual meeting of stockholders of Washington Gas Light Company (the Company) shall be held on the first Thursday in the month of March in each year, at 10:00 a.m., at the National Press Club, Washington, D.C., for the purpose of electing directors and for the transaction of such other business as properly may come before such meeting. If the day fixed for the annual meeting shall be a legal holiday in the District of Columbia, such meeting shall be held on the next succeeding business day.

SECTION 2. Special Meetings. Special meetings of stockholders may be held upon call by the Chairman of the Board, the President, the Secretary, a majority of the Board of Directors, or a majority of the Executive Committee, and shall be called by the Chairman of the Board, the President or Secretary upon the request in writing of the holders of record of not less than one-tenth of all the outstanding shares of stock entitled by its terms to vote at such meeting, at such time and at such place within the District of Columbia as may be fixed in the call and stated in the notice setting forth such call. Such request by the stockholders and such notice shall state the purpose of the proposed meeting.

SECTION 3. Notice of Meetings. Notice of the time, place and purpose of every meeting of the stockholders, shall, except as otherwise required by law, be delivered personally or mailed at least ten (10) but not more than one hundred (100) days prior to the date of such meeting to each stockholder of record entitled to vote at the meeting at his address as it appears on the records of the

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Company. Any meeting may be held without notice if all of the stockholders entitled to vote thereat are present in person or by proxy at the meeting, or if notice is waived by those not so present in person or by proxy.

SECTION 4. Quorum. At every meeting of the stockholders, the holders of record of a majority of the shares entitled to vote at the meeting, represented in person or by proxy, shall constitute a quorum. The vote of the majority of such quorum shall be necessary for the transaction of any business, unless otherwise provided by law or the articles of incorporation. If the meeting cannot be organized because a quorum has not attended, those present in person or by proxy may adjourn the meeting from time to time until a quorum is present when any business may be transacted that might have been transacted at the meeting as originally called.

SECTION 5. Voting. Unless otherwise provided by law or the articles of incorporation, every stockholder of record entitled to vote at any meeting of stockholders shall be entitled to one vote for every share of stock standing in his name on the records of the Company on the record date fixed as provided in these Bylaws. In the election of directors, all votes shall be cast by ballot and the persons having the greatest number of votes shall be the directors. On matters other than election of directors, votes may be cast in such manner as the Chairman of the meeting may designate.

SECTION 6. Inspectors. The Board of Directors shall annually appoint two or more persons to act as inspectors or judges at any election of directors or vote conducted by ballot at any meeting of stockholders. Such inspectors or judges of election shall take charge of the polls and after the balloting shall make a certificate of the result of the vote taken. In case of a failure to appoint inspectors, or in case an inspector shall fail to attend, or refuse or be unable to serve, the Chairman of the meeting may appoint, or the stockholders may elect, an inspector or inspectors to act at such

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meeting. Such inspector or inspectors shall make a certificate of the result of the vote taken.

SECTION 7. Conduct of Stockholders’ Meeting. The following persons, in the order named, shall be entitled to call each stockholders’ meeting to order: (1) the Chairman of the Board, (2) the President of the Company, (3) a Vice President, or (4) any person elected by the stockholders. The stockholders shall have the right to elect a Chairman of the meeting.

The Secretary of the Company, or in his absence any person appointed by the Chairman, shall act as Secretary of the meeting for organization purposes. The stockholders shall have the right to elect a secretary of the meeting.

SECTION 8. Record Date. In lieu of closing the stock transfer books, the Board of Directors, in order to make a determination of stockholders entitled to notice of or to vote at any meeting, or to receive payment of any dividends or for any other proper purpose, may fix in advance a date, but not more than fifty days in advance, as a record date for such determination, and in such case only stockholders of record on the date so fixed shall be entitled to notice of, and to vote at, such meeting, or to receive payment of such dividend, or to exercise such other rights, as the case may be, notwithstanding any transfer of stock on the books of the Company after such date. If the Board of Directors does not fix a record date as aforesaid, such date shall be as provided by law.

SECTION 9. Notice of Business . At any meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (1) by or at the direction of the Board of Directors or (2) by any stockholder of the Company who is a stockholder of record at the time of giving of the notice as provided for in this Section 9, who shall be entitled to vote at such meeting and who complies with the following procedures:

Requirement of Timely Notice . For business to be properly brought before a meeting

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of stockholders by a stockholder, the business shall be a proper subject of stockholder action and the stockholder shall have given timely notice thereof in writing to the Secretary. To be timely, a stockholder’s notice shall be delivered to or mailed and received by the Secretary at the principal executive office of the Company not less than sixty (60) days prior to the scheduled date of the meeting (regardless of any postponements, deferrals or adjournments of the meeting to a later date); provided , however , if no notice is given and no public announcement is made to the stockholders regarding the date of the meeting at least 75 days prior to the meeting, the stockholder’s notice shall be valid if delivered to or mailed and received by the Secretary at the principal executive office of the Company not less than fifteen (15) days following the day on which the notice or public announcement of the date of the meeting was given or made.

Contents of Notice . Such stockholder’s notice to the Secretary shall set forth as to each item of business the stockholder proposes to bring before the meeting (1) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and, in the event that such business includes a proposal to amend either the Charter or these Bylaws, the language of the proposed amendment, (2) the name and address, as they appear on the Company’s books, of the stockholder proposing such business, (3) the class and number of shares of capital stock of the Company that are beneficially owned by such stockholder, and (4) any material interest (financial or other) of such stockholder in such business.

Compliance with Bylaws . Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at a stockholders’ meeting except in accordance with the

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procedures set forth in this Section 9. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that the business was not properly brought before the meeting and in accordance with the provisions of these Bylaws, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted at the meeting. Notwithstanding the foregoing provisions of this Section 9, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section 9.

Effective Date of Stockholder Business . Notwithstanding anything in these Bylaws to the contrary, no business brought before a meeting of the stockholders by a stockholder shall become effective until the final termination of any proceeding which may have been commenced in any court of competent jurisdiction for an adjudication of any legal issues incident to determining the validity of such business and the procedure pursuant to which it was brought before the stockholders, unless and until such court shall have determined that such proceedings are not being pursued expeditiously and in good faith.

ARTICLE II

Board of Directors.

SECTION 1. Number, Powers, Term of Office, Quorum, Presiding Director The Board of Directors of the Company shall consist of eight persons. The Board of Directors may exercise all the powers of the Company and do all acts and things which are proper to be done by the Company which are not by law or by these Bylaws directed or required to be exercised or done by the stockholders. The members of the Board of Directors shall be elected at the annual meeting of

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stockholders and shall hold office until the next succeeding annual meeting, or until their successors shall be elected and shall qualify. A majority of the number of directors fixed by the Bylaws shall constitute a quorum for the transaction of business. The action of a majority of the directors present at any lawful meeting at which there is a quorum shall, except as otherwise provided by law or by these Bylaws, be the action of the Board. The Board of Directors shall have a Presiding Director, who shall be an independent director, not an employee of the Company. The powers and responsibilities of the Presiding Director shall be established by the Board of Directors and shall be set forth in the Corporate Governance Guidelines of the Company. The powers and responsibilities of the Presiding Director may be modified from time to time in the discretion of the Board of Directors.

SECTION 2. Election . Except as provided in Section 3 hereof, directors shall be elected by the stockholders of the Company pursuant to the procedures enumerated below:

Eligible Persons . Only persons who are nominated in accordance with the following procedures shall be eligible for election by the stockholders as directors of the Company.

Nominations . Nominations of persons for election as directors of the Company may be made at a meeting of stockholders (1) by or at the direction of the Board of Directors, (2) by any nominating committee or person appointed by the Board of Directors or (3) by any stockholder of the Company entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 2.

Nomination by Directors or Nominating Committee . Nominations made by or at the direction of the Board of Directors or the nominating committee or person appointed by the Board of Directors may be made at any time prior to the stockholders’ meeting. The Board of

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Directors must send notice of nominations to the stockholders together with the notice of the meeting of the stockholders; provided , however , if the nominations are made after the notice of the meeting has been mailed, the Board of Directors must send notice of its nominations to the stockholders as soon as practicable.

Nomination by Stockholders . Nominations, other than those made by or at the direction of the Board of Directors or the nominating committee or person appointed by the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary. To be timely, a stockholder’s notice shall be delivered to or mailed and received by the Secretary at the principal executive office of the Company not less than sixty (60) days prior to the scheduled date of the meeting (regardless of any postponements, deferrals or adjournments of the meeting to a later date); provided , however , if no notice is given and no public announcement is made to the stockholders regarding the date of the meeting at least 75 days prior to the meeting, the stockholder’s notice shall be valid if delivered to or mailed and received by the Secretary at the principal executive office of the Company not less than fifteen (15) days following the day on which the notice or public announcement of the date of the meeting was given or made.

Contents of Notice . Nominations, other than those made by or at the direction of the Board of Directors or the nominating committee or person appointed by the Board of Directors, shall set forth:

(1) as to each person whom the stockholder proposes to nominate for election or reelection as a director, (a) the name, age, business address and residential address of the person, (b) the principal occupation or employment of the person (c) the class

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and number of shares of capital stock of the Company that are beneficially owned by the person, (d) written consent by the person, agreeing to serve as director if elected, (e) a description of all arrangements or understandings between the person and the stockholder regarding the nomination, (f) a description of all arrangements or understandings between the person and any other person or persons (naming such persons) regarding the nomination, (g) all information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Rule 14a under the Securities Exchange Act of 1934, as amended, and (h) such other information as the Company may reasonably request to determine the eligibility of such proposed nominee to serve as director of the Company; and

(2) as to the stockholder giving the notice, (a) the name, business address and residential address of the stockholder giving the notice, (b) the class and number of shares of capital stock of the Company that are beneficially owned by such stockholder, (c) a description of all arrangements or understandings between the stockholder and the nominee regarding the nomination, and (d) a description of all arrangements or understandings between the stockholder and any other person or persons (naming such persons) regarding the nomination.

-9-

Compliance with Bylaws . No person shall be eligible for election by the stockholders as a director of the Company unless nominated in accordance with the procedures set forth in this section of the Bylaws. The Chairman of the Board of Directors shall, if the facts warrant, determine and declare prior to the meeting of stockholders that the nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so inform the nominee and the stockholder who nominated the nominee as soon as practicable and the defective nomination shall be disregarded.

Effective Date of Election of Director . Notwithstanding anything in these Bylaws to the contrary, no election of a director nominated by a stockholder shall become effective until the final termination of any proceeding which may have been commenced in any court of competent jurisdiction for an adjudication of any legal issues incident to determining the procedure pursuant to which the nomination of such director was brought before the stockholders, unless and until such court shall have determined that such proceedings are not being pursued expeditiously and in good faith.

SECTION 3. Vacancies. Whenever any vacancy shall occur in the Board of Directors by any cause other than by reason of an increase in the number of directors, a majority of the remaining directors, by an affirmative vote at any lawful meeting may elect a director to fill the vacancy and to hold office until the next annual election, or until his successor is duly elected and qualified.

SECTION 4. Meetings. Regular meetings of the Board shall be held at the office of the Company in the District of Columbia at times fixed by resolution of the Board of Directors. Notice of such meetings need not be given.

Special meetings of the Board may be called by the Chairman of the Board, the President of

-10-

the Company, the Presiding Director or by any two directors. The Presiding Director may call meetings of the independent directors, who shall not be employees of the Company. At least two days’ notice of all special meetings of the Board shall be given to each director personally by telegraphic or written notice. Any meeting may be held without notice if all of the directors are present, or if those not present waive notice of the meeting by telegram or in writing. Special meetings of the Board of Directors may be held within or without the District of Columbia.

SECTION 5. Committees. The Board of Directors shall, by resolution or resolutions passed by a majority of the whole Board, designate an Executive Committee, to consist of the Chief Executive Officer of the Company who may be the Chairman of the Board, or the President and three additional members, and not fewer than three alternates to serve at the call of the Chief Executive Officer in case of the unavoidable absence of one of the regular members, to be elected from the Board of Directors. The Executive Committee shall, when the Board is not in session, have and may exercise all of the authority of the Board of Directors in the management of the business and affairs of the Company.

SECTION 6. Compensation of Directors. The Board of Directors shall fix the fee to be paid

-11-

to each director for attendance at any meeting of the Board or of any committee thereof, and may, in its discretion, authorize payment to directors of traveling expenses incurred in attending any such meeting.

SECTION 7. Removal. Any directors may be removed from office at any time, with or without cause, and another be elected in his place, by the vote of the holders of record of a majority of the outstanding shares of stock of the Company (of the class or classes by which such director was elected) entitled to vote thereon, at a special meeting of stockholders called for such purpose.

ARTICLE III

Officers.

SECTION 1. Officers. The officers of the Company shall be elected by the Board of Directors and shall consist of a Chairman of the Board, a President, a Secretary, a Treasurer, and one or more Vice Presidents, and such other officers as the Board from time to time shall elect, with such duties as the Board shall deem necessary to conduct the business of the Company. Any officer may hold two or more offices (including those of the Chairman of the Board and President) except that the offices of President and Secretary may not be held by the same person. The Chairman of the Board shall be a director; other officers, including any Vice Chairman and the President, may be, but are not required to be, Directors.

SECTION 2. Term of Office. Removal. In the absence of a special contract, all officers shall hold their respective offices for one year or until their successors shall have been duly elected and qualified, but they or any of them may be removed from their respective offices on a vote by a majority of the Board.

SECTION 3. Powers and Duties . The officers of the Company shall have such powers and

-12-

duties as generally pertain to their offices, respectively, as well as such powers and duties as from time to time shall be conferred by the Board of Directors and/or by the Executive Committee. In the absence of the Chairman of the Board, if any, the President shall preside at the meetings of the Board of Directors. In the absence of both the Chairman of the Board and the President, and provided a quorum is present, the senior member of the Board present, in terms of service on the Board, shall serve as Chairman pro tem of the meeting.

SECTION 4. Salaries. The salaries of all executive officers of the Company shall be determined and fixed by the Board of Directors, or pursuant to such authority as the Board may from time to time prescribe.

ARTICLE III-A

Indemnification of Directors and Officers.

SECTION 1. With respect to a Company officer, director, or employee, the Company shall indemnify, and with respect to any other individual the Company may indemnify, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (an “Action”), whether civil, criminal, administrative, arbitrative or investigative (including an action by or in the right of the Company) by reason of the fact the person is or was a director, officer, employee, or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by that person in connection with such Action; except in relation to matters as to which the person shall be finally adjudged in such Action to have knowingly violated the criminal law or be liable for willful misconduct in the performance of the

-13-

person’s duty to the Company. The termination of any Action by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself create a presumption that the person was guilty of willful misconduct.

Any indemnification (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstance because the person has met the applicable standard of conduct set forth above. In the case of any director, such determination shall be made: (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such Action; or (2) if such a quorum is not obtainable, by majority vote of a committee duly designated by the Board of Directors (in which designation directors who are parties may participate) consisting solely of two or more directors not at the time parties to the proceeding; or (3) by special legal counsel selected by the Board of Directors or its committee in the manner prescribed by clause (1) or (2) of this paragraph, or if such a quorum is not obtainable and such a committee cannot be designated, by majority vote of the Board of Directors, in which selection directors who are parties may participate; or (4) by vote of the shareholders, in which vote shares owned by or voted under the control of directors, officers and employees who are at the time parties to the Action may not be voted. In the case of any officer, employee, or agent other than a director, such determination may be made (i) by the Board of Directors or a committee thereof; (ii) by the Chairman of the Board of the Company or, if the Chairman is a party to such Action, the President of the Company, or (iii) such other officer of the Company, not a party to such Action, as such person specified in clause (i) or (ii) of this paragraph may designate. Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that

-14-

indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled hereunder to select such legal counsel.

Expenses incurred in defending an Action for which indemnification may be available hereunder shall be paid by the Company in advance of the final disposition of such Action as authorized in the manner provided in the preceding paragraph, subject to execution by the person being indemnified of a written undertaking to repay such amount if and to the extent that it shall ultimately be determined by a court that such indemnification by the Company is not permitted under applicable law.

It is the intention of the Company that the indemnification set forth in this Section of Article III-A, shall be applied to no less extent than the maximum indemnification permitted by law. In the event that any right to indemnification or other right hereunder may be deemed to be unenforceable or invalid, in whole or in part, such unenforceability or invalidity shall not affect any other right hereunder, or any right to the extent that is not deemed to be unenforceable. The indemnification provided herein shall be in addition to, and not exclusive of, any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders, or otherwise, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and inure to the benefit of such person’s heirs, executors, and administrators.

SECTION 2. In any proceeding brought by a stockholder in the right of the Company or brought by or on behalf of the stockholders of the Company, no monetary damages shall be assessed against an officer or director. The liability of an officer or director shall not be limited as provided in this section if the officer or director engaged in willful misconduct or a knowing violation of the

-15-

criminal law or of any federal or state securities law.

ARTICLE IV

Checks, Notes, Etc.

SECTION 1. All checks and drafts on the Company’s bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, agent or agents, as shall be thereunto authorized from time to time by the Board of Directors.

SECTION 2. Shares of stock and other interests in other corporations or associations shall be voted by such officer or officers as the Board of Directors may designate.

SECTION 3. Except as the Board of Directors shall otherwise provide, all contracts expressly approved by the Board shall be signed on behalf of the Company by the Chairman of the Board, the President, or a Vice President.

ARTICLE V

Capital Stock.

SECTION 1. Certificates for shares. Unless otherwise authorized by the Board of Directors, the interest of each stockholder of the Company shall be evidenced by a certificate or certificates for shares of stock in such form as required by law and as the Board of Directors may from time to time prescribe. The Board of Directors may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. The certificates of stock shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary and sealed with the seal of the Company. Such seal may be a facsimile.

-16-

SECTION 2. Transfer of Shares. The shares of stock of the Company shall be transferable on the books of the Company by the holders thereof in person or by duly authorized attorney, upon surrender and cancellation of certificates for a like number of shares, with duly executed assignment and power of transfer endorsed thereon or attached thereto, and with such proof of the authenticity of the signatures as the Company or its agents may reasonably require.

SECTION 3. Lost, Stolen or Destroyed Certificates. No certificate of stock claimed to have been lost, destroyed or stolen shall be replaced by the Company with a new certificate of stock until the holder thereof has produced evidence of such loss, destruction or theft, and has furnished indemnification to the Company and its agents to such extent and in such manner as the proper officers or the Board of Directors may from time to time prescribe.

ARTICLE VI

Corporate Records.

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SECTION 1. Where Kept . The books, records and papers belonging to the business of the Company, and the corporate seal, shall be kept at the office of the Company in the District of Columbia.

SECTION 2. Inspection. Any stockholder or stockholders, who shall have been such for at least six months, or who shall be the holder or holders of record of at least five percent of all the outstanding shares of stock of the Company, desiring to inspect the books or records of the Company, shall present to the Board of Directors or the Executive Committee an application for such inspection, specifying the particular books or records to be inspected and the purpose for which such inspection is desired. If, upon such application, the Board of Directors or Executive Committee deems such inspection is sought for a legitimate purpose connected with the interest of the applicant as a stockholder of the Company, such application shall be granted and a time and place for the inspection shall be specified. The stock and transfer books of the Company shall at all times, during business hours, be open to the inspection of stockholders. The Board of Directors shall have the power from time to time to establish general regulations conferring upon stockholders such further rights with respect to inspection of books and records of the Company as the Board shall deem proper.

ARTICLE VII

Fiscal Year.

The fiscal year of the Company shall begin on the 1st day of October in each year and shall end on the 30th day of September following.

ARTICLE VIII

Corporate Seal.

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The seal of the Company shall be circular in form and there shall be inscribed thereon — Washington Gas Light Company — a Corporation of the District of Columbia and Virginia — Originally Chartered by Congress in 1848.

ARTICLE IX

Amendments.

The Board of Directors shall have power to make and alter (unless the stockholders shall in any particular instance have otherwise prescribed) any Bylaws of the Company. Such action may be taken at any meeting of the Board by the affirmative vote of a majority of the total number of directors, provided that notice of the proposed change shall have been given to all directors prior to the meeting, or that all of the directors shall be present at the meeting. Any Bylaws made or altered by the Board of Directors may be altered or repealed at any time by the stockholders.

Exhibit 10.1

MASTER SERVICES AGREEMENT

between

WASHINGTON GAS LIGHT COMPANY

and

ACCENTURE LLP

June 19, 2007

CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST THAT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE OMITTED INFORMATION IS INDICATED BY THE SYMBOL “***” AT EACH PLACE IN THIS EXHIBIT WHERE THE REDACTED INFORMATION APPEARS IN THE ORIGINAL.

TABLE OF CONTENTS


1.	Definitions; Construction of Terms

2.	Scope of Services
	2.1	Services; Additions
	2.2	Additional Services
		2.2.1	New Services
		2.2.2	New Affiliates
	2.3	Order of Precedence
	2.4	Services Inclusive
	2.5	Non-Exclusive Agreement
	2.6	Transition Plans
	2.7	Provision of Services
		2.7.1	Affiliates
		2.7.2	Service Locations
		2.7.3	Safety and Physical Security Procedures
	2.8	WG Corporate Policies
	2.9	Contract Administration
		2.9.1	Service Provider Responsibilities
		2.9.2	Third Party Invoices
		2.9.3	Assigned Agreements
		2.9.4	No Additional Charges
		2.9.5	Appointment as Agent
		2.9.6	Service Provider’s Payment on WG’s Behalf
	2.10	Services Procedure Manual

3.	Service Provider Commitments
	3.1	Capital
	3.2	Equipment and Transferred Assets
		3.2.1	Service Provider Equipment
		3.2.2	Transferred Assets
	3.3	Personnel and Facilities
	3.4	Improvements
	3.5	New Technology and Re-engineering

4.	Term
	4.1	Term of the Agreement
	4.2	Term of Work Agreements; Renewals

5.	Pricing
	5.1	Prices for Services
	5.2	Price Adjustments
	5.3	Incidental Expenses
	5.4	Reimbursable Expenses
	5.5	Service Provider’s Billing Rates

(i)


	5.6	Tax Obligations

6.	Invoicing and Payment
	6.1	Monthly Payments
	6.2	Payment
	6.3	Intentionally Omitted
	6.4	Adjustments to Invoiced Amounts
	6.5	Records and Audit
	6.6	Service Level Credits and Milestone Default Credits
	6.7	Disputed Charges

7.	Acceptance
	7.1	Acceptance Testing
	7.2	Failure of Acceptance Testing for Submitted Items
		7.2.1
		7.2.2
	7.3	Failure to Meet Deliverables
	7.4	Acceptance of Transition Submittals

8.	Performance Measurement for Support Services
	8.1	Performance of Services
	8.2	Modification of Service Levels
	8.3	Measurement and Monitoring Tools for Service Levels
	8.4	Failure to Meet Service Levels
	8.5	Failure to Meet Critical Milestones
	8.6	Root Cause Analysis
	8.7	Commitment of Commercially Reasonable Efforts

9.	Benchmarking

10.	Change Management Process
	10.1	Changes
	10.2	Mandatory Changes

11.	Project and Relationship Management
	11.1	Contract Governance
	11.2	Failure to Act
	11.3	Other Providers

12.	Service Provider Personnel and Subcontractors
	12.1	Key Personnel
		12.1.1	Generally
		12.1.2	Time and Effort
		12.1.3	Replacements
		12.1.4	Replacement Transition
	12.2	Personnel.
		12.2.1	Qualified Personnel

(ii)


		12.2.2	Withdrawal/Replacement
		12.2.3	Notification and Replacement
		12.2.4	Compliance
		12.2.5	Screening and Background Checks
		12.2.6	Visas and Immigration Requirements
	12.3	No Third Party Beneficiaries
	12.4	Transfer of WG Personnel
	12.5	Service Provider’s Use of Subcontractors and Third Party Suppliers
		12.5.1	Subcontractors
		12.5.2	Third Party Services
		12.5.3	Service Provider’s Responsibility for Subcontractors

13.	Audit and Inspection Rights

14.	Business Continuity and Disaster Recovery
	14.1	Business Continuity Plan
	14.2	Implementation of Business Continuity Plan
	14.3	Testing of Business Continuity Plan

15.	Confidentiality
	15.1	Duty of Confidentiality
	15.2	Exclusions to Confidential Information
	15.3	Permitted Disclosures
	15.4	Confidentiality Agreements
	15.5	Data Protection
	15.6	Strictest Treatment
	15.7	Remedy
	15.8	Attorney Client Privilege/Work Product
	15.9	No Right or License

16.	Data and Information Security
	16.1	Safeguarding of WG Data
	16.2	Provision of WG Data
	16.3	Ownership and Use of WG Data
	16.4	Data Retention
		16.4.1	During Term
		16.4.2	Post-Term

17.	Intellectual Property
	17.1	WG Intellectual Property
		17.1.1	Trademarks and Service Marks
		17.1.2	WG Intellectual Property
		17.1.3	WG Work Product
		17.1.4	Service Provider’s Subcontractors
	17.2	Service Provider Intellectual Property
		17.2.1	Service Provider Intellectual Property
		17.2.2	Deliverables

(iii)


	17.3	Disclosure and Delivery of All Deliverables and Work Product
	17.4	No Other Licenses
	17.5	Service Provider and Third Party Intellectual Property
	17.6	Inventions
	17.7	Residual Rights

18.	Representations, Warranties and Covenants
	18.1	Service Provider Representations, Warranties and Covenants
		18.1.1	Authorization
		18.1.2	Professional Services
		18.1.3	Employees
		18.1.4	Non-Infringement
		18.1.5	No Unlawful or Unauthorized Actions
		18.1.6	Viruses/Disabling Code
		18.1.7	New Software
		18.1.8	Continuing Warranties
	18.2	WG Representations, Warranties and Covenants
		18.2.1	Authorization
		18.2.2	Non-Infringement
		18.2.3	No Unauthorized Actions
		18.2.4	Viruses/Disabling Code
		18.2.5	Continuing Warranties
	18.3	Disclaimer
	18.4	Compliance with Laws
		18.4.1	WG Compliance
		18.4.2	Service Provider Compliance
		18.4.3	Material Impact on Changes of Law
		18.4.4	Notification
		18.4.5	Miscellaneous

19.	Indemnification
	19.1	Service Provider’s Indemnity
		19.1.1	General
		19.1.2	Intellectual Property
		19.1.3	Limitations
		19.1.4	Duty to Correct
		19.1.5	Third Party Indemnities
	19.2	WG’s Indemnity
		19.2.1
		19.2.2	Intellectual Property
		19.2.3	Limitations
		19.2.4	Third Party Indemnities
	19.3	General Provisions and Procedures
		19.3.1	Notice
		19.3.2	Counsel
		19.3.3	Settlement
		19.3.4	Third Party Losses

(iv)


20.	Limitations of Liability
	20.1	Limitation on Direct Damages
	20.2	Aggregate Liability
	20.3	Exclusion of Consequential Damages and Certain Other Damages
	20.4	Exceptions
	20.5	Force Majeure
		20.5.1	Force Majeure Events
		20.5.2	Business Continuity Plan
	20.6	Duty to Mitigate

21.	Insurance
	21.1	Service Provider Insurance Coverage
		21.1.1	Workers’ Compensation
		21.1.2	Commercial General Liability
		21.1.3	Automobile Liability
		21.1.4	Crime
		21.1.5	Professional Liability
		21.1.6	Excess Liability
		21.1.7	Property Coverage
	21.2	Certificates
	21.3	[***]
	21.4	Change in A.M. Best Rating

22.	Dispute Resolution Process
	22.1	Informal Dispute Resolution
	22.2	Formal Proceedings
	22.3	Equitable Relief
	22.4	Choice of Law
	22.5	Waiver of Jury Trial

23.	Termination
	23.1	Termination by WG
		23.1.1	Termination for Convenience
		23.1.2	Cap Refresh
		23.1.3	Termination for Cause
		23.1.4	Change of Control of Service Provider
		23.1.5	Services to Former Affiliates; Termination for Change of Control of WG.
		23.1.6	Termination for Insolvency or Bankruptcy
		23.1.7	Termination for Benchmarking
		23.1.8	Termination for Force Majeure
		23.1.9	Cross-Termination
		23.1.10	Partial Termination
		23.1.11	Extension of Termination Effective Date
	23.2	Termination by Service Provider
		23.2.1	Termination for Convenience
		23.2.2	Termination for WG's Failure to Pay

[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

(v)


	23.3	Effect of Termination
	23.4	Termination/Expiration Assistance
	23.5	Equitable Remedies
	23.6	Service Provider Employees and Contracts
	23.7	Service Provider Subcontractors

24.	General
	24.1	Entire Agreement
	24.2	Assignment
	24.3	Notices
	24.4	Third Party Notice
	24.5	Expenses
	24.6	Relationship of the Parties
	24.7	Severability
	24.8	Consents and Approval
	24.9	Waiver of Default
	24.10	Remedies Cumulative
	24.11	Survival of License in Bankruptcy
	24.12	Survival of Obligations
	24.13	Media Releases
	24.14	Third Party Beneficiaries
	24.15	Compliance with Export/Import Control Laws
	24.16	Compliance with Foreign Corrupt Practices Act
	24.17	Further Assurances
	24.18	Calculation of Days
	24.19	Headings and Appendices; Construction
	24.20	Counterparts
	24.21	Strategic Alliances

(vi)

APPENDICES


Appendix 1		WG Corporate Policies
Appendix 2		Data Security and Information Protection Policies
Appendix 3		Health, Safety, Physical Security and Welfare Policies
Appendix 4		Form of Work Agreement
Appendix 5		Taxes
Appendix 6		Data Security Procedures
Appendix 7		Benchmarking
Appendix 8		Service Level Methodology
Appendix 9		Form of Assignment and Assumption
Appendix 10		Audit Procedures
Appendix 11		Definitions
Appendix 12		Governance
Appendix 12.1		Change Request Procedures
Appendix 13		Disaster Recovery and Business Continuity
Appendix 14		Affiliate Acknowledgement
Appendix 15		Service Provider Parent Guarantee

(vii)

MASTER SERVICES AGREEMENT

This Master Services Agreement is made and entered into as of June 19, 2007 (the “ Execution Date ”), by and between WASHINGTON GAS LIGHT COMPANY , a District of Columbia and Virginia corporation (“ WG ”), and ACCENTURE LLP , an Illinois limited liability partnership (“ Service Provider ”).

WHEREAS, Service Provider is a reputable, industry leading, information technology and business process outsourcing provider;

WHEREAS, WG desires Service Provider to provide and Service Provider desires to provide, certain outsourcing, professional and other services to WG and its Affiliates;

WHEREAS, Service Provider desires to provide such services, for a reasonable profit, in accordance with the terms of this Agreement;

WHEREAS, the Parties’ specific goals and objectives for the services are to:

	(i)		establish a delivery process that provides value and is responsive to the demands of WG’s business, and to changes in the industry and business environment, in technology and in methods for providing services;

	(ii)		leverage Service Provider’s business processes, information technology services, and integration capabilities to enhance the quality of the services required to be provided while identifying opportunities for savings and maintaining and improving the quality of the services as set forth in this Agreement;

	(iii)		provide the services and solutions in a manner that is flexible, cost effective and efficient, at a reduced cost to WG, with predictable pricing and in full alignment with business unit and regulatory requirements as set forth in this Agreement;

	(iv)		provide for the orderly transfer of responsibility of certain functions and processes from WG to Service Provider;

	(v)		maintain and continuously enhance a strong internal controls environment; and

	(vi)		have WG and its Third Party Providers deliver the enabling capabilities and resources for which WG and its Third Party Providers are responsible as set forth in this Agreement and that are required for WG and Service Provider to perform their obligations.

The foregoing recitals are intended to be a general introduction to this Agreement and are not intended by either Party to be binding, expand the scope of either Party’s obligations, or alter the terms and conditions of this Agreement. However, if the terms and conditions of this Agreement do not address a particular circumstance or are otherwise unclear or ambiguous, the recitals set forth above shall assist in interpreting and construing such terms and conditions but only to the extent the contract terms do not address a particular circumstance or are otherwise unclear or ambiguous.

NOW , THEREFORE , Service Provider agrees to provide such services to WG and its Affiliates, and WG agrees to purchase such services from Service Provider, on the terms and conditions set forth in this Agreement and in consideration of the covenants and promises contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

1. Definitions; Construction of Terms.

Terms used herein with initial capital letters shall have the respective meanings set forth in Appendix 11 . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.

2. Scope of Services

2.1 Services; Additions.

Pursuant to the terms and conditions of this Agreement, Service Provider shall provide to WG the Services, which will be described in Work Agreements, the form of which is attached hereto as Appendix 4 . Services may be modified from time to time during the Term in accordance with the procedures for Changes set forth in Appendix 12.1 . Service Provider shall not have the right to cease provision of the Services (in whole or in part) except as expressly provided in this Agreement.

2.2 Additional Services

2.2.1 New Services.

If WG or its Affiliates elect to outsource services similar to the Services, Service Provider shall provide the New Services in accordance with this Agreement to the extent applicable, [***]. Any New Services (including the Transition Plan related thereto) shall be set forth in a Change Order or in a new Work Agreement that is executed by the Parties during the Term.

2.2.2 New Affiliates.

If WG requests that Service Provider provide some or all of the Services for a New Affiliate, Service Provider will provide such New Affiliate with the Services. As part of its obligation under this Section 2.2.2 , Service Provider shall propose a transition plan and schedule for implementation of the Services to be provided to such New Affiliate. The Service Provider may charge WG for the initial set-up, transition and implementation charges allocable to such New Affiliate (determined on a commercially reasonable basis consistent with the other Charges), unless such Charges are specifically identified in the applicable Work Agreement, and shall charge WG for the performance and delivery of the Services allocable to such New Affiliate, based on the existing charging methodologies for increases or decreases in the Charges due to increases or reductions in the quantity of the Services used by WG.

2.3 Order of Precedence.

The Parties contemplate that they may enter into additional Work Agreements during the term of this Master Services Agreement. The Parties intend that this Agreement govern the relationship of the Parties to the extent practicable, with Work Agreements intended to specify the particular Services to be provided. In case of ambiguity or conflict between the terms and conditions of the body of this Master Services Agreement or an Appendix, on the one hand, and a Work Agreement, on the other hand, the terms and conditions of the body of this Master Services Agreement or the applicable Appendix shall control, except to the extent the Parties wish to supersede a term or condition of the body of this Master Services Agreement or an Appendix in connection with the provision of a particular Service, in which case the applicable Work Agreement shall expressly reference such term or condition. A subsequent Work Agreement shall supersede any and all prior agreements or understandings in a prior Work Agreement with respect to the Services described therein. In case of an ambiguity or conflict between the terms and conditions of the body of this Master Services Agreement and an Appendix, the terms and conditions of the body of this Master Services Agreement shall control, except to the extent the Parties wish to supersede a term or condition of the body of this Master Services Agreement in a particular Appendix, in which case the applicable Appendix shall expressly reference such term or condition. For purposes of this Section 2.3 , the definitions in Appendix 11 shall be deemed to be a part of the body of this Master Services Agreement.

2.4 Services Inclusive.

The Services consist of the tasks and functions set forth in the Work Agreements, the functions and activities set forth in this Article 2 and, [***] activities, tasks and responsibilities that are (i) [***] for Service Provider to provide to Service Provider’s other customers that are [***] as the Services from a Service Provider shared service delivery location, (ii) inherent or necessary as part of the Services, or (iii) reasonably necessary for the proper performance of the Services.

2.5 Non-Exclusive Agreement.

WG may engage, and enter into relationships with, third party entities providing any services, including any services the same as or comparable to the Services. Subject to the termination provisions set forth in Article 23 or in any Work Agreement, WG may at any time, in-source or obtain any or all of the Services from one or more third parties. Each Party acknowledges and agrees that the execution of this Agreement is not a guarantee of (i) future work or (ii) minimum payment (subject to such payment obligations set forth in the applicable Work Agreement). If WG acquires a product or service in a category of spend that is included in the Savings Calculation Methodology in Work Agreement No. 1, such acquisition will be dealt with in the manner as set forth in the Savings Calculation Methodology.

2.6 Transition Plans.

Each Work Agreement shall include, if applicable, a Transition Plan for Services provided under such Work Agreement. The Transition Plan for a Work Agreement shall include a transition approach and transition project plan with, as and to the extent set forth in the applicable Work Agreement and Transition Plan, specific responsibilities of the Parties and, as applicable, Deliverables, Milestones, Acceptance Testing, as well as Critical Milestones and Milestone Default Credits. Service Provider shall, with input from WG (i) develop and present each specific Transition Plan to WG for its approval or amendment, (ii) manage the mutually agreed upon Transition Plan, (iii) develop and present an Acceptance Test Plan for the Transition Plan to WG for its approval or amendment, and (iv) execute the Transition Plan and the Acceptance Test Plan, subject to WG’s rights in Section 7.4 . If and to the extent set forth in the applicable Transition Plan Service Provider fails to complete the transition within [***] days after the date for such completion set forth in the Transition Plan, WG shall accrue Milestone Default Credits as set forth in the Transition Plan. WG may terminate the applicable Work Agreement, in whole or in part, for cause, pursuant to Section 23.1.3(v) and if specified in Exhibit D to that Work Agreement, if Service Provider fails to complete the transition as specified in the Transition Plan.

2.7 Provision of Services.

2.7.1 Affiliates.

Services may be provided (i) by an Affiliate of Service Provider, or (ii) to an Affiliate of WG. Each such Work Agreement shall be subject to the terms and conditions of this Agreement pursuant to Section 2.3 , with references in this Agreement to Service Provider being read as references to the relevant Affiliate of Service Provider and references to WG being read as references to the relevant Affiliate of WG where appropriate. To the extent Services are provided to WG Affiliates through WG, WG as a Party to this Agreement will (i) remain responsible for all payments for Charges to Service Provider for such Services and (ii) in its own name pursue any claim against Service Provider for damages suffered by such WG Affiliate as a result of such Services. Each WG Affiliate receiving Services through WG shall sign an Affiliate Acknowledgement form provided in Appendix 14 . To the extent WG Affiliates are to receive Services directly from Service Provider ( i.e. , not through WG), WG Affiliates shall enter into Work Agreements directly with Service Provider so long as Service Provider is reasonably satisfied with any such Affiliate’s credit rating and financial ability to meet its payment obligations under such Work Agreement. Any such WG Affiliate shall be liable and responsible for the performance of its obligations under such Work Agreement. Services will be provided for the benefit of WG and its Affiliates residing in the United States and will be delivered to United States locations. WG may elect to extend provision of the Services to a New Affiliate in accordance with

and subject to the terms of Section 2.2.2 , which Services to such Affiliate shall be subject to the same terms and conditions (including price terms) as the Services. Any amounts paid or owed to Service Provider or one of its Affiliates under any such Work Agreement shall count toward any volume discount pricing arrangement or minimum revenue commitment, if any, between the Parties.

2.7.2 Service Locations.

To the extent applicable, each specific Work Agreement shall identify the WG Locations that shall receive each of the Services under such Work Agreement and the approved Service Provider Service Locations that shall provide each of such Services. WG acknowledges that Service Provider may utilize non-U.S. based operations in connection with the performance of this Agreement. Service Provider shall be entitled, subject to compliance with all Laws Applicable to Service Provider, Generally Applicable Laws as they apply to Service Provider, WG Compliance Directives and all Data Protection Laws, as provided in Section 18.4 , to transfer Services and related obligations from a Service Provider Service Location to another location as set forth in this Section 2.7.2 .

(A) Transition Plan . Service Provider shall be permitted to transfer Services as expressly set forth in the Transition Plan for each Service.

(B) General Principles .

(1) Service Provider must notify WG at least [***] in advance of any transfer, except as provided in (A) above.

(2) Service Provider shall, prior to such transfer, promptly provide WG with all information reasonably requested by WG to evaluate such new Service Provider Service Location and allow WG to conduct due diligence with respect to such new Service Provider Service Location, including a site visit.

(3) Service Provider [***] that Service Provider will, after such transfer, be able to fulfill all of its obligations as provided in this Agreement.

(4) If WG believes Service Provider has not [***], then Service Provider may pursue resolution through the Dispute Resolution Process.

(5) If WG agrees that Service Provider will, after such transfer, be able to fulfill all of its obligations as provided in this Agreement or as a result of the Dispute Resolution Process it has been determined that Service Provider [***],

(i) and WG agrees to such transfer, then Service Provider may so transfer and Service Provider will be responsible for all costs associated with such transfer, or

(ii) and WG does not agree to such transfer or agrees to such transfer subject to a delay in the actual date of the transfer, then Service Provider may not transfer and WG must either agree to pay all of Service Provider’s costs associated with Service Provider continuing to provide Services from that current Service Provider Service Location (including during the period which WG has asked Service Provider to delay such transfer) that are in excess of the costs Service Provider would have incurred had it transferred and provided such Services from such new Service Provider Service Location or, if WG does not agree to pay such costs, then Service Provider may terminate this Agreement for its convenience (and without a payment by WG of any Termination Charges) by giving [***] notice to WG (provided that Service Provider will provide up to [***] of Termination Assistance Services).

(1) Service Provider must notify WG at least [***] in advance of any transfer.

(2) Service Provider must obtain WG’s prior consent to transfer any Leak Call Services and Service Provider shall, prior to such transfer, promptly provide WG with all information reasonably requested by WG to evaluate such new Service Provider Service Location and allow WG to conduct due diligence with respect to such new Service Provider Service Location, including a site visit.

(3) Service Provider shall have [***] that Service Provider will, after such transfer, be able to fulfill all of its obligations as provided in this Agreement and provide the Leak Call Services as well as or better than they were provided from the original Service Provider Service Location.

(4) If WG believes Service Provider has not [***], then Service Provider may pursue resolution through the Dispute Resolution Process.

