form10-k.htm

Exhibit 10.21

SEPARATION AGREEMENT AND GENERAL RELEASE

THIS SEPARATION AGREEMENT AND GENERAL RELEASE (“Agreement”) is made and entered into on September 12, 2007, by and between Barry C. Cooper (hereinafter “Cooper” or “you” or “your”), a Missouri resident, and The Laclede Group, Inc.; and its current and former agents; officers; employees; directors; divisions; subsidiaries, including but not limited to those entities listed on Appendix A; affiliates; representatives; attorneys; successors and assigns (hereinafter collectively “Laclede”). For and in consideration of the following promises, the parties agree to the following:

RECITALS

WHEREAS, Cooper currently serves Laclede in the positions indicated on Appendix A; and

WHEREAS, Cooper has agreed to resign from all the positions indicated on Appendix A at the end of the day on September 30, 2007 (the “Separation Date”), meaning that Cooper will no longer be employed by Laclede in any capacity starting on October 1, 2007; and,

WHEREAS, Cooper has agreed to resign from the positions indicated on Appendix A to pursue other business interests; and,

WHEREAS, Cooper and Laclede desire to resolve any and all issues between them, actual or potential; and

WHEREAS, Cooper and Laclede desire to enter into a full and final settlement of all matters between Cooper and Laclede, including, but not limited to, any issues which might arise out of Cooper’s separation from Laclede.

NOW THEREFORE, for and in consideration of the releases, covenants and undertakings hereinafter set forth, and for other good and valuable consideration, which each party hereby acknowledges, it is agreed as follows:

Payments and Benefits. Laclede will make the payments and provide the benefits described below in consideration and in exchange for Cooper’s promises, agreements, releases, and obligations set out below, so long as Cooper submits this Agreement properly executed to Laclede on or before September 25, 2007, and adheres to the promises and agreements set out in the balance of this Agreement. Cooper, however, will not be eligible for participation in any bonus or equity programs or any other benefits except as outlined in this Agreement, following the Separation Date.

(A)

Payments. Laclede will pay Cooper twelve (12) monthly installments, each in an amount equal to Cooper’s regular salary of Twenty Thousand, Three Hundred Seventy-Five Dollars and No Cents ($20,375.00) per month, less withholdings, with the first installment to be paid on November 1, 2007, and the last installment to be paid on October 1, 2008, resulting in total payments, before withholdings, of Two Hundred Forty-Four Thousand, Five Hundred Dollars and No Cents ($244,500.00).

(B)

Annual Incentive Plan. Pursuant to Laclede’s Annual Incentive Plan, Cooper will receive a bonus for the fiscal year 2007 if the Compensation Committee of The Laclede Group, Inc. (the “Committee”), in its sole discretion, determines that the Annual Incentive Plan is funded and that Cooper has sufficiently attained his objectives for the fiscal year 2007 under the Annual Incentive Plan. Should the Committee determine that Cooper is entitled to a bonus for the fiscal year 2007, the Committee will act with its sole discretion to determine the amount of Cooper’s bonus. Notwithstanding the terms of this Agreement, Cooper acknowledges and agrees that, at all times, the Committee has had and continues to retain the sole discretion to determine whether Cooper is entitled to a bonus for the fiscal year 2007 and the amount of any such bonus to be paid to Cooper.

(C)	Unused Vacation Time. Laclede will pay Cooper the cash value, less appropriate withholdings, of any unused 2007 vacation time preceding the Separation Date. Payment under this Subparagraph will be made in a lump sum amount with Cooper’s initial installment described in Subparagraph 1(A), above.

(D)

Outplacement Benefits. Laclede will pay and arrange for the services of an outplacement firm, which Laclede will choose based on Laclede’s sole discretion, to be provided for Cooper for no more than one (1) year following the Separation Date. Should Cooper accept a position of employment prior to the end of one (1) year following his Separation Date, Laclede will discontinue paying for the outplacement benefits described herein. Accordingly, Cooper agrees to notify Laclede in writing if and when he accepts a position of employment within one (1) year of his Separation Date.

(E)

Acknowledgment of Consideration. Cooper acknowledges and agrees the payments referenced in Paragraph 1 and Subparagraphs 1(A), 1(B), 1(C), and 1(D) of this Agreement are valuable consideration to him and that he would not otherwise be entitled to such consideration absent his execution of this Agreement and the promises set forth herein.

Resignation. By executing this Agreement, the parties acknowledge that Cooper has submitted his resignation, effective at the end of the day on the Separation Date, for all his positions with Laclede, as listed in Appendix A, and that Laclede has accepted Cooper’s resignation of those positions, effective at the end of the day on the Separation Date.