(5) If WG agrees that Service Provider will, after such transfer, be able to provide the Leak Call Services as well as or better than they were provided from the original Service Provider Service Location, or as a result of the Dispute Resolution Process it has been determined that Service Provider has [***],

(i) and WG agrees to such transfer, then Service Provider may so transfer and Service Provider will be responsible for all costs associated with such transfer, or

(ii) and WG does not agree to such transfer or agrees to such transfer subject to a delay in the actual date of the transfer, then WG must either agree to pay all of Service Provider’s costs associated with Service Provider continuing to provide Services in that Service Provider Service Location (including during the period which WG has asked Service Provider to delay such transfer) that are in excess of the costs Service Provider would have incurred had it transferred and provided such Services from such new Service Provider Service Location or, if WG does not agree to pay such costs, then Service Provider may terminate the Leak Call Services for its convenience (and without a payment by WG of any Termination Charges) by giving [***] notice to WG (provided that Service Provider will provide up to [***] of Termination Assistance Services).

(D) Onshore to Offshore . Notwithstanding anything to the contrary in this Section 2.7.2 , and except as provided in the Transition Plan for each Service, Service Provider must obtain WG’s prior consent, [***] to transfer any Services from an onshore location to an offshore location (for the purposes of this Section 2.7.2 , all locations in the U.S. and Canada shall be considered onshore locations, and all other locations, including locations in Mexico, shall be considered offshore locations); and,

(E) Specific Services in Work Agreement . Notwithstanding anything to the contrary in this Section 2.7.2 , any Work Agreement may require a different standard for approval for a transfer from one Service Provider Service Location to another Service Provider Service Location than is set forth in this Section 2.7.2 .

(F) Service Provider Responsibility . Notwithstanding WG’s approval of the transfer of Services from a Service Provider Service Location to another Service Provider Service Location, Service Provider shall remain liable and responsible for the performance of all Services by it and all of its Affiliates hereunder. Service Provider shall be [***] resulting from any transfer from one Service Provider Service Location to another Service Provider Service Location; provided , however , that WG shall be [***] (A) such transfer was expressly requested by WG; or (B) WG has expressly agreed to be responsible for [***] a Change Order or Work Agreement. [***]

(G) Dissatisfaction . If WG becomes dissatisfied with a Service Provider Service Location due to political instability, change in Law, or similar reason, the Parties shall discuss in good faith the movement of the Services from such Service Provider Service Location to another Service Provider Service Location.

2.7.3 Safety and Physical Security Procedures.

As part of the Services, Service Provider shall maintain and enforce at Service Provider Service Locations safety and security procedures that are at least (i) equal to accepted industry standards of leading providers of information technology services and business process outsourcing services that are providing services similar to the Services and the standards set forth in the applicable Work Agreement, and (ii) as rigorous as those procedures in effect at Service Provider Service Locations as of the Effective Date. In addition, Service Provider shall comply with WG Policies as set forth in Appendix 3 . Changes to WG Policies set forth in Appendix 3 shall be agreed to and implemented in accordance with Article 10 and the Change Request Procedures in Appendix 12.1 .

2.8 WG Corporate Policies.

Service Provider shall comply with the WG Corporate Policies as set forth in Appendix 1 . Changes to such WG Corporate Policies shall be agreed to and implemented in accordance with Article 10 and the Change Request Procedures in Appendix 12.1 .

2.9 Contract Administration.

In the event Service Provider is required to administer any contracts on behalf of WG, the terms and conditions of this Section 2.9 shall apply.

2.9.1 Service Provider Responsibilities.

2.9.1.1 Service Provider Administered Agreements.

During the Term, Service Provider shall be responsible for managing, administering, and maintaining the Service Provider Administered Agreements.

With respect to all Service Provider Administered Agreements, and any mutually agreed to substitutes or replacements therefor, Service Provider shall:

(i) provide WG with reasonable notice of any renewal, termination, or cancellation dates and fees;

(ii) upon agreement by WG and Service Provider, to the extent permitted by the Service Provider Administered Agreements, modify, terminate, or cancel any such Service Provider Administered Agreements;

(iii) pay the modification, termination, or cancellation fees or charges imposed upon WG in connection with any modification, termination,

or cancellation of any such Service Provider Administered Agreements, where such [***] (A) caused by, or resulted from, an act by Service Provider not approved by WG, or its Affiliates, including Service Provider’s failure to notify WG of a renewal, termination, or cancellation date on a timely basis, or (B) imposed by Service Provider;

(iv) be responsible for notifying WG of any performance obligations, and maintaining any warranties (including making warranty claims for defective products and services), under such Service Provider Administered Agreements;

(v) be the primary point of contact and be responsible for communicating with the third party, including handling, with WG’s input and approval, problem resolution in respect of the services provided under such Service Provider Administered Agreements;

(vi) review operational service delivery and performance reports, escalating problems for resolution and, where applicable, maintaining support relationships;

(vii) work with WG to administer contractual relationships between WG and such third party with respect to such Service Provider Administered Agreements;

(viii) review reports received concerning the delivery of services by such third party and compliance with any service levels applicable to such third party and notify WG and such third party of each failure by such third party to perform in accordance with the applicable service levels;

(ix) escalate third party performance failures to management of the third party as necessary to achieve timely resolution;

(x) review the third party’s efforts to remedy a failure of performance;

(xi) communicate to WG the status of the third party’s efforts to remedy a failure of performance; and

(xii) otherwise use commercially reasonable efforts to notify WG of issues it becomes aware of concerning each third party’s compliance or non-compliance with its applicable duties and obligations, including all applicable service levels.

2.9.1.2 Performance Under Agreements .

Subject to WG’s compliance with its obligations with respect to such Service Provider Administered Agreements, Service Provider shall abide by the terms of, and shall not breach or violate, any of the Service Provider Administered Agreements. Subject to Service Provider’s compliance with its obligations with respect to such Service Provider Administered Agreements, WG shall abide by the terms of, and shall not breach or violate, any of such Service Provider Administered Agreements. Service Provider shall promptly inform WG once it becomes aware of any breach of, or misuse or fraud in connection with, any such Service Provider Administered Agreements and shall cooperate with WG to prevent or stay any such breach, misuse, or fraud. Service

Provider [***] as a result of Service Provider’s failure to perform its obligations under this Agreement with respect to such Service Provider Administered Agreements.

2.9.1.3 Limitations .

Any use by Service Provider of any services provided by each such third party pursuant to a Service Provider Administered Agreement shall be limited to fulfilling the requirements of this Agreement. Except as expressly set forth in this Section 2.9 or an applicable Work Agreement, Service Provider shall not be responsible for any costs associated with any of the contracts between such third parties and WG, nor for the enforcement of WG’s rights or such third party’s obligations under such contracts, acting as an agent of WG or otherwise.

2.9.2 Third Party Invoices.

(i) Service Provider Obligations . Service Provider shall: (A) receive all Third Party Invoices; (B) review and use commercially reasonable efforts to correct any errors in any such Third Party Invoices in a timely manner; (C) validate that the goods and services provided with respect to such invoice were provided or performed in accordance with such Service Provider Administered Agreement; and (D) submit such Third Party Invoices to WG for payment within a reasonable period of time prior to the due date, if received in sufficient time or, if a discount for such payment is given, the date on which WG may pay such Third Party Invoice with a discount.

(ii) WG Obligations . WG shall: (A) pay the Third Party Invoices received and presented for payment by Service Provider in compliance with Section 2.9.2(i) ; and (B) be [***] in respect of the Third Party Invoices; provided , however , that Service Provider submitted the applicable Third Party Invoices to WG for payment within a reasonable period of time prior to the date any such Third Party Invoice is due.

2.9.3 Assigned Agreements.

The Parties shall execute an Assignment and Assumption Agreement applicable to each Assigned Agreement, in the form attached hereto as Appendix 9 . Until WG obtains any required Consents and the Parties have executed an Assignment and Assumption Agreement in respect of an Assigned Agreement, such agreements shall be considered a Service Provider Administered Agreement.

Subject to WG obtaining any required Consents, WG shall assign, and Service Provider shall assume, all of WG’s rights and obligations under the Assigned Agreements designated as:

(i) “Expected to be Assigned (Reviewed)” provided that full disclosure of the terms of such Agreements have been made as of the Effective Date or

(ii) “Expected to be Assigned (Not Reviewed)”,

each in Exhibit I to Work Agreement No. 1.

In the event that an Assigned Agreement designated as “Expected to be Assigned (Reviewed)” has not been fully disclosed as of the Effective Date, such Agreement shall be designated as “Expected to be Assigned (Not Reviewed).”

Notwithstanding the foregoing, with respect to any Assigned Agreement designated as “Expected to be Assigned (Not Reviewed)” in Exhibit I to Work Agreement No. 1, Service Provider shall decide before the applicable Services Commencement Date whether it wishes to accept the assignment of such Assigned Agreement. If Service Provider wishes to accept assignment, and upon WG obtaining any required Consents, WG shall assign, and Service Provider shall assume, all of WG’s rights and obligations under such Assigned Agreements. If Service Provider wishes not to accept assignment, it shall notify WG prior to such Services Commencement Date, such agreement shall be considered a Service Provider Administered Agreement and the Parties will agree to an equitable adjustment to the Charges associated with such Assigned Agreement pursuant to Paragraph 13.1(a)(i) of Exhibit C to Work Agreement No. 1. With respect to any Service Provider Administered Agreement that is identified in Exhibit I to Work Agreement No. 1 as being subject to an “Agreed Termination Date,” the Party responsible for any termination fees that would be required to terminate such Service Provider Administered Agreement is the Party so identified on Exhibit I to Work Agreement No. 1. WG shall have financial and administrative responsibility for Consents required to transfer or assign an Assigned Agreement or to allow Service Provider to manage or administer a Service Provider Administered Agreement.

2.9.4 No Additional Charges.

Except as expressly set forth in the applicable Work Agreement, Service Provider shall not assess WG any additional charges or fees for administering any Service Provider Administered Agreements (including marking up the charges or fees set forth in any Third Party Invoices).

2.9.5 Appointment as Agent.

WG shall, to the extent necessary, in a Work Agreement, appoint Service Provider as its agent for all matters pertaining to the Service Provider Administered Agreements.

2.9.6 Service Provider’s Payment on WG’s Behalf.

To the extent any Service requires Service Provider to make or disburse a payment to a third party as payment agent for WG, or otherwise on WG’s behalf, the Parties shall utilize procedures to reduce or eliminate Service Provider’s holding of WG’s funds prior to payment. In the event Service Provider makes an incorrect payment to a third party, Service Provider shall, subject to WG’s approval, seek to recover such incorrect payment directly from such third party.

2.10 Services Procedure Manual.

Service Provider shall provide a Services Procedure Manual as a Deliverable that describes how the Service Provider shall perform and deliver the Services under this Agreement and pursuant to the applicable Statement of Work. The content and delivery requirements for the Services Procedure Manual shall be as set forth in the Work Agreement. In the event of a conflict between the provisions of this Agreement and the Services Procedure Manual, the provisions of this Agreement shall control. The Services Procedure Manual shall be considered an operational document, which Service Provider and WG may revise by mutual written agreement without the need to amend this Agreement. The Service Provider shall establish, maintain and keep current training materials and other documentation required by Service Provider to perform the Services.

3. Service Provider Commitments.

3.1 Capital.

During the Term, unless otherwise agreed by the Parties in such Work Agreement, all capital investments made by Service Provider to provide the Services or as may be necessary to enhance (in accordance with Section 3.4) and maintain the quality of the Services and Service Levels as required by this Agreement shall be made at Service Provider’s sole expense.

3.2 Equipment and Transferred Assets.

3.2.1 Service Provider Equipment.

Except as otherwise expressly provided in this Agreement, Service Provider shall be the owner or lessee of all Equipment and be solely responsible for the maintenance of the Equipment.

3.2.2 Transferred Assets.

A Work Agreement may identify certain Equipment to be transferred by WG to Service Provider thereunder. Such Work Agreement will specify the terms and conditions under which such Equipment is to be sold, assigned, transferred and conveyed to Service Provider. WG shall retain a purchase money security interest in the transferred Equipment to secure the prompt payment of any consideration for such Equipment as set forth in the applicable Work Agreement, and Service Provider agrees to sign and deliver any filings, and take such other steps, as may be reasonably requested by WG to perfect such security interest. Upon the transfer of such Equipment, Service Provider shall be responsible for ongoing maintenance, repair and replacement of such Equipment as required. THE TRANSFERRED EQUIPMENT IS TRANSFERRED “AS IS” AND “WHERE IS” WITH NO OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER. SERVICE PROVIDER ACKNOWLEDGES THAT WG IS NOT ACTING AS A MERCHANT WITH RESPECT TO SUCH TRANSFER.

3.3 Personnel and Facilities.

WG will provide work space, phone, LAN/WAN and supplies at WG Locations for the Service Provider Personnel set forth on Exhibit L , at no additional cost to Service Provider. Except as otherwise expressly provided in this Agreement (including the previous sentence), Service Provider shall be responsible for providing all facilities, personnel, and other resources necessary for Service Provider’s provision of the Services, and all costs and expenses associated therewith.

3.4 Improvements.

Service Provider will explore opportunities on an ongoing-basis to reduce WG’s total cost of receiving the Services (including the Charges) and to improve Service Provider’s performance of the Services and Service Levels and shall be required, throughout the Term, to implement such measures as mutually agreed to and implemented in accordance with [***] and the Change Request Procedures or as otherwise set forth in a Work Agreement. Such opportunities may include economies of scale and greater efficiencies developed by Service Provider and technical changes and other developments affecting delivery of the Services. Each Work Agreement shall identify the Services to be provided under such Work Agreement that are subject to continuous improvement. The program for such continuous improvement shall be set forth in [***] or the applicable Work Agreement.

3.5 New Technology and Re-engineering.

During the Term, Service Provider shall keep itself informed of new technology and improvements in current technology that may facilitate or improve the Services to result in cost savings, improvement in Service Provider’s performance of the Services and Service Levels, and other benefits to WG. Service Provider shall advise WG of such new technology or improvements about which it is aware and advise WG of their prospective benefits at quarterly meetings between the Parties, and in a written report to WG at least once in each calendar year. In addition, Service Provider shall review the operations required to support WG and shall recommend to WG certain re-engineering procedures, processes and tools. In the event that the re-engineering opportunity would require WG to modify its methods, practices or policies, Service Provider shall (i) present the changes to WG, (ii) discuss with WG the requirements of implementation, and (iii) identify the projected benefits to both WG and Service Provider. The Parties shall work in good faith to determine the costs, benefits and proper level of commitment by both WG and Service Provider for implementing such re-engineering projects. Either Party may request implementation of any of the foregoing in accordance with the procedures for Changes set forth in Appendix 12.1 , and Service Provider shall not implement any of the foregoing without such Changes being mutually agreed to in accordance with Appendix 12.1 .

4. Term.

4.1 Term of the Agreement.

This Master Services Agreement shall be effective as of the Execution Date and shall remain in effect until the later of: ten (10) years after the Execution Date; or (ii) the date that there is no Work Agreement in effect.

4.2 Term of Work Agreements; Renewals.

Each Work Agreement shall set forth its Effective Date and its Term, as well as any renewal term(s), as applicable. Unless otherwise provided in this Agreement, expiration or termination of such Work Agreement shall not terminate any other Work Agreement or this Master Services Agreement.

5. Pricing

5.1 Prices for Services.

The Charges for the Services are specified in each Work Agreement in accordance with the pricing provisions set forth in each such Work Agreement. Such Charges are exclusive of Taxes that are WG’s responsibility pursuant to this Agreement. WG is not committed to a minimum level of business and associated charges pursuant to this Agreement except as otherwise provided in the applicable Work Agreement.

5.2 Price Adjustments.

The Service Provider will review all Services and their associated prices with WG on an annual basis, and where available improvements in performance or appropriate adjustments in Charges are identified (including through Section 3.4 and Section 3.5 ), such improvements and adjustments shall be documented and agreed to in accordance with the procedures for Changes set forth in Appendix 12.1 ; provided, however, that the requirement in this Section 5.2 that the Parties agree to improvements shall not apply to Services specifically identified in applicable Work Agreements as being subject to continuous improvement obligations pursuant to [***].

5.3 Incidental Expenses.

Any expenses that Service Provider expects to incur that are incidental to Service Provider’s performance of the Services, such as long distance telephone charges, office supplies, document reproduction, shipping and overnight mail charges, network connectivity charges, overnight mail charges and costs associated with personnel training in accordance with WG policies, shall be included in the prices set forth in the applicable Work Agreement. Unless otherwise expressly set forth in such Work Agreement, such incidental expenses shall be the sole responsibility of Service Provider and shall in no circumstances be reimbursed by WG.

5.4 Reimbursable Expenses.

WG shall reimburse Service Provider for pass-through expenses (including travel expenses, living, hotel and transportation expenses) approved in advance by WG and in accordance with WG’s then-current expense reimbursement policy. WG shall only reimburse expenses incurred by Service Provider, if Service Provider submits such expenses to WG within [***] of the end of the month in which such expenses were incurred, and so long as Service Provider submits a reasonable estimate of such expenses [***] in which such expenses were incurred.

5.5 Service Provider’s Billing Rates.

Service Provider’s rates for certain types of work to be performed for WG are as set forth in each applicable Work Agreement, which rates shall not increase during the Term, unless otherwise set forth in the applicable Work Agreement.

5.6 Tax Obligations.

The Parties’ respective obligations with respect to Taxes arising under, or in connection with, this Agreement are set forth in Appendix 5 .

6. Invoicing and Payment.

6.1 Monthly Payments.

Service Provider shall invoice WG in U.S. Dollars on a monthly basis for all Services that Service Provider believes are to be performed by Service Provider and all related forthcoming charges that Service Provider believes are to be incurred by WG during that calendar month, including any transition or transformation charges, and adjusted for any relevant Milestone Default Credits or Service Level Credits. Service Provider shall provide the invoice within the first three (3) days of the month. Such invoice shall separately identify any applicable Taxes for which WG is responsible. Service Provider shall send all invoices, in the format set forth in the applicable Work Agreement, in both electronic and hard copy form and with accounting codes prepopulated, to the attention of the person therein designated, to the address set forth in the applicable Work Agreement or such other address as WG may provide to Service Provider from time to time. All invoices will be issued by Service Provider from an address in the United States to WG at an address in the United States. Simultaneously with each invoice Service Provider shall also provide the supporting information, documentation and time sheets identified in the applicable Work Agreement for WG to verify the accuracy of such invoice. Service Provider will reconcile the actual Charges to the invoiced Charges as soon as reasonably possible and provide an associated accounting and reconciliation for any necessary adjustments to prior months’ billings. In the event that Service Provider does not provide WG with a reasonable estimate of Charges within [***], or does not provide an invoice (and the supporting information, documentation and time sheets identified in the applicable Work Agreement) within [***] of the end of the month in which such Services were provided (or the applicable reimbursable expense was incurred), WG will not be obligated to pay any after-issued invoice with respect to such Services (or applicable reimbursable expense); provided , however , that (i) WG will remain responsible for any WG Tax obligations with respect to such Services that are later assessed by a governmental tax authority with respect to the Services and the delay in levying of the assessment is not due to Service Provider’s failure to fulfill its obligations under this Agreement, and (ii) any such failure by Service Provider to provide an invoice within [***] shall not relieve Service Provider of any obligation to credit any excess charges previously invoiced by Service Provider.

6.2 Payment.

WG shall pay via wire transfer in U.S. Dollars all undisputed amounts in such invoices on or before the last Business Day in the month when the invoice was submitted. WG shall remit all such payments to the address specified by Service Provider. Any payment by WG shall be without prejudice of WG’s right to contest the accuracy of any invoice or charges. Any portion of an invoice not paid on or before the last Business Day of the month when the invoice was submitted, and not disputed pursuant to Section 6.7 , shall accrue interest at a rate of the lesser of one (1) percent per month and the highest rate permitted by Law per month, such interest beginning to accrue as of the first day after such portion was late and calculated on a simple interest basis (provided, however, that WG will not be required to pay interest to the

extent WG’s delay in payment to Service Provider is due to Service Provider’s failure with respect to its obligations (if any) with respect to any accounts payable aspects of the Services).

6.3 Intentionally Omitted.

6.4 Adjustments to Invoiced Amounts.

With respect to any amount that is agreed between the Parties as an amount that (i) should be reimbursed to a Party by the other Party, (ii) is owed to a Party by the other Party with respect to damages incurred, or (iii) is otherwise owed or payable to a Party by the other Party pursuant to this Agreement, WG may deduct the entire amount owed against the Charges otherwise payable or expenses owed to Service Provider under this Agreement and Service Provider may add the entire amount owed to the Charges otherwise payable or expenses owed to Service Provider under this Agreement.

6.5 Records and Audit.

Service Provider shall comply with the obligations set forth in Appendix 10 with respect to audits.

6.6 Service Level Credits and Milestone Default Credits.

Subject to WG’s review and approval, Service Provider shall calculate any Service Level Credits and Milestone Default Credits in accordance with Appendix 8 and Exhibit D . In addition, with each such Service Level Credit and Milestone Default Credit, Service Provider shall provide WG with supporting documentation in reasonably sufficient detail to permit WG to review and confirm the accuracy of such Service Level Credit and Milestone Default Credit.

6.7 Disputed Charges.

WG shall pay all undisputed charges when they become due in accordance with this Agreement. If WG, in good faith, disputes any Charges regarding the Services, it shall promptly notify Service Provider and the Parties shall address such Dispute in accordance with this Section 6.7 . With respect to those portions not in Dispute, Service Provider shall submit a new invoice for such portions and WG shall pay such portions within five (5) Business Days of receipt of such new invoice but in no event earlier than the date payment was due in accordance with the original invoice. With respect to those portions in Dispute, WG may withhold payment of such portions provided that WG may not withhold in the aggregate more than an amount equal to one (1) month’s Charges without placing the amount into escrow. In such event, WG will promptly notify Service Provider of the disputed amount, with an explanation of the reasons therefor. Following notification of a disputed invoice charge amount, the Parties will use their reasonable endeavors to resolve such Dispute within fifteen (15) days. If the Parties cannot resolve such Dispute within fifteen (15) days, then the matter will be escalated to the representatives of the Parties specified in the Dispute Resolution Process. Upon resolution, the amount, if any, payable will be paid to Service Provider with interest calculated at the lesser of

(i) the prime rate as published in the Wall Street Journal as of the date on which the Parties agree on the amount of the overcharge and (ii) the highest rate allowed by Law. If the aggregate amounts withheld exceed one (1) month of Charges, WG shall place all such amounts in excess of one (1) month of Charges in an escrow account in an FDIC-insured bank chosen by WG, pending resolution of the Dispute by mutual agreement or pursuant to the Dispute Resolution Process. Amounts held in escrow (including interest received, if any) shall be released upon joint instruction of the Parties following any settlement or other mutual agreement, or as determined by final adjudication of the Dispute (less, in either case, reasonable, applicable escrow costs, which shall be equally divided), provided that the Party that is successful in any final adjudication of the Dispute shall be entitled to the interest, if any. In no event will the disputed amounts to be withheld pursuant to this Section 6.7 exceed in the aggregate at any one time the Maximum Withholding Amount; provided, however, that disputed amounts withheld due to an invoice containing an unmistakable manifest error ( e.g. , a request for payment of $1,000,000,000 when the amount due was $100,000) will not be included when calculating the Maximum Withholding Amount. WG’s failure to deposit disputed Charges into escrow as provided in this Section 6.7 , or WG’s withholding of Charges in excess of the Maximum Withholding Amount, shall be grounds for Service Provider to terminate this Agreement, including all Work Agreements, in accordance with Section 23.2 .

7. Acceptance.

7.1 Acceptance Testing.

Service Provider shall perform Acceptance Testing of the Submitted Items as set forth in each applicable Work Agreement in accordance with the applicable Acceptance Criteria for such Submitted Item. The Acceptance Criteria for each Submitted Item shall be set forth in the appropriate Agreement document ( e.g. , Work Agreement, Project Work Order, Change Order). If no Acceptance Criteria are set forth, then each Submitted Item shall not be subject to acceptance, provided that in no event does the lack of specific acceptance criteria relieve Service Provider from its obligations to otherwise provide such Submitted Item in accordance with the provisions of this Agreement. Following Service Provider’s successful completion of such Acceptance Testing, Service Provider shall provide prompt written notice thereof and WG may, at its option and in its discretion, perform any additional Acceptance Testing itself. Service Provider shall seek WG’s Acceptance of each Submitted Item in accordance with the timelines for such Submitted Item set forth in the applicable Agreement document. The initial submission of a Submitted Item for WG’s approval shall be made at least [***] Business Days (or such other time period agreed by the parties (the “ Review Period ”) prior to the applicable due date. When establishing a Milestone or projected completion date for a Submitted Item, Service Provider shall take the Review Period into consideration for timing.

7.2 Failure of Acceptance Testing for Submitted Items.

7.2.1

If the relevant WG Work Product, Deliverables or any portion thereof does not conform to the Acceptance Criteria or fails Acceptance Testing (whether performed by Service Provider or WG), WG shall give Service Provider a Rejection Notice specifying any deficiencies in sufficient detail and Service Provider shall correct all deficiencies [***] after receipt of the Rejection Notice or such other time period as may be set forth in the applicable Work Agreement. Within thirty (30) days after such corrections have been made, Service Provider and/or WG shall retest the applicable WG Work Product or Deliverables as set forth in such Work Agreement. If the WG Work Product or Deliverables fail Acceptance Testing upon such retest, WG may, in its sole discretion: (x) grant Service Provider additional time to correct the outstanding deficiencies; or (y) without prejudice to any of WG’s other rights and remedies under this Agreement or at law or in equity, make a claim for damages.

7.2.2

If Service Provider has successfully performed Acceptance Testing or met the Acceptance Criteria under the applicable Work Agreement after such Acceptance Testing by Service Provider and/or WG, or WG otherwise decides, in its sole discretion, to accept a Submitted Item subject to such Acceptance Testing, WG shall notify Service Provider of its Acceptance of such Submitted Item. Payment by WG of any Charges to Service Provider for use of such Submitted Item by WG prior to Acceptance shall not constitute WG’s Acceptance of such WG Work Product or Deliverables. WG will not forgo any remedies it may otherwise have under this Agreement in the event of a later discovery of material defects, deficiencies or nonconformities in the accepted Submitted Items that were not reasonably discoverable by WG prior to such Acceptance. Further, in accepting such Submitted Item, WG will not forgo any remedies it may otherwise have under this Agreement with respect to such Submitted Item to the extent in the Work Agreement, Project Work Order or Change Order it is specifically called out as being dependent on any other Submitted Item that fails Acceptance Testing relating thereto,

7.3 Failure to Meet Deliverables.

Service Provider shall pay to WG Milestone Default Credits with respect to any failure by Service Provider to meet the Acceptance Criteria for any Deliverable or WG Work Product as set forth in the applicable Work Agreement. Service Provider’s obligation to pay Milestone Default Credits [***]. Milestone Default Credits shall be offset against any damages awarded in the event that WG successfully pursues a claim against Service Provider, [***].

7.4 Acceptance of Transition Submittals .

For Transition Submittals, when Service Provider determines that the applicable Production Readiness Criteria identified in the applicable Transition Plan for a particular Transition Critical Milestone in the Transition Plan have been met or recommends Transition should otherwise proceed, Service Provider shall notify WG. Thereafter, WG shall promptly determine whether the applicable Production Readiness Criteria identified in the applicable Transition Plan for a particular Transition Critical Milestone in the Transition Plan have been met or Transition should otherwise proceed. If WG determines that the Production Readiness Criteria have been met or WG agrees Transition should otherwise proceed, Service Provider shall notify the Executive Governance Committee. Thereafter, the Executive Governance Committee shall promptly determine whether such Production Readiness Criteria for such Transition Critical Milestone have been met or Transition should otherwise proceed. In the event that the Executive Governance Committee determines that such Production Readiness Criteria for such Transition Critical Milestone have been met or Transition should otherwise proceed and issues an Acceptance (the “Completion Criteria”), the Completion Criteria shall be considered satisfied and the Transition Critical Milestone shall be considered accepted. In the event that WG or the Executive Governance Committee makes a negative determination, Service Provider shall promptly be provided written notice of the Production Readiness Criteria that were not met and Service Provider shall seek to meet the Production Readiness Criteria for a particular Transition Critical Milestone and resubmit it for review by WG and the Executive Governance Committee consistent with this Section. This process shall continue until the Executive Governance Committee determines that the Completion Criteria have been met or until WG exercises its termination rights pursuant to Section 23.1.3(v) and Exhibit D .

8. Performance Measurement for Support Services.

8.1 Performance of Services.

Service Provider shall develop and exhibit an understanding of the business and technical objectives of WG. Service Provider shall provide the Services and the Termination Assistance Services in accordance with the Service Levels and Performance Requirements set forth in the applicable Work Agreement. In the event a Work Agreement does not specify a Service Level or Performance Requirement for particular Services or Termination Assistance Services, or portion thereof, Service Provider shall provide such Services or Termination Assistance Services at a commercially reasonable level in accordance with accepted industry standards of leading providers of information technology services and business process outsourcing services that are providing services similar to the Services or Termination Assistance

Services and the standards set forth in the applicable Work Agreement. WG may require Service Provider to correct or re-perform any defective or non-conforming Services or Termination Assistance Services, and except due to the fault of WG or its Affiliates or WG Third Party Suppliers, WG shall not be obligated to pay for such correction or re-performance beyond the amounts that WG would otherwise have had to pay had such Services or Termination Assistance Services been performed correctly in the first instance.

8.2 Modification of Service Levels.

WG and Service Provider may modify the Service Levels as set forth in Appendix 8 or the applicable Work Agreement. In addition, Service Levels shall also be adjusted to reflect the results of benchmarking pursuant to Appendix 7 .

8.3 Measurement and Monitoring Tools for Service Levels.

Service Provider shall implement, at its expense, the Measurement and Monitoring Tools. Such Measurement and Monitoring Tools shall permit reporting on at least a monthly basis to WG at a level of detail sufficient to verify compliance with the Service Levels and Performance Requirements and shall be subject to audit by WG in accordance with Appendix 10 .

8.4 Failure to Meet Service Levels.

Service Provider shall pay to WG Service Level Credits in accordance with Appendix 8 . Service Provider’s obligation to pay Service Level Credits to WG shall not limit WG’s right to seek additional remedies for any failure by Service Provider to meet the applicable Service Level. Service Level Credits shall not constitute a penalty or liquidated damages but any Service Level Credits paid by Service Provider to WG shall be offset against any damages awarded in the event that WG successfully pursues a claim arising out of such service failure. To the extent that a maximum credit amount (as set forth in the applicable Work Agreement) has been reached, Service Provider’s obligation to provide the maximum amount of Service Level Credits shall have no effect on WG’s right to terminate the applicable Work Agreement or this Agreement or any other rights or remedies WG may have under this Agreement at law or in equity, including any right to damages upon termination or otherwise.

8.5 Failure to Meet Critical Milestones.

Service Provider shall pay to WG Milestone Default Credits with respect to any failure by Service Provider to fully satisfy any Critical Milestone in accordance with the applicable Work Agreement. Service Provider’s obligation to pay a Milestone Default Credit to WG as a result of failure to meet a Critical Milestone shall not limit WG’s right to seek additional remedies for any failure by Service Provider to meet such Critical Milestone. Milestone Default Credits shall not constitute a penalty or liquidated damages but any Milestone Default Credits paid by Service Provider to WG shall be offset against any damages awarded in the event that WG successfully pursues any claim arising out of such failure to meet a Critical Milestone.

8.6 Root Cause Analysis.

Promptly after receipt of a notice from WG of Service Provider’s failure to meet a [***] (as provided in Appendix 8 ), Service Provider shall (i) commence diligent efforts to perform a root cause analysis, (ii) within fifteen (15) days provide a preliminary root-cause analysis for such failure, (iii) within thirty (30) days provide a final root-cause analysis for such failure, (iv) correct such failure within a reasonable time period taking into account the circumstances, (v) provide WG with a report detailing the cause of, and procedure for correcting, such failure, and (vi) provide WG with reasonable evidence that such failure will not be repeated.

8.7 Commitment of Commercially Reasonable Efforts.

To the extent that Service Provider fails to satisfy a Critical Milestone, Service Level or Performance Requirement or is otherwise in a position such that the provision of the Services within the time frame specified in the applicable Work Agreement is jeopardized, Service Provider shall use commercially reasonable efforts to complete the development or attain the relevant Critical Milestone or to provide the Services as necessary for such timeframe to be met. The use of commercially reasonable efforts by Service Provider as required in this Section 8.7 shall not in any way limit Service Provider’s liability (including the payment of Milestone Default Credits and Service Level Credits) for failure to meet the Critical Milestones, Service Levels and Performance Requirements and other Milestones set forth in the applicable Work Agreement, and to the extent the Services are being performed on a fixed price basis, WG shall [***].

9. Benchmarking.

WG shall have the right to benchmark the Services in accordance with the procedures set forth in Appendix 7 .

10. Change Management Process.

10.1 Changes.

The Parties may revise, amend, alter, or otherwise change the nature and scope of the Services provided under this Agreement from time to time by mutual written agreement, including changes relating to: (i) the addition of Services; (ii) the termination of certain Services; (iii) the modification of Services; (iv) changes to WG Policies, or (v) any other changes that alter the scope of a Work Agreement, or the nature of the Services (collectively, “Changes”). All such Changes shall be made in accordance with the procedures set forth in Appendix 12.1 and the applicable Work Agreement, and shall except as otherwise provided in Appendix 12.1 only become effective upon the execution by both Parties of a Change Order.

10.2 Mandatory Changes.

Notwithstanding Section 10.1 and Appendix 12.1 , if WG determines that the implementation of a Change is required for WG to comply with a change in Laws or to prevent or mitigate a material adverse effect on WG’s business or operations, then WG may, upon written notice, require Service Provider to commence with implementing such Change without agreement on a Change Order, unless implementing such Change would require Service Provider to violate applicable Law; provided , however , that (i) if such Change would require Service Provider to incur additional direct costs (with a reasonable margin), WG will reimburse Service Provider for such costs on a time and materials basis using the Project Rates set forth in the rate cards set forth in the applicable Work Agreement for the applicable Service Tower until the Parties agree on the Change Order and (ii) if Service Provider performs such Change on a time and materials basis to allow WG to comply with a change in Laws, such Change will be considered a WG Compliance Directive.

11. Project and Relationship Management.

11.1 Contract Governance.

The Parties shall implement the contract governance procedures set forth in Appendix 12 .

11.2 Failure to Act.

Service Provider and its subcontractors will be excused from failures to perform their obligations under this Agreement or to meet or exceed the Service Levels, and any resulting damages, to the extent that (i) WG, its Affiliates or its and their agents (other than Service Provider and its agents and other persons or entities working on Service Provider’s behalf) fail to perform the retained services identified in a Work Agreement or other provisions of this Agreement, or WG, its Affiliates or its and their agents (other than Service Provider and its agents and other persons or entities working on Service Provider’s behalf) fail to provide resources required by this Agreement or fulfill an obligation under this Agreement and (ii) such failure directly causes Service Provider’s failure to perform; provided , however , that Service Provider must (x) give WG prompt notice of WG’s, its Affiliates’ or its and their agents’ failure to perform such retained services, provide such resources or fulfill such obligation resulting in such performance failure, (y) use its reasonable efforts to continue to perform despite WG’s, its Affiliates’ or its and their agents’ failure to perform such retained services, provide such resources or fulfill such obligation under this Agreement and (z) use its reasonable efforts to mitigate the adverse consequences of WG’s, its Affiliates’ or its and their agents’ failure to perform such retained services, provide such resources or fulfill such obligation under this Agreement. Any such failure of WG, its Affiliates or its and their agents shall not [***] to the extent that Service Provider is seeking to be excused pursuant to this Section 11.2 and shall only

excuse Service Provider and its subcontractors from failing to perform their obligations under this Agreement or to meet or exceed the Service Levels.

11.3 Other Providers.

Service Provider acknowledges that provision of the Services may involve interaction with other providers of services and products to WG, including possibly Third Party Providers. Service Provider shall interact with the Third Party Providers in a manner that facilitates provision of the Services and the Third Party Providers’ services or products in an orderly manner; provided, however, that Service Provider’s obligation to cooperate is subject to any Third Party Provider’s agreement to the confidentiality restrictions that this Agreement imposes on WG (but only to the extent that Service Provider’s Confidential Information is involved), and such cooperation will respect Service Provider’s and WG’s commitments to contractual restrictions and obligations imposed by WG Third Party Supplier Agreements and Service Provider Third Party Supplier Agreements. Service Provider shall promptly notify WG of any matter involving a Third Party Provider that causes or threatens proper provision of the Services or the provision of any products or services by a Third Party Provider.

12. Service Provider Personnel and Subcontractors.

12.1 Key Personnel.

12.1.1 Generally.

Each Work Agreement shall list the Key Personnel and their respective responsibilities to facilitate continuity of Services during the Term. In assigning such Key Personnel, Service Provider shall represent to WG that such Key Personnel are qualified to provide and are experienced in providing the Services to which they are assigned. Unless a Work Agreement specifies otherwise, Service Provider shall not reassign or remove any such Key Personnel for [***] from the date that such person is designated as Key Personnel, without the prior express consent of WG, or unless such person (i) voluntarily resigns from Service Provider, (ii) is dismissed by Service Provider for cause, (iii) will be subject to material undue hardship ( e.g. , marital issues, illness, etc.), and as a result will terminate his/her employment with Service Provider if such person is not permitted to be reassigned to another account, or (iv) dies or is unable to work due to his or her disability. Service Provider shall, if possible, consult with WG prior to reassigning or removing any Key Personnel pursuant to subsections (ii) and (iii). Service Provider shall be responsible for the cost of training and transitioning a replacement Key Personnel.

12.1.2 Time and Effort.

Unless a Work Agreement specifies otherwise, all Key Personnel shall devote their full working time and resources to performance of Services for WG under such Work Agreement.

12.1.3 Replacements.

Before replacing any of the Key Personnel, Service Provider shall, at its sole expense: (i) notify WG of the proposed replacement, selected by Service Provider in Service Provider’s sole discretion; (ii) introduce the proposed replacement to appropriate WG representatives; (iii) provide WG with the proposed replacement’s resume and any other information about such individual’s qualifications as may be reasonably and lawfully requested by WG; and (iv) inform WG of the training and knowledge transfer plan to be used by Service Provider. If, within [***] of WG’s receipt of such information, WG objects to the proposed assignment on lawful grounds, Service Provider shall review and confer with WG regarding such objections, and shall attempt to resolve such concerns in a manner agreeable to both Parties. If the Parties have not been able to resolve WG’s concerns within [***] after WG’s objection, Service Provider shall not assign the proposed replacement to that position and shall propose to WG the assignment of another individual of suitable ability and qualifications, selected by Service Provider in Service Provider’s sole discretion, which assignment shall be subject to the review and approval procedure set forth in this Section 12.1.3 ; provided , however , that if any of the Key Personnel terminates their employment with Service Provider or will terminate his/her employment with Service Provider in accordance with Section 12.1.1 , Service Provider will have the ability to replace such person on a temporary basis and will work cooperatively and expeditiously with WG to identify a permanent replacement for such person.

12.1.4 Replacement Transition.

In connection with any change of Key Personnel, unless WG otherwise agrees in a particular instance in writing, Service Provider shall, if it can, provide that the person to be replaced and the approved replacement have overlapping service (i.e., dual coverage) of at least fifteen (15) days. Service Provider shall execute the training and knowledge transfer plan referenced in Section 12.1.3 at Service Provider’s sole cost.

12.2 Personnel.

12.2.1 Qualified Personnel.

Service Provider and its subcontractors shall provide Personnel with suitable training, education, skill and other qualifications to perform the Services under each specific Work Agreement.

12.2.2 Withdrawal/Replacement.

If WG desires to withdraw or replace any Personnel providing the Services, WG shall consult with Service Provider. If, after such consultation, WG requests the withdrawal or replacement of any Personnel, Service Provider and its subcontractors shall withdraw or replace such Personnel as soon as reasonably practical, and in connection with such action [***].

12.2.3 Notification and Replacement.

Service Provider shall use commercially reasonable efforts to facilitate the continued employment by Service Provider and its Affiliates of its and their employees then performing Services pursuant to a Work Agreement. Service Provider shall notify WG, on a confidential basis, of the termination, and the reasons therefor, for Service Provider’s or its subcontractor’s termination for cause of (i) any Personnel in customer-facing positions, handling WG’s money or financial matters, or that has access to WG Personal Data; (ii) any subcontractors set forth in Exhibit O , or for whom WG’s prior written consent is required in accordance with Section 12.5.1 ; (iii) any Personnel where termination is related to a breach of WG Policies or violation of applicable Law. If either (x) the employment of any Personnel performing Services under a Work Agreement is terminated by Service Provider or such Personnel for any reason whatsoever, or (y) WG requires the withdrawal or replacement of any Personnel pursuant to Section 12.2.2 , Service Provider and such subcontractor shall replace such terminated or withdrawn Personnel with new Personnel appropriately trained for the position that person is assuming. WG shall [***].

12.2.4 Compliance.

When Personnel (including those of each subcontractor) are on WG’s premises, they shall comply with all applicable WG rules, regulations and policies applicable to other contractors at WG, to the extent such policies have been provided to Service Provider, including such matters as on-site working hours, and holidays. WG will comply with WG Polices as set forth in Appendix 1 and Appendix 3 . Service Provider acknowledges that it has been provided with copy of all of the policies referenced on Appendix 1 and Appendix 3 . Service Provider shall provide each of its Personnel performing Services with copies of such rules, regulations and policies provided by WG and shall monitor such Personnel’s compliance with such rules, regulations and policies. WG may, in its sole discretion, approve all Personnel requiring access to any WG facility or site. Personnel shall only perform applicable Services and shall not work on other accounts when present on WG premises.

12.2.5 Screening and Background Checks.

Service Provider shall, at its expense, maintain a program to provide reasonable assurance that its Personnel performing the Services are trustworthy and reliable.

i) All Personnel: Subject to applicable Law and availability in the relevant jurisdiction, the following are required for all Personnel:


Searches		Information Required for Search
Local Criminal History Research [***] Years of Residence		Names to be searched; date of birth; SSN; and all information regarding jurisdictions to be searched

Social Locator		Full name and SSN (or equivalent in countries outside of the United States)

Education Verification		Correct name of school; address (at least city and state); year of graduation; last year attended; campus attended; name of applicant; all former names; date of birth; SSN; degree earned; name on degree

Driving Record (if driving a WG vehicle)		Drivers license number; names as appears on driver’s license; state of license; SSN; date of birth

Credit Report (if handling WG funds)		SSN; current address; date of birth

ii) Leak Call Services. In addition to the requirements of Section 12.2.5(i) , Service Provider shall, at its expense, maintain a program to provide reasonable assurance that its Personnel performing Leak Call Services and Personnel managing the Leak Call Services are trustworthy and reliable. Service Provider may not use Personnel to perform such functions if Service Provider obtains information indicating such Personnel has tested positive for controlled substances, tested at or above .04 breath alcohol concentration, or refused to test. Such program, administered by an independently audited lab, shall consist of:

	1.		All collection, transportation, testing procedures, test evaluation measures, quality control measures applicable to laboratories, medical review officers, record keeping, and reporting of drug test results will conform to the U. S. Department of Health and Human Services’ “Mandatory Guidelines for Federal Workplace Programs”, 49 CFR Part 40.

	2.		A policy and procedure for conducting the controlled substance and alcohol tests as approved by WG that describes how the tests will be conducted, when they will be conducted, and how records will be audited and retained, including confirmation of all positive test results by a) a second methodology utilizing

			Gas Chromatography/Mass Spectrometry (GS/MS) and b) a medical review officer.

	3.		The performance of four types of controlled substance tests:

			(i) Prequalification controlled substance and alcohol testing is a requirement for all applicants intended for hire or transfer into performing or managing safety sensitive employees. Prospective employees must submit to a pre-qualification (NIDA 10 panel) test for the use of controlled substances, including alcohol, not greater than [***] before the applicant is to begin performing Leak Call Services. Prior to collection of a urine sample, the applicant shall be notified that the sample will be tested for the presence of controlled substances. Applicants who provide a sample that tests positive will be prohibited from performing Leak Call Services.

			(ii) Reasonable cause controlled substance and alcohol (NIDA 10 panel) – testing protocol to be implemented when conduct witnessed by a supervisor or company official is indicative of the use of a controlled substance. All supervisors of Personnel performing Leak Call Services shall be trained in the identification of actions, appearance, or conduct that are indicative of the use of a controlled substance. Where such behavior has been observed, a supervisor shall transport such Personnel to the collection site within two (2) hours of the witnessing of indicative behavior. Refusal to submit to the test should result in removal from performing the Leak Call Services. While awaiting the test results and confirmation from the medical review officer, such Personnel should be removed from performing Leak Call Services.

			(iii) Post incidence controlled substance and alcohol NIDA 10 panel tests shall be conducted at the direction and upon notification from WG. The decision to test is based upon the conclusion that the Personnel’s actions cannot be ruled out as a contributing factor to an incident. Upon such notification, a supervisor will escort such Personnel to the closest testing facility as soon as possible, but no later than two (2) hours of the notification. A refusal by such Personnel to submit to the test should be treated as a positive test. Such Personnel should be removed from performing Leak Call Services for a refusal or until the results are received from the medical review officer. Any positive result should result in removal from performing Leak Call Services.

			(iv) Random controlled substance (10 Panel NIDA) testing will be conducted quarterly and administered at a fifty percent (50%) annualized rate so that during any twelve (12) month period the number of tests conducted will be equal to half of the total pool of covered Personnel. Personnel providing Leak

Call Services will be subject to random testing at any time with no advance notice. The random selection process will ensure each Personnel

			the same fair and equal chance of being selected. Personnel randomly selected will be notified by his/her supervisor of the selection and instructed to immediately go to the designated collection site. Failure to submit to a random test should be treated as a positive test and Personnel should be removed from performing Leak Call Services. Positive results confirmed by the medical review officer should result in such Personnel being removed from performing Leak Call Services.

	4.		Record Retention

Service Provider will retain the following records for a period of at least five (5) years:

	(1)		Records of Personnel tested, by type of test, and the results of each test;

	(2)		Documentation of Personnel that refuse to take required controlled substance and alcohol tests;

	(3)		Confirmed positive drug test results that show that Personnel failed a drug test; this record will also include: (a) the prohibited drug used; and (b). disposition of the Personnel (i.e., termination, reassignment);

Service Provider will retain records confirming supervisory and Personnel training described in 3(ii) above for at least three (3) years.

(iii) Other: Additional background check and screening requirements may be set forth in a Work Agreement.

In the event that any part of this program is not permitted by applicable Law without consent, Service Provider shall endeavor to obtain the appropriate consent. Notwithstanding the foregoing, and including in the event of any transfer of Leak Calls to a new Service Provider Service Location, Service Provider shall: (x) assign sufficient Personnel at any given time to handle Leak Calls, and (y) prevent any Personnel that has not undergone the foregoing screening program specified above from handling Leak Calls.

12.2.6 Visas and Immigration Requirements.

Service Provider shall procure, at its expense, all visas and other immigration requirements necessary to provide the Services as set forth in an applicable Work Agreement.

12.3 No Third Party Beneficiaries.

Nothing in this Article 12 is intended to provide to any employee of either Party or the Personnel any benefit or right, or entitle any such employee or the Personnel to any claim, cause of action, remedy, or right of any kind, the intent of the Parties being that nothing in this Article 12 shall be deemed to create any obligations of either Party to any employee of either Party or

the Personnel or to create any right to any employee of either Party or the Personnel. No employee of either Party or the Personnel shall have any rights to enforce this Article 12 , either for his or her own benefit or otherwise. Personnel supplied hereunder are not WG’s employees or agents and Service Provider shall continue to be fully responsible for their acts. Service Provider, or its subcontractors (as applicable) shall be solely responsible for the payment of compensation of the Personnel and Service Provider and its subcontractors (as applicable) shall inform Personnel that they are not entitled to any of WG’s employee benefits. Service Provider or its subcontractors (as applicable), and not WG, shall be solely responsible for payment of worker’s compensation, disability benefits and benefits similar thereto and unemployment insurance or for withholding and paying employment taxes for the Personnel.

12.4 Transfer of WG Personnel.

If any employees will be transferred from WG to Service Provider, the applicable Work Agreement will include the human resource provisions.

12.5 Service Provider’s Use of Subcontractors and Third Party Suppliers.

12.5.1 Subcontractors.

12.5.1.1 Service Provider Obligations .

Service Provider shall not subcontract any portion of the Services or all or any portion of its obligations under this Agreement without WG’s prior written consent, except that Service Provider may, without WG’s prior written consent, (i) enter into subcontracts for third party services or products with any of the subcontractors listed in Exhibit O as pre-approved as of the Effective Date, (ii) cause its Affiliates to provide any of the Services, (iii) enter into subcontracts with (A) natural persons (1) who qualify as “independent contractors” or “temp employees” of Service Provider who provide temporary services to Service Provider under independent contractor relationships of a type commonly referred to in the United States as “1099” relationships or (2) who provide services to Service Provider on a leased employee or so-called “staffed- or temp-employee basis” pursuant to contracts between Service Provider and a staff augmentation or staff supplementation company, or (B) subcontractors that provide ancillary indirect support services, or (iv) in the ordinary course of business, enter into a subcontract with an entity to provide third party services for which the total estimated or anticipated value of such subcontract is less than [***] in any calendar year.

12.5.1.2 Limitations .

Notwithstanding Section 12.5.1.1 , WG’s consent shall be required for Service Provider to subcontract with any person or entity (other than Service Provider’s

Affiliates) contracted with exclusively to provide services to WG or any of its Affiliates [***], to provide any of the Leak Call Services [***], or to provide Services that are expressly identified in a Work Agreement as requiring WG’s consent for subcontracting [***]. WG’s consent with respect to any subcontracting shall not relieve Service Provider of its responsibility for the performance of any of its obligations under this Agreement or constitute WG’s consent to further subcontracting. In assigning subcontractors to provide the Services for which WG’s prior written consent is required, Service Provider shall first obtain WG’s written approval and shall further represent to WG that such subcontractors are qualified to provide, and are experienced in providing, the Services to which they are assigned. To the extent WG’s consent for such subcontractors is required under this Agreement, WG approves the subcontractors set forth in the applicable Work Agreement, but only with respect to the specific portions of the Services to be subcontracted to such subcontractor as set forth in the Work Agreement.

12.5.1.3 Reassignment or Removal by Service Provider .

Service Provider shall not, without the consent of WG, reassign or remove any subcontractor that has been contracted with exclusively to provide Services to WG. If Service Provider proposes to enter into a Subcontract for which WG’s prior written consent is required, Service Provider shall clearly set forth in writing to WG: (i) the specific portions of the Services that Service Provider proposes to subcontract; (ii) the scope of the proposed subcontract; (iii) the identity, background, and qualifications of the proposed subcontractor; and (iv) the type of contract that exists or shall exist between Service Provider and the subcontractor.

12.5.1.4 Reassignment or Removal at WG’s Request.

WG shall have the right: (i) to approve or disapprove the use of proposed subcontractors for which WG’s prior written consent is required; and (ii) to revoke its prior approval of a subcontractor for which WG’s prior written consent was required; provided , however , that WG agrees to relieve Service Provider from its obligations to meet applicable Service Levels for a reasonable period of time to the extent impairment is caused by such discontinuance and to reimburse Service Provider for termination charges (if any) Service Provider is required to pay such subcontractor to terminate its agreement with Service Provider and other reasonable fees associated with such transition, so long as Service Provider uses commercially reasonable efforts to mitigate such impairment and to avoid such termination charges. Notwithstanding the foregoing, WG shall have the right to terminate any subcontractor that is an entity, without payment of any related charges, if WG has the right (whether or not such right is exercised) to terminate this Agreement, or the applicable Work Agreement, as a result of the acts or omissions of such subcontractor.

12.5.1.5 Subcontracts .

Each Subcontract shall be subject to all Data Protection Laws, and to the extent necessary as determined by WG, the subcontractor entering into such Subcontract may be required to provide adequate assurance that the WG Personal Data will be processed in a manner consistent with the Data Protection Laws.

12.5.2 Third Party Services.

Notwithstanding Section 12.5.1.1 , Service Provider may, without WG’s consent, subcontract or obtain services that meet all of the following criteria: (i) the services are not designated as critical functions for the Services in the applicable Work Agreement; (ii) the services do not involve interaction with WG’s customers; and (iii) the services do not involve access to or the use of WG Personal Data. Also, for purposes of this Agreement, a third party that provides Equipment or Software and associated repair or maintenance services for such Equipment or Software would not be considered a subcontractor for purposes of this Agreement solely with respect to the foregoing.

12.5.3 Service Provider’s Responsibility for Subcontractors.

With respect to any obligations of Service Provider under this Agreement performed by subcontractors, Service Provider shall remain responsible for such obligations in addition to subcontractor compliance with the terms and conditions of this Agreement to the same extent Service Provider would be responsible for its own compliance with the terms and conditions of this Agreement. Service Provider shall not disclose to any subcontractor, or any third party supplier under a Service Provider Third Party Supplier Agreement, any of WG’s Confidential Information unless and until such subcontractor, vendor or supplier has a need to know such Confidential Information and has agreed in writing to protect the confidentiality of such information in a manner that is equivalent to that required of Service Provider by Article 15 . Service Provider shall be responsible as WG’s sole point of contact regarding the Services.

13. Audit and Inspection Rights.

WG may conduct audits of Service Provider as set forth in Appendix 10 .

14. Business Continuity and Disaster Recovery.

14.1 Business Continuity Plan.

Upon the Services Commencement Date for a Service to be performed by Service Provider under each Work Agreement, Service Provider shall apply Service Provider’s Business Continuity Plan (as approved by WG and as modified pursuant to this Agreement) to such Service in accordance with Appendix 13 and the applicable Work Agreement.

14.2 Implementation of Business Continuity Plan.

Upon the occurrence of a Disaster and as part of the Charges, Service Provider shall implement the Business Continuity Plan in accordance with Appendix 13 . The occurrence of a Disaster (including any Force Majeure Event) will not relieve Service Provider of its obligation to implement the Business Continuity Plan and to provide disaster recovery Services. If the Services are not restored within the period specified in the Business Continuity Plan, and to the extent such failure to restore Services is attributable to Service Provider’s failure to comply with the Business Continuity Plan, WG may [***].

14.3 Testing of Business Continuity Plan.

Each Work Agreement shall set forth the frequency with which Service Provider must, at its own expense, test the Business Continuity Plan, but in no event shall such tests be conducted less frequently than annually. WG shall have the right, at any time and from time to time, to review the Business Continuity Plan as it relates to the Services and request Service Provider to modify or enhance the Business Continuity Plan as reasonably necessary to address any WG concerns or policy changes and such modifications or enhancements will be agreed to and implemented using the Change Request Procedures in Appendix 12.1 .

15. Confidentiality.

15.1 Duty of Confidentiality.

Each Party acknowledges that it may, in the course of performing its responsibilities under this Agreement, be exposed to, or acquire, Confidential Information of the other Party or its Affiliates or their customers or third parties to whom the other Party or its Affiliates owe a duty of confidentiality. Recipient agrees to hold the Confidential Information of Discloser in confidence using the same or greater degree of care it uses with its own most sensitive information (but in no event less than a reasonable degree of care) and not to copy, reproduce, sell, assign, license, market, transfer or otherwise dispose of, give or disclose such information to third parties or to use such information for any purposes whatsoever other than the performance of this Agreement or as expressly set forth in this Agreement. Recipient will limit access to Confidential Information of Discloser to only those of its employees, agents and contractors having a need-to-know in connection with this Agreement or provision of the Services. Recipient shall advise all of its employees and subcontractors who may be exposed to the Confidential Information of Discloser of their obligations to keep such information confidential in accordance with this Article 15 . Recipient shall, upon expiration or termination of this Agreement or applicable Work Agreement or otherwise upon demand, either return to Discloser or destroy and certify in writing to Discloser the destruction of any and all documents, papers and materials and notes thereon in Recipient’s possession, including copies or reproductions thereof, to the extent they contain Confidential Information of Discloser except for any

Confidential Information which is otherwise required to be retained pursuant to this Agreement, which Confidential Information will continue to be subject to the terms of this Agreement.

15.2 Exclusions to Confidential Information.

Confidential Information shall not include information that Recipient can show: (i) was or has later become available to the public through no breach of this Agreement; (ii) was obtained from a third party who rightfully received the information without the obligation of confidentiality; (iii) was already in the Recipient’s possession prior to direct or indirect disclosure pursuant to this Agreement, the Request for Information, the Request for Proposal, or the Supplemental Request; or (iv) was independently developed by Recipient without reference to the Confidential Information of Discloser.

15.3 Permitted Disclosures.

If the Recipient is requested to disclose all or any part of any Confidential Information of the Discloser under a discovery request, a subpoena, or inquiry issued by a court of competent jurisdiction or by a judicial, administrative, regulatory or governmental agency or legislative body or committee, or the Recipient determines that disclosure is required under applicable Law, the Recipient shall, to the extent practicable and subject to applicable Laws, give prompt written notice of such request or such determination to the Discloser and shall give the Discloser the opportunity to seek an appropriate confidentiality agreement, protective order or modification of any disclosure or otherwise intervene, prevent, delay or otherwise affect the response to such request or such determination and Recipient shall cooperate in such efforts. Discloser shall reimburse Recipient for reasonable legal fees and expenses incurred in Recipient’s effort to comply with this provision. The Parties agree that this Section 15.3 would be applicable to the extent either Party intended to make this Agreement or any portion thereof publicly available.

15.4 Confidentiality Agreements.

WG and its Affiliates receiving Services shall inform its and their employees with access to Service Provider’s Confidential Information of their respective confidentiality obligations under Section 15.1 . Service Provider shall require its subcontractors and employees to execute confidentiality agreements that contain confidentiality obligations that are no less rigorous with respect to WG’s Confidential Information than the confidentiality obligations set forth in this Agreement.

15.5 Data Protection.

In the event Service Provider shall have access to any WG Personal Data, the terms and conditions set forth in Appendix 2 and Appendix 6 shall apply.

15.6 Strictest Treatment.

Service Provider shall comply with the strictest applicable requirements under this Agreement for any information that meets the definition of more than one of the following terms: Confidential Information of WG and WG Personal Data.

15.7 Remedy.

It is understood and agreed that in the event of a breach of this Article 15 , damages will not be an adequate remedy and the non-breaching Party shall be entitled to injunctive relief to restrain any such breach, threatened or actual, notwithstanding Article 22 .

15.8 Attorney Client Privilege/Work Product.

As a result of its position in providing and performing the Services, Service Provider may have unique knowledge of certain operations and information of WG that neither WG nor any of its employees will have in full. In addition, although Service Provider and WG have not established an employee-employer relationship, in providing and performing the Services as an independent contractor, Service Provider may interact with the employees, executive management, board of directors, accountants and legal counsel to WG in a manner and with respect to matters that, functionally, may appear to be the same as or similar to functions performed or previously performed by employees and agents of WG. Service Provider also acknowledges that certain documents, data and databases to which Service Provider has access or are created by Service Provider for WG and all associated communications relating thereto may be subject to the legal professional client privilege and that such information may have been or may be prepared in anticipation of litigation and that Service Provider is performing the Services in respect of such information as an agent of WG. To the extent that any of the materials or information provided to and from Service Provider as part of the Services for, and related communications with, legal counsel of WG (both in-house counsel and outside counsel) may be subject to WG attorney-client privilege and/or work product privilege, Service Provider shall reasonably cooperate, at WG’s expense and direction, to take steps designed to prevent waiver of any privilege with respect thereto. The foregoing shall not, however, be construed to affect the liability or obligations of the Parties pursuant to or in connection with this Agreement or the Services; provided, however, that the Recipient may disclose certain Confidential Information in accordance with Section 15.3 .

15.9 No Right or License.

Nothing in this Article 15 shall be construed as obligating either Party to disclose its Confidential Information to the other Party, or as granting to, or conferring on, the other Party, expressly or impliedly, any rights or license to the Confidential Information.

16. Data and Information Security.

16.1 Safeguarding of WG Data.

Service Provider shall establish and maintain safeguards against the destruction, loss, misuse or alteration of WG Data in the possession of Service Provider that are no less rigorous than those set forth in Article 15 , Article 16 , or Appendix 2 . WG shall have the right to establish separate backup security for WG Data and to keep backup data and data files. Service Provider shall notify WG immediately in the event of (i) a breach of any Data Protection Law, (ii) a breach in the security of any WG Data, or (iii) a breach of any requirement under this Agreement with respect to WG Data and shall also follow the procedures set forth in Appendix 2 and Appendix 6 with respect thereto.

16.2 Provision of WG Data.

Notwithstanding any other provision of this Agreement, Service Provider shall make all WG Data (complete and unaltered) available at any time to WG and its authorized agents in the form in which Service Provider is using or storing such WG Data at no additional charge.

16.3 Ownership and Use of WG Data.

As between the Parties, WG Data shall be and remain the property of WG. Service Provider shall use the WG Data solely to perform Service Provider’s obligations under this Agreement. Except as expressly permitted in this Agreement, Service Provider shall not sell, assign, lease, disseminate, or otherwise dispose of the WG Data or any part thereof to any other person, and Service Provider shall not commercially exploit any part of the WG Data. Service Provider shall not possess or assert any property interest in, or any lien or other right against or to, any WG Data.

16.4 Data Retention.

16.4.1 During Term.

During the Term and subject to Appendix 2 , Service Provider shall retain all WG Data associated with a Work Agreement for as long as WG is required by Law, or by WG’s Policies set forth in Appendix 1 , or as expressly set forth in such Work Agreement. WG shall inform Service Provider of any such requirements of Law (subject to Section 18.4 ) and WG Policies, which shall be incorporated into the applicable Work Agreement. Nothing in this Article 16 shall relieve Service Provider of (i) other document retention requirements expressly provided in this Agreement, or (ii) its obligations in Section 18.4 .

16.4.2 Post-Term.

Upon termination or expiration of a Work Agreement, or upon request by WG at any time with respect to particular WG Data not required by Service Provider to perform Service Provider’s obligations under this Agreement, or at the end of any specified retention period set forth in such Work Agreement, Service Provider shall return to WG the WG Data associated with such Work Agreement in the form and manner reasonably requested by WG (which shall be at no charge to WG if such form

and manner was that used by Service Provider, but conversion to a different form and manner may result in a reasonable charge to WG) including all copies of documents, papers or other material that may contain or be derived from WG Confidential Information and delete from its servers any electronic copies of all such information (excluding for purposes of this Section 16.4.2 , copies of this Agreement) that are in Service Provider’s possession or control, together, if requested by WG, with a certificate signed by Service Provider in form and substance reasonably satisfactory to WG, stating that all WG Data has been returned or destroyed. Service Provider shall remove WG Data from its applications and databases and shall use mutually approved data destruction methods to remove WG Data from its back-up systems.

17. Intellectual Property.

17.1 WG Intellectual Property.

17.1.1 Trademarks and Service Marks.

To the extent that the Services permit or require a Party to use the name, logo or domain name of the other Party, a Party shall, unless otherwise agreed in a particular instance, adhere to all brand identity standards provided in writing to the other Party. Any such use of the name, logo or domain name by that Party does not constitute a trademark license by the Party to the other Party to use the name, logo or domain name in association with any other trademark, any product or service that a other Party manufactures, distributes, sells, or supports, or any service that the other Party performs or renders. The Parties acknowledge that the company logo and all goodwill associated therewith of the other Party are, and shall remain, the sole property of the Party that owns such company logos and no rights are conferred upon the other Party with respect thereto. Any and all trademarks appearing in any materials and systems connected with the Services shall contain appropriate trademark ownership/attribution notices that clearly identify the applicable owner as the owner of such trademarks.

17.1.2 WG Intellectual Property.

WG shall be, and shall remain, the sole and exclusive owner of all WG Intellectual Property. Subject to the other terms and conditions of this Agreement, WG hereby grants to Service Provider and its subcontractors providing the Services, during the Term and during the period Termination Assistance Services are being provided, a non-exclusive, worldwide, royalty-free, non-transferable license to use, copy, maintain, modify, enhance and create derivative works of the WG Intellectual Property solely for the purpose of providing the Services to WG pursuant to this Agreement. Neither Service Provider nor its subcontractors shall be permitted to use WG Intellectual Property for the benefit of any entities other than WG and its Affiliates. Except as requested or approved by WG, or as otherwise provided in this Agreement, Service

Provider and its subcontractors shall cease all use of WG Intellectual Property at the end of the Term and after Termination Assistance Services are discontinued.

17.1.3 WG Work Product.

All WG Work Product shall be considered “works made for hire” and shall be owned by WG and WG shall be, pursuant to the Copyright Act, the author of such work. If any WG Work Product may not be considered a “work made for hire” under applicable Law, Service Provider hereby agrees to irrevocably assign to WG, upon payment of all applicable separately identifiable Charges as provided in the applicable Work Agreement, all of Service Provider’s right, title, and interest in and to the WG Work Product, including all Intellectual Property Rights therein (excluding rights in Pre-Existing Service Provider Intellectual Property and Independently Acquired Intellectual Property), and waives any moral rights therein. Service Provider acknowledges that WG and the successors and assigns of WG shall have the right to obtain and hold in their own name any Intellectual Property Rights and other proprietary rights in and to all WG Work Product. Service Provider shall execute any documents and take any other actions reasonably requested by WG to effectuate the purposes of this Section 17.1.3 . To the extent that the WG Work Product includes or incorporates any Pre-Existing Service Provider Intellectual Property or Independently Acquired Intellectual Property, Service Provider hereby grants to WG and its Affiliates, during and after the Term, a paid-up, royalty-free, perpetual, irrevocable, worldwide, non-exclusive, and transferable right to use, copy, maintain, modify, enhance and create derivative works of such Service Provider Intellectual Property (i) solely as embedded in such WG Work Product, and (ii) solely in connection with WG’s and its Affiliates’ respective businesses for the receipt or delivery of services that are substantially similar to the Services; provided , however , that WG and its Affiliates (or their successors) may sub-license such rights to unrelated third parties solely in connection with WG’s own business and solely for the purpose of providing services substantially similar to the Services to WG, its Affiliates or their successors.

17.1.4 Service Provider’s Subcontractors.

Each of Service Provider’s subcontractors that creates any WG Work Product shall be required by Service Provider to execute written agreements (i) assigning to WG (or to Service Provider who shall then in turn assign to WG), without further consideration, all of its right, title, and interest in and to such WG Work Product, including all Intellectual Property Rights therein, and (ii) agreeing to execute any documents and take any other actions reasonably requested by WG (or Service Provider, on WG’s behalf) to effectuate the purposes of this Section 17.1.4 .

17.2 Service Provider Intellectual Property.

17.2.1 Service Provider Intellectual Property.

Service Provider and its Affiliates shall be, and shall remain, the sole and exclusive owners of all Service Provider Intellectual Property. Subject to the other terms and conditions of this Agreement, Service Provider, on behalf of itself and its Affiliates, hereby grants to WG, for itself and its Affiliates, a non-exclusive, worldwide, royalty free (during the Term), non-transferable license, with the right to sublicense to third parties solely for the purpose of providing services to WG and its Affiliates (provided that a Service Provider Competitor may not be a sublicensee thereof unless contractually obligated to keep such Service Provider Intellectual Property confidential), to use and maintain the Service Provider Intellectual Property that is incorporated in, or provided as part of, the Services. Service Provider may use the Service Provider Intellectual Property for any purpose, including for the purpose of providing services to a third party.

17.2.2 Deliverables.

During the Term of the applicable Work Agreement, Service Provider shall create Deliverables as set forth in an applicable Work Agreement or Change Order. All Deliverables shall be owned by Service Provider and Service Provider shall be, pursuant to the Copyright Act, the author of such work, provided that Service Provider shall remove WG’s Confidential Information contained in such Deliverables, if any, prior to making such Deliverables available to any third party. Service Provider hereby grants to WG and its Affiliates during and after the Term a perpetual, paid-up, royalty-free, worldwide, non-exclusive, sub-licensable but otherwise non-transferable (except to a successor) right to use, copy, maintain, modify, enhance and create derivative works of such Deliverables (including any Service Provider Intellectual Property incorporated therein) solely in connection with WG’s own business for the receipt or delivery of services substantially similar to the Services to WG or its Affiliates; provided , however , that (i) WG may sublicense such rights to unrelated third parties solely in connection with WG’s own business and solely for the purpose of providing services to WG, its Affiliates or their successors, and (ii) if such Deliverable is a discrete deliverable subject to separately identifiable Charges, the foregoing license shall become irrevocable once such Charges have been paid to Service Provider.

17.3 Disclosure and Delivery of All Deliverables and Work Product.

Upon completion of the Services or the termination of a project and subject to the transfer provisions of Section 17.1.3 , Service Provider shall use all commercially reasonable efforts to disclose fully and to deliver promptly to WG all of the Deliverables and WG Work Product, including related object and source code, as well as any and all copies, summaries or extracts of such WG Work Product; provided that, subject to the restrictions of this Agreement, Service Provider shall have the right to retain one copy of any and all reports and other work product associated therewith for its own files for reference only.

17.4 No Other Licenses.

This Agreement does not grant or otherwise give either Party ownership in, or other proprietary rights or license to use, the other Party’s Intellectual Property Rights except as expressly provided for herein or in an applicable Work Agreement.

17.5 Service Provider and Third Party Intellectual Property.

To the extent Service Provider desires to include any Service Provider Intellectual Property or other third party Intellectual Property in any WG Work Product or Deliverables to be provided or licensed to WG that would not be covered by the licenses granted to WG under Sections 17.1.3 and Section 17.2 above, Service Provider shall (i) notify WG prior to such inclusion, (ii) identify all such Service Provider Intellectual Property and third party Intellectual Property in the applicable Work Agreement, and (iii) not proceed with such inclusion without first obtaining WG’s consent. During the Term and except as set forth in an applicable Work Agreement, Service Provider shall have financial and administrative responsibility for obtaining any Consents and any additional licenses that may be necessary for Service Provider to use such third party Intellectual Property or Service Provider Software during the Term in the provision of Services and to grant the licenses set forth in this Article 17 , and WG shall have financial and administrative responsibility for obtaining any Consents and any additional licenses that may be necessary for Service Provider to use the WG Software and WG Systems in the provision of Services. The Party financially and administratively responsible for obtaining the Consent shall obtain such Consent. Such responsibility will include the payment of any required transfer, upgrade, access, license or similar fees or charges related thereto. The other Party will provide reasonable assistance to the responsible Party in obtaining such Consent. The Parties will cooperate to obtain such Consents in a cost effective and efficient manner.

If any Consent cannot be obtained, the Parties will (i) make any appropriate adjustments to their respective obligations under this Agreement, all to the extent necessary due to a failure to obtain such Consents, and (ii) seek to establish mutually acceptable alternative arrangements so that the Parties may perform their respective obligations under this Agreement by alternative means. After the Term, Service Provider shall use commercially reasonable efforts to obtain the right for WG and its Affiliates, as applicable, to use such third party Intellectual Property, or to have a third party use such third party Intellectual Property on WG’s and its Affiliates’ behalf.

17.6 Inventions.

Each Party, and their respective Affiliates, shall own any Inventions created, conceived or developed by such Party or Affiliate in connection with this Agreement. WG hereby grants to Service Provider a non-exclusive, worldwide, paid-up, perpetual, irrevocable and transferable license under all Inventions, and any patent applications and patents issued thereon, created, conceived or developed by WG or its employees, whether alone or jointly with others, in connection with the Services, WG Work Product or Deliverables, with the right to sublicense, to make, have made, use, copy, maintain, modify, enhance and create derivative works of such Inventions. Service Provider hereby grants to WG and its Affiliates a nonexclusive, worldwide, paid-up, perpetual, irrevocable and transferable license under all Inventions, and any patent applications and patents issued thereon, created, conceived or developed by Service Provider or its employees, whether alone or jointly with others, in connection with the provision of Services,

WG Work Product or Deliverables, with the right to sublicense, to make, have made, use, copy, maintain, modify, enhance and create derivative works of such Inventions. The Parties shall jointly own any Inventions that is jointly developed by the Parties, without any duty of accounting, and without payment of license, royalties, or any other fees; provided , however , that a Party shall remove the other Party’s Confidential Information contained in such Intellectual Property, if any, prior to making such Inventions available to any third party. Subject to the preceding sentence, neither Party shall be restricted from marketing or commercializing such jointly owned Inventions. The Parties shall jointly have all right, title, and interest in and to any patents arising from jointly owned Inventions. Each Party agrees to execute any documents and take other actions as may be necessary or reasonably requested by the other Party (at such other Party’s expense) to perfect or register such other Party’s joint ownership of any jointly owned Inventions.

17.7 Residual Rights.

So long as a Party complies with its obligations under this Agreement (including with respect to Intellectual Property Rights and license rights and its confidentiality and data protection obligations), nothing in this Agreement is intended to preclude a Party from acquiring, marketing, developing, distributing, licensing, or using for itself or others, services, products or technology that are the same as or similar to those provided pursuant to this Agreement. Furthermore, subject to the rights that the other Party may have with respect to patents or copyrights, a Party will continue to be free to use the general knowledge, skills and experience and any Residual Rights that are acquired or used in the course of providing or receiving the Services.

18. Representations, Warranties and Covenants.

18.1 Service Provider Representations, Warranties and Covenants.

18.1.1 Authorization.

Service Provider represents and warrants: (i) that this Agreement has been validly executed and delivered by Service Provider and that the provisions set forth in this Agreement constitute legal, valid, and binding obligations of Service Provider enforceable against Service Provider in accordance with their terms, subject to bankruptcy, insolvency, reorganization and other laws affecting creditors’ rights generally, and with regard to equitable remedies, to the discretion of the court before which proceedings to obtain such remedies may be pending; (ii) that Service Provider has all requisite power and authority to enter into this Agreement (including the power and authority to enter into any agreements required under applicable Data Protection Laws and any other agreements the forms of which are attached hereto on behalf of its Affiliates) and to carry out the transactions contemplated by this Agreement, and that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all

requisite action on the part of Service Provider; (iii) that Service Provider’s execution and delivery of this Agreement and Service Provider’s performance or compliance with the terms of this Agreement shall not conflict with, result in a breach of, constitute a default under, or, other than the Consents, require the consent of any third party under any license, sublicense, lease, contract, agreement, or instrument to which Service Provider is bound or by which its properties are subject; and (iv) that Service Provider has not authorized any third party to act as a broker or finder or in any similar capacity in connection with the transactions contemplated by this Agreement.

18.1.2 Professional Services.

Service Provider represents and warrants that Service Provider will perform the Services and the Termination Assistance Services in a professional and workmanlike manner in accordance with accepted industry standards of leading providers of information technology and business process outsourcing services providing services similar to the Services.

18.1.3 Employees.

Service Provider represents and warrants that the Services and Termination Assistance Services will be performed by employees of Service Provider within the scope of their employment or by third party subcontractors retained in accordance with the terms of this Agreement, all of whom are under written obligations to assign to Service Provider all right, title and interest, including all Intellectual Property Rights, in the Services, Termination Assistance Services, WG Work Product and Deliverables to Service Provider. Service Provider also represents and warrants that any employee, agent, or contractor assigned by Service Provider to provide Services or Termination Assistance Services under this Agreement shall be deemed to be an employee, agent, or contractor of Service Provider.

18.1.4 Non-Infringement.

Service Provider represents and warrants that: (i) any hardware, software, documents or other materials provided under this Agreement or any Work Agreement, including any Pre-Existing Service Provider Intellectual Property, Independently Acquired Intellectual Property, Deliverables and WG Work Product do not and shall not infringe or otherwise conflict with the Intellectual Property Rights of a third party; and (ii) it shall perform the Services and Termination Assistance Services under this Agreement in a manner that does not and shall not infringe, or constitute an infringement or misappropriation of, any Intellectual Property Rights of any third party; provided , however , that WG’s sole and exclusive remedy for a breach of this warranty shall be WG’s rights under Section 19.1 .

18.1.5 No Unlawful or Unauthorized Actions.

Service Provider represents and warrants that it has not violated and will not violate any applicable Laws or any WG Policies regarding the offering of unlawful

inducements, and, except as otherwise expressly provided in this Agreement, it has not taken and will not take any actions that (i) create, or purport to create, any obligation on behalf of WG, or (ii) grant, or purport to grant, any rights or immunities to any third party under WG Intellectual Property.

18.1.6 Viruses/Disabling Code.

Service Provider represents and warrants that any Software provided or used (other than WG Software owned by or licensed to WG) by Service Provider as part of the Services (including Service Provider Software and Service Provider Third Party Software) or developed for WG (i) does not and shall not contain any malicious code designed to intentionally disable, slowdown, impair or otherwise shut down WG’s System, including any viruses, disabling code, time bombs or Trojan horses, except to the extent attributable to any action by WG; and (ii) shall be interoperable with other Software used by Service Provider that may deliver records to WG Software, receive records from such WG Software or interact with such WG Software, including to back-up and archive data, excluding operation failures and other problems that arise as a consequence of defects in the WG Data, WG Software or other Software not provided by or through the Service Provider, its Affiliates or their subcontractors.

18.1.7 New Software.

When Service Provider develops Software pursuant to a Work Agreement or a Change Order, Service Provider and WG shall jointly prepare specifications for such Software, and Service Provider shall warrant for the time period (if any) specified in the applicable Work Agreement or Change Order that such Software shall perform in accordance with such specifications in all material respects. Service Provider shall use and comply with generally accepted coding practices and any standards or requirements expressly set forth in an applicable Work Agreement.

18.1.8 Continuing Warranties.

Service Provider covenants that each of the representations and warranties set forth in this Section 18.1 and each other express representation and warranty of Service Provider in this Agreement, shall remain true and correct during the Term. To the extent that any such representation or warranty becomes untrue in any material respect during the Term, Service Provider shall notify WG of the facts and circumstances surrounding such situation.

18.2 WG Representations, Warranties and Covenants.

18.2.1 Authorization.

WG represents and warrants: (i) that this Agreement has been validly executed and delivered by WG and that the provisions set forth in this Agreement

constitute legal, valid, and binding obligations of WG enforceable against WG in accordance with their terms, subject to bankruptcy, insolvency, reorganization and other laws affecting creditors’ rights generally, and with regard to equitable remedies, to the discretion of the court before which proceedings to obtain such remedies may be pending; (ii) that WG has all requisite power and authority to enter into this Agreement (including the power and authority to enter into any agreements required under applicable Data Protection Laws and any other agreements the forms of which are attached hereto) and to carry out the transactions contemplated by this Agreement, and that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all requisite action on the part of WG; (iii) that WG’s execution and delivery of this Agreement and WG’s performance or compliance with the terms of this Agreement shall not conflict with, result in a breach of, constitute a default under, or, other than the Consents, require the consent of any third party under any license, sublicense, lease, contract, agreement, or instrument to which WG is bound or by which its properties are subject; and (iv) that WG has not authorized any third party to act as a broker or finder or in any similar capacity in connection with the transactions contemplated by this Agreement, provided that Service Provider acknowledges that WG has engaged EquaTerra, Inc. in an advisory capacity with respect to this Agreement and the transactions contemplated herein.

18.2.2 Non-Infringement.

WG represents and warrants that: (i) any hardware, software, documents or other materials provided under this Agreement, including any WG Intellectual Property and WG Software that is owned by WG do not and shall not infringe or otherwise conflict with the Intellectual Property Rights of a third party; provided , however , that Service Provider’s sole and exclusive remedy for a breach of the warranty in this Section 18.2.2 shall be Service Provider’s rights under Section 19.2 .

18.2.3 No Unauthorized Actions.

WG represents and warrants that it has not taken and will not take any actions that, except as expressly provided by this Agreement (i) create, or purport to create any obligation on behalf of Service Provider, or (ii) grant, or purport to grant, any rights or immunities to any third party under Service Provider Intellectual Property.

18.2.4 Viruses/Disabling Code.

WG represents and warrants that any WG Software owned by it, as provided in its unmodified state by WG to Service Provider, does not contain any malicious code designed to intentionally disable, slowdown, impair or otherwise shut down Service Provider’s systems, including any viruses, disabling code, time bombs or Trojan horses, except to the extent attributable to any action by Service Provider.

18.2.5 Continuing Warranties.

WG covenants that each of the representations and warranties set forth in this Section 18.2 and each other express representation and warranty of WG in this Agreement, shall remain true and correct during the Term. To the extent that any such representation or warranty becomes untrue in any material respect during the Term, WG shall notify Service Provider of the facts and circumstances surrounding such situation.

18.3 Disclaimer.

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER, INCLUDING FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY, INFORMATIONAL CONTENT, SYSTEMS INTEGRATION, NON-INFRINGEMENT, INTERFERENCE WITH ENJOYMENT, OR RESULTS TO BE DERIVED FROM THE USE OF ANY SERVICE, SOFTWARE, HARDWARE, DELIVERABLES, OR OTHER MATERIALS PROVIDED UNDER THIS AGREEMENT. SERVICE PROVIDER DOES NOT REPRESENT OR WARRANT THAT THE OPERATION OF ANY SOFTWARE WILL BE UNINTERRUPTED OR ERROR FREE.

18.4 Compliance with Laws.

18.4.1 WG Compliance.

WG shall comply with all Laws Applicable to WG and all Generally Applicable Laws as they apply to WG and shall be responsible for any fines, penalties, sanctions and interest imposed on Service Provider or WG by a Governmental Authority to the extent directly resulting from (i) the failure of WG to comply with Laws Applicable to WG or Generally Applicable Laws as they apply to WG, except to the extent caused by Service Provider’s failure to fulfill its obligations under this Agreement, (ii) the compliance by Service Provider with a WG Compliance Directive, or (ii) the failure of WG to issue a WG Compliance Directive. WG shall promptly notify Service Provider of any non-compliance by WG with Laws Applicable to WG or Generally Applicable Laws as they apply to WG that impacts Service Provider upon learning thereof. WG shall work expeditiously to remedy such non-compliance and the Parties will otherwise cooperate in a commercially reasonable manner with each other to allow for the Services to be provided to the extent legally permissible. Service Provider shall be responsible for any fines, penalties, sanctions and interest imposed on WG by a Governmental Authority resulting from WG’s noncompliance with Laws Applicable to WG or Generally Applicable Laws as they apply to WG that is a direct result of Service Provider’s failure to perform the Services. To the extent of any change in Laws Applicable to WG or Generally Applicable Laws as they apply to WG, or a change to the Service as a result of a WG Compliance Directive, the cost of such change shall be borne by WG. With respect to this Section 18.4.1 , a Work Agreement may specify specific obligations with respect to compliance with Laws. The Parties

agree that in the case of a conflict between the terms and conditions of this Section 18.4.1 and a specific obligations on WG with respect to compliance with Laws contained in a Statement of Work with respect to whether an obligation is an obligation to comply with Laws Applicable to WG, the specific obligation in a Work Agreement with respect to compliance shall be deemed to be an obligation to comply with Laws Applicable to WG.