Health Insurance Continuation. Pursuant to the provisions of the Internal Revenue Code of 1986, as amended, and the Employee Retirement Income Security Act of 1974, as amended, commonly referred to as “COBRA,” Laclede will provide the required COBRA notification within fourteen (14) days of the Separation Date and the COBRA benefit entitlement period of eighteen (18) months shall commence to run effective on October 1, 2007. Cooper’s existing insurance coverage will expire at the end of the day on September 30, 2007. Cooper and any of his eligible dependents, as applicable, may elect COBRA coverage under the provisions of COBRA on October 1, 2007. Should Cooper or any of his eligible dependents elect COBRA coverage, Cooper will be solely responsible for the full cost of premiums associated with any such election.

Equity Incentive Plan. By executing this Agreement, Cooper acknowledges that all non-qualified stock options granted to him by Laclede will be forfeited if not exercised as of the end of the day on the Separation Date. Furthermore, Cooper acknowledges that he shall forfeit any and all right to the ownership of performance-contingent restricted stock (“PCRS”) previously granted to him by Laclede, effective at the end of the day on the Separation Date. Following the dividend payment date of October 1, 2007, Cooper will neither accrue nor receive any further dividend payments of any kind in connection with the PCRS previously granted to him by Laclede.

5.	Vesting in Retirement Plans. As of the Separation Date, Cooper will be vested pursuant to the Employees’ Retirement Plan and the Supplemental Retirement Benefit Plan of Laclede Gas Company, provided however, that Cooper’s employment with Laclede continues through September 30, 2007.

Deferred Income Plan II. In accordance with the terms of Laclede’s Deferred Income Plan II (the “DIP”), Cooper will no longer be eligible to participate in the DIP following the Separation Date. Pursuant to the terms and conditions of the DIP, Cooper will receive a single payment equal to the amount of his existing deferrals, plus interest, at the Moody’s rate applicable to each plan year, minus applicable taxes, within thirty-one (31) days of the Separation Date.

Release of Claims. In exchange for the receipt of the payments set out in the foregoing paragraphs of this Agreement, and for his promises set out herein, Cooper, for and on behalf of Cooper and Cooper’s heirs, beneficiaries, executors, administrators, successors, assigns, and anyone claiming through or under any of the foregoing, hereby agrees to, and does, remise, release and forever discharge Laclede from any and all matters, claims, demands, damages, causes of action, debts, liabilities, controversies, judgments and suits of every kind and nature whatsoever, foreseen or unforeseen, known or unknown, which have arisen or could arise between Cooper and Laclede from matters, actions, or inactions which occurred prior to or on the Separation Date, which matters include but are not limited to Cooper’s separation from employment with Laclede, and matters arising from the offer and acceptance of this Agreement. Cooper understands that the provisions of this Paragraph mean that he cannot bring a lawsuit against Laclede for any reason.

Agreement Not to File Suit or Other Claims. In exchange for the receipt of the consideration, payments, and promises set out in this Agreement above, Cooper, for and on behalf of Cooper and Cooper’s beneficiaries, executors, administrators, successors, assigns, and anyone claiming through or under any of the foregoing, agree that they will not file or otherwise submit any charge, claim, complaint, or action to any agency, court, organization, or judicial forum (nor will Cooper permit any person, group of persons, or organization to take such action on Cooper’s behalf) against Laclede arising out of any actions or non-actions on the part of Laclede arising before or on the Separation Date.Cooper further agrees that in the event that any person or entity should bring such a charge, claim, complaint, or action on his behalf, he hereby waives and forfeits any right to recovery under said claim and will exercise every good faith effort (but will not be obliged to incur any expense) to have such claim dismissed. The provisions of this Paragraph and Paragraph 9, below, shall not be construed to prevent Cooper from filing a charge with the Equal Employment Opportunity Commission (“EEOC”), only to the extent he is permitted to do so by law, notwithstanding the provisions of this Agreement to the contrary. However, Cooper expressly waives and disclaims any right to compensation or other benefit which may inure to him as a result of any such charge and hereby expressly agrees to provide any such benefit or pay any such compensation directly to Laclede. Cooper understands that the provisions of this Paragraph mean that he cannot bring a lawsuit against Laclede for any reason.

Claims Covered by Agreement. The charges, claims, complaints, matters, demands, damages, and causes of action referenced in Paragraphs 7 and 8 above include, but are not limited to, (i) any breach of an actual or implied contract of employment between Cooper and Laclede, (ii) any claim of unjust, wrongful, or tortious discharge (including any claim of fraud, negligence, retaliation for whistleblowing, or intentional infliction of emotional distress), (iii) any claim of defamation or other common-law action, (iv) any claim related to the issuance or non-issuance of stock, or (v) any claims of violations arising under whistleblower employee protection provisions of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A, the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e etseq., the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Age Discrimination in Employment Act, 29 U.S.C. § 621 etseq., (including but not limited to the Older Worker’s Benefit Protection Act), the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 etseq., the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 etseq., the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 etseq., the Family and Medical Leave Act, 29 U.S.C. § 2601, the Employee Retirement Income Security Act, 29 U.S.C. § 1001, etseq. or the Missouri Human Rights Act, R.S. Mo. § 213.010, et.seq., the Missouri Service Letter Statute, R.S. Mo. § 290.140, the Missouri Employment Security Act, R.S. Mo. § 288.010, et seq., retaliation for exercise of rights Under the Missouri Worker’s Compensation Act, R.S. Mo.§ 287.010 et seq.; the Missouri Aids Act, R.S.Mo. § 191.6665, etseq., as amended; the Missouri Equal Pay Law, R.S.Mo. § 290.400-290.460 etseq., as amended; the Missouri Handicap Discrimination Statute, R.S.Mo. § 209.150, 290.160, 290.162, and 209.180 etseq., as amended; the Missouri Genetic Testing Information Bias Law, R.S.Mo. § 375.1300, 375.1303, 375.1306 and 375.1309 etseq., as amended; the Missouri Smokers Rights Law, R.S.Mo. § 290.145 et