18.4.2 Service Provider Compliance.

18.4.2.1 Laws Applicable to Service Provider .

Service Provider shall perform the Services in compliance with all Laws Applicable to Service Provider, all Generally Applicable Laws as they apply to Service Provider, and all WG Compliance Directives, and shall be responsible for any fines, penalties, sanctions and interest imposed on Service Provider or WG by a Governmental Authority to the extent directly resulting from the failure of Service Provider to comply with (i) Laws Applicable to Service Provider or (ii) Generally Applicable Laws as they apply to Service Provider or a WG Compliance Directive, except to the extent caused by WG’s failure to fulfill its obligations under this Agreement. Service Provider shall promptly notify WG in writing of non-compliance by Service Provider with Laws Applicable to Service Provider or Generally Applicable Laws as they apply to Service Provider or WG Compliance Directives that impacts WG upon learning thereof. Service Provider shall work expeditiously to remedy such non-compliance and the Parties will otherwise cooperate in a commercially reasonable manner with each other to allow for the Services to be provided to the extent legally permissible. To the extent a change in Laws Applicable to Service Provider or Generally Applicable Laws as they apply to Service Provider is such that had WG not entered into this Agreement it would have had to modify its internal services as a consequence of such change in Laws Applicable to Service Provider or Generally Applicable Laws as they apply to Service Provider, the costs of such change in Laws Applicable to Service Provider or Generally Applicable Laws as they apply to Service Provider shall be borne by WG to the extent of such modifications; provided , however , to the extent that the costs of such change are allocable to multiple customers of Service Provider, such costs shall be equitably allocated to WG and such customers. To the extent of any other change in Laws Applicable to Service Provider or Generally Applicable Laws as they apply to Service Provider, the cost of such change in Laws Applicable to Service Provider or Generally Applicable Laws as they apply to Service Provider shall be borne by Service Provider. In the event of any changes in Laws, Service Provider shall implement any necessary modifications to the Services prior to the deadline imposed by the Governmental Authority having jurisdiction for such change, in accordance with Section 10.2 . With respect to this Section 18.4.2.1 , a Work Agreement may specify specific obligations with respect to compliance with Laws. The Parties agree that in the case of a conflict between the terms and conditions of this Section 18.4.2.1 and specific obligations of Service Provider with respect to compliance with Laws contained in a Work Agreement with

respect to whether an obligation is an obligation to comply with Laws Applicable to Service Provider, the specific obligation in a Work Agreement with respect to compliance shall be deemed to be an obligation to comply with Laws Applicable to Service Provider.

18.4.2.2 Compliance Directives .

WG shall instruct Service Provider as to the manner in which Service Provider should perform the Services or implement changes to the Services so as to comply with any Laws Applicable to WG or Generally Applicable Laws as they apply to WG (a “ WG Compliance Directive ”). WG may, at any time after the Effective Date, identify the specific obligations of Service Provider that so enable WG to comply with any Laws Applicable to WG or Generally Applicable Laws as they apply to WG, including compliance with applicable WG Policies and meeting specific Service Levels,

and such identification will serve as the WG Compliance Directive relating thereto. Service Provider shall be authorized to act and rely on, and shall implement, each WG Compliance Directive in the performance and delivery of the Services. Subject to Section 10.2 , any changes to the Services necessitated by a new WG Compliance Directive shall be as agreed by the Parties in accordance with the Change Request Procedures. To the extent that the costs of such Changes are allocable to multiple customers of Service Provider, such costs shall be equitably allocated to WG and such customers.

18.4.2.3 Interpretive Issues.

If Service Provider determines in good faith that the performance of the Services requires an interpretation of any aspect of a WG Compliance Directive (an “ Interpretive Issue ”), Service Provider shall give WG a written request for interpretation, which shall include the factual scenario in issue for resolution. WG shall as soon as practical instruct Service Provider in writing with respect to each such Interpretive Issue so presented to it, and Service Provider is authorized to act and rely on, and shall promptly implement such WG instruction(s) in the performance and delivery of the Services as agreed by the Parties in accordance with the Change Request Procedures. All WG interpretative responses regarding Interpretive Issues shall be deemed WG Compliance Directives. WG shall be responsible for any fines, penalties, sanctions or interest imposed on Service Provider or WG by a Governmental Authority resulting from Service Provider’s failure to comply with WG Compliance Directives to the extent such fines or penalties result directly from WG’s failure to respond, within a reasonable period of time, to a written request by Service Provider for interpretation of a WG Compliance Directive.

18.4.3 Material Impact on Changes of Law .

If the implementation of a WG Compliance Directive pursuant to Section 18.4.2.2 or a Change due to change in Laws Applicable to WG or Generally Applicable Laws as they apply to WG or, (subject to Section 18.4.2.2 ), Laws Applicable to Service Provider or Generally Applicable Laws as they apply to Service Provider, results in WG being required to pay Service Provider charges that represent an increase of greater than [***] in the monthly Charges for the Services to which such WG Compliance Directive or Change relates, or a material reduction in the quality or scope of such Services, then WG shall have the right to terminate such Services or this Agreement by giving Service Provider [***] notice of such termination and payment of the applicable Termination Charges for termination pursuant to this Section 18.4.3 . Otherwise, Service Provider and WG will execute the Change in accordance with the Change Request Procedures.

18.4.4 Notification.

Service Provider will notify WG of any changes in Laws Applicable to WG, Laws Applicable to Service Provider or Generally Applicable Laws, or of any non-compliance by WG with Laws Applicable to WG or Generally Applicable Laws of which Service Provider employees providing the Services become aware; provided , however , that notwithstanding anything to the contrary in the Agreement (i) failure of Service Provider to notify WG of such changes in Laws Applicable to WG, Laws Applicable to Service Provider or Generally Applicable Laws, or of such non-compliance with Laws Applicable to WG or Generally Applicable Laws shall not be deemed a breach of this Agreement by Service Provider, and (ii) nothing in this Section 18.4.4 or in this Agreement shall be read to require Service Provider to maintain, staff or fund a legal compliance organization. To the extent that Service Provider employees do not notify WG of changes in Laws Applicable to WG or Generally Applicable Laws or of WG’s non-compliance with Laws Applicable to WG or Generally Applicable Laws, Service Provider agrees to meet with WG and discuss in good faith how Service Provider might improve its ability to provide such notifications (subject always to the conditions in the previous sentence).

18.4.5 Miscellaneous .

Notwithstanding anything to the contrary in this Agreement:

(i) neither WG nor Service Provider will be required to undertake any activity that would violate any Laws,

(ii) Service Provider will not be required to provide, and nothing in this Agreement will be construed as the provision by Service Provider of, any legal, accounting, audit, attest, tax or other similar professional advice, and

(iii) Service Provider will not be required to maintain, staff or fund a legal compliance organization.

19. Indemnification

19.1 Service Provider’s Indemnity

19.1.1 General.

Service Provider shall indemnify, defend, and hold harmless the WG Indemnified Parties, in accordance with the procedures described in Section 19.3 , from and against any and all Claims and threatened Claims to the extent arising out of, or relating to, any of the following with respect to this Agreement:

(i) any bodily injury or damage to tangible property where such accident, injury or damage results from [***] of Service Provider or its subcontractors or employees;

(ii) subject to the Enhanced Cap, a violation of Data Protection Laws applicable to Service Provider or a failure to follow a WG Compliance Directive pertaining to Data Protection Laws, both with respect to WG Personal Data, unless Service Provider is given a WG Compliance Directive, there is no way to comply with both the WG Compliance Directive and the Data Protection Laws, and Service Provider has previously informed WG that Service Provider cannot comply with both the WG Compliance Directive and Data Protection Laws;

(iii) the employment, engagement or termination of the employment or engagement of an employee or subcontractor of Service Provider or claim by any employees, or subcontractors of Service Provider or on behalf of any employees or subcontractors of Service Provider [***];

(iv) any failure by Service Provider to pay, remit or discharge any Taxes (including interest and penalties) for which Service Provider is responsible as set forth in Section 5.6 and Appendix 5 , or any Work Agreement;

(v) any breach by Service Provider of any Assigned Agreement or acts or omissions of Service Provider in connection with any Assigned Agreement occurring subsequent to the assignment of such Assigned Agreement to Service Provider by WG;

(vi) any claims made by Service Provider’s subcontractors or vendors in connection with the Services provided hereunder except to the extent caused by WG or its Affiliates;

(vii) (A) offers of employment to Transferring Employees by Service Provider that are inconsistent with Exhibit G , to the extent inconsistent with Exhibit G ; and (B) except for such acts directed by WG to be undertaken by Service Provider, any alleged act or omission by Service Provider or its Personnel giving rise to potential liability arising out of or relating to (1) any employment related claims of or on behalf of Transferred Employees arising on and after the Hire Date and relating to their employment by Service Provider, and (2) any claims that Service Provider has violated any Worker Notification Law or other claims of or on behalf of Transferred Employees arising as a result of claims arising after the Hire Date for breach of a written or oral contract of employment with Service Provider, employee benefits plans, policies, or programs for which the Transferred Employees are eligible in

accordance with the terms of such express contract of employment with Service Provider, or with respect to any claims by such employees under such plans, policies, or programs during the Transferred Employees’ employment with Service Provider;

(viii) any breach of Service Provider’s representations or warranties set forth in Section [***] ; and

(ix) Service Provider’s failure to obtain, maintain or comply with applicable Consents.

19.1.2 Intellectual Property.

Service Provider shall indemnify, defend and hold harmless the WG Indemnified Parties, in accordance with the procedures described in Section 19.3 , from and against any and all Claims arising out of any actual or alleged infringement or misappropriation of any Intellectual Property Rights owned by a third party relating to the [***] (collectively, “ Service Provider Indemnified Items ” and individually, a “ Service Provider Indemnified Item ”), including any Claims alleging or establishing that: (i) WG’s permitted use under this Agreement of the Service Provider Indemnified Items infringes or misappropriates any Intellectual Property Rights of a third party; or (ii) the processes utilized by Service Provider in providing the Services to WG infringe or misappropriate any Intellectual Property Rights of a third party; provided, however, that Service Provider’s obligation to indemnify for patent infringement shall be limited to (A) for Services, to patents that have issued at any time prior to the Execution Date [***], and (B) for Deliverables and WG Work Product, to patents that have issued any time prior to the Execution Date[***], in each case, in [***]. Notwithstanding anything to the contrary under this Agreement, Service Provider will not have any liability whatsoever under this Agreement with the respect to any Claim or threatened Claim made [***].

19.1.3 Limitations.

Service Provider’s indemnification obligations under Section 19.1.2 shall not extend to any Claims to the extent resulting from, or relating to (i) WG’s use of the Service Provider Indemnified Item outside the scope of any applicable license granted by Service Provider; (ii) modification of a Service Provider Indemnified Item, unless such modification was done with the authorization of Service Provider, or at the request of Service Provider or someone working on behalf of Service Provider; (iii) WG’s failure to use corrections or enhancements made available by Service Provider at no additional charge to WG; (iv) WG’s use of the Service Provider Indemnified Item in combination with any product or information not owned or developed by Service Provider, where such combination causes the infringement [***]; (v) WG’s distribution, marketing or use for the benefit of third parties [***]; or (vi) the use of

information, direction, specification or materials provided by WG or any third party (excluding subcontractors and Affiliates of Service Provider) to the extent such information, direction, specification or materials constitute the elements of the claim).

19.1.4 Duty to Correct.

In addition to any other remedy available to WG under this Agreement or otherwise, if the Service Provider Indemnified Item or any portion thereof is held to constitute an infringement of any Intellectual Property Right held by any third party or its use as contemplated by this Agreement be enjoined or threatened to be enjoined, Service Provider shall promptly notify WG and within a commercially reasonable period of time, at Service Provider’s expense, (i) procure for WG the right to continue to use the same, as delivered under the applicable Work Agreement, or (ii) replace or modify the Service Provider Indemnified Item, or portion thereof with a version that is non-infringing, provided that the replacement or modified version must be equivalent to or better than the Service Provider Indemnified Item being replaced or modified. If (i) and (ii) are not available to Service Provider, in addition to any other damages or expenses reimbursed under this Section 19.1 , Service Provider shall reimburse WG for any separate, discernable Charges paid by WG to Service Provider for any affected Deliverable or Work Product [***].

19.1.5 Third Party Indemnities.

Service Provider shall use commercially reasonable efforts to extend the benefit to WG Indemnified Parties of any warranties and indemnities related to Intellectual Property Rights and, with respect to any Software provided by Service Provider to WG, to freedom of such Software from viruses or other malicious code, which warranties and indemnities are provided to Service Provider through any Service Provider Third Party Supplier Agreements, or through any agreement with a third party licensing such Software to Service Provider.

19.2 WG’s Indemnity.

19.2.1

WG shall defend, indemnify and hold harmless the Service Provider Indemnified Parties, in accordance with the procedures described in Section 19.3 , from and against any and all Claims and threatened Claims to the extent arising out of, or relating to, any of the following with respect to this Agreement:

(i) any bodily injury or damage to tangible property where such accident, injury or damage results from [***] of WG or its subcontractors and employees;

(ii) the employment, engagement or termination of the employment or engagement of an employee or subcontractor of WG or claim by any employees, or subcontractors of WG or on behalf of any employees or subcontractors of WG [***];

(iii) any failure by WG to pay, remit or discharge any Taxes (including interest and penalties) for which WG is responsible as set forth in Section 5.6 and Appendix 5 or any Work Agreement;

(iv) any breach by WG of any Assigned Agreement or acts or omissions of WG in connection with any Assigned Agreement occurring before the effected assignment of such Assigned Agreement to Service Provider by WG;

(v) any claims made by WG’s subcontractors, Third Party Providers or vendors in connection with the Services provided hereunder except to the extent caused by or made by Service Provider or its Affiliates ;

(vi) any breach of WG’s representations or warranties set forth in Section [***];

(vii) except for such acts directed by Service Provider to be undertaken by WG, (A) any employment-related claims of or on behalf of Affected Employees arising prior to the Hire Date and relating to their employment with WG or its Affiliate, regardless of the date upon which the claim is made, and claims arising out of or related to cessation of their employment with WG or its Affiliates, (B) any claims that WG has violated any Worker Notification Law or any other employment related claims of or on behalf of Affected Employees (other than claims of or on behalf of Transferred Employees arising from and after the Hire Date and relating to their employment by Service Provider), and claims of Transferred Employees arising from a written or oral contract of employment entered into by WG or its Affiliates with any such Transferred Employee, (C) any claims alleging that WG or its Affiliates is bound by or a party to any collective bargaining agreement or other agreement with any trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent relating to any of the Transferring Employees; and (D) any employment related claims of or on behalf of Affected Employees arising out of acts directed by WG to be undertaken by Service Provider with respect to such employees;

(viii) subject to the Enhanced Cap, a violation of Data Protection Laws applicable to WG or a Claim brought against Service Provider to the extent based on Service Provider’s compliance with a WG Compliance Directive pertaining to Data Protection Laws, both with respect to WG

Personal Data (but excluding any Claims to the extent based on Service Provider’s failure to follow WG Compliance Directive pertaining to Data Protection Laws); and

(ix) WG’s failure to obtain, maintain or comply with applicable Consents.

19.2.2 Intellectual Property.

WG shall indemnify, defend and hold harmless Service Provider Indemnified Parties, in accordance with the procedures described in Section 19.3 , from and against any and all Claims arising out of any actual or alleged infringement or misappropriation of any Intellectual Property Rights owned by a third party relating to [***] (collectively, “ WG Indemnified Items ,” and individually, a “ WG Indemnified Item ”), including any Claims alleging or establishing that: Service Provider’s permitted use under this Agreement of a WG Indemnified Item infringes or misappropriates any Intellectual Property Rights of a third party; provided , however , that WG’s obligation to indemnify for patent infringement shall be limited to patents that have issued at any time prior to the Execution Date [***] in [***]. Notwithstanding anything to the contrary under this Agreement, WG will not have any liability whatsoever under this Agreement with the respect to any Claim or threatened Claim made by [***].

19.2.3 Limitations.

WG’s indemnification obligations under Section 19.2.2 shall not extend to any Claims to the extent resulting from, or relating to (i) Service Provider’s use of the WG Indemnified Item outside the scope of the license granted by WG; (ii) modification of a WG Indemnified Item, unless such modification was done with the authorization of WG, or at the request of WG or someone working on behalf of WG; (iii) Service Provider’s failure to use corrections or enhancements made available by WG at no additional charge to Service Provider; (iv) Service Provider’s use of the WG Indemnified Item in combination with any product or information not owned or developed by WG, where such combination causes the infringement [***]; (v) Service Provider’s distribution, marketing or use for the benefit of third parties (excluding Service Provider’s Affiliates) of the WG Indemnified Item; or (5) the use of information, direction, specification or materials provided by Service Provider or any third party (excluding subcontractors and Affiliates of WG) to the extent such information, direction, specification or materials constitute the elements of the claim).

19.2.4 Third Party Indemnities.

WG shall use commercially reasonable efforts to extend the benefit to Service Provider Indemnified Parties of any warranties and indemnities related to Intellectual Property Rights and, with respect to any third party Software provided by

WG to Service Provider, freedom of such Software from viruses or other malicious code, which warranties and indemnities are provided to WG through any WG Third Party Supplier Agreements, or through any agreement with a third party licensing such Software to WG.

19.3 General Provisions and Procedures.

The indemnification provisions set forth in this Agreement are subject to the following general provisions and procedures:

19.3.1 Notice.

Any Indemnified Party entitled to indemnification under this Agreement shall provide the Indemnifying Party with an Indemnification Notice regarding the applicable Claim promptly but in any event within [***] after the Indemnified Party receives a summons, or within [***] after the Indemnified Party receives any other written communication; provided that the failure of the Indemnified Party to undertake such actions shall not relieve the Indemnifying Party of any obligation it may have to indemnify, except and only to the extent that the Indemnifying Party’s ability to fulfill such obligation has been actually and materially prejudiced thereby.

19.3.2 Counsel.

The Indemnified Party shall permit the Indemnifying Party to answer and defend the claim. The Indemnifying Party shall permit the Indemnified Party to participate in its own defense with its own counsel at its own expense. If the Indemnified Party elects to participate in its own defense, the Indemnifying Party shall agree to consider in good faith the views of the Indemnified Party and its counsel and to keep the Indemnified Party and its counsel reasonably informed of the progress of the defense, litigation, arbitration, or settlement discussions relating to such claims.

19.3.3 Settlement.

The Indemnifying Party shall not settle any claims against the Indemnified Party that involves anything other than a waiver of claims and the payment of a settlement by the Indemnifying Party except with the Indemnified Party’s prior written permission. The Indemnifying Party shall not be responsible for any settlement made by the Indemnified Party without the Indemnifying Party’s written permission. In the event the Indemnified Party and Indemnifying Party agree to settle a claim, the Indemnifying Party shall not publicize the settlement without first obtaining the Indemnified Party’s written permission.

19.3.4 Third Party Losses.

The Indemnifying Party shall use reasonable efforts to mitigate liability, damages, and other losses suffered in connection with this Article 19 , including where any damages can be mitigated by lawfully pursuing recovery from third parties, in which case the Indemnifying Party shall conduct or permit diligent efforts to so recover.

20. Limitations of Liability.

20.1 Limitation on Direct Damages.

Except as provided in this Section 20.1 and Section 20.4 below, the total and cumulative liability of each Party, its Affiliates, and its and their respective shareholders, directors, officers, employees, agents, subcontractors and licensors, for direct damages and Acknowledged Direct Damages (whether a claim therefor is based on warranty, contract, tort (including negligence or strict liability), statute, or otherwise) connected with or arising or resulting from any performance or nonperformance of Services under this Agreement shall be limited in the aggregate for all claims to the Cap. Each Party agrees that the damage limitations in this Section 20.1 shall not be deemed or alleged to have caused this Agreement to fail of its essential purpose. Charges paid and payable by WG to Service Provider pursuant to Article 6 , Invoicing and Payment [***] shall not apply against the Cap or the Enhanced Cap and will not be considered excluded by Section 20.3 below. If the liability of a Party is based on the [***] the limitation in this Section 20.1 will be expanded to include an additional amount so that the aggregate liability of that Party under this Section 20.1 will be limited in the aggregate for all claims to the Enhanced Cap.

20.2 Aggregate Liability.

For the avoidance of doubt, the aggregate liability of a Party under Section 20.1 will never be greater than the Enhanced Cap.

20.3 Exclusion of Consequential Damages and Certain Other Damages.

NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT THAT MAY BE TO THE CONTRARY (EXCEPT AS EXPRESSLY PROVIDED IN SECTION 20.4 BELOW), NEITHER PARTY, NOR ITS AFFILIATES OR ITS OR THEIR RESPECTIVE SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, OR LICENSORS, SHALL BE LIABLE TO THE OTHER PARTY, OR ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, MEMBERS, AFFILIATES, OR SUBCONTRACTORS, FOR CLAIMS FOR INCIDENTAL, INDIRECT, PUNITIVE, EXEMPLARY, CONSEQUENTIAL, OR SPECIAL DAMAGES, INCLUDING DAMAGES FOR LOSS OF PROFITS, LOSS OF USE OR REVENUE, LOSS OF SAVINGS, OR LOSSES BY REASON OF COST OF CAPITAL, CONNECTED WITH, OR ARISING OR

RESULTING FROM, ANY PERFORMANCE OR LACK OF PERFORMANCE UNDER THIS AGREEMENT, EVEN IF SUCH DAMAGES WERE FORESEEABLE OR THE PARTY SOUGHT TO BE HELD LIABLE WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND REGARDLESS OF WHETHER A CLAIM IS BASED ON CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY), VIOLATION OF ANY APPLICABLE DECEPTIVE TRADE PRACTICES ACT, OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLE.

20.4 Exceptions.

The limitations set forth in Section 20.1 and Section 20.2 and the exculpations set forth in Section 20.3 shall not apply to:

(i) damages resulting from Service Provider’s refusal to provide the Services or Termination Assistance Services (for purposes of this subsection (i), “refusal” means the failure to start or intentional cessation by [***] (without good faith efforts to promptly rectify such failure to start or intentional cessation after written notice from [***]) of the performance of all or a material portion of the Services or Termination Assistance Services (a) with respect to Services, for [***] after [***] gives notice of its intentional cessation of all or a material portion of the Services or [***] after [***] gives notice to [***] that [***] has intentionally ceased [***] all or a material portion of the Services (the [***] to be measured from [***], and (b) with respect to Termination Assistance Services for [***] immediately following notice [***] of its intentional cessation of all or a material portion of the Services or [***] after [***] gives notice [***] that [***] has intentionally [***] of all or a material portion of the Services [***], but shall not mean [***] based on a good faith belief that [***];

(ii) any liability caused by or arising from (a) Willful Misconduct of a Party or (b) [***], or (c) any bodily injury or damage to tangible property where such injury or damage results from [***], unless due to the acts, omissions, negligence or Willful Misconduct of the other Party or its subcontractors;

(iii) either Party’s indemnification obligations set forth in Article 19 (except with respect to the indemnities [***]; or

(iv) breach of [***] by either Party.

20.5 Force Majeure.

20.5.1 Force Majeure Events.

Subject to Section 20.5.2 , neither Party shall be liable for any failure or delay in the performance of its obligations under this Agreement to the extent such failure or delay both is caused by a Force Majeure Event. The Parties expressly acknowledge that Force Majeure Events do not include the regulatory acts of governmental agencies in the ordinary course, labor strikes by the workforce of the Party subject to the failure or delay, or the non-performance of subcontractors or third party suppliers of the non-performing Party, unless such failure or non-performance by a subcontractor or third party suppliers is itself caused by a Force Majeure Event. Upon the occurrence of a Force Majeure Event, the non-performing Party shall be excused from any further performance or observance of the affected obligation(s) for as long as such circumstances prevail, and such Party continues to attempt to recommence performance or observance to the greatest extent possible without delay.

20.5.2 Business Continuity Plan.

Notwithstanding any other provision of this Agreement, a Force Majeure Event shall (i) obligate and require Service Provider to perform its obligations under the Business Continuity Plan within the time period described therein and (ii) not relieve Service Provider from any performance obligation to the extent the Business Continuity Plan was intended to prevent or minimize the occurrence of the Force Majeure Event. Service Provider shall implement the redundancy requirements set forth in the Business Continuity Plan and/or the applicable Work Agreements. The Business Continuity Plan shall provide sufficient redundancy with respect to core aspects of the Services to minimize the impact of any Force Majeure Event. If Service Provider is unable to perform the Services in any material respect, Service Provider shall immediately notify WG of such inability. WG, in its sole discretion, may elect to provide Service Provider a reasonable opportunity to recommence performance. WG may procure such Services from an alternate source and suspend Service Provider’s provision of such Services for the duration of the agreement executed between WG and such alternate source in respect of the provision of such services. WG will use commercially reasonable efforts to minimize the duration of the agreement to procure such services from such alternate source. Service Provider will use commercially reasonable efforts to coordinate its re-initiation of the performance of the Services in conjunction with the termination of such agreement pursuant to which WG receives services from the alternate source. Service Provider will credit WG for cost for any services that must be procured from such alternate source for a period of [***] up to the amount equal to [***] of the Charges paid to Service Provider by WG during this [***] period; however, WG’s obligations to continue paying the Charges to Service Provider will remain in full force and effect.

20.6 Duty to Mitigate.

Each Party has a duty to mitigate the damages that would otherwise be recoverable from the other Party pursuant to this Agreement by taking appropriate and commercially reasonable actions to reduce or limit the amount of such damages.

21. Insurance.

For the avoidance of doubt, the insurance that Service Provider is required to maintain hereunder shall cover Service Provider and its Affiliates.

21.1 Service Provider Insurance Coverage.

During the term of this Agreement, Service Provider shall carry and maintain the following insurance coverage through an insurance company that has a Best’s Rating of [***] or higher and a Financial Size Category of [***] or higher, as such ratings are assigned by A.M. Best Company, Inc.

21.1.1 Workers’ Compensation.

Workers’ compensation insurance in compliance with the Laws in the jurisdiction where the Services will be performed, and Employers Liability Insurance with a limit of not less than [***] each employee.

21.1.2 Commercial General Liability.

Commercial general liability insurance, occurrence form, including contractual liability coverage, with limits of not less than $1,000,000 per occurrence and $2,000,000 as an annual aggregate, $2,000,000 Products and Completed Operations aggregate; $1,000,000 Personal Injury and Advertising injury per offense. [***]

21.1.3 Automobile Liability.

Automobile liability insurance for Service Provider vehicles owned, hired and non-owned, with a combined single limit of $2,000,000 per accident. [***]

21.1.4 Crime.

Crime insurance that [***]. The policy shall also cover theft of money, securities and other property of WG by Service Provider’s employees while such employees are involved in the provision of Services, with a limit of not less than [***].

21.1.5 Professional Liability.

Professional liability insurance providing “errors and omissions liability” or equivalent coverage for the work being performed, with limits of $[***]. The policy or policies shall include coverage for Service Provider for acts [***].

21.1.6 Excess Liability.

Excess liability insurance, Umbrella Form, shall carry coverage in excess of the limits provided for in the above Employers Liability, Commercial General Liability and Automotive Liability policies, with a limit of not less than $[***].

21.1.7 Property Coverage.

Property coverage will be maintained providing [***] for the property of others that is in Service Provider’s care, custody and control with limits not less than the [***] of the property in question. Such coverage shall name [***].

It is acknowledged by the Parties that should any legislation in any jurisdiction require or have the effect of requiring any amendment to the provisions of, or the obligations imposed by, this Section in respect of that jurisdiction, the necessary amendments to this Section shall be agreed between the Parties (such amendments applying in relation to that jurisdiction only) and recorded in the applicable Work Agreement. Service Provider shall also monitor its subcontractors performing Services so that such subcontractors carry insurance coverage with respect to the Services that Service Provider deems appropriate under the circumstances.

21.2 Certificates.

Service Provider shall grant WG the [***] required above using a [***] or if such endorsement is no longer available, Service Provider shall cause the policy to be endorsed to grant this status. Evidence of the above insurance policies shall be provided to WG on a standard ACORD form 25 S, or its equivalent, within fifteen (15) days of the Execution Date and within fifteen (15) days of the renewal of each such policy, [***]:

The following wording shall be used on the Certificate: “Washington Gas Light Company, its successors, subsidiaries, directors, officers, agents and employees are named as additional insureds on the general and automobile liability policy listed above [***]. Such coverage is primary, not contributory, and not in excess of any other insurance of Certificate Holder to the extent required for Service Provider to meet its contractual obligations.”

21.3 [***].

[***]

21.4 Change in A.M. Best Rating.

If, during the term of this Agreement, Service Provider’s insurer fails to meet or exceed the A.M. Best rating required by Section 21.1 , Service Provider shall, procure insurance from an alternative insurer who does meet or exceed such rating at the policy renewal date immediately following such change in rating.

22. Dispute Resolution Process.

Any Dispute between the Parties shall be resolved as provided in this Article 22 .

22.1 Informal Dispute Resolution.

Informal dispute resolution procedures are set forth in Appendix 12 .

22.2 Formal Proceedings.

Formal proceedings for the resolution of a Dispute may be commenced after the earlier of (i) the designated representatives concluding that amicable resolution of the Dispute through continued negotiation does not appear likely, or (ii) [***] after the initial request to negotiate the Dispute, except for Disputes related to disputed amounts in invoices, for which such time period shall be [***]. Notwithstanding the foregoing, each Party may institute formal proceedings at any time in order to avoid the expiration of any applicable limitations period, to preserve a superior position with respect to other creditors, or to seek equitable relief.

22.3 Equitable Relief.

A Party may seek equitable relief if (i) a Party makes a determination that a breach (or potential breach) of the terms of this Agreement by the other Party may result in damages or consequences that shall be immediate, severe, and incapable of adequate redress after the fact, so that a temporary restraining order or other immediate injunctive relief is the only adequate remedy, or (ii) a third party necessary to the resolution of the Dispute cannot be joined in the escalation process described in this section.

22.4 Choice of Law.

THE INTERNAL LAWS OF THE STATE OF NEW YORK EXCLUDING ITS CONFLICTS OF LAW PRINCIPLES SHALL GOVERN THIS AGREEMENT. WITH RESPECT TO ANY AND ALL LITIGATION ARISING OUT OF, OR RELATED TO, THE TERMS OF, THE TRANSACTIONS AND RELATIONSHIPS CONTEMPLATED BY, OR BREACH OR ALLEGED BREACH OF, THIS AGREEMENT, SERVICE PROVIDER HEREBY IRREVOCABLY CONSENTS (I) TO THE EXCLUSIVE JURISDICTION OF, AND VENUE IN, ANY FEDERAL COURT OF COMPETENT JURISDICTION LOCATED IN DISTRICT OF COLUMBIA FOR THE PURPOSES OF ADJUDICATING ANY MATTER ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT AND THE NONEXCLUSIVE JURISDICTION OF LOCAL COURTS WITH RESPECT TO DATA PROTECTION CLAIMS OR OTHER MATTERS REQUIRED TO BE BROUGHT IN A LOCAL COURT OR FOR MATTERS FOR WHICH SUCH DISTRICT OF COLUMBIA COURTS DO NOT EXERCISE JURISDICTION AND (II) AGREES TO ONLY INSTITUTE LITIGATION IN SUCH COURTS. The Parties further irrevocably consent to the non-exclusive jurisdiction of any other court located within a jurisdiction that encompasses assets of a Party

against which a judgment has been rendered for the enforcement of such judgment or award against the assets of such Party.

22.5 Waiver of Jury Trial.

EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN THE RESOLUTION OF ANY DISPUTE ARISING OUT OF, OR RELATING TO, THIS AGREEMENT.

23. Termination.

23.1 Termination by WG.

23.1.1 Termination for Convenience.

WG may terminate this Master Services Agreement, any Work Agreement, any Service Tower, or all Leak Call Services for convenience at any time after [***], upon [***]; provided , however , that (A) WG may terminate [***]. Service Provider shall use all reasonable efforts to minimize costs upon receipt of such notice.

23.1.2 Cap Refresh.

In the event that Service Provider owes to WG direct damages [***] as a result of one or more of the following (i) an agreement by Service Provider that it owes WG certain direct damages, (ii) a settlement agreed to by the Parties, (iii) an order from a court of competent jurisdiction or (iv) a ruling as a result of an arbitration where the Parties have agreed that such arbitration would be binding, and Service Provider does not agree to refresh the Cap to its original amount (i.e., none of such recovered direct damages shall, after such refresh, be considered to have applied against the Cap) within [***] after a request to refresh the Cap has been made by WG, then WG may terminate this Agreement, the applicable Work Agreement or the applicable Service Tower upon no less than [***] prior written notice to Service Provider [***].

23.1.3 Termination for Cause.

WG may terminate this Agreement or any Work Agreement, in whole or in part, for cause in the event of (i) Service Provider’s material breach of its obligations or warranties or (ii) a series of breaches by Service Provider of its obligations under this Agreement that may be immaterial if considered individually, but are material in the aggregate, (provided that all such breaches upon which WG is basing its material breach claim pursuant to this subsection (ii) shall have occurred within the [***]

immediately preceding any notice of material breach), if such material breach is not cured within [***] after WG notifies Service Provider of such material breach (“ Cure Period ”), or in the case of a breach that cannot be cured within the Cure Period, Service Provider has [***]. Notwithstanding the foregoing, WG may terminate this Agreement or any Work Agreement, in whole or in part, for cause in the event of Service Provider’s breach of its obligations or warranties in [***], if such breach is not cured within [***] after WG notifies Service Provider of such breach (“ Accelerated Cure Period ”), or in the case of a breach that can be cured but not within the Accelerated Cure Period, if Service Provider has [***], provided, in either case, that WG discusses the breach with Service Provider prior to exercising the foregoing right to terminate. The express acknowledgment in this Article 23 that certain events constitute grounds for WG to terminate for cause does not imply that other events (including, for example [***]) cannot constitute a material breach of this Agreement or cannot therefore constitute grounds for WG to terminate for cause under other sections of this Agreement. WG shall not be obligated to pay any Termination Charge with respect to a termination under this Section 23.1.3 unless otherwise expressly stated in this Agreement.

(i) Termination for Inability to [ *** ] .

WG may terminate this Agreement for cause if Service Provider’s acts or omissions in breach of its obligations under this Agreement is the [ *** ], or (ii) [ *** ] after WG so notifies Service Provider of such breach (provided that all such breaches upon which WG is basing its breach claim pursuant to this Section 23.1.3(i) shall have occurred within the [ *** ] period immediately preceding any notice of such breach).

(ii) Termination for Breach that [ *** ] .

WG may terminate this Agreement for cause if Service Provider action in breach of its obligations under the Agreement is the [ *** ] (provided that all such breaches upon which WG is basing its breach claim pursuant to this Section 23.1.3(ii) shall have occurred within the [ *** ] period immediately preceding any notice of such breach).

(iii) Termination for [ *** ].

(A) If (1) the Service Provider proximately causes [***] with respect to the Services that is a responsibility of Service Provider under this Agreement, (2) such [***], (3) such [***], (4) such [***], and (5) such [***] in the next or any future reporting period and WG reports to [***] and [*** ] , WG may terminate this Agreement for cause upon thirty (30) days notice, with no further opportunity to cure.

(B) If the Service Provider [***] with respect to [***] with respect to the Services that is a responsibility of Service Provider under this Agreement and [***] does not arise in accordance with subsection (A) above, WG and the Service Provider will agree on a [***]. If the Service Provider does not [***] within the time agreed to by the Parties and WG [***] and [***], WG may terminate this Agreement for cause upon [***], with no further opportunity to cure.

(iv) Termination of Leak Call Services .

WG may terminate Leak Call Services for cause if [ *** ] and such failure leads to a reportable incident (as defined by the United States Department of Transportation).

(v) Termination for Failure to Complete Transition Plan .

WG may terminate an individual Service Tower for cause if Service Provider fails to meet a Transition Critical Milestone in the applicable Service Tower by [ *** ] (excluding WG Holidays) after the Commencement Due Date for such Transition Critical Milestone. In addition, WG may terminate Work Agreement No. 1 for cause if Service Provider fails to meet a [ *** ] by [ *** ] (excluding WG Holidays) after the Commencement Due Date for such Transition Critical Milestone.

(vi) Termination for Service Level Default .

In the event that (i) Service Provider fails to perform in accordance with the Minimum Service Level for [***] or during [***] out of any [***] period, or (ii) the total value of Service Level Credits accruing to WG and not earned back by Service Provider over any rolling [***] period following the Services Commencement Date exceeds the [***] for the [***] during such period where the [***], WG shall have the right to terminate this Agreement, or the applicable Work Agreement, for cause.

23.1.4 Change of Control of Service Provider.

In the event of a Change of Control of Service Provider, including a spin off or an initial public offering of Service Provider business entity used to provide the Services such that Service Provider no longer enjoys control over that business entity but excluding a Change of Control between entities within Service Provider’s corporate structure, WG shall have the right to terminate this Agreement or any Work Agreement upon at least thirty (30) days written notice with the payment of a Termination Charge to Service Provider as set forth in a Work Agreement.

23.1.5 Services to Former Affiliates; Termination for Change of Control of WG.

(i) If a WG entity is divested by WG, WG shall elect either (A) to terminate that part of the Services that was provided to the divested entity pursuant to the termination provisions, without payment of a Termination Charge, or (B) to require Service Provider to continue to provide Services to the divested entity on the same terms and to the same standards that such services were previously provided, for up to [***] after divestiture, the cost of such Services to be underwritten by WG or to be paid directly by the divested entity.

(ii) In the event that WG or any Affiliate of WG or any portion of the business or operations thereof becomes a Former Affiliate, Service Provider shall, at WG’s option, provide such Former Affiliate: (A) up to [***] of the Termination Assistance Services set forth in each applicable Work Agreement with respect to the Services such Former Affiliate was receiving from Service Provider prior to such Change in Control, commencing as soon as reasonably practical after the date that such Affiliate has become a Former Affiliate, and (B) continued Services until such Former Affiliate, in the reasonable opinion of WG, is able to procure services similar to the Services from a third party or provide such services itself, or until [***] after the date that such Affiliate has become a Former Affiliate, whichever is earlier (but in no event longer than the Term under which such Former Affiliate was receiving Services). To the extent the applicable charging methodology or resource baseline includes the resources necessary to provide such Termination Assistance Services and continued Services, such Termination Assistance Services and continued Services shall be provided to such Former Affiliate in accordance with such charging methodology or resource baseline.

23.1.6 Termination for Insolvency or Bankruptcy.

WG may terminate this Agreement, provided that WG pays the Termination Charge to Service Provider set forth in the applicable Work Agreement, within thirty (30) days after WG receives or has notice of Service Provider: [***].

23.1.7 Termination for Benchmarking.

In the event that WG exercises its right to terminate in accordance with Paragraph 6.2 of Appendix 7 , WG may terminate the relevant benchmarked Service Tower by giving Service Provider at least ninety (90) days prior written notice and upon payment of the applicable Termination Charges set forth in the applicable Work Agreement.

23.1.8 Termination for Force Majeure.

WG may terminate this Agreement, the applicable Work Agreement, or any affected Service if Service Provider is unable to perform the Services in any material respect for more than [***], or for more [***], as a result of a Force Majeure Event; provided , however , that (i) WG will only terminate any Service affected by such Force Majeure Event [***], (ii) in the event of (i), WG will pay the Termination Charge set forth in the applicable Work Agreement, and (iii) this Section 23.1.8 shall not apply to the extent that Service Provider is able to perform the Services in accordance with this Agreement but WG is unable to receive such Services.

23.1.9 Cross-Termination.

In the event WG is entitled to terminate a Work Agreement under this Agreement, WG shall also have the right, but not the obligation, to terminate [***].

23.1.10 Partial Termination.

If the Services are terminated in part, or if less than all Work Agreements are terminated, Service Provider shall continue to provide the remaining Services pursuant to the terms of this Agreement, provided that (i) the Parties shall agree to an equitable adjustment in Charges pursuant to Change Request Procedures set forth in Appendix 12.1 , and (ii) the Parties may set forth, in the applicable Work Agreements, any Services dependencies such that termination of a specified Service or Work Agreement requires cross-termination of another Service or Work Agreement; provided , however , that the foregoing shall not preclude WG from terminating Leak Call Services independently of the termination of any other Services.

23.1.11 Extension of Termination Effective Date.

WG may extend the effective date of termination of the Services or any Work Agreement one time, at WG’s sole discretion, provided that WG gives notice to Service Provider [***] notice prior to the termination of the Services and the total duration of such extension shall not exceed [***] following the original effective date of termination. Any such extension shall be counted as part of the period specified in Section 4.1 and Section 4.2 during which Service Provider shall continue to provide Services for fees specified in this Agreement but will not effect the [***] period set forth in Section 20.4(i) .

23.2 Termination by Service Provider.

23.2.1 Termination for Convenience.

Service Provider may terminate this Master Services Agreement for convenience at any time after [***] from the Execution Date, provided that Service

Provider shall provide at least [***] notice to WG, and provided further that such termination shall not terminate any Work Agreement then in effect, and the terms of this Agreement shall continue to apply to such Work Agreements.

23.2.2 Termination for WG’s Failure to Pay.

Service Provider may terminate this Agreement and any Work Agreement if (i) WG fails to pay Service Provider undisputed invoiced amounts due and payable under such Work Agreement for [***] after such amounts become due and payable, provided that WG fails to pay such undisputed invoiced amounts or provide evidence of a Dispute relating to such undisputed invoiced amounts, in each case for [***] after WG’s receipt of Service Provider’s written notice of such failure, or (ii) WG fails to deposit disputed amounts in escrow as required in Section 6.7 or withholds disputed charges in excess of the Maximum Withholding Amount for [***] after WG’s receipt of Service Provider’s written notice of such failure or withholding in excess of the Maximum Withholding Amount, and (iii) Service Provider has exhausted the Dispute Resolution Process set forth in Article 22 , or such failure or withholding is not cured within [***] from Service Provider’s written notice, whichever occurs first. Except as expressly set forth in this Section 23.2 , WG’s failure to perform any of WG’s obligations under this Agreement shall not be grounds for termination of this Agreement or any Work Agreement by Service Provider but Service Provider shall not be prohibited from seeking any other remedies (other than suspension of Service Provider’s performance) it may have against WG under this Agreement or applicable Law.

23.3 Effect of Termination.

Any termination by WG for material breach by Service Provider shall not prohibit WG from seeking any other remedies it may have against Service Provider under this Agreement or applicable Law. Any termination shall not, however, relieve: (i) WG of its obligation to pay any undisputed charges incurred under this Agreement prior to such termination (with such payment to be the pro rata portion of the relevant fixed fee for corresponding work completed if the Services under this Agreement or any applicable Work Agreement are rendered by Service Provider on a fixed fee basis); (ii) Service Provider from providing WG with Termination Assistance Services as set forth in Section 23.4 below and this Agreement and further described in the Work Agreement, which such obligation shall be absolute and unconditional; provided , however , that (A) in the event that Service Provider rightfully gives notice of termination pursuant to Section 23.2 , Service Provider may require WG to pay in advance all outstanding monthly Charges, any amounts being withheld in excess of the Maximum Withholding Amount, the monthly Charges for the next month and, if applicable, a reasonable estimate of the variable

fees for the next month before providing any Termination Assistance Services and (B) if WG has not complied with its obligations to pay in advance as provided in the previous sentence, Service provider may refuse to provide Termination Assistance Services; or (iii) both Parties from performing any obligation that is intended to survive the termination of this Agreement or the applicable Work Agreement.

23.4 Termination/Expiration Assistance.

In the event of the expiration or WG’s notice to Service Provider of the termination of a Work Agreement or this Agreement for any reason, Service Provider shall, upon WG’s request, provide the Termination Assistance Services. Without limiting the foregoing, Service Provider shall agree to (i) provide the specific Termination Assistance Services set forth in the applicable Work Agreement, provided that if Service Provider terminates this Agreement pursuant to Section 23.2 , WG shall pay for such Termination Assistance Services in advance in accordance with Section 23.3 .

23.5 Equitable Remedies.

Subject to Section 23.3 above, Service Provider acknowledges that, in the event Service Provider breaches, or attempts or threatens to breach, its obligation to provide WG assistance in accordance with Section 23.4 , then notwithstanding the Dispute Resolution Process set forth in Article 22 , WG shall be entitled to seek an injunction, specific performance, or other equitable relief in any court of competent jurisdiction.

23.6 Service Provider Employees and Contracts.

Upon expiration or termination of a Work Agreement or this Agreement for any reason, WG may (i) subject to Section 24.17 , hire those employees of Service Provider and Service Provider’s Affiliates who were substantially dedicated to providing the Services who wish to be hired, (ii) take assignment of contracts and licenses used and entered into exclusively to provide the Services, and Service Provider shall use commercially reasonable efforts so (A) that such contracts are assigned to WG, or (B) that WG can otherwise obtain the rights under such contracts on substantially similar terms directly from the third party to such contract, and (iii) acquire assets used by Service Provider exclusively to provide the Services at a price to be agreed upon by the Parties, plus applicable Taxes.

23.7 Service Provider Subcontractors.

Service Provider agrees that it will not enter into agreements with its subcontractors that are providing the Services that contain provisions that would expressly preclude such subcontractors from (x) working with or for WG or any of its Affiliates after the termination or expiration of the applicable Work Agreements, or (y) providing services that are not the same as or substantially similar to the Services, whether during or after the Term.

24. General.

24.1 Entire Agreement.

This Agreement and any other agreements the forms of which are attached hereto and when executed by the Parties constitute the entire agreement between the Parties with respect to their subject matter and shall not be modified or rescinded except by a writing signed by WG and Service Provider. The Appendices and all Work Agreements (and the Exhibits thereto) are incorporated herein by this reference. Except as set forth in Section 2.3 , the provisions of this Agreement and any other agreements the forms of which are attached hereto and when executed by the Parties supersede all contemporaneous oral agreements and all prior oral and written quotations, communications, agreements, understandings of the Parties, and written or oral representations of either Party with respect to the subject matter of this Agreement, including any letter of intent or memorandum of understanding executed by the Parties with respect to the Services; provided, however, that with respect to the confidentiality agreement signed by the Parties on March 13, 2006, the Parties agree that any Confidential Information exchanged pursuant to such confidentiality agreement will be subject to the terms of Article 15 of this Agreement. There are no representations, understandings or agreements relating to this Agreement that are not fully expressed in this Agreement and each of the Parties acknowledges that it has not relied on any representation, promise, understanding or warranty (other than as fully expressed in this Agreement) in entering into this Agreement.

24.2 Assignment.

This Agreement shall be binding on the Parties and their respective successors and permitted assigns. Service Provider may not assign (whether by sale of all or substantially all of its assets, sale of stock, merger or reorganization) this Agreement or any of its rights and obligations under this Agreement without the prior written consent of WG. Any attempted assignment, delegation, or subcontracting (other than pursuant to Section 12.5 ) in contravention of the above provision shall be void and ineffective. Service Provider hereby acknowledges that WG is entering into this Agreement based upon (i) its personal relationship with Service Provider and (ii) the personal judgment, skills and abilities of Service Provider and the Personnel. Notwithstanding the foregoing, Service Provider may assign its rights and obligations under this Agreement, without the consent of WG, to an Affiliate of Service Provider provided that in the case of such assignment, Service Provider remains fully liable for and is not relieved from the full performance of its obligations under this Agreement, and Service Provider will provide WG prompt written notice of the assignment. WG may not assign this Agreement or any of its rights and obligations under this Agreement without the prior written consent of Service Provider; provided, however, that WG may assign this Agreement, in whole or in part, to (x) an Affiliate or (y) to the purchaser of WG (whether by sale of all or substantially all of its assets, sale of stock, merger or reorganization) provided that in the case of such assignment, WG remains fully liable for and is not relieved from the full performance of its obligations under this Agreement, and WG will provide Service Provider prompt written notice of the assignment.

24.3 Notices.

Any notice required or permitted to be given under this Agreement shall, except as otherwise provided in an Appendix or Work Agreement, be given in writing and shall be

effective from the date sent by registered or certified mail, by hand, facsimile or overnight courier to the addresses set forth below.


		To Service Provider:		Accenture, LLP
				1661 Page Mill Road
				Palo Alto, CA 94304
				Attention: General Counsel
				Telephone: 650-213-2136
				Fax: 650-213-2956

		with a copy (which shall not constitute notice) sent to:		Burrell G. Kilmer One Freedom Square 11951 Freedom Drive Reston, VA 20190-5651
				Telephone: 703-947-1471
				Fax: 202-330-5668

		To WG:		Beverly J. Burke
				General Counsel
				Washington Gas
				101 Constitution Avenue, N.W.
				Washington, DC 20080
				Telephone: (202) 624-6177
				Fax: (202) 842-2880

				Terry D. McCallister
				President & Chief Operating Officer
				Washington Gas
				6801 Industrial Road
				Springfield, VA 22151
				Telephone: (703) 750-5521
				Fax: (703) 750-5199

Either Party may change the address set forth in this Section at any time by giving prior written notice to the other Party as provided above. Notwithstanding the foregoing, operational notifications will be addressed to the Parties’ respective Responsible Executives.

24.4 Third Party Notice.

If either Party receives a notice of infringement, request for disclosure, subpoena, or other inquiry with respect to any matter relating to this Agreement, such Party shall promptly notify the other Party. To the extent any such request relates to the other Party’s Confidential Information, Section 15.3 shall control. Neither Party shall respond to such notices, requests, subpoenas, or inquiries, without first so notifying the other Party pursuant to this Section 24.4 unless such notice would be otherwise prohibited by Law.

24.5 Expenses.

Except as otherwise expressly provided by this Agreement, each Party shall pay all fees and expenses incurred by such Party in connection with the negotiation and execution of, and performance under, this Agreement.

24.6 Relationship of the Parties.

Service Provider shall perform the Services as an independent contractor. Nothing in this Agreement or in the performance of the Services by Service Provider shall be construed to create: (i) a partnership, joint venture or other joint business arrangement between WG and Service Provider; (ii) any fiduciary duty owed by one Party to the other Party or any of its Affiliates (unless otherwise contemplated by a Work Agreement); (iii) a relationship of employer and employee between the Parties; or (iv) any basis for any employee of a Party to claim that he or she is an employee of the other Party. Service Provider and WG are not joint employers, a single employer, associated employers or related employers for any purpose under this Agreement. Except as expressly permitted by this Agreement, neither Party shall have the authority to commit the other Party contractually or otherwise to any obligations to third parties.

24.7 Severability.

If any provision of this Agreement is determined to be invalid or unenforceable, the remaining provisions of this Agreement shall not be affected thereby and shall be binding upon WG and Service Provider and shall be enforceable and such provision shall be reformed to the extent necessary to render such provision valid and enforceable and to reflect the intent of the Parties to the maximum extent possible under applicable Law.

24.8 Consents and Approval.

Except as and to the extent otherwise expressly provided in such approval or consent, an approval or consent given by a Party under this Agreement shall not relieve the other Party from responsibility for complying with the requirements of this Agreement, nor shall it be construed as a waiver of any rights under this Agreement. Whenever this Agreement requires or contemplates any action, permission, consent or approval, each Party will act reasonably and in good faith and will not unreasonably withhold or delay such action, permission, consent or approval, unless this Agreement expressly establishes some other standard, such as exercise of a Party’s sole discretion, or the right to withhold any of the foregoing for any reason or no reason.

24.9 Waiver of Default.

The failure by either WG or Service Provider to insist upon strict performance of any of the provisions contained in this Agreement shall not constitute a waiver of its rights, at law or in equity, or a waiver of any other provisions or subsequent default by the other Party in the performance or compliance with any of the terms and conditions set forth in this Agreement. No waiver of any of the provisions of this Agreement or any Work Agreement will be effective unless it is expressly stated to be a waiver and communicated to the other Party in writing.

24.10 Remedies Cumulative.

Unless expressly stated otherwise in this Agreement, all remedies provided for in this Agreement will be cumulative and in addition to, and not in lieu of, any other remedies available to either Party at law, in equity or otherwise.

24.11 Survival of License in Bankruptcy.

All licenses granted to WG under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Paragraph 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Paragraph 101(35A) of the U.S. Bankruptcy Code. The Parties agree that WG, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code, or similar laws of other jurisdictions.

24.12 Survival of Obligations.

The obligations of the Parties under this Agreement that the Parties have expressly agreed shall survive termination or expiration of this Agreement or a Work Agreement or that, by their nature, would continue beyond the expiration or termination of this Agreement or a Work Agreement, shall survive the expiration or termination of this Agreement or a Work Agreement for any reason. Without limiting the generality of the foregoing, the Parties intend that the following Sections survive expiration or termination of this Agreement or a Work Agreement: 1, 2.3, 5, 6, 7.3, 12.5.3, 15, 16, 17.1.3, 17.1.4, 17.2, 17.3, 17.5, 17.6, 17.7, 19, 20, 21.1, 21.3, 22.3, 22.4, 22.5, 23, 24.11 and 24.12, in addition to the following Appendices: 10 and 11. Upon the expiration or termination of the applicable Work Agreement, any monies, penalties or other charges due and owing either Party shall be paid by the other Party within thirty (30) days of the effective date of such termination or expiration.

24.13 Media Releases.

All media releases, public announcements and public disclosures by either Party relating to this Agreement or the subject matter of this Agreement, including internal and external promotional or marketing materials (but not including announcements intended solely for internal distribution or to meet legal or regulatory requirements beyond the reasonable control of the disclosing Party) shall be coordinated with and approved in writing by the other Party prior to release. The Parties also will use commercially reasonable efforts to mutually agree on the wording of a press release within a reasonable period of time after the Execution Date; provided , however , no such press release may be issued unless so agreed. Notwithstanding the above, during the first year of the term of this Agreement, Service Provider shall obtain WG’s prior consent [***] to list WG’s name and/or use WG’s corporate logo on a customer list that Service Provider provides to prospective buyers of its products or services along with a general description, approved in writing by WG in its sole discretion, of the types of Services Service Provider is performing for WG. After the first year of the term of this Agreement,

Service Provider may use WG’s name, such logo and such products and services description in the manner previously approved by WG without the need for WG to consent in each instance as long as Service Provider [***].

24.14 Third Party Beneficiaries.

Except for the WG Indemnified Parties and Service Provider Indemnified Parties to the extent provided in Article 19, this Agreement shall not be deemed to create any obligations of a Party to any such third party or create any rights in third parties, including employees, suppliers, or customers of a Party. No provision of this Agreement shall create any third party beneficiary rights in any employee or former employee (including any beneficiary or dependent thereof) of WG in respect of rights to continued employment of benefits of any kind. WG and Service Provider hereby specifically acknowledge and agree that it is their intention, (i) that all of the terms and conditions of this Agreement be made available to Affiliates of WG, and (ii) that Affiliates of WG are not intended third party beneficiaries of this Agreement (other than to the extent a WG Indemnified Party), but shall be entitled to enforce this Agreement as it pertains to any applicable Work Agreement to which such Affiliate is a party and that WG be entitled to enforce this Agreement or any applicable Work Agreement on behalf of such Affiliates.

24.15 Compliance with Export/Import Control Laws.

The Parties expressly acknowledge their obligation to comply with all applicable Laws relating to their respective businesses, facilities, and the provision of services to third parties, regarding (i) export from any country of Export/Import Items, (ii) import into any country of any Export/Import Items, (iii) use in any country of any Export/Import Items and (iv) re-export from any country of any Export/Import Items, as such Laws may be modified from time to time, in connection with this Agreement. In their respective performance of the activities contemplated under this Agreement, neither Party shall directly or indirectly export (or re-export) any Export/Import Items, or permit the shipment of same: (x) into any country to which the United States has embargoed goods; (y) to anyone on the U.S. Treasury Department’s List of Specially Designated Nationals, List of Specially Designated Terrorists or List of Specially Designated Narcotics Traffickers, or the U.S. Commerce Department’s Denied Parties List; or (z) to any country or destination for which the United States government or a United States governmental agency requires an export license or other approval for export without first having obtained such license or other approval. Each Party acknowledges export control or economic sanctions programs may include U.S. export control laws such as the Export Administration Regulations and the International Traffic in Arms Regulations, and U.S. economic sanctions programs that are or may be maintained by the U.S. Government, including sanctions currently imposed against Belarus, Burma (Myanmar), Cuba, Iran, Ivory Coast, Liberia, North Korea, Sudan, Syria and Zimbabwe, as well as Specially Designated Nationals and Blocked Persons programs. The Parties will review the impact of obtaining approvals, consents, licenses and/or permits required for the export or import of any Export/Import Items under this Agreement on Service Provider’s ability to provide the Services. Prior to providing Service Provider any goods, software, services and/or technical data subject to export controls controlled at a level other than EAR99/AT, WG

shall provide written notice to Service Provider specifying the nature of the controls and any relevant export control classification numbers. Each Party shall cooperate with the other and shall provide to the other promptly upon request any end-user certificates and other documents and technical information concerning any Export/Import Items as the other Party may require to obtain such approvals, consents, licenses and/or permits.

24.16 Compliance with Foreign Corrupt Practices Act.

Neither Party nor any of its directors, officers, employees or owners will make any payment (including any offer to pay, promise to pay or gift of money or anything else of value) in connection with this Agreement or any Services provided pursuant to this Agreement to:

(i) any government official, any political party or official of a political party, or any candidate for political office (in any country); or

(ii) any other person, while knowing, having reason to know or having credible information suggesting in any way that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any government official, to any political party, or official thereof or to any candidate for political office (in any country), where the purpose of the payment was or is to influence or induce any government official, political party, official of a political party or candidate for political office: (A) to take any act or make any decision in that person’s official capacity; (B) to fail to take an act in violation of that person’s official duty; (C) affect or influence any act or decision by a government; or (D) take or fail to take any other action that would violate the laws or regulations of the United States of America or any other country in order to assist a Party, or any of a Party’s directors, officers, employees or owners, in obtaining or retaining business for or with, or directing business to, any person. Service Provider represents and warrants that none of the members of its board of directors, or any of its senior management that are directly involved with this Agreement, is a government official, an official of a political party, or a candidate for political office, in any country outside of the United States, except as has been disclosed in writing to WG. Service Provider represents that it has a program in place to monitor its compliance with the Foreign Corrupt Practices Act and to determine whether any of its directors, officers, employees or owners may be subject thereto. The term “government official” means any officer or employee of a government or a department, agency, or instrumentality thereof, or any such person acting in an official capacity for or on behalf of such government or department, agency, or instrumentality, in any country.

24.17 Solicitation.

During the Term, and for a period of one (1) year following the expiration or termination of a Work Agreement, neither party shall solicit any officer or employee of the other Party or its Affiliates having performed under or in connection with such Work Agreement, without the prior written consent of the other Party. General advertisements or publication of employment

opportunities by a Party that are not targeted at employees or officers of the other Party shall not be deemed to violate a Party’s non-solicitation obligations.

24.18 Further Assurances.

Each of the Parties agrees that from time to time, at the request of the other Party and without further consideration, it shall execute and deliver such other documents and take such other actions as the other Party may reasonably request to consummate more effectively the transactions contemplated by this Agreement.

24.19 Calculation of Days.

Unless otherwise noted in this Agreement, “days” refers to calendar days.

24.20 Headings and Appendices; Construction.

The table of contents of this Agreement and the headings used for the Articles and Sections in this Agreement are for convenience and reference purposes only and shall in no way affect the meaning or interpretation of this Agreement. The terms “Section,” “Paragraph,” “Clause,” “Article” and “Provision” refer to sections in this Agreement, and its Appendices, Exhibits, Schedules, Attachments and Annexes, respectively. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall,” and vice versa.

24.21 Counterparts.

This Agreement may be executed in several counterparts, all of which taken together shall constitute one single agreement between the Parties.

24.22 Strategic Alliances.

Service Provider has alliance relationships with third party product and services vendors and as part of such alliances, Service Provider is able to resell certain products and services and/or may receive compensation from vendors in the form of fees or other benefits in connection with the marketing, technical and other assistance provided by Service Provider. WG acknowledges that such relationships may be beneficial to Service Provider and assist in its performance of the Services hereunder. With respect to any sourcing projects Service Provider undertakes as part of Exhibit C.1 of Work Agreement No. 1, Service Provider agrees that to the extent Service Provider recommends third party products or services vendors from entities with which Service Provider has alliance relationships as described in this Section 24.22 , Service Provider will only recommend such products or services to the extent they can be provided under

prices and terms comparable to or more favorable than those which WG can obtain from other sources.

* * * * *

IN WITNESS WHEREOF, each of the Parties hereto, by its duly authorized representative, has caused this Agreement to be executed as of the Execution Date.


WASHINGTON GAS LIGHT COMPANY						ACCENTURE LLP

By:						By:


Printed Name:						Printed Name:


Title:						Title:

Exhibit 10.2

EXECUTION COPY

AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF AUGUST 3, 2007

AMONG

WGL HOLDINGS, INC.,

THE LENDERS PARTIES HERETO,

WACHOVIA BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT,

BANK OF TOKYO-MITSUBISHI UFJ TRUST COMPANY,
AS SYNDICATION AGENT,

CITIBANK, N.A.,
SUNTRUST BANK
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS DOCUMENTATION AGENTS,

AND

WACHOVIA CAPITAL MARKETS, LLC,
AS LEAD ARRANGER AND BOOK RUNNER

TABLE OF CONTENTS


	Page
ARTICLE I INTERPRETATION		1
1.1 Definitions		1
1.2 Other Interpretive Provisions		14

ARTICLE II CREDIT FACILITY		15
2.1 The Facility		15
2.1.1 Amount of Facility		15
2.1.2 Availability of Facility		15
2.1.3 Repayment of Facility		15
2.2 Ratable Loans		15
2.2.1 Commitment to Lend		15
2.2.2 Types of Ratable Loans		15
2.2.3 Method of Selecting Types and Interest Periods for Ratable Loans		15
2.2.4 Conversion and Continuation of Outstanding Loans		16
2.3 Competitive Bid Loans		17
2.3.1 Competitive Bid Option		17
2.3.2 Competitive Bid Quote Request		17
2.3.3 Invitation for Competitive Bid Quotes		18
2.3.4 Submission and Contents of Competitive Bid Quotes		18
2.3.5 Notice to Borrower		19
2.3.6 Acceptance and Notice by Borrower		20
2.3.7 Allocation by Administrative Agent		20
2.3.8 Administration Fee		21
2.4 Funding by Lenders; Disbursement to the Borrower		21
2.4.1 Ratable Loans		21
2.4.2 Competitive Bid Loans		21
2.5 Fees		22
2.5.1 Facility Fee		22
2.5.2 Utilization Fee		22
2.6 Reductions in Aggregate Commitments; Increases in Aggregate Commitments		22
2.6.1 Reductions		22
2.6.2 Increases		22
2.7 Extension Option		23
2.8 Term-Out Option		24
2.9 Repayments; Optional Principal Prepayments		24
2.10 Changes in Interest Rate, etc.		25
2.11 Rates Applicable After Default		25
2.12 Method of Payment		25
2.13 Evidence of Indebtedness		26
2.14 Telephonic Notices		26
2.15 Interest Payment Dates; Interest and Fee Basis		27


	Page
2.16 Notification of Loans, Interest Rates, Prepayments and Commitment Reductions		27
2.17 Lending Installations		27
2.18 Non-Receipt of Funds by the Administrative Agent		28
2.19 Maximum Interest Rate		28

ARTICLE III YIELD PROTECTION; TAXES		28
3.1 Yield Protection		28
3.2 Changes in Capital Adequacy Regulations		29
3.3 Availability of Types of Loans		29
3.4 Funding Indemnification		29
3.5 Taxes		30
3.6 Lender Statements; Survival of Indemnity		32

ARTICLE IV CONDITIONS PRECEDENT		32
4.1 Initial Loan		32
4.2 Each Loan		33

ARTICLE V REPRESENTATIONS AND WARRANTIES		34
5.1 Corporate Existence		34
5.2 Financial Condition		34
5.3 Litigation		34
5.4 No Breach		35
5.5 Corporate Action		35
5.6 Regulatory Approval		35
5.7 Regulations U and X		35
5.8 Pension and Welfare Plans		35
5.9 Accuracy of Information		36
5.10 Taxes		36
5.11 Environmental Warranties		36
5.12 Investment Company Act		37
5.13 Subsidiaries		37

ARTICLE VI COVENANTS		38
6.1 Financial Statements		38
6.2 Litigation		39
6.3 Corporate Existence, Compliance with Laws, Taxes, Examination of Books, Insurance, etc.		39
6.4 Use of Proceeds		40
6.5 Environmental Covenant		40
6.6 Financial Covenant		40
6.7 Utility Dividends		40
6.8 Borrower’s Continued Ownership of Utility’s Capital Stock		41

ARTICLE VII EVENTS OF DEFAULT		41

ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES		43


	Page
8.1 Acceleration		43
8.2 Amendments		43
8.3 Preservation of Rights		44

ARTICLE IX GENERAL PROVISIONS		44
9.1 Survival of Representations		44
9.2 Governmental Regulation		44
9.3 Headings		44
9.4 Entire Agreement		44
9.5 Several Obligations; Benefits of this Agreement		44
9.6 Expenses; Indemnification		45
9.7 Numbers of Documents		45
9.8 Accounting		45
9.9 Severability of Provisions		46
9.10 Nonliability of Lenders		46
9.11 Confidentiality		46
9.12 Disclosure		46
9.13 Rights Cumulative		46
9.14 Syndication Agent; Documentation Agents		46

ARTICLE X THE ADMINISTRATIVE AGENT		47
10.1 Appointment; Nature of Relationship		47
10.2 Powers		47
10.3 General Immunity		47
10.4 No Responsibility for Loans, Recitals, etc.		47
10.5 Action on Instructions of Lenders		48
10.6 Employment of Agents and Counsel		48
10.7 Reliance on Documents; Counsel		48
10.8 Administrative Agent’s Reimbursement and Indemnification		48
10.9 Notice of Default		49
10.10 Rights as a Lender		49
10.11 Lender Credit Decision		49
10.12 Successor Administrative Agent		50
10.13 Administrative Agent and Arranger Fees		50
10.14 Delegation to Affiliates		50

ARTICLE XI SETOFF; RATABLE PAYMENTS		51
11.1 Setoff		51
11.2 Ratable Payments		51

ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS		51
12.1 Successors and Assigns		51
12.2 Participations		52
12.2.1 Permitted Participants; Effect		52
12.2.2 Voting Rights		52
12.2.3 Benefit of Setoff		52
12.2.4 Benefit of Certain Provisions		53

iii


	Page
12.3 Assignments		53
12.3.1 Permitted Assignments		53
12.3.2 Effect; Effective Date		53
12.4 Assignment to Reflect Amended Commitments		54
12.5 Dissemination of Information		54
12.6 Tax Treatment		54

ARTICLE XIII NOTICES		54
13.1 Notices		54
13.2 Change of Address		55

ARTICLE XIV COUNTERPARTS; EFFECTIVENESS; AMENDMENT AND RESTATEMENT OF EXISTING CREDIT AGREEMENT		55

ARTICLE XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL		55
15.1 CHOICE OF LAW		55
15.2 CONSENT TO JURISDICTION		55
15.3 WAIVER OF JURY TRIAL		56
15.4 LIMITATION ON LIABILITY		56
15.5 USA PATRIOT Act Notice		56


SCHEDULES

Schedule 1.1		Pricing Schedule
Schedule 5.3		Litigation
Schedule 5.8		Employee Benefit Plans
Schedule 5.11		Environmental Matters
Schedule 5.13		Subsidiaries

EXHIBITS

EXHIBIT 2.2.3		Form of Ratable Borrowing Notice
EXHIBIT 2.2.4		Form of Notice of Conversion or Continuation
EXHIBIT 2.3.2		Form of Competitive Bid Quote Request
EXHIBIT 2.3.3		Form of Invitation for Competitive Bid Quotes
EXHIBIT 2.3.4		Form of Competitive Bid Quote
EXHIBIT 2.6.2		Form of Commitment Increase Supplement
EXHIBIT 2.9		Form of Notice of Prepayment
EXHIBIT 2.13-1		Form of Ratable Note
EXHIBIT 2.13-2		Form of Competitive Bid Note
EXHIBIT 4.1(e)		Form of Opinion
EXHIBIT 4.2		Form of Compliance Certificate
EXHIBIT 12.3.1		Form of Assignment Agreement

AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 3, 2007 (the “ Agreement ”), among WGL HOLDINGS, INC., as Borrower, the financial institutions from time to time parties hereto, as LENDERS, WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent, BANK OF TOKYO-MITSUBISHI UFJ TRUST COMPANY, as SYNDICATION AGENT, and CITIBANK, N.A., SUNTRUST BANK and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agents.

RECITALS

WHEREAS, the Borrower entered into that certain Amended and Restated Credit Agreement dated as of September 30, 2005, among the Borrower, the several lender parties listed on the signature pages thereof (each an “ Existing Lender ”), The Bank of New York, as Administrative Agent, Wachovia Bank, National Association, as Syndication Agent, and Bank of Tokyo-Mitsubishi Trust Company, SunTrust Bank and Citibank, N.A., as Documentation Agents (the “ Existing Credit Agreement ”); and

WHEREAS, the Borrower has requested, and the Lenders have agreed, that the Existing Credit Agreement be amended and restated in its entirety pursuant to this Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

INTERPRETATION

1.1 Definitions . As used in this Agreement:

“ Absolute Bid Rate ” means, with respect to an Absolute Bid Rate Loan made by a given Lender for the relevant Absolute Bid Rate Interest Period, the rate of interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender and accepted by the Borrower pursuant to Section 2.3 .

“ Absolute Bid Rate Auction ” means a solicitation of Competitive Bid Quotes setting forth Absolute Bid Rates pursuant to Section 2.3 .

“ Absolute Bid Rate Interest Period ” means, with respect to an Absolute Bid Rate Loan, a period of not less than 14 and not more than 180 days commencing on a Business Day selected by the Borrower pursuant to this Agreement. If such Absolute Bid Rate Interest Period would end on a day which is not a Business Day, such Absolute Bid Rate Interest Period shall end on the next succeeding Business Day.

“ Absolute Bid Rate Loan ” means a Loan which bears interest at an Absolute Bid Rate.

“ Acquisition ” means any transaction, or any series of related transactions, consummated on or after the Agreement Date, by which the Borrower or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise, or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series

of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company.

“ Additional Commitment Lender ” is defined in Section 2.6.2 .

“ Adjusted Eurodollar Rate ” means, for any Eurodollar Interest Period, a rate per annum (rounded upward, if necessary, to the next higher 1/16 of 1%) equal to the rate obtained by dividing (i) the Eurodollar Rate for such Interest Period by (ii) a percentage equal to 1.00 minus the Reserve Requirement in effect from time to time during such Eurodollar Interest Period.

“ Administrative Agent ” means Wachovia Bank, National Association, in its capacity as administrative agent for the Lenders pursuant to Article X , and not in its individual capacity as a Lender or any successor Administrative Agent appointed pursuant to Article X .

“ Affiliate ” of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.

“ Aggregate Commitments ” means the aggregate of the Commitments of all the Lenders, in the initial aggregate amount of $400,000,000, as increased or decreased from time to time pursuant to the terms hereof.

“ Agreement ” means this Agreement, including all schedules, annexes and exhibits hereto.

“ Agreement Date ” means August 3, 2007.

“ Alternate Base Rate ” means, for any day, a rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2%.

“ Alternate Base Rate Loan ” means a Loan which, except as otherwise provided in Section 2.10 , bears interest at the Alternate Base Rate.

“ Applicable Law ” means, anything in Section 15.1 to the contrary notwithstanding, (i) all applicable common law and principles of equity and (i) all applicable provisions of all (A) constitutions, statutes, rules, regulations and orders of governmental bodies, (B) Governmental Approvals and Governmental Registrations and (C) orders, decisions, judgments and decrees.

“ Applicable Margin ” means, with respect to Ratable Loans of any Type at any time, the percentage rate per annum which is applicable at such time with respect to Loans of such Type as set forth in the Pricing Schedule, but subject to Section 2.8 hereof.

“ Arranger ” means WCMLLC.

“ Authorized Officer ” means any of the Vice President and Chief Financial Officer, Vice President and General Counsel, or the Treasurer of the Borrower, acting singly.

“ Bankruptcy Code ” means the United States Bankruptcy Code (11 U.S.C. §101 et seq.).

“ Borrower ” means WGL Holdings, Inc., a Virginia corporation.

“ Borrowing Date ” means a date on which a Loan is made.

“ Borrowing Notice ” means a Competitive Bid Borrowing Notice or a Ratable Borrowing Notice, as the context may require.

“ Business Day ” means (i) with respect to any borrowing, payment or rate selection of Eurodollar Loans, a day other than a Saturday, Sunday or other day on which banks in New York City are authorized to close and which is also a day when dealings in Dollars are carried on in the London interbank market, and (ii) for all other purposes, a day other than a Saturday, Sunday or other day on which banks in New York City are authorized to close.

“ Capitalized Lease ” of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Generally Accepted Accounting Principles.

“ Capitalized Lease Obligations ” of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Generally Accepted Accounting Principles.

“ Cash Equivalent Investments ” means (i) short-term obligations of, or fully guaranteed by, the United States of America, (ii) commercial paper rated A-1 or better by S&P or P-1 or better by Moody’s, (iii) demand deposit accounts maintained in the ordinary course of business, and (iv) certificates of deposit issued by, and time deposits with, commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000; provided in each case that the same provides for payment of both principal and interest (and not principal alone or interest alone) and is not subject to any contingency regarding the payment of principal or interest.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980.

“ CERCLIS ” means the Comprehensive Environmental Response, Compensation, and Liability Information System List.

“ Change ” means (i) any change after Agreement Date in the Risk Based Capital Guidelines or (ii) any adoption of or change in any other Applicable Law, governmental or quasi governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the Agreement Date which affects the amount of capital required or

expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender.

“ Code ” means the Internal Revenue Code of 1986.

“ Commitment ” means, for each Lender, the obligation of such Lender to make Ratable Loans not exceeding the amount set forth opposite its signature below, as it may be modified as a result of any assignment that has become effective pursuant to Section 12.3.2 or as otherwise decreased or increased from time to time pursuant to the terms hereof.

“ Commitment Increase ” is defined in Section 2.6.2 .

“ Commitment Increase Supplement ” is defined in Section 2.6.2 .

“ Competitive Bid Borrowing Notice ” is defined in Section 2.3.6 .

“ Competitive Bid Loan ” means a Eurodollar Bid Rate Loan or an Absolute Bid Rate Loan, or both, as the case may be.

“ Competitive Bid Margin ” means the margin above or below the applicable Eurodollar Base Rate (adjusted for reserve costs, if applicable) offered for a Eurodollar Bid Rate Loan, expressed as a percentage (rounded to the nearest 1/100 of 1%) to be added to or subtracted from such Eurodollar Base Rate.

“ Competitive Bid Note ” means any promissory note issued at the request of a Lender pursuant to Section 2.13 to evidence its Competitive Bid Loans.

“ Competitive Bid Quote ” means a competitive bid quote completed and delivered by a Lender to the Administrative Agent in accordance with Section 2.3.4 .

“ Competitive Bid Quote Request ” means a competitive bid quote request completed and delivered by the Borrower to the Administrative Agent in accordance with Section 2.3.2 .

“ Consolidated Financial Indebtedness ” means at any time the Financial Indebtedness of the Borrower and its Subsidiaries calculated on a consolidated basis as of such time.

“ Consolidated Net Worth ” means at any time the consolidated stockholders’ equity of the Borrower and its Subsidiaries calculated on a consolidated basis as of such time.

“ Consolidated Total Capitalization ” means at any time the sum of Consolidated Financial Indebtedness and Consolidated Net Worth, each calculated at such time.

“ Contingent Obligation ” of a Person means any agreement, Contract, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter,

operating agreement, take or pay contract or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership.

“ Contract ” means (i) any agreement, including an indenture, lease or license, (ii) any deed or other instrument of conveyance, (iii) any certificate of incorporation or charter and (iv) any by-law.

“ Controlled Group ” means all members of a controlled group of corporations and all members of a group of trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.

“ Conversion/Continuation Notice ” is defined in Section 2.2.4 .

“ Debt ” means any Liability that constitutes “debt” or “Debt” under section 101(11) of the Bankruptcy Code or under the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any analogous Applicable Law.

“ Decreasing Commitment Lender ” is defined in Section 12.4 .

“ Documentation Agent ” means each of Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, acting in the capacity as documentation agent hereunder.

“ Dollars ” and the sign “ $ ” mean lawful money of the United States of America.

“ Employee Benefit Plans ” is defined in Section 5.8 .

“ Environmental Laws ” means any and all federal, state, local and foreign statutes, Applicable Laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into ambient air, surface water, ground water, land surface or subsurface strata, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ Eurodollar Auction ” means a solicitation of Competitive Bid Quotes setting forth Eurodollar Bid Rates pursuant to Section 2.3 .

“ Eurodollar Base Rate ” means, with respect to a Eurodollar Base Rate Loan for the relevant Eurodollar Interest Period, the sum of (i) the Adjusted Eurodollar Rate applicable to such Eurodollar Interest Period plus (ii) the Applicable Margin.

“ Eurodollar Base Rate Loan ” means a Ratable Loan or a Term Loan which bears interest at a Eurodollar Base Rate requested by the Borrower pursuant to Section 2.2 .

“ Eurodollar Bid Rate ” means, with respect to a Eurodollar Bid Rate Loan made by a given Lender for the relevant Eurodollar Interest Period, the sum of (i) the Adjusted Eurodollar Rate applicable to such Interest Period, plus (ii) the Competitive Bid Margin offered by such Lender and accepted by the Borrower with respect to such Eurodollar Bid Rate Loan.

“ Eurodollar Bid Rate Loan ” means a Competitive Bid Loan which bears interest at a Eurodollar Bid Rate.

“ Eurodollar Interest Period ” means, with respect to a Eurodollar Loan, a period of one, two, three or six months commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Eurodollar Interest Period shall end on the day which corresponds numerically to the date of such Business Day one, two, three or six months thereafter; provided , however , that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Eurodollar Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If a Eurodollar Interest Period would otherwise end on a day which is not a Business Day, such Eurodollar Interest Period shall end on the next succeeding Business Day; provided , however , that if such next succeeding Business Day falls in a new calendar month, such Eurodollar Interest Period shall end on the immediately preceding Business Day.

“ Eurodollar Loan ” means a Eurodollar Base Rate Loan or Eurodollar Bid Rate Loan or both, as the context may require.

“ Eurodollar Rate ” means, with respect to a Eurodollar Loan for the relevant Eurodollar Interest Period, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the British Bankers’ Association quotation that appears on the Reuters Screen LIBOR01 (or otherwise on such page or screen as may replace such Reuters Screen) as of 11:00 A.M., London time, two Business Days prior to the beginning of the applicable Eurodollar Interest Period as the rate for U.S. dollar deposits to be delivered on the first day of such Eurodollar Interest Period, maintained for such interest period and having a maturity equal to such Eurodollar Interest Period. In the event that such rate does not so appear on the Reuters Screen (or otherwise as aforesaid), the “Eurodollar Rate” for purposes of this definition shall be the arithmetic average (rounded to the nearest 1/100 of 1%) of the offered quotation to first-class banks in the interbank Eurodollar market by each Reference Bank in London for U.S. dollar deposits with maturities comparable to the applicable Eurodollar Interest Period determined as of 11:00 A.M. (London time) on the date which is two Business Days prior to the commencement of such Eurodollar Interest Period. If any one or more of the Reference Banks shall not furnish such timely information to the Administrative Agent for the purpose of determining any such Interest Rate, the Administrative Agent shall determine such Interest Rate on the basis of timely information furnished by the remaining Reference Bank or Reference Banks.

“ Event of Default ” means an event described in Article VII .

“ Excluded Taxes ” means, in the case of each Lender or applicable Lending Installation and the Administrative Agent, taxes imposed on its overall net income, and franchise taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender or the Administrative

Agent is incorporated or organized or (ii) the jurisdiction in which the Administrative Agent’s, such Lender’s principal executive office or applicable Lending Installation is located.

“ Existing Credit Agreement ” has the meaning assigned to it in the recitals.

“ Existing Lender ” has the meaning assigned to it in the recitals.

“ Exiting Lender ” means each Existing Lender that is not a Lender on the Agreement Date.

“ Extension Option ” means the option of the Borrower under Section 2.7 hereof to extend the Facility Termination Date.

“ Facility Fee ” is defined in Section 2.5.1 .

“ Facility Fee Rate ” means, at any time, the percentage rate per annum at which Facility Fees are accruing on the Aggregate Commitments (without regard to usage) at such time as set forth in the Pricing Schedule.

“ Facility Termination Date ” means August 3, 2012, subject to Sections 2.7 and 2.8 hereof.

“ Federal Funds Effective Rate ” means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. on such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion.

“ Financial Indebtedness ” of a Person means such Person’s (i) obligations for borrowed money which, in accordance with Generally Accepted Accounting Principles, would be shown as short-term debt on a consolidated balance sheet of such Person, including obligations under notes, commercial paper, acceptances and other short-term instruments, and (ii) obligations for borrowed money which, in accordance with Generally Accepted Accounting Principles, would be shown as long-term debt (including current maturities) on a consolidated balance sheet of such Person.

“ Fitch ” means Fitch Ratings, Ltd.

“ Generally Accepted Accounting Principles ” means generally accepted accounting principles in the United States as in effect from time to time, applied in a manner consistent with those used in preparing the financial statements referred to in Section 5.2 .

“ Governmental Approval ” means any authority, consent, approval, license (or the like) or exemption (or the like) of any governmental unit.

“ Governmental Registration ” means any registration or filing (or the like) with, or report or notice (or the like) to, any governmental unit.

“ Hazardous Material ” means: any “hazardous substance”, as defined by CERCLA; any petroleum product; or any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any other Environmental Law.

“ Increasing Commitment Lender ” is defined in Section 12.4 .

“ Indebtedness ” of a Person means such Person’s (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens on, or payable out of the proceeds or production from, Property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) obligations of such Person to purchase securities or other Property arising out of or in connection with the sale of the same or substantially similar securities or Property, (vi) Capitalized Lease Obligations, (vii) any other obligation for borrowed money or other financial accommodation which in accordance with Generally Accepted Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person, (viii) Contingent Obligations in respect of any type of obligation described in any of the other clauses of this definition, (ix) obligations in respect of Letters of Credit, (x) Operating Lease Obligations, (xi) obligations in respect of Sale and Leaseback Transactions and (xii) Off-Balance Sheet Liabilities.

“ Indemnified Person ” means any Person that is, or at any time was, the Administrative Agent, the Syndication Agent, a Documentation Agent, a Lender or an Arranger or an Affiliate, director, officer, employee or agent of any such Person.

“ Interest Period ” means a Eurodollar Interest Period or an Absolute Bid Rate Interest Period.

“ Investment ” of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any deposit account or certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person.

“ Invitation for Competitive Bid Quotes ” means an Invitation for Competitive Bid Quotes completed and delivered by the Administrative Agent to the Lenders in accordance with Section 2.3.3 .

“ Lenders ” means the lending institutions listed on the signature pages of this Agreement, any Additional Commitment Lenders, and their respective successors and assigns.

“ Lending Installation ” means, with respect to a Lender or the Administrative Agent, the office, branch, subsidiary or affiliate of such Lender or the Administrative Agent listed on the signature pages hereof or on a Schedule or otherwise selected by such Lender or the Administrative Agent pursuant to Section 2.17 .