seq., as amended, or any other federal, state, or local statutes or ordinances or common laws, or any claims for pay, vacation pay, insurance, or welfare benefits or any other benefits of employment with Laclede arising from events occurring prior to or on the Separation Date other than those payments and benefits specifically provided herein.

10.	Release of Benefit Claims. In exchange for the monetary payments and benefits described in Paragraph 1 and Subparagraphs 1(A), 1(B), 1(C), and 1(D) Cooper further releases and waives any claim for any type of compensation or employee benefits with Laclede.

11.

Representations and Warranties Regarding the FMLA, FLSA, and Sarbanes-Oxley Act. Cooper represents and warrants that he is not aware of any circumstances that might entitle Cooper to a leave of absence under the Family and Medical Leave Act (“FMLA”) or any fact which might justify a claim against Laclede for violation of the FMLA. Cooper represents and warrants further that Cooper has received any and all wages and commissions for work performed and all overtime compensation and FMLA leave to which Cooper may have been entitled, and that Cooper is not currently aware of any facts or circumstances constituting a violation by Laclede of the FMLA, FLSA, or the Sarbanes-Oxley Act. Cooper specifically warrants that he has discussed this issue and all underlying facts with his attorney and in consultation with Cooper’s attorney, makes these representations.

12.

Confidentiality of Agreement. Notwithstanding Laclede’s duty to comply with Securities Exchange Commission (“SEC”) public disclosure requirements, in exchange for the receipt of the payments set out above, Cooper agrees that he will not publicize this Agreement directly, either in specific or as to general content, to either the public generally, to any employee or agent of Laclede, or to any other person or entity, except as Cooper might be lawfully compelled to give testimony by court or federal agency process, lawful deposition, interrogatory, or arbitrator of competent jurisdiction, or to participate in an EEOC, SEC, or other federal agency investigation. Furthermore, the parties do not intend for this Agreement to restrict Cooper from engaging in any whistleblower activity protected by federal law; thus, Cooper’s publicity of and discussions about the terms of this Agreement, if made in connection with whistleblower activity protected by federal law, will not constitute a breach of this Agreement. Cooper’s agreement to keep confidential the terms of this Agreement requires Cooper to refrain from communicating regarding the terms of this Agreement with anyone except Cooper’s immediate family and Cooper’s attorney, accountant, or financial advisor who has a legitimate need to know the terms of this Agreement in order to render professional advice or services to Cooper; otherwise, Cooper agrees not to identify or reveal any other terms of the Agreement. Cooper recognizes that despite the fact that Laclede will comply with all applicable SEC public disclosure requirements in connection with the execution of this Agreement, Cooper’s own discussions with other persons and/or entities regarding the terms of this Agreement could negatively impact Laclede. Particularly because Cooper has held positions of influence with Laclede, Cooper recognizes that his publicity of and discussions about the terms of the Agreement would cause a greater disruption in Laclede’s business than would exist otherwise. In light of this recognition, and because Cooper agrees that Laclede has a material interest in limiting any disruption to Laclede’s

business caused by the execution of this Agreement, Cooper agrees that this Paragraph constitutes a material term of this Agreement. As a result, any breach of this provision will be considered a material breach and will, among all other available remedies, excuse Laclede from any further obligations to Cooper under this Agreement, including any remaining payments set forth in Paragraph 1 and Subparagraphs 1(A), 1(B), 1(C), and 1(D) hereof. This shall not be construed as a limitation of remedies, and Laclede retains all rights to pursue any and all claims or actions against Cooper as a result of Cooper publicizing or discussing the terms of this Agreement in a manner prohibited by this Paragraph.

13.