“ Letter of Credit ” of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable.

“ Liability ” of any Person means (in each case, whether with full or limited recourse) any indebtedness, liability, obligation, covenant or duty of or binding upon, or any term or condition to be observed by or binding upon, such Person or any of its assets, of any kind, nature or description, direct or indirect, absolute or contingent, due or not due, in contract or tort, liquidated or unliquidated, whether arising under Contract, Applicable Law, or otherwise, whether now existing or hereafter arising, and whether for the payment of money or the performance or non-performance of any act.

“ Lien ” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).

“ Loan ” means, with respect to a Lender, a loan made by such Lender pursuant to Article II (and, in the case of a loan made pursuant to Section 2.2 , any conversion or continuation thereof).

“ Loan Document Related Claim ” means any claim or dispute (whether arising under Applicable Law, including any “environmental” or similar law, under Contract or otherwise and, in the case of any proceeding relating to any such claim or dispute, whether civil, criminal, administrative or otherwise) in any way arising out of, related to, or connected with, the Loan Documents, the relationships established thereunder or any actions or conduct thereunder or with respect thereto, whether such claim or dispute arises or is asserted before or after the Agreement Date or before or after the Repayment Date.

“ Loan Documents ” means this Agreement and any Notes issued pursuant to Section 2.13 .

“ Material Adverse Effect ” means any effect, resulting from any event or circumstance whatsoever, which will, or is reasonably likely to, have a material adverse effect on the financial condition, operations, assets, business, properties or prospects of the Borrower and its Subsidiaries, taken as a whole, on the ability of the Borrower to perform its obligations under this Agreement, or on the validity or enforceability of this Agreement.

“ Material Subsidiary ” means at any time with respect to a Person, a Subsidiary, if any, of such Person, the consolidated assets of which exceed at such time 15% of the consolidated assets of such Person and its Subsidiaries, if any, determined on a consolidated basis.

“ Maximum Permissible Rate ” means, with respect to interest payable on any amount, the rate of interest on such amount that, if exceeded, could, under Applicable Law, result in (i) civil or criminal penalties being imposed on the payee or (ii) the payee’s being unable to enforce payment of (or, if collected, to retain) all or any part of such amount or the interest payable thereon.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Multiemployer Plan ” means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Borrower or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions.

“ Non-Absolute Bid Rate Loan ” means a Loan other than an Absolute Bid Rate Loan.

“ Non-U.S. Lender ” is defined in Section 3.5(d) .

“ Notes ” means, collectively, all of the Competitive Bid Notes and all of the Ratable Notes which may be issued hereunder, and “ Note ” means any one of the Notes.

“ Obligations ” means all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to any Lender, the Administrative Agent or any Indemnified Person arising under the Loan Documents.

“ Off-Balance Sheet Liability ” of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease, (iii) any liability under any so-called “synthetic lease” transaction entered into by such Person, or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of, or takes the place of, borrowing, but which does not constitute a liability on the balance sheets of such Person, but excluding from this clause (iv) Operating Leases.

“ Operating Lease ” of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee which has an original term (including any required renewals and any renewals effective at the option of the lessor) of one year or more.

“ Operating Lease Obligations ” means, as at any date of determination, the amount obtained by aggregating the present values, determined in the case of each particular Operating Lease by applying a discount rate (which discount rate shall equal the discount rate which would be applied under Generally Accepted Accounting Principles if such Operating Lease were a Capitalized Lease) from the date on which each fixed lease payment is due under such Operating Lease to such date of determination, of all fixed lease payments due under all Operating Leases of the Borrower and its Subsidiaries.

“ Other Taxes ” is defined in Section 3.5(b) .

“ Overdue Rate ” means (i) in the case of overdue amounts of the principal of a Eurodollar Loan, (A) until the last day of the applicable Interest Period during which such Loan became due

and payable, the rate otherwise applicable hereunder plus 1%, and (B) thereafter, the Alternate Base Rate in effect from time to time plus 1%, and (ii) in the case of all other overdue amounts, the Alternate Base Rate in effect from time to time plus 1%.

“ Participants ” is defined in Section 12.2.1 .

“ Patriot Act ” is defined in Section 15.5 .

“ Payment Date ” means the last day of each month.

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Pension Plan ” means a “pension plan”, as such term is defined in section 3(2) of ERISA, which is subject to Title IV of ERISA, and to which the Borrower or any corporation, trade or business that is, along with the Borrower, a member of a Controlled Group, may have liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA.

“ Person ” means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.

“ Pricing Schedule ” means Schedule 1.1 attached hereto.

“ Prime Rate ” means a rate per annum equal to the prime rate of interest announced from time to time by Wachovia Bank, National Association, (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.

“ Property ” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.

“ Purchasers ” is defined in Section 12.3.1 .

“ Ratable Borrowing Notice ” is defined in Section 2.2.3 .

“ Ratable Loan ” means a Loan made by a Lender pursuant to Section 2.2 hereof.

“ Ratable Note ” means any promissory note issued at the request of a Lender pursuant to Section 2.11 to evidence its Ratable Loans.

“ Reference Banks ” means five leading dealers in the London interbank Eurodollar market as selected by the Administrative Agent from time to time.

“ Regulation D ” means Regulation D of the Board of Governors of the Federal Reserve System.

“ Regulation U ” means Regulation U of the Board of Governors of the Federal Reserve System.

“ Regulation X ” means Regulation X of the Board of Governors of the Federal Reserve System.

“ Release ” means “release”, as such term is defined in CERCLA.

“ Rentals ” of a Person means the aggregate fixed amounts payable by such Person under any Operating Lease.

“ Repayment Date ” means the later of (a) the date of the termination of the Commitments (whether as a result of the occurrence of the Facility Termination Date, reduction to zero pursuant to Section 2.6.1 or termination pursuant to Article VIII ), (b) if the Borrower shall exercise its Term-Out Option, the day one year after the Facility Termination Date, and (c) the date of the payment in full of all principal of and interest on the Loans and all other amounts payable or accrued hereunder.

“ Reportable Event ” means a reportable event, as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; provided , however , that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.

“ Reports ” is defined in Section 9.6 .

“ Required Lenders ” means Lenders having in the aggregate more than 50.0% of the Aggregate Commitments or, if the Aggregate Commitments has been terminated, Lenders holding in the aggregate more than 50.0% of the aggregate unpaid principal amount of the outstanding Loans.

“ Reserve Requirement ” means, at any time, the then current maximum rate for which reserves (including any marginal, supplemental or emergency reserve) are required to be maintained under Regulation D against “Eurocurrency liabilities”, as that term is used in Regulation D, by member banks of the Federal Reserve System in New York City with deposits exceeding five billion Dollars. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Requirement.

“ Resource Conservation and Recovery Act ” means the Resource Conservation and Recovery Act, 42 U.S.C. Section 690, et seq.

“ Risk Based Capital Guidelines ” means (i) the risk based capital guidelines in effect in the United States on the Agreement Date, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices entitled “International Convergence of Capital Measurements and Capital Standards,” including transition rules, and any amendments to such regulations adopted prior to Agreement Date.

“ S&P ” means Standard and Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc.

“ Sale and Leaseback Transaction ” means any sale or other transfer of Property by any Person with the intent to lease such Property as lessee.

“ SEC ” means the Securities and Exchange Commission.

“ SEC Disclosure Documents ” means all reports on Forms 10K, 10Q, and 8K filed by the Borrower with the SEC.

“ Single Employer Plan ” means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group.

“ Subsidiary ” of a Person means (i) any corporation more than 50% of the outstanding securities having the ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having the ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a “ Subsidiary ” shall mean a Subsidiary of the Borrower.

“ Syndication Agent ” means Bank of Tokyo-Mitsubishi UFJ Trust Company in its capacity as syndication agent hereunder.

“ Taxes ” means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

“ Term Loan ” is defined in Section 2.8 .

“ Term-Out Option ” is defined in Section 2.8 .

“ Termination Letter ” is defined in Section 4.1(g) .

“ Transferee ” is defined in Section 12.5 .

“ Type ” means, with respect to any Loan, its nature as an Alternate Base Rate Loan, Eurodollar Base Rate Loan, an Absolute Bid Rate Loan, or a Eurodollar Bid Rate Loan.

“ Unmatured Default ” means an event which but, for the lapse of time or the giving of notice, or both, would constitute an Event of Default.

“ Utility ” means Washington Gas Light Company, a Virginia and District of Columbia corporation.

“ Utilization Fee ” is defined in Section 2.5.2 .

“ Utilization Fee Rate ” means, at any time, the percentage rate per annum at which Utilization Fees are accruing at such time as set forth on the Pricing Schedule.

“ WCMLLC ” means Wachovia Capital Markets, LLC, and its successors, in its capacity as a Lead Arranger and Book Runner.

“ Welfare Plan ” means a “welfare plan”, as such term is defined in section 3(1) of ERISA.

1.2 Other Interpretive Provisions .

(i) Except as otherwise specified herein, all references herein (A) to any Person shall be deemed to include such Person’s successors and assigns, (B) to any Applicable Law defined or referred to herein shall be deemed references to such Applicable Law or any successor Applicable Law as the same may have been or may be amended or supplemented from time to time, and (C) to any Loan Document or other Contract defined or referred to herein shall be deemed references to (I) in the case of any such Loan Document, such Loan Document as the terms thereof may have been or may be amended, supplemented, waived or otherwise modified from time to time, and (II) in the case of any other Contract, such Contract as in effect on the Agreement Date.

(ii) When used in this Agreement, the words “herein”, “hereof” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any provision of this Agreement, and the words “Article”, “Section”, “Schedule” and “Exhibit” shall refer to Articles and Sections of, and Schedules and Exhibits to, this Agreement unless otherwise specified.

(iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, the masculine gender includes the feminine, and the singular number includes the plural, and vice versa.

(iv) Any item or list of items set forth following the word “including”, “include” or “includes” is set forth only for the purpose of indicating that, regardless of whatever other items are in the category in which such item or items are “included”, such item or items are in such category, and shall not be construed as indicating that the items in the category in which such item or items are “included” are limited to such items or to items similar to such items.

(v) Each authorization in favor of the Administrative Agent, the Lenders or any other Person granted by or pursuant to this Agreement shall be deemed to be irrevocable and coupled with an interest.

(vi) Except as otherwise specified herein, all references to the time of day shall be deemed to be to New York City time as then in effect.

ARTICLE II

CREDIT FACILITY

2.1 The Facility .

2.1.1 Amount of Facility . In no event may the aggregate principal amount of all outstanding Loans (including both the Ratable Loans and the Competitive Bid Loans) exceed the Aggregate Commitments.

2.1.2 Availability of Facility . Subject to the terms of this Agreement, the facility is available from the date hereof to the Facility Termination Date, and the Borrower may borrow, repay and reborrow at any time prior to the Facility Termination Date. The Commitments to lend hereunder shall expire on the Facility Termination Date.

2.1.3 Repayment of Facility . Subject to the terms of this Agreement, any outstanding Loans and all other unpaid Obligations shall be paid in full by the Borrower on the Facility Termination Date; provided that if any authorization of any state official or state regulatory authority required under any Applicable Law, for any borrowing of Loans by the Borrower expires without being extended at any time prior to the Facility Termination Date (and such authorization is required to be in effect at such time in order for the Borrower to continue to have such Loans and other unpaid Obligations outstanding under Applicable Law), then upon the expiration of such authorization, all outstanding Loans and all other unpaid Obligations shall be paid in full by the Borrower.

2.2 Ratable Loans .

2.2.1 Commitment to Lend . Upon the terms and subject to the conditions of this Agreement, each Lender agrees to make, from time to time during the period from the Agreement Date through the Facility Termination Date, Ratable Loans to the Borrower, provided that (i) the aggregate unpaid principal amount of such Lender’s Ratable Loans shall not at any time exceed such Lender’s Commitment at such time and (ii) the aggregate unpaid principal amount of all Loans shall not exceed at any time the Aggregate Commitments at such time.

2.2.2 Types of Ratable Loans . Subject to Section 2.4 , the Ratable Loans may be made as, and from time to time continued as or converted to, Alternate Base Rate Loans or Eurodollar Base Rate Loans, or a combination thereof, selected by the Borrower in accordance with Section 2.2.3 .

Ratable Borrowing Notice for a Eurodollar Base Rate Loan may be given not later than 15 minutes after the time by which the Borrower is required to accept or reject one or more bids offered in connection with a Eurodollar Auction pursuant to Section 2.3.6 . A Ratable Borrowing Notice shall be in the form of Exhibit 2.2.3 hereto and shall specify:

(i) the requested Borrowing Date, which shall be a Business Day, of such Ratable Loan,

(ii) the aggregate amount of such Ratable Loan,

(iii) the Type or Types of Ratable Loan selected, and

(iv) in the case of each Eurodollar Base Rate Loan, the Eurodollar Interest Period applicable thereto (which may not end after the Facility Termination Date).

Each Eurodollar Base Rate Loan shall be in the minimum amount of $5,000,000 (and in an integrated multiple of $1,000,000 if in excess thereof), and each Alternate Base Rate Loan shall be in the minimum amount of $1,000,000 (and in an integrated multiple of $1,000,000 if in excess thereof); provided , however , that, subject to Section 2.2.1 , any Alternate Base Rate Loan may be in the amount of the unused Aggregate Commitments. Upon receipt of any such notice, the Administrative Agent shall promptly notify each Lender of the contents thereof and of the amount and Type of each Ratable Loan to be made by such Lender on the requested date specified therein.

2.2.4 Conversion and Continuation of Outstanding Loans . (i) (i) Each Alternate Base Rate Loan shall continue as an Alternate Base Rate Loan unless and until such Alternate Base Rate Loan is either converted into a Eurodollar Base Rate Loan in accordance with this Section 2.2.4 or repaid in accordance with Section 2.7 . Each Eurodollar Base Rate Loan shall continue as a Eurodollar Base Rate Loan until the end of the then applicable Eurodollar Interest Period therefor, at which time such Eurodollar Base Rate Loan shall be automatically converted into an Alternate Base Rate Loan unless (x) such Eurodollar Base Rate Loan is or was repaid in accordance with Section 2.8 or (y) the Borrower shall have given the Administrative Agent a Conversion/Continuation Notice requesting that, at the end of such Eurodollar Interest Period, such Eurodollar Base Rate Loan continue as a Eurodollar Base Rate Loan for the same or another Eurodollar Interest Period. The Borrower may elect from time to time to convert all or any part of an Alternate Base Rate Loan into a Eurodollar Base Rate Loan. The Borrower shall give the Administrative Agent irrevocable notice in the form of Exhibit 2.2.4 (a “ Conversion/Continuation Notice ”) of each conversion of an Alternate Base Rate Loan into a Eurodollar Base Rate Loan, or continuation of a Eurodollar Base Rate Loan, not later than 11:00 a.m. at least three Business Days prior to the date of the requested conversion or continuation, specifying:

(a) the requested date, which shall be a Business Day, of such conversion or continuation,

(b) the aggregate amount and Type of the Ratable Loan which is to be converted or continued, and

(c) the amount of such Ratable Loan(s) which is to be converted or continued as a Eurodollar Base Rate Loan and the duration of the Eurodollar Interest Period applicable thereto.

Upon receipt of any such notice, the Administrative Agent shall promptly notify each Lender of (x) the contents thereof, (y) the amount and Type and, in the case of Eurodollar Base Rate Loans, the last day of the applicable Interest Period of each Ratable Loan to be converted or continued by such Lender and (z) the amount and Type or Types of Ratable Loans into which such Ratable Loans are to be converted or as which such Ratable Loan are to be continued.

(ii) Notwithstanding anything to the contrary contained in this Section 2.2.4 , during an Event of Default, the Administrative Agent may notify the Borrower that Ratable Loans may only be converted into or continued as Ratable Loans of certain specified Types.

(iii) Ratable Loans may not be converted into Competitive Bid Loans, and Competitive Bid Loans may not be converted, except as required under Section 3.3 , or continued.

2.3 Competitive Bid Loans .

2.3.1 Competitive Bid Option . In addition to Ratable Loans pursuant to Section 2.2 , but subject to the terms and conditions of this Agreement (including, without limitation, the limitation set forth in Section 2.1.1 as to the maximum aggregate principal amount of all outstanding Loans hereunder), the Borrower may, as set forth in this Section 2.3 , request the Lenders, prior to the Facility Termination Date, to make offers to make Competitive Bid Loans to the Borrower. Each Lender may, but shall have no obligation to, make such offers, and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section 2.3 . Each Competitive Bid Loan shall be repaid by the Borrower on the last day of the Interest Period applicable thereto. Each Competitive Bid Loan shall be in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess thereof).

2.3.2 Competitive Bid Quote Request . When the Borrower wishes to request offers to make Competitive Bid Loans under this Section 2.3 , it shall transmit to the Administrative Agent by telecopy a Competitive Bid Quote Request so as to be received no later than 11:00 a.m. at least five Business Days prior to the Borrowing Date proposed therein; provided that, a Competitive Bid Quote Request solely requesting an Absolute Bid Rate Auction does not need to be received by the Administrative Agent until no later than 10:00 a.m. at least one Business Day prior to the Borrowing Date proposed therein, and in each case specifying:

(a) the proposed Borrowing Date, which shall be a Business Day, for such Competitive Bid Loan;

(b) whether the Competitive Bid Quotes requested are to set forth a Competitive Bid Margin, an Absolute Bid Rate, or both;

(d) the Interest Periods applicable thereto (which may not end after the Facility Termination Date); and

(e) whether such Competitive Bid Loans shall be subject to prepayment.

The Borrower may request offers to make Competitive Bid Loans for more than one (1) Interest Period and either a Eurodollar Auction or an Absolute Bid Rate Auction, but not both, in a single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be given (x) while another Competitive Bid Quote Request is outstanding or (y) within five (5) Business Days (or such other number of days as the Borrower and the Administrative Agent may agree) of any other Competitive Bid Quote Request. A Competitive Bid Quote Request that does not conform substantially to the format of Exhibit 2.3.2 hereto shall be rejected by the Administrative Agent, and the Administrative Agent shall promptly notify the Borrower of such rejection.

2.3.3 Invitation for Competitive Bid Quotes . Promptly and in any event before the close of business on the same Business Day of receipt of a timely Competitive Bid Quote Request that is not rejected pursuant to Section 2.3.2 , the Administrative Agent shall send to each of the Lenders by telecopy an Invitation for Competitive Bid Quotes substantially in the form of Exhibit 2.3.3 hereto, which shall constitute an invitation by the Borrower to each Lender to submit Competitive Bid Quotes offering to make the Competitive Bid Loans to which such Competitive Bid Quote Request relates in accordance with this Section 2.3 .

2.3.4 Submission and Contents of Competitive Bid Quotes . (i) Each Lender may, in its sole discretion, submit a Competitive Bid Quote containing an offer or offers to make Competitive Bid Loans in response to any Invitation for Competitive Bid Quotes. Each Competitive Bid Quote must comply with the requirements of this Section 2.3.4 and must be submitted to the Administrative Agent by telecopy at its offices specified in or pursuant to Article XIII not later than (a) 9:00 a.m. at least three Business Days prior to the proposed Borrowing Date, in the case of a Eurodollar Auction, or (b) 9:00 a.m. on the proposed Borrowing Date, in the case of an Absolute Bid Rate Auction (or, in either case upon reasonable prior notice to the Lenders, such other time and date as the Borrower and the Administrative Agent may agree); provided that Competitive Bid Quotes submitted by a Lender that is, or is an Affiliate of, the Administrative Agent may only be submitted if the Administrative Agent or such Lender notifies the Borrower of the terms of the offer or offers contained therein not later than 15 minutes prior to the latest time at which the relevant Competitive Bid Quotes must be submitted by the other Lenders. Subject to Articles IV and VIII , any Competitive Bid Quote so made shall be irrevocable (but the Competitive Bid Loans made pursuant thereto shall be subject to Article IV ), except with the written consent of the Administrative Agent given on the instructions of the Borrower.

(ii) Each Competitive Bid Quote shall be in substantially the form of Exhibit 2.3.4 hereto and shall in any case specify:

(a) the proposed Borrowing Date, which shall be the same as that set forth in the applicable Invitation for Competitive Bid Quotes,

(b) identify the Type of Competitive Bid Loans such Lender is making an offer for,

(c) the principal amount of each Competitive Bid Loan for which each such offer is being made, which principal amount (1) may be greater than, less than or equal to the Commitment of the quoting Lender, (2) must be at least $5,000,000 and an integral multiple of $1,000,000, and (3) may not exceed the principal amount of Competitive Bid Loans for which offers were requested,

(d) in the case of a Eurodollar Auction, the Competitive Bid Margin offered for each such Competitive Bid Loan,

(e) in the case of an Absolute Bid Rate Auction, the Absolute Bid Rate offered for each such Competitive Bid Loan,

(f) the minimum amount, if any, of the Competitive Bid Loan which may be accepted by the Borrower,

(g) the maximum aggregate amount, if any, of Competitive Bid Loans offered by the quoting Lender which may be accepted by the Borrower, and

(h) the identity of the quoting Lender.

(iii) The Administrative Agent shall reject any Competitive Bid Quote that:

(a) is not substantially in the form of Exhibit 2.3.4 hereto or does not specify all of the information required by this Section 2.3.4(ii) ,

(b) contains qualifying, conditional or similar language, other than any such language contained in Exhibit 2.3.4 hereto,

(c) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bid Quotes, or

(d) arrives after the time set forth in Section 2.3.4(i) .

If any Competitive Bid Quote shall be rejected pursuant to this Section 2.3.4(iii) , then the Administrative Agent shall notify the relevant Lender of such rejection as soon as practical.

2.3.5 Notice to Borrower . The Administrative Agent shall promptly notify the Borrower of the terms (i) of any Competitive Bid Quote submitted by a Lender that is in accordance with Section 2.3.4 and (ii) of any Competitive Bid Quote that amends, modifies or is otherwise inconsistent with a previous Competitive Bid Quote submitted by such Lender with respect to the same Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by the Administrative Agent unless such subsequent Competitive Bid Quote specifically states that it is submitted solely to correct a manifest error in such former Competitive Bid Quote. The Administrative Agent’s notice to the Borrower shall specify the aggregate principal amount of Competitive Bid Loans for which offers have been received for

each Interest Period specified in the related Competitive Bid Quote Request and the respective principal amounts and Eurodollar Bid Rates or Absolute Bid Rates, as the case may be, so offered.

2.3.6 Acceptance and Notice by Borrower . Not later than (i) 10:00 a.m. at least three Business Days prior to the proposed Borrowing Date, in the case of a Eurodollar Auction or (ii) 10:00 a.m. on the proposed Borrowing Date, in the case of an Absolute Bid Rate Auction (or, in either case upon reasonable prior notice to the Lenders, such other time and date as the Borrower and the Administrative Agent may agree), the Borrower shall notify the Administrative Agent (such notice, a “ Competitive Bid Borrowing Notice ”) of its acceptance or rejection of the offers so notified to it pursuant to Section 2.3.5 (which notice shall be irrevocable, except, with respect to notices that have not yet been relied upon by any Lender, in the case of manifest error); provided , however , that the failure by the Borrower to give such notice to the Administrative Agent shall be deemed to be a rejection of all such offers. In the case of acceptance, such Competitive Bid Borrowing Notice shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Competitive Bid Quote in whole or in part (subject to the terms of Section 2.3.4(ii)(f) ); provided that:

(a) the aggregate principal amount of each Competitive Bid Loan may not exceed the applicable amount set forth in the related Competitive Bid Quote Request,

(b) (i) the aggregate principal amount of offers accepted may not (after giving effect to the making of the Competitive Bid Loans to which such offers relate) cause the aggregate unpaid principal amount of all Loans to exceed the aggregate amount of the Aggregate Commitments at such time, (ii) the aggregate principal amount of offers accepted with respect to each requested Type of Competitive Bid Loan may not exceed the principal amount specified for such Type in the request therefor, and (iii) the aggregate principal amount of any offer by any Lender accepted with respect to a requested Type of Bid Rate Loan may not exceed the maximum, nor be less than the minimum, aggregate principal amount thereof specified in such Lender’s offer with respect to such Type of Competitive Bid Loan,

(c) acceptance of offers may only be made on the basis of ascending Eurodollar Bid Rates or Absolute Bid Rates, as the case may be, and

(d) the Borrower may not accept any offer that is described in Section 2.3.4(iii) or that otherwise fails to comply with the requirements of this Agreement.

however , that no Lender shall be allocated a portion of any Competitive Bid Loan which is less than the minimum amount which such Lender has indicated that it is willing to accept. Allocations by the Administrative Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error. The Administrative Agent shall promptly, but in any event on the same Business Day, notify each Lender of its receipt of a Competitive Bid Borrowing Notice and the aggregate principal amount of such Competitive Bid Loan allocated to each participating Lender.

2.3.8 Administration Fee . The Borrower hereby agrees to pay to the Administrative Agent an administration fee of $2,500 for each Competitive Bid Quote Request transmitted by the Borrower to the Administrative Agent pursuant to Section 2.3.2 . Such administration fee shall be payable in arrears on each Payment Date hereafter and on the Facility Termination Date (or such earlier date on which the Aggregate Commitments shall terminate or be cancelled) for any period then ending for which such fee, if any, shall not have been theretofore paid.

2.4 Funding by Lenders; Disbursement to the Borrower .

2.4.1 Ratable Loans .

(i) Not later than 1:00 p.m. on each requested Borrowing Date, each Lender shall, if it has received the notice contemplated by Section 2.2.3 on or prior to 12:00 noon on such date, in the case of Alternate Base Rate Loans, or on or prior to its close of business on the third Eurodollar Business Day before such date, in the case of Eurodollar Base Rate Loans, make available to the Administrative Agent, in Dollars in funds immediately available to the Administrative Agent at its address specified pursuant to Article XIII , the amount of Ratable Loans to be made by such Lender on such date.

(ii) Ratable Loans shall be disbursed by the Administrative Agent not later than 3:30 p.m. on the date specified therefor by credit to an account of the Borrower at the Administrative Agent at its address specified pursuant to Article XIII or in such other manner as may have been specified to and as shall be reasonably acceptable to the Administrative Agent, in each case in Dollars in funds immediately available to the Borrower, as the case may be.

2.4.2 Competitive Bid Loans . (i) Not later than noon on each Borrowing Date, each Lender shall make available its Competitive Loan in funds immediately available in New York to the Administrative Agent at its address specified pursuant to Article XIII .

(ii) Competitive Bid Loans shall be disbursed by the Administrative Agent not later than 3:30 p.m. on the date specified therefor and shall be applied in the following order: first , to repay Competitive Bid Loans maturing or matured as of such date that have not otherwise been repaid or for which provision for repayment has not been made; and second , by credit to an account of the Borrower at the Administrative Agent at its address specified pursuant to Article XIII or in such other manner as may have been specified to and as shall be reasonably acceptable to the Administrative Agent, in each

case in Dollars in funds immediately available to the Borrower or the appropriate Lender, as the case may be.

2.5 Fees .

2.5.1 Facility Fee . The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee at a per annum rate equal to the Facility Fee Rate on the average daily amount of such Lender’s Commitment (whether used or unused) from the date hereof to and including the Repayment Date (the “ Facility Fee ”), payable on the last day of each calendar quarter hereafter and on the Repayment Date.

2.5.2 Utilization Fee . The Borrower agrees to pay to the Administrative Agent for the account of each Lender a utilization fee at a rate per annum equal to the Utilization Fee Rate on the aggregate unpaid principal amount of such Lender’s Loans for each day on which the aggregate outstanding principal amount of all outstanding Loans exceeds 50% of the Aggregate Commitments (the “ Utilization Fee ”), payable on the last day of each calendar quarter hereafter and on the Repayment Date.

None of the fees payable under this Section 2.5 shall be refundable in whole or in part.

2.6 Reductions in Aggregate Commitments; Increases in Aggregate Commitments .

2.6.1 Reductions . The Borrower may permanently reduce the Aggregate Commitments, in whole or in part, ratably among the Lenders in an amount equal to $5,000,000 or an integral multiple of $1,000,000 in excess of $5,000,000 upon at least three Business Days’ written notice to the Administrative Agent, which notice shall specify the amount of any such reduction; provided , however , that the amount of the Aggregate Commitments may not be reduced below the aggregate principal amount of the outstanding Loans. Upon receipt of any such notice, the Administrative Agent shall promptly notify each Lender of the contents thereof and the amount to which such Lender’s Commitment is to be reduced. All accrued Facility Fees shall be payable on the effective date of any termination of the obligations of the Lenders to make Loans hereunder.

the form of Exhibit 2.6.2 (a “ Commitment Increase Supplement ”). On the effective date of such Commitment Increase, each Additional Commitment Lender shall purchase, by assignment, from each other existing Lender the portion of such other Lender’s Ratable Loans outstanding at such time such that, after giving effect to such assignments, the respective aggregate amount of Ratable Loans of each Lender shall be equal to such Lender’s pro rata share (based on the total Commitments, as increased pursuant hereto) of the aggregate Ratable Loans outstanding. The purchase price for the Ratable Loans so assigned shall be the principal amount of the Ratable Loans so assigned plus the amount of accrued and unpaid interest thereon on the date of assignment. Upon payment of such purchase price, each Lender shall be automatically deemed to have sold and made such an assignment to such Additional Commitment Lender and shall, to the extent of the interest assigned, be released from its obligations under this Agreement, and such Additional Commitment Lender shall be automatically deemed to have purchased and assumed such an assignment from each other Lender and, if not already a Lender hereunder, shall be a party hereto and, to the extent of the interest assigned, have the rights and obligations of a Lender under this Agreement.

2.7 Extension Option . No earlier than 60 days and no later than 30 days prior to each anniversary of the Agreement Date occurring prior to any exercise of the Term-Out option pursuant to Section 2.8 hereof, the Borrower may, by written notice to the Administrative Agent, request that the Lenders extend the Facility Termination Date for an additional year. Any election by a Lender to extend the term of its Commitment pursuant to such a request shall be at such Lender’s sole discretion and subject to such credit evaluation as such Lender may determine.

2.7.1 No extension pursuant to this Section 2.7 shall become effective unless agreed to in writing not later than 15 days prior to the relevant anniversary of the Agreement Date by Lenders then holding not less than 51% of the Commitments.

2.7.2 In the event that Lenders then holding not less than 51% of the Commitments but less than 100% of the Commitments shall agree to an extension requested pursuant to this Section 2.7, the Borrower shall be entitled to propose a new Lender or Lenders (which shall be reasonably acceptable to the Administrative Agent), or an increase in the Commitment or Commitments of a then existing Lender or Lenders, whose new or increased Commitments (in an aggregate amount not in excess of the Commitments of the Lenders who did not agree to extend) shall be in effect during the extension period so agreed.

2.7.3 Unless a Lender which does not agree to extend its Commitment shall be replaced pursuant to Section 2.7.4, the Commitment of such Lender shall continue in full force and effect until the Facility Termination Date to which it has agreed.

2.7.4 In the event that an existing Lender shall not agree to extend its Commitment pursuant to a request by the Borrower, the Borrower shall be entitled to replace such Lender with a new Lender (which shall be reasonably acceptable to the Administrative Agent) that shall assume the then Commitment of such existing Lender and shall agree to the extension requested. In the event of such a replacement, such existing Lender shall assign to such replacement Lender the outstanding Ratable Loans of such existing Lender for a purchase

price equal to the principal amount of the Ratable Loans so assigned, plus the amount of accrued and unpaid interest thereon to the date of such assignment.

2.8 Term-Out Option . So long as no Unmatured Default or Event of Default has occurred and is continuing, and subject to satisfaction of the conditions set forth in Sections 4.2(c) and (d), the Borrower may, by notice to the Administrative Agent, no earlier than 60 days and no later than 30 days prior to the then Facility Termination Date, elect to have all Ratable Loans outstanding on the Facility Termination Date continue as non-revolving term loans (each, a “ Term Loan ”) of the same type for a period of one year from the Facility Termination Date. The option provided in this Section 2.8 (the “ Term-Out Option ”) may only be exercised by the Borrower on one occasion. In the event that the Borrower shall exercise the Term-Out Option pursuant to this Section 2.8, the Applicable Margin for each type of Ratable Loan that becomes a Term Loan shall be increased by 0.250%.

2.9 Repayments; Optional Principal Prepayments .

(a) Each Ratable Loan shall mature and become due and payable, and shall be repaid by the Borrower, in full on the day one year after the date such Ratable Loan was made, unless the Borrower’s Board of Directors, by a written resolution, has authorized such Ratable Loan to be outstanding for a term in excess of one year, in which case such Ratable Loan shall mature and become due and payable, and shall be repaid by the Borrower, in full on the date fixed by such written resolution, but in no event later than on the Facility Termination Date. Each Competitive Bid Loan shall become due and payable, and shall be repaid by the Borrower in full, on the last day of the applicable Interest Period thereof. Each Term Loan shall mature and become due and payable, and shall be repaid by the Borrower in full, on the day one year after the Facility Termination Date.

(b) The Borrower may from time to time pay, without penalty or premium, all outstanding Alternate Base Rate Loans, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $5,000,000 in excess thereof, any portion of the outstanding Alternate Base Rate Loans on any Business Day upon one Business Day’s prior notice to the Administrative Agent. The Borrower may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Eurodollar Base Rate Loans or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $5,000,000 in excess thereof, any portion of the outstanding Eurodollar Base Rate Loans on any Business Day upon three Business Days’ prior notice to the Administrative Agent. Each such notice of prepayment shall be in the form of Exhibit 2.9 and shall specify (i) the date such prepayment is to be made and (ii) the amount and Type of the Loans to be prepaid and, in the case of Eurodollar Base Rate Loans, the last day of the applicable Interest Period of the Eurodollar Base Rate Loans to be prepaid. Upon receipt of any such notice, the Administrative Agent shall promptly notify each Lender of the contents thereof and the amount and Type of the Loans to be prepaid and, in the case of Eurodollar Base Rate Loans, the last day of the applicable Interest Period of each Eurodollar Bar Rate Loan of such Lender to be prepaid. Amounts to be prepaid shall irrevocably be due and payable on the date specified in the applicable notice of prepayment, together with interest thereon as provided in Section 2.15 .

2.10 Changes in Interest Rate, etc . Each Alternate Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Loan is made or is converted from a Eurodollar Base Rate Loan into an Alternate Base Rate Loan pursuant to Section 2.2.4 to but excluding the date it becomes due or is converted into a Eurodollar Base Rate Loan pursuant to Section 2.2.4 hereof, at a rate per annum equal to the Alternate Base Rate for such day. Each Non-Absolute Bid Rate Loan shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such Non-Absolute Bid Rate Loan. No Interest Period may end after the Facility Termination Date or, if the Borrower exercises its Term-Out Option pursuant to Section 2.8 hereof, the date one year after the Facility Termination Date.

2.11 Rates Applicable After Default . Notwithstanding anything to the contrary contained in Section 2.2.3 or Section 2.2.4 , during the continuance of an Unmatured Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that no Ratable Loan may be made as, converted into or continued as a Eurodollar Base Rate Loan. During the continuance of an Event of Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that each Loan and all other amounts payable under the Loan Documents shall bear interest at the Overdue Rate; provided that, during the continuance of an Event of Default under Sections 7.1, 7.7 or 7.8 , any amount payable under the Loan Documents not paid when due (whether at maturity, by reason of notice of prepayment or otherwise) shall bear interest at a rate per annum equal to the Overdue Rate without any election or action on the part of the Administrative Agent or any Lender.

in a notice received by the Administrative Agent from such Lender. The Borrower hereby authorizes the Administrative Agent and each Lender, if and to the extent any amount payable by the Borrower under the Loan Documents (whether payable to such Person or to any other Person that is the Administrative Agent or a Lender) is not otherwise paid when due, to charge such amount against any or all of the accounts of the Borrower with such Person or any of its Affiliates (whether maintained at a branch or office located within or without the United States), with the Borrower remaining liable for any deficiency. Any Lender charging an amount against an account of the Borrower shall provide notice thereof to the Borrower, within a reasonable time thereafter, which notice shall include a description in reasonable detail of such action.

2.13 Evidence of Indebtedness .

(i) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(ii) The Administrative Agent shall also maintain accounts in which it will record (a) the amount of each Loan made hereunder, the Type thereof and the Interest Period with respect thereto, (b) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (c) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

(iii) The entries maintained in the accounts and records maintained pursuant to paragraphs (i) and (ii) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts and records or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms.

(iv) Any Lender may request that its Ratable Loans or its Competitive Bid Loans be evidenced by Ratable Notes or Competitive Bid Notes, respectively. In such event, the Borrower shall prepare, execute and deliver to such Lender a Ratable Note in the form of Exhibit 2.13-1 or a Competitive Bid Note in the form of Exhibit 2.13-2 , as the case may be, payable to the order of such Lender. Thereafter, the Loans represented by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3 ) be evidenced by a Note payable to the order of the payee named therein or any assignee pursuant to Section 12.3 , except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (i) and (ii) above.

by the Administrative Agent or any Lender, of each telephonic notice signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Administrative Agent and the Lenders, the records of the Administrative Agent and the Lenders shall govern absent manifest error.

2.15 Interest Payment Dates; Interest and Fee Basis . Interest accrued on each Alternate Base Rate Loan shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which the Alternate Base Rate Loan is prepaid, whether due to acceleration or otherwise, and at maturity. Interest accrued on that portion of the outstanding principal amount of any Alternate Base Rate Loan converted into a Eurodollar Base Rate Loan on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Non-Absolute Bid Rate Loan shall be payable on the last day of its applicable Interest Period, on any date on which the Non-Absolute Bid Rate Loan is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Non-Absolute Bid Rate Loan having an Interest Period longer than three months shall also be payable on the last day of each three month interval during such Interest Period. Interest, Facility Fees and Utilization Fees shall be calculated for actual days elapsed on the basis of a 360 day year, except that interest calculated based on the Prime Rate shall be calculated for actual days elapsed on the basis of a 365, or when appropriate 366, day year. Interest shall be payable for the day a Loan is made but not for the day of any payment on the amount paid if payment is received prior to noon (local time) at the place of payment. Whenever any payment to the Administrative Agent or any Lender under the Loan Documents would otherwise be due on a day that is not a Business Day, such payment shall instead be due on the next succeeding Business Day; provided , however , that if such next succeeding Business Day falls in a new calendar month, such payment shall instead be due on the immediately preceding Business Day. If the date any payment under the Loan Documents is due is extended (whether by operation of any Loan Document, Applicable Law or otherwise), such payment shall bear interest for such extended time at the rate of interest applicable hereunder. Interest at the Overdue Rate shall be payable on demand.

2.16 Notification of Loans, Interest Rates, Prepayments and Commitment Reductions . Promptly after receipt thereof, the Administrative Agent will notify each Lender of the contents of each Aggregate Commitments reduction notice, Ratable Borrowing Notice, Conversion/Continuation Notice, Competitive Bid Borrowing Notice, Commitment Increase Supplement and repayment notice received by it hereunder. The Administrative Agent will notify each Lender of the Eurodollar Rate or Alternate Base Rate applicable to each Non-Absolute Bid Rate Loan promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. The Administrative Agent will notify each Lender of any request by the Borrower pursuant to Section 2.7 to extend the Facility Termination date and any exercise by the Borrower of its Term-Out Option.

2.17 Lending Installations . Each Lender may book its Loans at any Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and any Notes issued hereunder shall be deemed held by each Lender for the benefit of any such Lending Installation. Each Lender may, by written notice to the Administrative Agent and the Borrower in accordance

with Article XIII , designate replacement or additional Lending Installations through which Loans will be made by it and for whose account Loan payments are to be made.

2.18 Non-Receipt of Funds by the Administrative Agent . Unless the Borrower or a Lender, as the case may be, notifies the Administrative Agent prior to the date on which it is scheduled to make payment to the Administrative Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal, interest or fees to the Administrative Agent for the account of the Lenders, that it does not intend to make such payment, the Administrative Agent may assume that such payment has been made. The Administrative Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient or receipts in reliance upon such assumption. If such Lender or the Borrower, as the case may be, has not in fact made such payment to the Administrative Agent, the recipient of such payment shall, on demand by the Administrative Agent, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to the Federal Funds Effective Rate for such day for the first three days and, thereafter, at the Alternate Base Rate plus 2%.

2.19 Maximum Interest Rate . Nothing contained in the Loan Documents shall require the Borrower at any time to pay interest at a rate exceeding the Maximum Permissible Rate. If interest payable by the Borrower on any date would exceed the maximum amount permitted by the Maximum Permissible Rate, such interest payment shall automatically be reduced to such maximum permitted amount, and interest for any subsequent period, to the extent less than the maximum amount permitted for such period by the Maximum Permissible Rate, shall be increased by the unpaid amount of such reduction. Any interest actually received for any period in excess of such maximum amount permitted for such period shall be deemed to have been applied as a prepayment of the Loans.

ARTICLE III

YIELD PROTECTION; TAXES

3.1 Yield Protection . If in the determination of any Lender on or after the Agreement Date, the adoption of any Applicable Law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or applicable Lending Installation with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:

(i) subjects such Lender or any applicable Lending Installation of such Lender to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender in respect of its Loans, or

(ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, such Lender or any applicable Lending Installation of such Lender (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Loans), or

(iii) imposes any other condition the result of which is to increase the cost to such Lender or any applicable Lending Installation of making, funding or maintaining its Loans or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with its Loans, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of Loans held or interest received by it, by an amount deemed material by such Lender,

and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation of making or maintaining its Loans or Commitment or to reduce the return received by such Lender or applicable Lending Installation in connection with such Loans or Commitment, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received.

3.2 Changes in Capital Adequacy Regulations . If a Lender determines the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a Change, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender determines is attributable to this Agreement, its Loans or its Commitment to make Loans hereunder (after taking into account such Lender’s policies as to capital adequacy).

3.3 Availability of Types of Loans . If (x) any Lender determines that maintenance of its Eurodollar Base Rate Loans or Eurodollar Bid Rate Loans at a suitable Lending Installation would violate any Applicable Law, rule, regulation, or directive, whether or not having the force of law, or if (y) the Required Lenders determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Base Rate Loans are not available or (ii) the interest rate applicable to Eurodollar Base Rate Loans does not accurately reflect the cost of making or maintaining Eurodollar Base Rate Loans, then the Administrative Agent shall in the case of clause (x) above, suspend the availability of Eurodollar Base Rate Loans and require any affected Eurodollar Base Rate Loans or Eurodollar Bid Rate Loans to be repaid or converted to Alternate Base Rate Loans, subject to the payment of any funding indemnification amounts required by Section 3.4 , and in the case of clause (y) , above, suspend the availability of Eurodollar Base Rate Loans and require any affected Eurodollar Base Rate Loans to be repaid or converted to Alternate Base Rate Loans, subject to the payment of any funding indemnification amounts required by Section 3.4 .

Section 2.6.2 or Section 2.7.4 of a Eurodollar Base Rate Loan other than on the last day of an Interest Period for such Eurodollar Base Rate Loan, (b) any payment, prepayment or conversion of a Eurodollar Base Rate Loan or payment or prepayment of an Absolute Bid Rate Loan on a date other than the last day of an Interest Period for such Eurodollar Base Rate Loan or an Absolute Bid Rate Loan or (c) a Eurodollar Base Rate Loan or an Absolute Bid Rate Loan for any reason not being made or, in the case of a Eurodollar Base Rate Loans, converted (other than as a result of the failure of such Lender to make such Loan available to the Borrower upon the fulfillment of the conditions specified in Article IV without any determination by the Administrative Agent or such Lender under Section 3.3 ), or any payment of principal thereof or interest thereon not being made, on the date therefor determined in accordance with the applicable provisions of this Agreement. At the election of such Lender, and without limiting the generality of the foregoing, but without duplication, such compensation on account of losses may include an amount equal to the excess of (i) the interest that would have been received from the Borrower under this Agreement on any amounts to be reemployed during an Interest Period or its remaining portion over (ii) the interest component of the return that such Lender determines it could have obtained had it placed such amount on deposit in the interbank Dollar market selected by it for a period equal to such Interest Period or its remaining portion.

3.5 Taxes . (a) (a) All payments by the Borrower to or for the account of any Lender or the Administrative Agent hereunder or under any Note shall be made free and clear of and without deduction for any and all Taxes. If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.5 ) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant authority in accordance with Applicable Law and (iv) the Borrower shall furnish to the Administrative Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made.

(b) In addition, the Borrower hereby agrees to pay, or reimburse the Administrative Agent and each Lender for, any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note (“ Other Taxes ”).

(c) The Borrower hereby agrees to indemnify the Administrative Agent and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5 ) paid by the Administrative Agent or such Lender and any Liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Administrative Agent or such Lender makes demand therefor pursuant to Section 3.6 .

(d) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a “ Non-U.S. Lender ”) agrees that it will, not more than ten

Business Days after the Agreement Date, deliver to each of the Borrower and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes. Each Non-U.S. Lender further undertakes to deliver to each of the Borrower and the Administrative Agent (x) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by the Borrower or the Administrative Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises the Borrower and the Administrative Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax. Upon the request of the Borrower or the Administrative Agent, each Lender that is incorporated under the laws of the United States of America or a state thereof shall from time to time submit to the Borrower and the Administrative Agent a certificate to the effect that it is such a United States Person and a duly completed Internal Revenue Service Form W-9 (or successor form).

(e) For any period during which a Non-U.S. Lender has failed to provide the Borrower with an appropriate form pursuant to clause (iv), above (unless such failure is due to a change in treaty, Applicable Law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5 with respect to income Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to federal income Taxes because of its failure to deliver a form required under clause (d) , above, the Borrower shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes.

(f) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by Applicable Law, such properly completed and executed documentation prescribed by Applicable Law as will permit such payments to be made without withholding or at a reduced rate.

Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Administrative Agent under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Administrative Agent, which attorneys may be employees of the Administrative Agent). The obligations of the Lenders under this Section 3.5(g) shall survive the payment of the Obligations and termination of this Agreement.

3.6 Lender Statements; Survival of Indemnity . To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans to reduce any liability of the Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar Base Rate Loans under Section 3.3 , so long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Borrower (with a copy to the Administrative Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5 . Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Base Rate or Eurodollar Bid Rate, as the case may be, applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrower of such written statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement.

ARTICLE IV

CONDITIONS PRECEDENT

4.1 Initial Loan . The Lenders shall not be required to make the initial Loan hereunder unless the Borrower has furnished to the Administrative Agent (with sufficient copies for each Lender):

(a) Copies of the articles or certificate of incorporation of the Borrower, together with all amendments thereto, and a certificate of good standing, each certified by the appropriate governmental officer in its jurisdictions of incorporation.

(b) Copies, certified by the Secretary or Assistant Secretary of the Borrower, of its by-laws and of its Board of Directors’ resolutions and of resolutions or actions of any other body authorizing (i) the execution of the Loan Documents to which the Borrower is a party and (ii) borrowings hereunder by the Borrower in an aggregate amount up to $450,000,000.

Documents, upon which certificate the Administrative Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower.

(d) A certificate, signed by the chief financial officer of the Borrower, stating that on the Agreement Date no Event of Default or Unmatured Default has occurred and is continuing.

(e) A written opinion of the Borrower’s counsel, addressed to the Lenders in substantially the form of Exhibit 4.1(e) .

(f) Any Notes requested by a Lender pursuant to Section 2.13 payable to the order of each such requesting Lender.

(g) A payoff and termination letter (“ Termination Letter ”) from each Exiting Lender, evidencing the termination of its rights and obligations under the Existing Credit Agreement and repayment of all amounts owing such Exiting Lender thereunder.

(h) Evidence satisfactory to the Administrative Agent of any required governmental approvals or consents regarding this Agreement.

(i) Such other documents as any Lender or its counsel may have reasonably requested.

4.2 Each Loan . The Lenders shall not be required to make any Loan, including the initial Loan, unless on the applicable Borrowing Date:

(a) The Borrower shall have furnished to the Administrative Agent, with sufficient copies for each Lender, a certificate dated such Borrowing Date and signed by an Authorized Officer of the Borrower, stating that after taking in account the making of such Loan, and the repayment of any outstanding obligations of the Borrower with respect to commercial paper with the proceeds of such Loan, the Borrower will not have exceeded the maximum aggregate principal amount that the Borrower is entitled to borrow from financial institutions or receive from the sale of commercial paper under Board of Directors’ resolutions of the Borrower.

(b) There exists no Event of Default or Unmatured Default.

(c) The representations and warranties contained in Article V (other than the representations and warranties set forth in Sections 5.2(b), 5.3, 5.11(a), 5.11(b), 5.11(c), 5.11(f), 5.11(g), 5.11(h) and 5.11(i) ) are true and correct as of such Borrowing Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date.

(d) All legal matters incident to the making of such Loan shall be satisfactory to the Lenders and their counsel (including, without limitation, evidence satisfactory to the Administrative Agent of any required governmental approvals or consents regarding such Loan).

(e) Each Ratable Borrowing Notice with respect to each Ratable Loan and each Competitive Bid Borrowing Notice with respect to each Competitive Bid Loan shall constitute a

representation and warranty by the Borrower that the conditions contained in Sections 4.2(a) and (b) have been satisfied. Any Lender may require a duly completed compliance certificate in substantially the form of Exhibit 4.2 as a condition to making a Loan.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

5.1 Corporate Existence . Each of the Borrower and its Material Subsidiaries: (a) is a corporation duly organized and validly existing under the laws of the jurisdiction of its incorporation; (b) has all requisite corporate power, and has all material governmental licenses, authorizations, consents and approvals, necessary to own its assets and carry on its business as now being or as proposed to be conducted; and (c) is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify would have a Material Adverse Effect.

5.2 Financial Condition . (a) The consolidated balance sheet and statement of consolidated capitalization of the Borrower and its consolidated Subsidiaries, if any, as at September 30, 2006 and the related consolidated statements of income, cash flows, common stockholders’ equity and income taxes of the Borrower and its consolidated Subsidiaries, if any, for the fiscal year ended on September 30, 2006, with the opinion thereon of Deloitte & Touche LLP, and the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries, if any, as at March 31, 2007 and the related consolidated statements of income and cash flows of the Borrower and its consolidated Subsidiaries, if any, for the applicable three or six-month period ended on such date, heretofore furnished to each of the Lenders are complete and correct and fairly present the consolidated financial condition of the Borrower and its consolidated Subsidiaries, if any, as at said date and the results of their operations for the fiscal year and the applicable three or six-month period ended on said dates (subject, in the case of financial statements as at March 31, 2007 to normal year-end audit adjustments), all in accordance with generally accepted accounting principles and practices applied on a consistent basis. Neither the Borrower nor any of its Material Subsidiaries had on said dates any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in said balance sheets as at said dates.

(b) Since March 31, 2007, there has been no material adverse change in the consolidated financial condition or operations, or the prospects or business taken as a whole, of the Borrower and its consolidated Subsidiaries, if any, from that set forth in said financial statements as at said date.

5.3 Litigation . Other than as set out in Schedule 5.3 hereto, there are no legal or arbitral proceedings or any proceedings by or before any governmental or regulatory authority or agency, now pending or (to the knowledge of the Borrower) threatened against the Borrower or any of its Material Subsidiaries as to which there is a reasonable possibility of an adverse

determination and which, if adversely determined, could have a Material Adverse Effect during the term of this Agreement.

5.4 No Breach . None of the execution and delivery of this Agreement and the Notes, the consummation of the transactions herein contemplated and compliance with the terms and provisions hereof will conflict with or result in a breach of, or require any consent under, the charter or By-laws of the Borrower, or any Applicable Law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which the Borrower or its Material Subsidiaries is a party or by which it is bound or to which it is subject or which is applicable to it, or constitute a default under any such agreement or instrument, or result in the creation or imposition of any Lien upon any of the revenues or assets of the Borrower or any of its Material Subsidiaries pursuant to the terms of any such agreement or instrument.

5.5 Corporate Action . The Borrower has all necessary corporate power and authority to execute, deliver and perform its obligations under this Agreement and the Notes and to consummate the transactions herein contemplated, and the execution, delivery and performance of this Agreement and the Notes, and the consummation of the transactions herein contemplated, by the Borrower have been duly authorized by all necessary corporate action on its part; and this Agreement has been duly and validly executed and delivered by the Borrower and constitutes, and each of the Notes when executed and delivered for value will constitute, its legal, valid and binding obligation, enforceable in accordance with its terms.

5.6 Regulatory Approval . The Borrower has obtained each consent, authorization and approval of, and/or made each filing or registration with, any governmental body or regulatory authority that is required in connection with the execution, delivery or performance of this Agreement or the Notes or for the consummation of the transactions herein contemplated, or for the validity or enforceability thereof.

5.7 Regulations U and X . The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Loans will be used for a purpose which violates, or would be inconsistent with, F.R.S. Board Regulation U or X, or any official rulings on or interpretations of such regulations. Terms for which meanings are provided in Regulation U or Regulation X or any regulations substituted therefor, as from time to time in effect, are used in this Section 5.7 with such meanings.

5.8 Pension and Welfare Plans . During the twelve consecutive-month period prior to the date of the execution and delivery of this Agreement and prior to the date of any borrowing hereunder, no steps have been taken to terminate or completely or partially withdraw from any Pension Plan, and no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under section 302 (f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which might result in the incurrence by the Borrower or any member of the Controlled Group of any material liability, fine or penalty. Except as disclosed in Schedule 5.8 (“ Employee Benefit Plans ”), neither the Borrower nor any member of the Controlled Group has any contingent liability with respect to any post-retirement benefit under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Title I of ERISA.

5.9 Accuracy of Information . All factual information heretofore or contemporaneously furnished by or on behalf of the Borrower in writing to the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all other such factual information hereafter furnished by or on behalf of the Borrower to the Administrative Agent or any Lender will be, true and accurate in every material respect on the date as of which such information is dated or certified and as of the date of execution and delivery of this Agreement by the Administrative Agent and such Lender, and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading.

5.10 Taxes . United States Federal income tax returns of the Utility and those of its Subsidiaries that have filed their returns on a consolidated basis with the Utility have been examined and/or closed through the fiscal year of the Utility ended September 30, 2006. The Borrower and its Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any of its Subsidiaries. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of the Borrower, adequate.

5.11 Environmental Warranties . Except as previously disclosed in the SEC Disclosure Documents or on Schedule 5.11 :

(a) all facilities and property (including underlying groundwater) owned, operated or leased by the Borrower or any of its Subsidiaries are in material compliance with all Environmental Laws, except for such instances of noncompliance as are unlikely, singly or in the aggregate, to have a Material Adverse Effect;

(b) there have been no past, and there are no pending or threatened:

(1) claims, complaints, notices or requests for information received by the Borrower or any of its Subsidiaries with respect to any alleged violation of any Environmental Law or,

(2) complaints, notices or inquiries to the Borrower or any of its Subsidiaries regarding potential liability under any Environmental Law;

except as are unlikely, singly or in the aggregate, to have a Material Adverse Effect;

(c) to the Borrower’s knowledge, there have been no Releases of Hazardous Materials at, on or under any property now or previously owned, operated or leased by the Borrower or any of its Subsidiaries that, singly or in the aggregate, are reasonably likely to have a Material Adverse Effect during the term of this Agreement;

(d) the Borrower and its Subsidiaries have been issued and are in material compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters and necessary for their businesses;

(e) no property now or previously owned, operated or leased by the Borrower or any of its Subsidiaries is listed or proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA or on any similar state list of sites requiring investigation or cleanup;

(f) to the Borrower’s knowledge, there are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under any property now or previously owned, operated or leased by the Borrower or any of its Subsidiaries that, singly or in aggregate, could have a Material Adverse Effect during the term of this Agreement;

(g) to the Borrower’s knowledge, neither Borrower nor any of its Subsidiaries has directly transported or directly arranged for the transportation of any Hazardous Material to any location which is listed or proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list or which is the subject of Federal, state or local enforcement actions or other investigations which may lead to material claims against the Borrower or such Subsidiary for any remedial work, damage to natural resources or personal injury, including claims under CERCLA that, singly or in the aggregate, are likely to have a Material Adverse Effect during the term of this Agreement;

(h) there are no polychlorinated biphenyls or friable asbestos present at any property now or previously owned, operated or leased by the Borrower or any of its Subsidiaries that, singly or in the aggregate, could have a Material Adverse Effect during the term of this Agreement; and

(i) no conditions exist at, on or under any property now or previously owned or leased by the Borrower or any of its Subsidiaries which, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law, which would have a Material Adverse Effect during the term of this Agreement.

5.12 Investment Company Act . Neither the Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

5.13 Subsidiaries . Schedule 5.13 is a true and complete list of all Subsidiaries of the Borrower as of the date hereof.

ARTICLE VI

COVENANTS

During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing:

6.1 Financial Statements . The Borrower shall deliver to the Administrative Agent (and, in the case of clauses (e), (f) and (g) below, to each of the Lenders):

(a) as soon as available and in any event within 50 days after the end of each of the first three fiscal quarterly periods of each fiscal year of the Borrower, a consolidated statement of income of the Borrower and its consolidated Subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and a consolidated statement of cash flows for the period from the beginning of the respective fiscal year to the end of such period, the related consolidated balance sheet as at the end of such period, accompanied by a certificate of a senior financial officer of the Borrower, which certificate shall state that said financial statements fairly present the consolidated financial condition and results of operations of the Borrower and its consolidated Subsidiaries in accordance with generally accepted accounting principles, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments);

(b) as soon as available and in any event within 95 days after the end of each fiscal year of the Borrower, consolidated statements of income, common stockholders’ equity, cash flows, and income taxes of the Borrower and its consolidated Subsidiaries for such year and the related consolidated balance sheet and statement of capitalization at the end of such year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, and accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state, without material qualification, that said financial statements fairly present the consolidated financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as at the end of, and for, such fiscal year;

(c) promptly upon their becoming available, notification of the filing of all registration statements, regular periodic reports, if any, and SEC Disclosure Documents which the Borrower shall have filed with the Securities and Exchange Commission (or any governmental agency substituted therefor) or any national securities exchange;

(d) promptly upon the mailing thereof to the shareholders of the Borrower generally, copies, if not publicly available, or notification of mailing, of all financial statements, reports and proxy statements so mailed;

(e) promptly after the Borrower knows or has reason to know that any Event of Default or Unmatured Default has occurred, a notice of such Event of

Default or Unmatured Default, describing the same in reasonable detail, and indicating what action is being undertaken with respect to such Event of Default or Unmatured Default;

(f) immediately upon becoming aware of the institution of any steps by the Borrower or any other Person to terminate any Pension Plan or the complete or partial withdrawal from any Pension Plan by the Borrower or any member of its Controlled Group, or the failure to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a Lien under section 302(f) of ERISA, or the taking of any action with respect to a Pension Plan which could result in the requirement that the Borrower furnish a bond or other security to the PBGC or such Pension Plan, or the occurrence of any event with respect to any Pension Plan which could result in the incurrence by the Borrower of any material liability, fine or penalty, or any material increase in the contingent liability of the Borrower with respect to any post-retirement Welfare Plan benefit, notice thereof and copies of all documentation relating thereto; and

(g) from time to time such other information regarding the business, affairs or financial condition of the Borrower or any of its Subsidiaries as any Lender or the Administrative Agent may reasonably request.

The Borrower will furnish to the Administrative Agent, at the time it furnishes each set of financial statements pursuant to clause (a) or (b) above, a certificate of a senior financial officer of the Borrower to the effect that no Event of Default or Unmatured Default has occurred and is continuing (or, if any Event of Default or Unmatured Default, has occurred and is continuing, describing the same in reasonable detail, and indicating what action is being undertaken with respect to such Event of Default or Unmatured Default) and including a calculation of the financial covenant under Section 6.6 .

6.2 Litigation . The Borrower shall promptly give to each Lender notice of all legal or arbitral proceedings, and of all proceedings before any governmental or regulatory authority or agency, affecting the Borrower or its Material Subsidiaries, except proceedings as to which there is no reasonable possibility of an adverse determination or which, if adversely determined, would not have a Material Adverse Effect during the term of this Agreement.

useful in its business in good working order and condition, ordinary wear and tear excepted; permit representatives of any Lender or the Administrative Agent, during normal business hours, to examine, copy and make extracts from its books and records, to inspect its properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by such Lender or the Administrative Agent (as the case may be); and keep insured by financially sound and reputable insurers all property of a character usually insured by corporations engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such corporations and carry such other insurance as is usually carried by such corporations.

6.4 Use of Proceeds . The Borrower shall use the proceeds of the Loans hereunder for its general corporate purposes (in compliance with all applicable legal and regulatory requirements).

6.5 Environmental Covenant . The Borrower will, and will cause each of its Subsidiaries to:

(a) use and operate all of its facilities and properties in compliance with all Environmental Laws except for such noncompliance which, singly or in the aggregate, will not have a Material Adverse Effect, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in compliance therewith, except where the failure to keep such permits, approvals, certificates, licenses or other authorizations, or any noncompliance with the provisions thereof, will not have a Material Adverse Effect, and handle all Hazardous Materials in compliance with all applicable Environmental Laws, except for any noncompliance that will not have a Material Adverse Effect;

(b) immediately notify the Administrative Agent and provide copies upon receipt of all written inquiries from any local, state or Federal governmental agency, claims, complaints or notices relating to the condition of its facilities and properties or compliance with Environmental Laws which will have a Material Adverse Effect, and promptly cure and have dismissed with prejudice or investigate and contest in good faith any actions and proceedings relating to material compliance with Environmental Laws; and

(c) provide such information and certifications which the Administrative Agent may reasonably request from time to time to evidence compliance with this Section 6.5 .

6.6 Financial Covenant . The Borrower will not permit the ratio of (i) its Consolidated Financial Indebtedness to (ii) its Consolidated Total Capitalization to exceed 0.65 to 1.0 at any time.

6.7 Utility Dividends . The Borrower shall not, and shall cause the Utility not to, enter into or permit to exist any restriction or other limitation on the ability of the Utility to pay dividends to the Borrower, other than restrictions and limitations required by Applicable Law or the terms of the Utility’s preferred stock.

6.8 Borrower’s Continued Ownership of Utility’s Capital Stock . The Borrower shall continue to own 100% of capital stock of the Utility.

ARTICLE VII

EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall constitute an Event of Default:

7.1 The Borrower shall default in the payment of any principal of or interest on any Loan or any other amount payable by it hereunder when due.

7.2 The Borrower or any of its Material Subsidiaries shall default in the payment when due of any principal of or interest on any of its other Indebtedness; or any event specified in any note, agreement, indenture or other document evidencing or relating to any such Indebtedness shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to become due prior to its stated maturity.

7.3 Any representation, warranty or certification made or deemed made herein by the Borrower, or any certificate furnished to any Lender or the Administrative Agent pursuant to the provisions hereof, shall prove to have been false or misleading as of the time made, deemed made, or furnished in any material respect.

7.4 The Borrower shall default in the performance of its obligations under Section 6.1(e) or 6.6 hereof.

7.5 The Borrower shall default in the performance of any of its other obligations in this Agreement and such default shall continue unremedied for a period of 15 days after the earlier of (i) the date on which a senior officer of the Borrower becomes aware of such default, or (ii) the date on which notice thereof is given to the Borrower by the Administrative Agent or any Lender (through the Administrative Agent).

7.6 The Borrower or any of its Material Subsidiaries shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due.

7.7 The Borrower or any of its Material Subsidiaries shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code, or (vi) take any corporate action for the purpose of effecting any of the foregoing.

7.8 A proceeding or case shall be commenced, without the application or consent of the Borrower or any of its Material Subsidiaries, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Borrower or such Material Subsidiary or of all or any substantial part of its assets, or (iii) similar relief in respect of the Borrower or such Material Subsidiary under any law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 days; or an order for relief against the Borrower or such Material Subsidiary shall be entered in an involuntary case under the Bankruptcy Code.

7.9 A final judgment or judgments for the payment of money in excess of $50,000,000 in the aggregate that is not covered by insurance, performance bonds or the like shall be rendered by a court or courts against the Borrower or any of its Subsidiaries, and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 90 days from the date of entry thereof and the Borrower or the relevant Subsidiary shall not, within said period of 90 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal.

7.10 Any of the following events shall occur with respect to any Pension Plan:

(i) the institution of any steps by the Borrower, any member of its Controlled Group or any other Person to terminate a Pension Plan if, as a result of such termination, the Borrower or any such member could be required to make a contribution to such Pension Plan, or could reasonably expect to incur a liability or obligation to such Pension Plan, in excess of $50,000,000; or

(ii) the complete or partial withdrawal from any Pension Plan by the Borrower or any member of its Controlled Group if, as a result of such withdrawal, the Borrower or any such member could incur any liability by such Pension Plan in excess of $50,000,000; or

(iii) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.

7.11 Any license, consent, authorization or approval, filing or registration now or hereafter necessary to enable the Borrower to comply with its obligations hereunder or under the Notes shall be revoked, withdrawn, withheld or not effected or shall cease to be in full force and effect.

7.12 The Borrower ceases to own all of the issued and outstanding stock of the Utility.

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

8.1 Acceleration . If any Event of Default described in Section 7.6, 7.7 or 7.8 occurs with respect to the Borrower, the obligations of the Lenders to make Loans hereunder shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Administrative Agent or any Lender. If any other Event of Default occurs, the Required Lenders (or the Administrative Agent with the consent of the Required Lenders) may terminate or suspend the obligations of the Lenders to make Loans hereunder, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly waives.

If, within 30 days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans hereunder as a result of any Event of Default (other than any Event of Default as described in Section 7.6, 7.7 or 7.8 ) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Administrative Agent shall, by notice to the Borrower, rescind and annul such acceleration and/or termination.

8.2 Amendments . Subject to the provisions of this Article VIII , the Required Lenders (or the Administrative Agent with the consent in writing of the Required Lenders) and the Borrower may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrower hereunder or waiving any Event of Default hereunder; provided , however , that no such supplemental agreement shall, without the consent of each Lender affected thereby:

(i) Extend the final maturity of any Loan or forgive all or any portion of the principal amount thereof, or reduce the rate or extend the time of payment of interest or fees thereon;

(ii) Reduce the percentage specified in the definition of Required Lenders;

(iii) Extend the Facility Termination Date, increase the period by which the Repayment Date may be extended pursuant to Section 2.8 , reduce the amount or extend the payment date for, the mandatory payments required under Section 2.1.3 , increase the amount the Commitment of such Lender hereunder (without the consent of such Lender), or permit the Borrower to assign its rights under this Agreement; or

(iv) Amend this Section 8.2 or any provision of this Agreement requiring the consent or other action of all of the Lenders.

No amendment of any provision of this Agreement relating to the Administrative Agent shall be effective without the written consent of the Administrative Agent. The Administrative Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this Agreement.

8.3 Preservation of Rights . No delay or omission of the Lenders or the Administrative Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Event of Default or an acquiescence therein, and the making of a Loan notwithstanding the existence of an Event of Default or the inability of the Borrower to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Administrative Agent and the Lenders until the Obligations have been paid in full.

ARTICLE IX

GENERAL PROVISIONS

9.1 Survival of Representations . All representations and warranties of the Borrower contained in this Agreement shall survive during the period that the Loans herein contemplated are outstanding.

9.2 Governmental Regulation . Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any Applicable Law.

9.3 Headings . Headings to Articles, Sections and subsections of, and Annexes, Schedules and Exhibits to the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents.

9.4 Entire Agreement . The Loan Documents embody the entire agreement and understanding among the Borrower, the Administrative Agent and the Lenders and supersede all prior agreements and understandings among the Borrower, the Administrative Agent and the Lenders relating to the subject matter thereof other than the fee letters described in Section 10.13 .

9.5 Several Obligations; Benefits of this Agreement . The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Administrative Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns; provided , however , that the parties hereto expressly agree that the Arranger shall enjoy the benefits of the provisions of Sections 9.6, 9.10 and 9.11 to the extent specifically set forth therein and shall have the right to enforce such provisions on its own behalf and in its own name to the same extent as if it were a party to this Agreement.

9.6 Expenses; Indemnification . (i) (i) The Borrower shall pay or reimburse the Administrative Agent and the Arranger for any costs, internal charges and out of pocket expenses (including attorneys’ fees and time charges of attorneys for the Administrative Agent, which attorneys may be employees of the Administrative Agent) paid or incurred by the Administrative Agent or the Arranger, and their respective Affiliates, in connection with the preparation, negotiation, execution, delivery, syndication, review, amendment, modification, and administration of the Loan Documents. The Borrower also agrees to reimburse the Administrative Agent, the Arranger and the Lenders for any costs, internal charges and out of pocket expenses (including attorneys’ fees and time charges of attorneys for the Administrative Agent, the Arranger and the Lenders, which attorneys may be employees of the Administrative Agent, the Arranger or the Lenders) paid or incurred by the Administrative Agent, the Arranger or any Lender in connection with the collection and enforcement of the Loan Documents. Expenses being reimbursed by the Borrower under this Section include, without limitation, costs and expenses incurred in connection with the Reports described in the following sentence. The Borrower acknowledges that from time to time the Administrative Agent may prepare and may distribute to the Lenders (but shall have no obligation or duty to prepare or to distribute to the Lenders) certain reports (the “ Reports ”) pertaining to the Borrower’s assets for internal use by the Administrative Agent from information furnished to it by or on behalf of the Borrower, after the Administrative Agent has exercised its rights of inspection pursuant to this Agreement.

(ii) The Borrower hereby further agrees to indemnify each Indemnified Person against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not such Indemnified Person is a party thereto) which any of them may pay or incur arising out of (A) any Loan Document Related Claim (whether asserted by such Indemnified Person or the Borrower or any other Person), including the prosecution or defense thereof and any litigation or proceeding with respect thereto (whether or not, in the case of any such litigation or proceeding, such Indemnified Person is a party thereto), or (B) any investigation, governmental or otherwise, arising out of, related to, or in any way connected with, the Loan Documents or the relationships established thereunder, except to the extent that they are determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the party seeking indemnification. The obligations of the Borrower under this Section 9.6 , and under Article III , shall survive the termination of this Agreement. All amounts payable by the Borrower under this Section 9.6 and under the other provisions of the Loan Documents shall, except as otherwise expressly provided, be immediately due upon request for the payment thereof.

9.7 Numbers of Documents . All statements, notices, closing documents, and requests hereunder shall be furnished to the Administrative Agent with sufficient counterparts so that the Administrative Agent may furnish one to each of the Lenders.

9.8 Accounting . Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Generally Accepted Accounting Principles, except that any calculation or determination which is to be made on a consolidated basis shall be made for the Borrower and all its Subsidiaries, including those Subsidiaries, if any, which are unconsolidated on the Borrower’s audited financial statements.

9.9 Severability of Provisions . Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. To the extent permitted by Applicable Law, the Borrower hereby waives any provision of Applicable Law that renders any provision of the Loan Documents prohibited or unenforceable in any respect.

9.10 Nonliability of Lenders . The relationship between the Borrower on the one hand and the Lenders and the Administrative Agent on the other hand shall be solely that of borrower and lender. Neither the Administrative Agent, the Arranger nor any Lender shall have any fiduciary responsibilities to the Borrower. Neither the Administrative Agent, the Arranger nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower’s business or operations. The Borrower agrees that neither the Administrative Agent, the Arranger nor any Lender shall have liability to the Borrower (whether sounding in tort, contract or otherwise) for losses suffered by the Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Administrative Agent, the Arranger nor any Lender shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby.

9.11 Confidentiality . Each Lender agrees to hold any confidential information which it may receive from the Borrower pursuant to this Agreement in confidence, except for disclosure (i) to its Affiliates and to other Lenders and their respective Affiliates, (ii) to legal counsel, accountants, and other professional advisors to such Lender or to a Transferee, (iii) to regulatory officials, (iv) to any Person as requested pursuant to or as required by Applicable Law, (v) to any Person in connection with any legal proceeding to which such Lender is a party, (vi) to such Lender’s direct or indirect contractual counterparties in swap agreements or to legal counsel, accountants and other professional advisors to such counterparties, and (vii) permitted by Section 12.5 .

9.12 Disclosure . The Borrower and each Lender hereby acknowledge and agree that the Administrative Agent and/or its Affiliates from time to time may hold investments in, make other loans to or have other relationships with the Borrower and its Affiliates.

9.13 Rights Cumulative . Each of the rights and remedies of the Administrative Agent and the Lenders under the Loan Documents shall be in addition to all of their other rights and remedies under the Loan Documents and Applicable Law, and nothing in the Loan Documents shall be construed as limiting any such rights or remedies.

9.14 Syndication Agent; Documentation Agents . Neither the Syndication Agent nor the Documentation Agents shall have any liability or obligation whatsoever to the Borrower, the

Administrative Agent or any Lender at any time under this Agreement, other than its obligations as a Lender hereunder.

ARTICLE X

THE ADMINISTRATIVE AGENT

10.1 Appointment; Nature of Relationship . Wachovia Bank, National Association, is hereby appointed by each of the Lenders as its administrative agent hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Administrative Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Administrative Agent agrees to act as such contractual representative upon the express conditions contained in this Article X . Notwithstanding the use of the term “administrative agent” and the defined term “Administrative Agent,” it is expressly understood and agreed that the Administrative Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Administrative Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders’ contractual representative, the Administrative Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a “representative” of the Lenders within the meaning of Section 9-102(a)(72)(E) of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives.

10.2 Powers . The Administrative Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Administrative Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Administrative Agent. The Administrative Agent shall not be required under any circumstances to take any action that, in its judgment, is contrary to any provision of the Loan Documents or Applicable Law.

10.3 General Immunity . Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith, except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person.

of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV , except receipt of items required to be delivered solely to the Administrative Agent; (d) the existence or possible existence of any Event of Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (g) the financial condition of the Borrower or any guarantor of any of the Obligations or of any of the Borrower’s or any such guarantor’s respective Subsidiaries. The Administrative Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by the Borrower to the Administrative Agent at such time, but is voluntarily furnished by the Borrower to the Administrative Agent (either in its capacity as Administrative Agent or in its individual capacity).

10.5 Action on Instructions of Lenders . The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge that the Administrative Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.

10.6 Employment of Agents and Counsel . The Administrative Agent may execute any of its duties as Administrative Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys in fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the conduct or misconduct of any such agents or attorneys in fact selected by it with reasonable care. The Administrative Agent shall be entitled to advice of counsel concerning the contractual arrangements among the Administrative Agent, the Borrower and the Lenders and all matters pertaining to the Administrative Agent’s duties hereunder and under any other Loan Document.

10.7 Reliance on Documents; Counsel . The Administrative Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, electronic mail, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the advice or opinion of counsel selected by the Administrative Agent, which counsel may be employees of the Administrative Agent.

under the Loan Documents, (ii) for any other expenses incurred by the Administrative Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Administrative Agent in connection with any dispute between the Administrative Agent and any Lender or between two or more of the Lenders) and (iii) for any Liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Administrative Agent in connection with any dispute between the Administrative Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other documents; provided that (i) no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Administrative Agent and (ii) any indemnification required pursuant to Section 3.4 shall, notwithstanding the provisions of this Section 10.8 , be paid by the relevant Lender in accordance with the provisions thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this Agreement.

10.9 Notice of Default . The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default or Unmatured Default hereunder unless the Administrative Agent has received written notice from a Lender or the Borrower referring to this Agreement describing such Event of Default or Unmatured Default and stating that such notice is a “Notice of Default”. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders.

10.10 Rights as a Lender . In the event the Administrative Agent is a Lender, the Administrative Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Loans as any Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, at any time when the Administrative Agent is a Lender, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. The Administrative Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. The Administrative Agent, in its individual capacity, is not obligated to remain a Lender.

10.11 Lender Credit Decision . Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, the Syndication Agent, any Documentation Agent, any Arranger or any other Lender and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Syndication Agent, any Documentation Agent, the Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the

time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents.

10.12 Successor Administrative Agent . The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Administrative Agent or, if no successor Administrative Agent has been appointed, forty-five days after the retiring Administrative Agent gives notice of its intention to resign. The Administrative Agent may be removed at any time for gross negligence or willful misconduct by written notice received by the Administrative Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrower and the Lenders, a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders within thirty days after the resigning Administrative Agent’s giving notice of its intention to resign, then the resigning Administrative Agent may appoint, on behalf of the Borrower and the Lenders, a successor Administrative Agent. Notwithstanding the previous sentence, the Administrative Agent may at any time without the consent of the Borrower or any Lender, appoint any of its Affiliates which is a commercial bank as a successor Administrative Agent hereunder. If the Administrative Agent has resigned or been removed and no successor Administrative Agent has been appointed, the Lenders may perform all the duties of the Administrative Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Administrative Agent shall be deemed to be appointed hereunder until such successor Administrative Agent has accepted the appointment. Any such successor Administrative Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Administrative Agent. Upon the effectiveness of the resignation or removal of the Administrative Agent, the resigning or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Administrative Agent, the provisions of this Article X shall continue in effect for the benefit of such Administrative Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Administrative Agent by merger, or the Administrative Agent assigns its duties and obligations to an Affiliate pursuant to this Section 10.12 , then the term “Prime Rate” as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Administrative Agent.

10.13 Administrative Agent and Arranger Fees . The Borrower agrees to pay to the Administrative Agent and the Arranger, for their respective accounts, the fees agreed to by the Borrower, the Administrative Agent and the Arranger from time to time.

10.14 Delegation to Affiliates . The Borrower and the Lenders agree that the Administrative Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate’s directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of

the indemnification, waiver and other protective provisions to which the Administrative Agent is entitled under Articles IX and X .

ARTICLE XI

SETOFF; RATABLE PAYMENTS

11.1 Setoff . In addition to, and without limitation of, any rights of the Lenders under Applicable Law, if the Borrower becomes insolvent, however evidenced, or any Event of Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender or any Affiliate of any such Lender to or for the credit or account of the Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part thereof, shall then be due.

11.2 Ratable Payments . If any Lender, whether by setoff or otherwise, has payment made to it upon its Loans or fees (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5 or payments of principal or interest on Competitive Bid Loans at a time when no Event of Default is continuing) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to acquire a portion of the Loans held by the other Lenders so that after such acquisition each Lender will hold its ratable proportion of the then outstanding Loans. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or other amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral or other protection ratably in proportion to their Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

Administrative Agent may in its discretion (but shall not be required to) follow instructions from the Person which made any Loan or which holds any Note to direct payments relating to such Loan or Note to another Person. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan.

12.2 Participations .

12.2.1 Permitted Participants; Effect . Any Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time sell to one or more banks or other entities (“ Participants ”) participating interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of its Loans and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under the Loan Documents.

12.2.2 Voting Rights . Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which would require consent of all of the Lenders pursuant to the terms of Section 8.2 or of any other Loan Document. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 8.2 that affects such Participant.

12.2.3 Benefit of Setoff . The Borrower agrees that each Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents; provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1 , agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender.

12.2.4 Benefit of Certain Provisions . The Borrower agrees that each Participant shall be entitled to the benefits of Article III to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 12.3.1 . A Participant shall not be entitled to receive any greater payment under Article III than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Non-U.S. Lender if it were a Lender shall not be entitled to the benefits of Section 3.5 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.5 as though it were a Lender.

12.3 Assignments .

12.3.1 Permitted Assignments . Any Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time assign to one or more banks or other entities (“ Purchasers ”) all or any part of its rights and obligations under the Loan Documents. Such assignment shall be pursuant to an agreement substantially in the form of Exhibit 12.3.1 . The consent of the Borrower and the Administrative Agent shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof; provided , however , that if an Event of Default has occurred and is continuing, the consent of the Borrower shall not be required. Such consent shall not be unreasonably withheld or delayed. Each such assignment with respect to a Purchaser which is not a Lender or an Affiliate thereof shall (unless each of the Borrower and the Administrative Agent otherwise consents) be in an amount not less than the lesser of (i) $5,000,000 or (ii) the remaining amount of the assigning Lender’s Commitment (calculated as at the date of such assignment) or outstanding Loans (if the applicable Commitment has been terminated).

12.3.2 Effect; Effective Date . Upon (i) delivery to the Administrative Agent of an assignment, together with any consents required by Section 12.3.1 , and (ii) payment of a $3,500 fee to the Administrative Agent for processing such assignment (unless such fee is waived by the Administrative Agent), such assignment shall become effective on the effective date specified in such assignment. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Borrower, the Lenders or the Administrative Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitments assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2 , the transferor Lender, the Administrative Agent and the Borrower shall, if the transferor Lender or the Purchaser desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as appropriate, replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.2.2 .

12.4 Assignment to Reflect Amended Commitments . The Lenders whose Commitments, after giving effect to this Agreement, are greater than their Commitment prior to giving effect to this Agreement (each an “Increasing Commitment Lender”) shall purchase, as an assignment from each Lender whose Commitment after giving effect to this Agreement is less than its Commitment prior to giving effect to this Agreement (each a “Decreasing Commitment Lender”), such portions of such Decreasing Commitment Lenders’ Loans outstanding at such time such that, after giving effect to such assignments, the respective Commitment of each Lender shall be equal to such Lender’s Commitment Percentage of the Aggregate Commitments. The purchase price for the Loans so assigned shall be the principal amount of the Loans so assigned plus the amount of accrued and unpaid interest thereon as of the date of assignment. Each Increasing Commitment Lender shall pay the aggregate purchase price payable by it to the Administrative Agent on the Agreement Date and the Administrative Agent shall promptly forward to each Decreasing Commitment Lender the portion thereof payable to it. Upon payment by an Increasing Commitment Lender of the purchase price payable by it to a Decreasing Commitment Lender, such Decreasing Commitment Lender shall be automatically deemed to have sold and made the applicable assignments to such Increasing Commitment Lender and shall, to the extent of the interest assigned, be released from its obligations under the Loan Documents, and such Increasing Commitment Lender shall be automatically deemed to have purchased and assumed such assignments from such Decreasing Commitment Lender and, if not already a Lender hereunder, shall be a party hereto and, to the extent of the interest assigned, have the rights and obligations of a Lender under the Loan Documents.

12.5 Dissemination of Information . The Borrower authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a “ Transferee ”) and any prospective Transferee any and all information in such Lender’s possession concerning the creditworthiness of the Borrower and its Subsidiaries, including without limitation any information contained in any Reports; provided that each Transferee and prospective Transferee agrees to be bound by Section 9.11 of this Agreement.

12.6 Tax Treatment . If any interest in any Loan Document is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 3.5(d) .

ARTICLE XIII

NOTICES

provisions of this Section 13.1 . Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Administrative Agent under Article II shall not be effective until received.

13.2 Change of Address . The Borrower, the Administrative Agent and any Lender may each change the address for service of notice upon it by a notice in writing to the other parties hereto.

ARTICLE XIV

COUNTERPARTS; EFFECTIVENESS; AMENDMENT AND RESTATEMENT OF
EXISTING CREDIT AGREEMENT

This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall become effective when (a) it has been executed by the Borrower, the Administrative Agent and the Lenders and each party has notified the Administrative Agent by facsimile transmission or telephone that it has taken such action and (b) the Borrower has paid all outstanding fees and other amounts payable by the Borrower to the Exiting Lenders in connection with the termination of each Exiting Lender’s rights and obligations under the Existing Credit Agreement.