Non-Solicitation. During Cooper’s employment with Laclede, Cooper had access to confidential information and developed certain relationships such that if Cooper were allowed to pursue employment relationships with Laclede’s employees, Cooper would have an unfair advantage based upon confidential information and/or relationships developed. Furthermore, Cooper acknowledges that Laclede expends significant resources, on an ongoing basis, to recruit, hire, train, and retain its personnel. Cooper agrees to adhere to the commitments contained in this Paragraph now and in the future and acknowledges that any breach of this promise will be material to Laclede. Therefore, Cooper agrees that from the date of execution of this Agreement until the expiration of a period of one (1) year from the date of execution of this Agreement (the “Covered Period”), Cooper will not, directly or indirectly:

(A)

solicit or recruit for employment, offer employment to, hire, solicit, or recruit for placement, place and/or offer to place with another company or entity -- on a temporary, permanent or contract basis, or otherwise -- anyone who at any time during the Covered Period is or was employed by Laclede (a “Covered Employee”); provided that, at the time of such solicitation, recruitment, offer of employment, hiring, offer to place or placement, or any time during the ninety (90) day period immediately preceding same, the Covered Employee is or was an employee of Laclede; or

(B)

encourage, entice or persuade, or attempt to encourage, entice or persuade any Covered Employee to leave his or her employment with Laclede.

14.

Nondisparagement. Cooper agrees that he will not, in any way, criticize, denigrate or otherwise disparage Laclede, including but not limited to Laclede’s current or former officers, directors and employees, and Cooper agrees he will not, at any time, make or solicit any comments, statements or the like to the media or to others, including their agents or representatives, that may be considered to be derogatory or detrimental to the good name or business reputation of Laclede. Cooper further represents and agrees that he has not and will not engage in any conduct or take any action whatsoever to cause or influence or which reasonably could be anticipated to cause or influence any person or entity, including but not limited to, any past, present or prospective employee of, or applicant for employment with Laclede, to initiate litigation, assert any other kind of claim or take any other kind of adverse action against Laclede. Notwithstanding the requirements of this Paragraph, nothing herein shall prohibit Cooper from engaging in whistleblower activity protected by federal law. Cooper acknowledges that this provision

constitutes a material term in this Agreement, without which Laclede would not enter into this Agreement. As a result, any breach of this provision will be considered a material breach and will, among all other available remedies, excuse Laclede from any further obligations to Cooper under this Agreement, including any remaining payments set forth in Paragraph 1 and Subparagraphs 1(A), 1(B), 1(C), and 1(D) hereof. This shall not be construed as a limitation of remedies, and Laclede retains all rights to pursue any and all claims or actions against Cooper as a result of any disparaging remarks made in violation of this Paragraph or otherwise.

15.

Non-Disclosure of Confidential Information. Cooper acknowledges that Laclede continually develops Confidential Information, that Cooper has developed Confidential Information for Laclede and that Cooper had possession of and access to Confidential Information during the course of his employment with Laclede. Cooper will continue to protect Laclede’s Confidential Information by refraining from disclosing to any person or entity, and from using, other than as required by applicable law, any Confidential Information obtained by Cooper incident to Cooper’s employment or other association with Laclede. The confidentiality obligation under this Paragraph shall not apply to information that is generally known or readily available to the public at the time of disclosure or becomes generally known through no wrongful act on the part of Cooper or any other person or entity having an obligation of confidentiality to Laclede. As a further acknowledgement of his responsibilities under this Paragraph, Cooper acknowledges and agrees that:

(A)

all memoranda, notes, records, reports, papers, drawings, designs, computer files in any media, documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of Laclede and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by Cooper, shall be the sole and exclusive property of Laclede. Cooper represents that during Cooper’s employment with Laclede, Cooper took all action necessary to safeguard all Confidential Information and has surrendered to Laclede all of Laclede’s property in Cooper’s possession or control.

(B)

in the event Cooper is requested or becomes legally compelled (by oral questions, interrogatories, requests for information or documents, deposition, subpoena, civil or federal agency investigative demand or similar process) to disclose any of the Confidential Information, Cooper shall, where permitted under applicable law, rule or regulation, provide written notice to Laclede promptly after such request so Laclede may, at its expense, seek a protective order or other appropriate remedy, and Cooper agrees to reasonably cooperate with Laclede in connection with seeking such order or other remedy. In the event that such protective order or other remedy is not obtained, Cooper shall furnish only that portion of the Confidential Information that Cooper is advised by counsel is required, and shall exercise reasonable efforts to obtain assurance that confidential treatment will be accorded such Confidential Information. In addition, Cooper may disclose Confidential Information in the course of inspections, examinations or inquiries by federal or state regulatory agencies and self regulatory organizations that have requested or required the inspection of records that contain the Confidential

Information provided that Cooper exercises reasonable efforts to obtain reliable assurances that confidential treatment will be accorded to such Confidential Information. To the extent such information is required to be disclosed and is not accorded confidential treatment as described in the immediately preceding sentence, it shall not constitute “Confidential Information” under this Agreement.

(C)

“Confidential Information” shall mean any and all information of Laclede that is not generally known by others with whom Laclede competes or does business, or with whom Laclede plans to compete or do business and any and all information, publicly known in part or not, which, if disclosed by Cooper would assist in competition against Laclede. Confidential Information includes without limitation such information relating to (i) trade secrets, the development, research, testing, manufacturing, marketing and financial activities of Laclede, (ii) the products and services, (iii) the costs, sources of supply, financial performance and strategic plans of Laclede, (iv) the identity and special needs of the customers of Laclede, and (v) client lists and the people and organizations with whom Laclede has business relationships and the substance of those relationships. Confidential Information also includes any information that Laclede has received, or may receive hereafter, belonging to customers or others with any understanding, express or implied, that the information would not be disclosed.

16.

Reasonable Scope of Agreement. Cooper acknowledges that the scope of this Agreement, including without limitation, Paragraphs 12, 13, 14, and 15 of the Agreement, including their respective Subparagraphs, is reasonable in light of its narrow focus and the legitimate interests of Laclede to be protected.

17.

Liquidated Damages. Cooper understands and agrees that the damage to Laclede due to any breach of Paragraphs 12, 13, 14, and 15 of this Agreement, including their respective Subparagraphs, will be extremely difficult to determine. Therefore, Cooper agrees that if he violates any of those Paragraphs of this Agreement, he will pay $10,000 to Laclede, without prejudice to any additional relief that may be available to Laclede, specifically including but not limited to Laclede’s right to cease paying any remaining payments otherwise due to Cooper under Paragraph 1 and Subparagraphs 1(A), 1(B), 1(C), or 1(D). Cooper’s obligation, pursuant to this Paragraph, to pay liquidated damages for multiple violations of Paragraphs 12, 13, 14, and 15 of this Agreement, including their respective Subparagraphs, shall not exceed $50,000. In addition, if Cooper breaks his promises in Paragraphs 7, 8, 9, or 10 of this Agreement and files a lawsuit regarding claims he has released, Cooper agrees to pay for all costs incurred by Laclede, including reasonable attorneys’ fees, in defending against his claims. Cooper acknowledges and agrees further that the liquidated damages described herein represent a conservative estimate of the damages Laclede is likely to suffer should Cooper breach Paragraphs 12, 13, 14, or 15 of this Agreement, including their respective Subparagraphs.

18.	No Admission of Wrongdoing. The parties to this Agreement agree that nothing in this Agreement is an admission by any party hereto of any wrongdoing, either in violation of an applicable law or otherwise, and that nothing in this Agreement is to be construed as such by any person.

19.

Knowing and Voluntary Agreement. Cooper acknowledges further that he understands this Agreement, the claims he is releasing herein, the promises and agreements he is making herein, and the effect of his signing this Agreement. Cooper represents, declares, and agrees further that he voluntarily accepts the consideration described above in Paragraph 1 and Subparagraphs 1(A), 1(B), 1(C), and 1(D) for the purpose of making a full and final compromise, adjustment, and settlement of all claims or potential claims against Laclede from any action or inaction taking place prior to or on the Separation Date.

20.

Choice of Law. Because of Laclede’s and Cooper’s substantial contacts with Missouri, the fact that Laclede hired Cooper in Missouri, Cooper’s primary place of work for Laclede has been located in Missouri, and the parties’ interests in ensuring that disputes regarding the interpretation, validity, and enforceability of this Agreement are resolved on a uniform basis, the parties agree that the Agreement shall be interpreted, construed, applied, and governed by and according to the laws of the State of Missouri, without regard for any conflict of law principles.

21.	Modification. The parties hereto agree that this Agreement may not be modified, altered, or changed except by a written agreement signed by the parties hereto.

22.	Entire Agreement. The parties acknowledge that this constitutes the entire agreement between them superseding all prior written and oral agreements, regarding Cooper’s separation, and there are no other understandings or agreements, written or oral, among them on the subject of Cooper’s separation.

23.	Severability. If any Paragraph, Subparagraph, clause or provision of this Agreement is held to be invalid, the remaining provisions shall remain in full force and effect.

24.

Rule of Construction. The rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement. The parties intend for this Agreement to satisfy the provisions of the Age Discrimination in Employment Act of 1967, as amended, and the Sarbanes-Oxley Act of 2002, and this Agreement shall always be construed or limited in conformity with such provisions.

25.

Execution and Effective Date. Separate copies of this document shall constitute original documents which may be signed separately but which together will constitute one single agreement. This Agreement will not be binding on any party, however, until, at a minimum, it is signed by all parties or their representatives. In addition, this Agreement shall become effective and binding on the eighth day following Cooper’s execution of this Agreement.

26.

Time for Consideration. Cooper acknowledges that Laclede first gave him a copy of this Agreement by or before the close of the business day on September 4, 2007 (the “Offer Date”), and that, at that time, Laclede advised Cooper that Cooper could consider the offer for up to twenty-one (21) days from the Offer Date. This Agreement shall not become final and binding upon Cooper until the eighth

calendar day following Cooper’s execution of this Agreement. During said seven-day period, Cooper may revoke this Agreement by giving written notice to Richard A. Skau, Vice President of Human Resources, Laclede Gas Company, 720 Olive Street, Rm. 812, St. Louis, MO 63101. By executing this Agreement, Cooper acknowledges that Laclede has advised him that he has up to twenty-one (21) days until the close of the business day on September 25, 2007, within which to consider this Agreement before signing the same, and that Cooper has, in fact, been given at least twenty-one (21) days within which to consider this Agreement prior to signing the Agreement. Notwithstanding the opportunity to consider this Agreement for twenty-one (21) days, Cooper acknowledges that should he sign this Agreement anytime prior to the expiration of twenty-one (21) days, that he has nonetheless given full consideration to those terms and signs of his free volition. Laclede shall be deemed to have revoked its offer to enter into this Agreement if Cooper shall not have executed this Agreement within twenty-one (21) days of the Offer Date.