ARTICLE XV

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

15.1 CHOICE OF LAW . THE RIGHTS AND DUTIES OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS UNDER THIS AGREEMENT AND THE NOTES (INCLUDING MATTERS RELATING TO THE MAXIMUM PERMISSIBLE RATE), AND THE OTHER LOAN DOCUMENTS SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

determined in accordance with the provisions of Article XIII , and service so made shall be deemed completed on the third Business Day after such service is deposited in the mail. Nothing herein shall affect the right of the Administrative Agent, any Lender or any other Indemnified Person to serve process in any other manner permitted by law or shall limit the right of the Administrative Agent, the Syndication Agent, any Documentation Agent, any Lender or any other Indemnified Person to bring proceedings against the Borrower in the courts of any other jurisdiction. Any judicial proceeding by the Borrower against the Administrative Agent or any Lender involving any Loan Document Related Claim shall be brought only in a court located in the City and State of New York.

15.3 WAIVER OF JURY TRIAL . THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY LOAN DOCUMENT RELATED CLAIM.

15.4 LIMITATION ON LIABILITY . TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, NEITHER THE ADMINISTRATIVE AGENT, NOR THE LENDERS NOR ANY OTHER INDEMNIFIED PERSON SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, AND TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, PUNITIVE DAMAGES SUFFERED BY THE BORROWER IN CONNECTION WITH ANY LOAN DOCUMENT RELATED CLAIM.

15.5 USA PATRIOT Act Notice . Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Patriot Act ”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative Agent have executed this Agreement as of the date first above written.


		WGL HOLDINGS, INC.

		By: /s/ Shelley C. Jennings

		Name: Shelley C. Jennings
		Title: Treasurer

		101 Constitution Ave. N.W.
		Washington, DC 20080

		Attention: Shelley C. Jennings, Treasurer
		Telephone: 202 624-6668
		Fax: 202 624-6655


Commitment
$46,571,000		WACHOVIA BANK, NATIONAL ASSOCIATION,
		as Administrative Agent and a Lender

		By: /s/ Dan Wolff

		Name: Dan Wolff
		Title: Vice President

		301 South College Street
		NC0760,
		Charlotte, NC 28288

		Attention: Shannan Townsend
		Telephone: 704 383-9580
		Fax: 704 383-6647


Commitment
$43,714,000		BANK OF TOKYO-MITSUBISHI UFJ TRUST
		COMPANY, as Syndication Agent and a Lender

		By: /s/ Nicholas R. Battista

		Name: Nicholas R. Battista
		Title: Vice President

		1251 Avenue of the Americas
		New York, New York 10020-1104

		Attention: Nicholas R. Battista
		Telephone: 212-782-4333
		Fax: 212-782-6440


Commitment
$42,286,000		CITIBANK, N.A., as a Documentation Agent and a Lender

		By: /s/ David E. Hunt

		Name: David E. Hunt
		Title: Attorney-in- Fact

		333 Clay Street, St. 3700
		Houston, Texas 77002

		Attention: David E. Hunt
		Telephone: 713 654-2829
		Fax: 713 481-0255


Commitment
$42,286,000		SUNTRUST BANK, as a Documentation Agent and a Lender

		By: Yann Pirio

		Name: Yann Pirio
		Title: Vice President

		Mail Code 1929, 303 Peachtree Street
		Atlanta, Georgia 30308

		Attention: Yann Pirio
		Telephone: 404 813-5498
		Fax: 404 827-6270


Commitment
$42,286,000		WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Documentation Agent and a Lender

		By: /s/ Jo Ann Vasquez

		Name: Jo Ann Vasquez
		Title: Vice President

		MAC T5002-090
		1000 Louisiana Street, 9 ^th Floor
		Houston, Texas 77002

		Attention: Jo Ann Vasquez
		Telephone: 713 319-1922
		Fax: 713 739-1087


Commitment
$38,571,000		THE BANK OF NEW YORK, as a Lender

		By: /s/ Richard A. Matthews

		Name: Richard A. Matthews
		Title: Vice President

		One Wall Street, 19th Floor
		New York, New York 10286

		Attention: John Watt
		Telephone: 212 635-7533
		Fax: 212 635-7923


Commitment
$38,571,000		JPMORGAN CHASE BANK, N.A., as a Lender

		By: /s/ Helen D. Davis

		Name: Helen D. Davis
		Title: Vice President

		10 South Dearborn Street, IL1-0090
		Chicago, Illinois 60603

		Attention: Helen D. Davis
		Telephone: 312 732-1759
		Fax: 312 732-1762


Commitment
$17,143,000		BANK OF AMERICA, N.A., as a Lender

		By: /s/ Jim Langley

		Name: Jim Langley
		Title: Vice President

		8300 Greensboro Drive
		Mezzanine Level
		McLean, Virginia 22102

		Attention: Jim Langley
		Telephone: 703 761-8356
		Fax: 704 719-8483


Commitment
$24,286,000		PNC BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ D. Jermaine Johnson

		Name: D. Jermaine Johnson
		Title: Vice President

		808 17 ^th Street NW
		Washington, D.C. 20006

		Attention: D. Jermaine Johnson
		Telephone: 202 835-5034
		Fax: 202 835-5977


Commitment
$24,286,000		BRANCH BANKING & TRUST COMPANY, as a Lender

		By: /s/ James E. Davis

		Name: James E. Davis
		Title: Senior Vice President

		8200 Greensboro Drive, Suite 1000
		McLean, Virginia 22102
		Attention: Divina S. Tamayo
		Telephone: 703-442-4038
		Fax: 703-442-4025


Commitment
$20,000,000		THE BANK OF NOVA SCOTIA, as a Lender

		By: /s/ Thane Rattew

		Name: Thane Rattew
		Title: Managing Director The Bank of Nova Scotia
		One Liberty Plaza, 26 ^th Floor
		New York, New York 10006

		Attention: Isabel Abella
		Telephone: 212-225-5305
		Fax: 212-225-5480


Commitment
$20,000,000		THE NORTHERN TRUST COMPANY, as a Lender

		By: /s/ Michael Kingsley

		Name: Michael Kingsley
		Title: Vice President

		50 South LaSalle Street
		Chicago, Illinois 60603

		Attention: Sharon Jackson
		Telephone: 312 630-1609
		Fax: 312 630-1566

Schedule 1.1

PRICING SCHEDULE


Applicable
Margin	Level I			Level II			Level III			Level IV			Level V
Eurodollar Base Rate Loans		0.110	%		0.130	%		0.150	%		0.190	%		0.270	%
Alternate Base Rate Loans		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%


Applicable
Facility Fee	Level I			Level II			Level III			Level IV			Level V
Facility Fee Rate		0.040	%		0.045	%		0.050	%		0.060	%		0.080	%


Applicable
Utilization Fee
Rate	Level I			Level II			Level III			Level IV			Level V
Utilization Fee Rate		0.025	%		0.025	%		0.050	%		0.050	%		0.050	%

For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule:

“ Level ” means Level I, Level II, Level III, Level IV or Level V, as applicable.

“ Level I ” exists at any date if, on such date, any two of the following ratings are in effect: the Moody’s Rating is Aa3 or higher, the S&P Rating is AA- or higher, and the Fitch’s Rating is AA- or higher.

“ Level II ” exists at any date if, on such date, any two of the following ratings are in effect: the Moody’s Rating is A1, the S&P Rating is A+, and the Fitch’s Rating is A+.

“ Level III ” exists at any date if, on such date, any two of the following ratings are in effect: the Moody’s Rating is A2, or the S&P Rating is A, and the Fitch’s Rating is A.

“ Level IV ” exists at any date if, on such date, any two of the following ratings are in effect: the Moody’s Rating is A3, or the S&P Rating is A-, and the Fitch’s Rating is A-.

“ Level V ” exists at any date if, on such date, the Moody’s Rating is less than A3, the S&P Rating is less than A-, and the Fitch’s Rating is less than A-.

“ Fitch’s Rating ” means, at any time, one level lower than the rating issued by Fitch and then in effect with respect to the Utility’s senior unsecured long-term debt securities without third party credit enhancement.

“ Moody’s Rating ” means, at any time, one level lower than the rating issued by Moody’s and then in effect with respect to the Utility’s senior unsecured long-term debt securities without third-party credit enhancement.

“ S&P Rating ” means, at any time, one level lower than the rating issued by S&P and then in effect with respect to the Utility’s senior unsecured long-term debt securities without third-party credit enhancement.

The Applicable Margin, the applicable Facility Fee Rate and the applicable Utilization Fee Rate shall be determined in accordance with the foregoing table based on the Borrower’s Level as determined from the then-current Fitch’s Rating, Moody’s Rating and S&P Rating. The credit rating in effect on any date for the purposes of this Schedule is that in effect at the close of business on such date. If at any time the Borrower has no Fitch’s Rating, no Moody’s Rating or no S&P Rating, Level V shall exist. If no two ratings are at the same Level, the Level of the intermediate rating shall apply.

Schedule 5.3

LITIGATION

NONE

Schedule 5.8

EMPLOYEE BENEFIT PLANS

The Utility provides certain health care and life insurance benefits for its retired employees. Substantially all employees of the Utility may become eligible for such benefits if they meet specified service requirements and attain retirement status under the Pension Plan while working for the Utility. The Borrower accounts for these benefits under the provisions of Statement of Financial Accounting Standards No. 106 entitled “Employers’ Accounting for Postretirement Benefits Other than Pensions.” Reference is made to Footnote 12 in the Borrower’s Annual Report to Shareholders for the fiscal year ended September 30, 2006, for the quantification of those liabilities.

Schedule 5.11

ENVIRONMENTAL MATTERS

The Utility received a letter from the property owner of a property adjacent to one of its former manufactured gas plant (MGP) sites, claiming that the owner has incurred additional expenses due to the presence of MGP wastes. The Utility responded to the letter, asking for additional information about the costs incurred and the actions taken, including whether or not the property owner has complied with the National Contingency Plan, and raising other possible defenses.

After receiving further correspondence from the property owner, the Utility responded that it does not believe that it has any liability for the expenses incurred in connection with the MGP wastes.

Schedule 5.13

SUBSIDIARIES

The Utility
Crab Run Gas Company
Hampshire Gas Company
Washington Gas Resources Corp.

(Subsidiaries of Washington Gas Resources Corp.)

Washington Gas Energy Services, Inc.
Washington Gas Energy Systems, Inc.
Washington Gas Credit Corp.

EXHIBIT 2.2.3

RATABLE BORROWING NOTICE

[Name and address of Administrative Agent
in accordance with Section 13.1]

Date:

Ladies and Gentlemen:

Reference is made to the Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank, and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Credit Agreement ”). Terms defined in the Credit Agreement that are not otherwise defined herein are used herein with the meanings therein ascribed to them. The undersigned hereby gives notice pursuant to Section 2.2.3 of the Credit Agreement of its request to have the following Ratable Loans made to it on [insert requested date of borrowing]:


Type of Loans ¹		Amount

[Please disburse the proceeds of the Ratable Loans by [insert requested method of disbursement].] ²

The undersigned represents and warrants that (a) the borrowing requested hereby complies with the requirements of Section 2.2.3 of the Credit Agreement and (b)


¹		Specify whether the Loans are Absolute Bid Rate Loans or Eurodollar Base Rate Loans and, if Eurodollar Base Rate Loans, the duration of the initial Interest Period applicable thereto (e.g., “1-mo. Eurodollar”).

²		Include and complete this sentence if the proceeds of the requested Ratable Loans are to be disbursed in a manner other than by credit to an account of the Borrower at the Administrative Agent’s address specified pursuant to Article XIII .

[except to the extent set forth on Annex A hereto,] ³ (i) each of the representations and warranties contained in Article V (other than the representations and warranties set forth in Sections 5.2(b), 5.3, 5.11(a), 5.11(b), 5.11 (c), 5.11(f), 5.11(g), 5.11(h) and 5.11(i) ) are true and correct as of the date hereof except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty was true and correct on and as of such earlier date and (except to the extent the undersigned gives notice to the Lenders to the contrary prior to 5:00 p.m. (New York time) on the Business Day before the requested date for the making of the Ratable Loans) will be true and correct at and as of the time the Ratable Loans are made, in each case both with and without giving effect to the Ratable Loans and the application of the proceeds thereof, and (ii) no Unmatured Default has occurred and is continuing as of the date hereof or would result from the making of the Ratable Loans or from the application of the proceeds thereof if the Ratable Loans were made on the date hereof, and (except to the extent the undersigned gives notice to the Lenders to the contrary prior to 5:00 p.m. (New York time) on the Business Day before the requested date for the making of the Ratable Loans) no Unmatured Default will have occurred and be continuing at the time the Ratable Loans are to be made or would result from the making of the Ratable Loans or from the application of the proceeds thereof.


	WGL HOLDINGS, INC.
	By:
		Name:
		Title:


³		If the representation and warranty in either clause (b)(i) or (b)(ii) would be incorrect, include the material in brackets and set forth the reasons such representation and warranty would be incorrect on an attachment labeled Annex A.

EXHIBIT 2.2.4

NOTICE OF CONVERSION OR CONTINUATION

[Name and address of Administrative Agent
in accordance with Section 13.1]

Date:

Ladies and Gentlemen:

Reference is made to the Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, Citibank, N.A., SunTrust Bank, and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Credit Agreement ”). The undersigned hereby gives notice pursuant to Section 2.2.4 of the Credit Agreement of its desire to convert or continue the Ratable Loans specified below into or as Ratable Loans of the Types and in the amounts specified below on [insert date of conversion or continuation]:


Loans to be Converted or Continued			Resulting Loans
Type of	Last Day of Current
Loans ¹	Interest Period ²	Amount	Type of Loans ¹	Amount

The undersigned represents and warrants that the conversions and continuations requested hereby comply with the requirements of the Credit Agreement.


	WGL HOLDINGS, INC.
	By:
		Name:
		Title:


¹		Specify whether the Loans are Alternate Base Rate Loans or Eurodollar Base Rate Loans and, if Eurodollar Base Rate Loans, the duration of the current Interest Period applicable thereto (e.g., “1-mo. Eurodollar”).

²		If the Loans are Eurodollar Base Rate Loans, specify the last day of the initial Interest Period applicable thereto

EXHIBIT 2.3.2

COMPETITIVE BID QUOTE REQUEST

(Section 2.3.2)

, ¹


To:		Wachovia Bank, National Association, as administrative agent (the “Administrative Agent”)


From:		WGL Holdings, Inc. (the “Borrower”)


Re:		Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank, and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Agreement ”)

1. Capitalized terms used herein have the meanings assigned to them in the Agreement.

2. We hereby give notice pursuant to Section 2.3.2 of the Agreement that we request Competitive Bid Quotes for the following proposed Competitive Bid Loan(s):

Borrowing Date: ,


	Principal Amount ²			Interest Period ³
	$

3. Such Competitive Bid Quotes should offer [a Competitive Bid Margin] [an Absolute Bid Rate]. ⁴


¹		Each Competitive Bid Quote Request must be received by the Administrative Agent no later than 11:00 a.m. at least five Business Days prior to the proposed Borrowing Date; provided that, a Competitive Bid Quote Request requesting an Absolute Bid Rate Auction does not need to be received by the Administrative Agent until no later than 10:00 a.m. at least one Business Day prior to the proposed Borrowing Date

²		Amount must be at least $5,000,000 and an integral multiple of $1,000,000.

³		One (1), two (2), three (3) or six (6) months (Eurodollar Auction) OR at least seven (7) and up to one hundred and eighty (180) days (Absolute Bid Rate Auction), subject to the provisions of the definitions of Eurodollar Interest Period and Absolute Bid Rate Interest Period.

⁴		The Borrower may request either a Competitive Bid Margin or an Absolute Bid Rate, but not both.

4. Upon acceptance by the undersigned of any or all of the Competitive Bid Loans offered by Lenders in response to this request, the undersigned shall be deemed to represent and warrant that (a) the borrowing requested hereby complies with the requirements of Section 2.3.2 of the Credit Agreement and (b) (i) each of the representations and warranties contained in Article V (other than the representations and warranties set forth in Sections 5.2(b), 5.3, 5.11(a), 5.11(b), 5.11(c), 5.11(f), 5.11(g), 5.11(h) and 5.11(i) ) are true and correct as of the date hereof except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty was true and correct on and as of such earlier date and (except to the extent the undersigned gives notice to the Administrative Agent to the contrary prior to 5:00 p.m. (New York time) on the Business Day before the requested date for the making of the Competitive Bid Loans) will be true and correct at and as of the time the Competitive Bid Loans are made, in each case both with and without giving effect to the Competitive Bid Loans and the application of the proceeds thereof, and (ii) no Unmatured Default has occurred and is continuing as of the date hereof or would result from the making of the Competitive Bid Loans or from the application of the proceeds thereof if the Competitive Bid Loans were made on the date hereof, and (except to the extent the undersigned gives notice to the Lenders to the contrary prior to 5:00 p.m. (New York time) on the Business Day before the requested date for the making of the Competitive Bid Loans) no Unmatured Default will have occurred and be continuing at the time the Competitive Bid Loans are to be made or would result from the making of the Competitive Bid Loans or from the application of the proceeds thereof.


		WGL HOLDINGS, INC.
		By:

		Name:

		Title:

EXHIBIT 2.3.3

INVITATION FOR COMPETITIVE BID QUOTES

(Section 2.3.3)


To:		Each of the Lenders party to the Agreement referred to below


Re:		Invitation for Competitive Bid Quotes to WGL Holdings, Inc. (the “Borrower”)

Pursuant to Section 2.3.3 of the Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Agreement ”), we are pleased on behalf of the Borrower to invite you to submit Competitive Bid Quotes to the Borrower for the following proposed Competitive Bid Loan(s):

Borrowing Date: ,


	Principal Amount			Interest Period
	$

Such Competitive Bid Quotes should offer [a Competitive Bid Margin] [an Absolute Bid Rate]. Your Competitive Bid Quote must comply with Section 2.3.4 of the Agreement and the foregoing. Capitalized terms used herein have the meanings assigned to them in the Agreement.

Please respond to this invitation by no later than 9:00 a.m. (New York time) on ___, ___.


		WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent
		By:

		Title:

EXHIBIT 2.3.4

COMPETITIVE BID QUOTE

(Section 2.3.4)


To:		Wachovia Bank, National Association, as Administrative Agent


Re:		Competitive Bid Quote to WGL Holdings, Inc. (the “Borrower”)

In response to your invitation on behalf of the Borrower dated , , we hereby make the following Competitive Bid Quote pursuant to Section 2.3.4 of the Agreement hereinafter referred to and on the following terms:

1. Quoting Lender:

2. Person to contact at Quoting Lender:

3. Borrowing Date: ¹

4. We hereby offer to make Competitive Bid Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates:

Principal

Interest

[Competitive

[Absolute

Minimum/Maximum

Amount ²

Period ³

Bid Margin ⁴ ]

Rate ⁵ ]

Amount ⁶

We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National


¹		As set forth in the Invitation for Competitive Bid Quotes.

²		Principal amount bid for each Interest Period may not exceed the principal amount requested. Bids must be made for at least $5,000,000 and an integral multiple of $1,000,000.

³		One (1), two (2), three (3) or six (6) months or at least seven ( 7 ) and up to one hundred and eighty (180) days, as specified in the related Invitation For Competitive Bid Quotes.

⁴		Competitive Bid Margin over or under the Eurodollar Base Rate determined for the applicable Interest Period. Specify percentage (rounded to the nearest 1/100 of 1%) and specify whether “PLUS” or “MINUS”.

⁵		Specify rate of interest per annum (rounded to the nearest 1/100 of 1%).

⁶		Specify minimum or maximum amount, if any, which the Borrower may accept (see Section 2.3.4(ii)(f) and (g)).

Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Agreement ”), irrevocably obligates us to make the Competitive Bid Loan(s) for which any offer(s) are accepted, in whole or in part. Capitalized terms used herein and not otherwise defined herein shall have their meanings as defined in the Agreement.


		Very truly yours,

		[NAME OF LENDER]

		By:

		Title:

EXHIBIT 2.6.2

COMMITMENT INCREASE SUPPLEMENT

THIS COMMITMENT INCREASE SUPPLEMENT is made and dated as of ______ ___, by and among [ADDITIONAL COMMITMENT LENDER] (the “Additional Commitment Lender”), WGL HOLDINGS, INC., and WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent, to the Amended and Restated Credit Agreement dated as of August 3, 2007 among Washington Gas Light Company, the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Credit Agreement ”). Terms used and not otherwise defined herein are used herein with the meanings therein ascribed thereto in the Credit Agreement.

WHEREAS, the Borrower desires to have the Aggregate Commitments increased; and

WHEREAS, the Additional Commitment Lender is willing to [become an additional Lender][increase its Commitment];

NOW, THEREFORE, the parties hereto agree as follows:

1. Upon the effectiveness of this Commitment Increase Supplement, [the Additional Commitment Lender shall be a party to the Credit Agreement and shall be entitled to all of the rights, and be subject to all of the obligations, of a Lender under the Credit Agreement] [the Commitment of the Additional Commitment Lender shall be increased from $___to $___.][The initial amount of the Additional Commitment Lender’s Commitment shall be $___.] ¹

2. The Additional Commitment Lender acknowledges, and agrees to comply with, its obligation under Section 2.6.2 of the Credit Agreement to purchase assignments of Ratable Loans from the other Lenders on the effective date hereof.

3. This Commitment Increase Supplement shall become effective upon the execution and delivery hereof by the Additional Commitment Lender, the Borrower and the Administrative Agent, which Commitment Increase Supplement is subject to the consent of the Administrative Agent.

4. This Commitment Increase Supplement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

5. The rights and duties of the parties to this Commitment Increase Supplement shall, pursuant to New York General Obligations Law Section 5-1401, be governed by the law of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused this Commitment Increase Supplement to be executed as of the day and year first written above.


	[ADDITIONAL COMMITMENT LENDER]
	By:
		Name:
		Title:

	WGL HOLDINGS, INC.
	By:
		Name:
		Title:

	WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent
	By:
		Name:
		Title:

EXHIBIT 2.9

NOTICE OF PREPAYMENT

[Name and address of Administrative Agent
in accordance with Section 13.1]

Date:

Ladies and Gentlemen:

Reference is made to the Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Credit Agreement ”). The undersigned hereby gives notice pursuant to Section 2.9 of the Credit Agreement that it will prepay the Ratable Loans specified below on [insert date of prepayment]:


	Last Day of
	Current
Type of Loans ¹	Interest Period	Amount

The undersigned represents and warrants that the prepayment requested hereby complies with the requirements of the Credit Agreement.


	WGL HOLDINGS, INC.
	By:
		Name:
		Title:


¹		Specify whether the Loans are Alternate Base Rate Loans or a Eurodollar Base Rate Loans and, if Eurodollar Base Rate Loans, the duration of the current Interest Period applicable thereto (e.g., “1-mo. Eurodollar”)

EXHIBIT 2.13-1

RATABLE NOTE

[Date]

WGL Holdings, Inc., a Virginia and corporation (the “ Borrower ”), promises to pay to the order of (the “ Lender ”) the aggregate unpaid principal amount of all Ratable Loans made by the Lender to the Borrower pursuant to Section 2.2 of the Agreement (as hereinafter defined), in immediately available funds at the place, in the type of money and funds, and in the manner specified in Section 2.12 of the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Ratable Loans in full on the day one year after the date such Ratable Loan was made, unless the Borrower’s Board of Directors, by a written resolution, has authorized such Ratable Loan to be outstanding for a term in excess of one year, in which case such Ratable Loan shall mature and become due and payable, and shall be repaid by the Borrower, in full on the date fixed by such written resolution, but in no event later than on the Facility Termination Date, or, if the Borrower exercises the Term-Out Option pursuant to Section 2.8 of the Agreement, the day one year after the Facility Termination Date.

The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Ratable Loan and the date and amount of each principal payment hereunder.

Presentment, demand, protest, notice of dishonor and notice of intent to accelerate are hereby waived by the undersigned.

This Ratable Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Agreement ”), to which Agreement reference is hereby made for a statement of the terms and conditions governing this Ratable Note, including the terms and conditions under which this Ratable Note may be prepaid or its maturity date accelerated. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.

This Ratable Note shall, pursuant to New York General Obligations Law Section 5-1401, be governed by the law of the State of New York.


		WGL HOLDINGS, INC.

		By:

		Print Name:

		Title:

SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL

RATABLE NOTE OF WGL HOLDINGS, INC.,

DATED _________,


	Principal	Maturity	Principal
	Amount of	of Interest	Amount	Unpaid
Date	Loan	Period	Paid	Balance

EXHIBIT 2.13-2

COMPETITIVE BID NOTE

[Date]

WGL Holdings, Inc., a Virginia corporation (the “ Borrower ”), promises to pay to the order of (the “ Lender ”) the aggregate unpaid principal amount of all Competitive Bid Loans made by the Lender to the Borrower pursuant to Section 2.3 of the Agreement (as hereinafter defined), in immediately available funds at the place, in the type of money and funds, and in the manner specified in Section 2.12 of the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on each Competitive Bid Loan in full on the last day of the Interest Period applicable thereto.

The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Competitive Bid Loan and the date and amount of each principal payment hereunder.

Presentment, demand, protest, notice of dishonor and notice of intent to accelerate are hereby waived by the undersigned.

This Competitive Bid Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Agreement ”), to which Agreement reference is hereby made for a statement of the terms and conditions governing this Competitive Bid Note, including the terms and conditions under which this Competitive Bid Note may be prepaid or its maturity date accelerated. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.

This Competitive Bid Note shall, pursuant to New York General Obligations Law Section 5-1401, be governed by the law of the State of New York.


		WGL HOLDINGS, INC.

		By:

		Print Name:

		Title:

SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL

COMPETITIVE BID NOTE OF WGL HOLDINGS, INC.,

DATED ,


	Principal	Maturity	Principal
	Amount of	of Interest	Amount	Unpaid
Date	Loan	Period	Paid	Balance

EXHIBIT 4.1(e)

FORM OF OPINION

, 2005

The Administrative Agent and the Lenders who are parties to the
Amended and Restated Credit Agreement described below.

Gentlemen/Ladies:

As Vice President and General Counsel for WGL Holdings, Inc. (the “Borrower”), I have represented the Borrower in connection with its execution and delivery of an Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Agreement ”). All capitalized terms used in this opinion and not otherwise defined herein shall have the meanings attributed to them in the Agreement.

I have examined the Borrower’s Articles of Incorporation, Bylaws, Board Resolutions, and regulatory authorizations, the Loan Documents and such other matters of fact and law which I deem necessary in order to render this opinion. Based upon the foregoing, it is my opinion that:

1. Each of the Borrower and its Subsidiaries is a corporation, partnership or limited liability company duly and properly incorporated or organized, as the case may be, validly existing and (to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted.

2. The execution and delivery by the Borrower of the Loan Documents and the performance by the Borrower of its obligations thereunder have been duly authorized by proper corporate proceedings on the part of the Borrower and will not:

(a) require any consent of the Borrower’s shareholders (other than any such consent as has already been given and remains in full force and effect);

(b) violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower or any of its Subsidiaries or (ii) the Borrower’s or any Subsidiary’s articles or certificate of incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, by-laws, or operating or other management agreement, as the case may be, or (iii) the provisions of any indenture, instrument or agreement to which the Borrower or any of its Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder; or

(c) result in, or require, the creation or imposition of any Lien in, of or on the Property of the Borrower or a Subsidiary pursuant to the terms of any indenture, instrument or agreement binding upon the Borrower or any of its Subsidiaries.

3. The Loan Documents have been duly executed and delivered by the Borrower and constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and subject also to the availability of equitable remedies if equitable remedies are sought.

4. There is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the best of my knowledge after due inquiry, threatened against the Borrower or any of its Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect.

5. The Borrower has obtained each order, consent, adjudication, approval, license, authorization and validation from, and has made each filing, recording or registration with (or has obtained exemption by, or other action in respect of) any governmental or public body or authority, or any subdivision thereof, which is required to be obtained or made, as the case may be, by the Borrower in connection with the execution and delivery of the Loan Documents, the borrowings under the Agreement, the payment and performance by the Borrower of the Obligations, or the legality, validity, binding effect or enforceability of any of the Loan Documents.

This opinion may be relied upon by the Administrative Agent, the Lenders and their participants, assignees and other transferees.

Very truly yours,

EXHIBIT 4.2

COMPLIANCE CERTIFICATE


To:		The Lenders parties to the Amended and Restated Credit Agreement Described Below

This Compliance Certificate is furnished pursuant to that certain Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Agreement ”). Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am the duly elected of the Borrower;

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

3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Unmatured Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and

4. Schedule I attached hereto sets forth financial data and computations evidencing the Borrower’s compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct.

**[5. Schedule II attached hereto sets forth the various reports and deliveries which are required at this time under the Credit Agreement and the other Loan Documents and the status of compliance.]**

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

The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this day of , .


		By

		Name:
		Title:

SCHEDULE I TO COMPLIANCE CERTIFICATE

Compliance as of ___, ___with
Provisions of ___and ___of
the Agreement

SCHEDULE II TO COMPLIANCE CERTIFICATE

REPORTS AND DELIVERIES CURRENTLY DUE

EXHIBIT 12.3.1

ASSIGNMENT AGREEMENT

THIS ASSIGNMENT AGREEMENT (THIS “ ASSIGNMENT AGREEMENT ”) BETWEEN ______ (THE “ ASSIGNOR ”) AND ______(THE “ ASSIGNEE ”) IS DATED AS OF ___, ______. THE PARTIES HERETO AGREE AS FOLLOWS:

1. PRELIMINARY STATEMENT . The Assignor is a party to an Amended and Restated Credit Agreement (which, as it may be amended, modified, renewed or extended from time to time, is herein called the “ Credit Agreement ”) described in Item 1 of Schedule 1 attached hereto (“ Schedule 1 ”). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement.

2. ASSIGNMENT AND ASSUMPTION . The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor’s rights and obligations under the Credit Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The amount of the Aggregate Commitments (or Loans, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1.

3. EFFECTIVE DATE . The effective date of this Assignment Agreement (the “ Effective Date ”) shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Administrative Agent) after this Assignment Agreement, together with any consents required under the Credit Agreement, are delivered to the Administrative Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date.

4. PAYMENT OBLIGATIONS . In consideration for the sale and assignment of Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Administrative Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Loans and fees received from the Administrative Agent which relate to the portion of the Commitment or Loans assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Administrative Agent or the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto.

5. RECORDATION FEE . The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Administrative Agent in connection with this Assignment Agreement unless otherwise specified in Item 6 of Schedule 1.

6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR’S LIABILITY . The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor and (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Borrower or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of the Borrower, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents.

7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE . The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (vi) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vii) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys’ fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee’s non performance of the obligations assumed under this Assignment Agreement, and (vii) if applicable, attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes.

8. GOVERNING LAW . Pursuant to Section 5-1401 of the New York General Obligation Law, this Assignment Agreement shall be governed by, and shall be construed in accordance with, the law of the State of New York.

9. NOTICES . Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the addresses set forth in Schedule 1.

10. COUNTERPARTS; DELIVERY BY FACSIMILE . This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement.

IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement as of the date first above written.


		[NAME OF ASSIGNOR]

		By:

		Name:
		Title:

		[NAME OF ASSIGNEE]

		By:

		Name:
		Title:

Consented to by:

WGL HOLDINGS, INC.


By:

Name:
Title:

WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent

By:

Name:
Title:

SCHEDULE 1

to Assignment Agreement

1. Description and Date of Credit Agreement: Amended and Restated Credit Agreement dated as of August 3, 2007 among WGL Holdings, Inc., the Lenders parties thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of Tokyo-Mitsubishi UFJ Trust Company, as Syndication Agent, Citibank, N.A., SunTrust Bank and Wells Fargo Bank, National Association, as Documentation Agents (as amended, supplemented or otherwise modified from time to time through the date hereof, the “ Credit Agreement ”)

2.		Date of Assignment Agreement: ___,___

3.		Amounts (As of Date of Item 2 above):


	a.	Assignee’s percentage of the Assignee’s Loans purchased under the Assignment Agreement**		%


	b.	Amount of the Assignee’s Loans purchased under the Assignment Agreement***	$


4.	Assignee’s Commitment (or Loans with respect to terminated Commitments) purchased hereunder:		$


5.	Proposed Effective Date:


6.	Assignee Address Information

7.	Assignor Address Information

Exhibit 10.3

EXECUTION COPY

AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF AUGUST 3, 2007

AMONG

WASHINGTON GAS LIGHT COMPANY,

THE LENDERS PARTIES HERETO,

WACHOVIA BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT,

BANK OF TOKYO-MITSUBISHI UFJ TRUST COMPANY,

AS SYNDICATION AGENT,

CITIBANK, N.A.,
SUNTRUST BANK
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS DOCUMENTATION AGENTS,

AND

WACHOVIA CAPITAL MARKETS, LLC,
AS LEAD ARRANGER AND BOOK RUNNER

TABLE OF CONTENTS


			Page
ARTICLE I INTERPRETATION				1
	1.1	Definitions		1
	1.2	Other Interpretive Provisions		14

ARTICLE II CREDIT FACILITY				14
	2.1	The Facility		14
		2.1.1 Amount of Facility		14
		2.1.2 Availability of Facility		15
		2.1.3 Repayment of Facility		15
	2.2	Ratable Loans		15
		2.2.1 Commitment to Lend		15
		2.2.2 Types of Ratable Loans		15
		2.2.3 Method of Selecting Types and Interest Periods for Ratable Loans		15
		2.2.4 Conversion and Continuation of Outstanding Loans.		16
	2.3	Competitive Bid Loans		17
		2.3.1 Competitive Bid Option		17
		2.3.2 Competitive Bid Quote Request		17
		2.3.3 Invitation for Competitive Bid Quotes		18
		2.3.4 Submission and Contents of Competitive Bid Quotes		18
		2.3.5 Notice to Borrower		19
		2.3.6 Acceptance and Notice by Borrower		19
		2.3.7 Allocation by Administrative Agent		20
		2.3.8 Administration Fee		21
	2.4	Funding by Lenders; Disbursement to the Borrower		21
		2.4.1 Ratable Loans		21
		2.4.2 Competitive Bid Loans		21
	2.5	Fees		21
		2.5.1 Facility Fee		21
		2.5.2 Utilization Fee		22
	2.6	Reductions in Aggregate Commitments; Increases in Aggregate Commitments		22
		2.6.1 Reductions		22
		2.6.2 Increases		22
	2.7	Extension Option		23
	2.8	Term-Out Option		23
	2.9	Repayments; Optional Principal Prepayments		24
	2.10	Changes in Interest Rate, etc		24
	2.11	Rates Applicable After Default		25
	2.12	Method of Payment		25
	2.13	Evidence of Indebtedness		26
	2.14	Telephonic Notices		26
	2.15	Interest Payment Dates; Interest and Fee Basis		26


			Page
	2.16	Notification of Loans, Interest Rates, Prepayments and Commitment Reductions		27
	2.17	Lending Installations		27
	2.18	Non-Receipt of Funds by the Administrative Agent		27
	2.19	Maximum Interest Rate		28

ARTICLE III YIELD PROTECTION; TAXES				28
	3.1	Yield Protection		28
	3.2	Changes in Capital Adequacy Regulations		29
	3.3	Availability of Types of Loans		29
	3.4	Funding Indemnification		29
	3.5	Taxes.		30
	3.6	Lender Statements; Survival of Indemnity		31

ARTICLE IV CONDITIONS PRECEDENT				32
	4.1	Initial Loan		32
	4.2	Each Loan		33

ARTICLE V REPRESENTATIONS AND WARRANTIES				33
	5.1	Corporate Existence		34
	5.2	Financial Condition		34
	5.3	Litigation.		34
	5.4	No Breach		34
	5.5	Corporate Action		35
	5.6	Regulatory Approval		35
	5.7	Regulations U and X		35
	5.8	Pension and Welfare Plans		35
	5.9	Accuracy of Information		35
	5.10	Taxes		36
	5.11	Environmental Warranties		36
	5.12	Investment Company Act		37

ARTICLE VI COVENANTS				37
	6.1	Financial Statements		37
	6.2	Litigation		39
	6.3	Corporate Existence, Compliance with Laws, Taxes, Examination of Books, Insurance, etc		39
	6.4	Use of Proceeds		39
	6.5	Environmental Covenant		39
	6.6	Financial Covenant		40
	6.7	Local Regulatory Commission Approval		40

ARTICLE VII EVENTS OF DEFAULT				40

ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES				42
	8.1	Acceleration		42
	8.2	Amendments		42


			Page
	8.3	Preservation of Rights		43

ARTICLE IX GENERAL PROVISIONS				43
	9.1	Survival of Representations		43
	9.2	Governmental Regulation		43
	9.3	Headings		44
	9.4	Entire Agreement		44
	9.5	Several Obligations; Benefits of this Agreement		44
	9.6	Expenses; Indemnification.		44
	9.7	Numbers of Documents		45
	9.8	Accounting		45
	9.9	Severability of Provisions		45
	9.10	Nonliability of Lenders		45
	9.11	Confidentiality		46
	9.12	Disclosure		46
	9.13	Rights Cumulative		46
	9.14	Syndication Agent; Documentation Agents		46

ARTICLE X THE ADMINISTRATIVE AGENT				46
	10.1	Appointment; Nature of Relationship		46
	10.2	Powers		47
	10.3	General Immunity		47
	10.4	No Responsibility for Loans, Recitals, etc		47
	10.5	Action on Instructions of Lenders		47
	10.6	Employment of Agents and Counsel		48
	10.7	Reliance on Documents; Counsel		48
	10.8	Administrative Agent’s Reimbursement and Indemnification		48
	10.9	Notice of Default		48
	10.10	Rights as a Lender		49
	10.11	Lender Credit Decision		49
	10.12	Successor Administrative Agent		49
	10.13	Administrative Agent and Arranger Fees		50
	10.14	Delegation to Affiliates		50

ARTICLE XI SETOFF; RATABLE PAYMENTS				50
	11.1	Setoff		50
	11.2	Ratable Payments		50

ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS				51
	12.1	Successors and Assigns		51
	12.2	Participations		51
		12.2.1 Permitted Participants; Effect		51
		12.2.2 Voting Rights		51
		12.2.3 Benefit of Setoff		52
		12.2.4 Benefit of Certain Provisions		52
	12.3	Assignments		53
		12.3.1 Permitted Assignments		53

iii


			Page
		12.3.2 Effect; Effective Date		53
	12.4	Assignment to Reflect Amended Commitments		53
	12.5	Dissemination of Information		54
	12.6	Tax Treatment		54

ARTICLE XIII NOTICES				54
	13.1	Notices		54
	13.2	Change of Address		55

ARTICLE XIV COUNTERPARTS; EFFECTIVENESS; AMENDMENT AND RESTATEMENT OF EXISTING CREDIT AGREEMENT				55

ARTICLE XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL				55
	15.1	CHOICE OF LAW		55
	15.2	CONSENT TO JURISDICTION		55
	15.3	WAIVER OF JURY TRIAL		56
	15.4	LIMITATION ON LIABILITY		56
	15.5	USA PATRIOT Act Notice		56


SCHEDULES

Schedule 1.1		Pricing Schedule
Schedule 5.3		Litigation
Schedule 5.8		Employee Benefit Plans
Schedule 5.11		Environmental Matters

EXHIBITS

EXHIBIT 2.2.3		Form of Ratable Borrowing Notice
EXHIBIT 2.2.4		Form of Notice of Conversion or Continuation
EXHIBIT 2.3.2		Form of Competitive Bid Quote Request
EXHIBIT 2.3.3		Form of Invitation for Competitive Bid Quotes
EXHIBIT 2.3.4		Form of Competitive Bid Quote
EXHIBIT 2.6.2		Form of Commitment Increase Supplement
EXHIBIT 2.9		Form of Notice of Prepayment
EXHIBIT 2.13-1		Form of Ratable Note
EXHIBIT 2.13-2		Form of Competitive Bid Note
EXHIBIT 4.1(e)		Form of Opinion
EXHIBIT 4.2		Form of Compliance Certificate
EXHIBIT 12.3.1		Form of Assignment Agreement

AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 3, 2007 (the “ Agreement ”), among WASHINGTON GAS LIGHT COMPANY, as Borrower, the financial institutions from time to time parties hereto, as LENDERS, WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent, BANK OF TOKYO-MITSUBISHI UFJ LTD. TRUST COMPANY as SYNDICATION AGENT, and CITIBANK, N.A., SUNTRUST BANK and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agents.

RECITALS

WHEREAS, the Borrower has requested, and the Lenders have agreed, that the Existing Credit Agreement be amended and restated in its entirety pursuant to this Agreement;

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

INTERPRETATION

1.1 Definitions . As used in this Agreement:

“ Absolute Bid Rate Auction ” means a solicitation of Competitive Bid Quotes setting forth Absolute Bid Rates pursuant to Section 2.3 .

“ Absolute Bid Rate Loan ” means a Loan which bears interest at an Absolute Bid Rate.

“ Additional Commitment Lender ” is defined in Section 2.6.2 .

“ Aggregate Commitments ” means the aggregate of the Commitments of all the Lenders, in the initial aggregate amount of $300,000,000, as increased or decreased from time to time pursuant to the terms hereof.

“ Agreement ” means this Agreement, including all schedules, annexes and exhibits hereto.

“ Agreement Date ” means August 3, 2007.

“ Alternate Base Rate Loan ” means a Loan which, except as otherwise provided in Section 2.10 , bears interest at the Alternate Base Rate.

“ Arranger ” means WCMLLC.

“ Authorized Officer ” means any of the Vice President and Chief Financial Officer, Vice President and General Counsel, or the Treasurer of the Borrower, acting singly.

“ Bankruptcy Code ” means the United States Bankruptcy Code (11 U.S.C. §101 et seq.).

“ Borrower ” means Washington Gas Light Company, a Virginia and District of Columbia corporation.