27.	Consultation with an Attorney. By executing this Agreement, Cooper acknowledges that, at the time Laclede presented this Agreement to him for his consideration, Laclede advised Cooper to consult with an attorney about this Agreement, its meaning and effect, prior to executing this Agreement.

28.	No Reliance. The parties have not relied on any representations, promises, or agreements of any kind made to them in connection with this Agreement, except for those set forth in this Agreement.

29.

Capacity to Settle. Each party herein represents and warrants to the other that each has no legal impediments (including bankruptcies) to fully and completely settle all claims and to sign this Agreement. Both parties further warrant that each is the sole owner of all the claims released in this Agreement, and that each has not assigned or transferred any such claim (or any interest in any such claim) to any other person, and that each will indemnify, defend and hold each other harmless for any damages costs, fees or expenses which they may incur if these representations and warranties are incorrect in any respect.

30.

Cooperation by Cooper. In exchange for the receipt of the payments set out above, Cooper agrees to cooperate fully in any manner requested by Laclede regarding any and all pending cases, including timely and accurately providing his testimony in cases in which he was involved in any manner during his tenure of employment with Laclede. Cooper will not receive any additional pay for any such testimony. Cooper also agrees that in exchange for the payments set out above, he will remain on-call with Laclede and cooperate fully in any manner requested by Laclede during the period prior to and including his Separation Date and during the twelve-month period ending on September 30, 2008, with respect to reasonable requests for information by Laclede in order to access Laclede’s information, explain information known by Cooper by virtue of his employment with Laclede, or otherwise assist in transitioning Cooper’s job responsibilities with Laclede and transitioning Laclede’s systems and procedures.

31.	Return of Property. Cooper agrees to return all property belonging to Laclede, including, but not limited to the car provided to him by Laclede, his laptop computer, cellular

phone, Blackberry device, PDA, pager, Laclede identification card, keys, security cards, credit cards, gas cards, parking pass, documents (including all copies regardless of media) of any kind provided or shown to Cooper throughout his employment with Laclede, and any other property of Laclede. Cooper further agrees he has not copied or otherwise replicated or retained any of the above or like data and things. All property described herein shall be returned by the close of business on the Separation Date.

32.

Re-Employment and Re-Instatement. Cooper agrees that he will neither apply for nor accept employment or re-employment with Laclede, in any capacity whatsoever, including but not limited to placement as a contingent worker (such as a contract hire, consultant, industry or technical assistant, or independent contractor) and that Laclede has no obligation whatsoever, contractual or otherwise, to re-hire, re-employ, re-call or contract with Cooper in any capacity in the future.

33.

Arbitration. The parties agree that in the event of any breach or alleged breach of this Agreement, such breach or dispute shall be submitted to arbitration under the rules of the American Arbitration Association (“AAA”) for selection of a neutral arbitrator. Arbitration shall be the sole and exclusive remedy with respect to any alleged breach or dispute, and shall be handled pursuant to the procedures and provisions of the AAA and the proceedings shall be private and confidential.

The parties shall jointly request the AAA to designate a panel of arbitrators, and either the parties mutually shall agree upon one of the arbitrators or, in the absence of mutual agreement, each side shall alternatively strike a name from the list of arbitrators commencing with the party seeking arbitration, and the name remaining on the list shall be deemed chosen as the arbitrator.

The parties agree the issue before the arbitrator shall be whether one of the parties breached the terms of this Agreement, and, if so, what are the appropriate damages, if any, except that the arbitrator will have no authority to award punitive damages or damages for non-economic injuries. The finding of the arbitrator shall be final and binding on both parties. The arbitrator shall have no power to add to, detract from, or alter this Agreement in any way, and, notwithstanding any AAA rule to the contrary, the arbitrator shall have no power to award, and may not award, punitive or non-economic damages. The arbitrator’s decision shall be subject to review only as provided under the Federal Arbitration Act where the arbitrator has failed to base his or her decision on the Agreement. Pending final decision by the arbitrator, there shall be no other legal action taken by either party to the controversy.

The arbitration shall take place in the State of Missouri. All costs and expenses incidental to and arising out of the arbitration (e.g., arbitrator’s fee) shall be borne by the losing party, but each side shall pay its own attorneys’ fees.

IN WITNESS WHEREOF, the undersigned parties have executed this Separation Agreement and General Release.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

I HAVE READ THIS SEPARATION AGREEMENT AND GENERAL RELEASE AND, UNDERSTANDING ALL OF ITS TERMS, SIGN IT OF MY FREE WILL. I UNDERSTAND THAT THIS AGREEMENT HAS A BINDING ARBITRATION PROVISION WHICH CAN BE ENFORCED BY THE PARTIES.

September 12, 2007	/s/Barry C. Cooper
	Barry C. Cooper

Subscribed and sworn to before me, a Notary Public, this 12th day of September, 2007.

/s/ Lori A. Vance

NOTARY PUBLIC

My commission expires:

February 9, 2011

LACLEDE:

September 4, 2007	By: /s/Richard A. Skau
	Richard A. Skau

	Title: Vice President, Human Resources
	Laclede Gas Company

Subscribed and sworn to before me, a Notary Public, this 4th day of September, 2007.

/s/ Lori A. Vance

NOTARY PUBLIC

My commission expires:

February 9, 2011

APPENDIX A

Entity	Cooper’s Positions

The Laclede Group, Inc.	Chief Financial Officer

Laclede Gas Company	Chief Financial Officer and Director

Laclede Development Company	Vice President and Director

Laclede Energy Resources, Inc.	Vice President and Director

Laclede Gas Family Services, Inc.	Vice President and Director

Laclede Pipeline Company	Vice President and Director

Laclede Venture Corp.	Vice President and Director

Laclede Investment LLC	Vice President and Manager

SM&P Utility Resources, Inc.	Director

Exhibit 10.22

RETENTION AGREEMENT

This RETENTION AGREEMENT (“Agreement”) is made and entered into as of the 24th day of September, 2007, by and among The Laclede Group, Inc., a Missouri corporation (“Laclede”), its wholly-owned subsidiary, SM&P Utility Resources, Inc., an Indiana corporation (“SM&P”) and Robert E. Shively (“Employee”).

WITNESSETH THAT:

WHEREAS, Laclede and SM&P (collectively, the “Company”) desire to explore the possible sale of SM&P (“Transaction”);

WHEREAS, Employee is employed by SM&P and possesses skills and experience which the Company believes are of substantial value and importance to the success of the current operations of SM&P;

WHEREAS, the Company believes that the skill and experience of Employee are also of substantial value and importance to the sale process and to potential buyers of SM&P in the Transaction (“Buyers” or “Buyer”);

WHEREAS, the sale process may require additional time and effort on the part of the Employee;

WHEREAS, the Company desires that Employee remain actively employed with SM&P through the day of closing of the Transaction as the term “Closing” is defined in any agreement evidencing the Transaction (“Closing”) and for at least a limited period of time following the Closing; and

WHEREAS, Employee desires to render services to SM&P on the terms hereinafter set forth through the period indicated;

NOW, THEREFORE, in consideration of the promises and of the covenants and agreements hereinafter set forth, it is covenanted and agreed as follows:

1. Retention Payment. Subject to the terms and conditions hereof, Company will pay Employee a retention payment (“Retention Payment”) in the amount specified on Exhibit A. Such payment shall be subject to applicable payroll tax withholding requirements.

(a)	First Payment. Company will pay one-half of the Retention Payment to Employee promptly following the day of Closing, provided the Employee has not breached any provision of this Agreement.

(b)

Second Payment. Promptly following the thirtieth (30^th) day after Closing, Employee shall deliver a letter to Laclede in the form attached to this Agreement as Exhibit B certifying that the Employee has not breached any provision of this Agreement following Closing. Upon receipt of Employee’s letter, and provided the Employee has not breached any provision of this Agreement prior to Closing, Company will pay promptly the remaining one-half of the Retention Payment to Employee.

(c)

Resignation/Termination. If, prior to Closing, Employee either (i) resigns without good reason or (ii) is terminated for cause, Employee shall forfeit all rights to the Retention Payment. If, after Closing and through the thirtieth (30th) day following Closing, Employee either (i) resigns without good reason or (ii) is terminated for cause, Employee shall forfeit all rights to the second half of the Retention Payment.

(1)

The phrase “good reason” shall mean: (i) a change in the reporting location of greater than fifty (50) miles from where Employee is currently performing his or her job duties; or (ii) a reduction in the base salary, position, level of responsibilities, or conditions of the job which Employee currently performs.

(2)

The phrase “for cause” shall mean: (i) gross neglect of any of Employee’s duties; (ii) willful violation of any of the Company’s policies, standards or practices; (iii) fraud, dishonesty, or any other act of negligent, reckless or willful misconduct; and (iv) breach of any provision of this Agreement.

(3)

For purposes of this section, if Employee is terminated for reasons other than for cause and otherwise has complied with all of the terms of this Agreement, then Employee will be entitled to receive the Retention Payment.

(d)

Stock Awards. Employee has previously been awarded shares of Performance Contingent Restricted Stock under Laclede’s Equity Incentive Plan (“Plan”). Employee acknowledges that the terms of the Plan and such awards provide that (i) Employee will forfeit and otherwise lose all rights to such shares of restricted stock as a result of no longer being employed by a Laclede affiliate, and (ii) Laclede will have no obligation or liability to Employee under such Plan or such awards following Closing.

2. Performance Contingent Payment. Subject to the terms and conditions hereof, provided that each of the conditions listed in Section 2(a) below is met in the sole discretion of Laclede, and Employee has not breached any provision of this Agreement prior to Closing, Company will pay Employee a performance contingent payment (“Performance Payment”) in the amount specified on Exhibit A. Such payment shall be subject to applicable payroll tax withholding requirements.

(a) Conditions.

(1)

Earnings. Company meets or exceeds its financial targets for those portions of fiscal 2007 and fiscal 2008 that occur within the term of this Agreement. For purposes of this section, the phrase “financial targets” shall mean the rolling estimate for earnings for fiscal 2007 and the targets for earnings for fiscal 2008 provided by Company to Laclede at its August 2007 Strategic Workshop.

(2)

Customers. Company retains all of its significant customers on terms and pricing substantially similar to the terms and pricing effective for each such customer on the date of this Agreement.

(b)

Payment of Performance Payment. Subject to Sections 2(b)(1) and 2(b)(2) below, if Company determines that Employee is entitled to the Performance Payment, Company will pay Employee the Performance Payment, if applicable, on the Second Payment Date.

(1)

If on or before the thirtieth (30th) day following Closing, Employee either (i) resigns without good reason or (ii) is terminated for cause, Employee shall forfeit all rights to the Performance Payment.

(2)

If Employee is terminated for reasons other than for cause and otherwise has complied with all of the terms of this Agreement, then Employee will be entitled to receive the Performance Payment.

3. Employee Covenants. Employee covenants and agrees as follows:

(a)	Through the thirtieth (30^th) day following Closing, Employee will use his or her best efforts to perform the responsibilities of his or her current position, and to maintain and grow the value of SM&P and its business.

(b)

Until Closing, Employee will use his or her best efforts to facilitate the Transaction, including without limitation the following, as requested by Company, (i) being available when and where reasonably necessary for due diligence purposes or otherwise, (ii) collection of due diligence information, (iii) preparation of analyses of SM&P and its business, (iv) timely review and accurate verification of proposed representations and warranties, (v) being positive and supportive of the Transaction to employees, customers and potential buyers, and (vi) communicating directly or indirectly with any potential Buyer or its representatives only through, or in the presence of, a Laclede representative designated by Laclede for such purpose, or with the express authorization of an officer of Laclede.

(c)	From the date of Closing through the thirtieth (30^th) day following Closing, Employee will use his or her best efforts to aid the Buyer in the transition of ownership from Laclede to Buyer.

(d)

Until the earlier of (i) thirty (30) days following Closing, or (ii) termination pursuant to Section 4 of this Agreement, Employee will not disclose to anyone, including without limitation, customers, employees, competitors, media and potential Buyers, the existence of the pending Transaction, the agreements, terms, conditions, negotiation or status thereof, the existence, terms or conditions of this Agreement or any other confidential information of the Company, including without limitation, pricing, strategic plans, customer information, marketing strategies or similar core information, except as expressly authorized by the Company. This provision shall not apply to confidential information that becomes generally available to the public other than as a result of a disclosure by Employee. Further, nothing in this provision will preclude Employee from consulting with his or her personal attorney for legal advice regarding the terms and conditions of this Agreement.

(e)	Employee acknowledges that nothing in this Agreement supersedes or amends in any way any confidentiality obligation that Employee owes to SM&P, including without limitation, any obligations existing pursuant to the Employee Confidentiality Agreement between SM&P and Employee.

(f)	Employee will not, directly or indirectly, perform any of the following for a period extending until thirty (30) days after the earlier of (i) Closing, or (ii) termination of this Agreement:

(1)

solicit or hire or assist anyone else to solicit or hire any employee of SM&P, or seek to persuade or assist anyone else to persuade any such employee to discontinue employment with SM&P; or

(2)

participate in, engage in, assist in, consult with, serve as an employee of or partner in, encourage or provide financial resources to any activity which competes with SM&P in any territories in which SM&P has conducted business, including without limitation solicitation of customers of SM&P for a competitor of SM&P. In the event that Employee has forfeited his or her rights to the Retention Payment pursuant to Section 1(c) of this Agreement for reasons other than due to a breach of this Agreement, then this Section 3(f)(2) shall no longer apply and will not have force and effect subsequent to Employee’s employment with SM&P.

4. Term. This Agreement is effective as of the date first written above and will terminate automatically and without notice on June 30, 2008 (“Termination Date”), unless unilaterally extended by Laclede, and all the obligations set forth in this Agreement shall terminate and be of no further force and effect; provided that termination of this Agreement will not terminate liability for any breaches prior to the Termination Date. It is expressly understood and agreed that if this Agreement terminates without a sale of SM&P, or if Laclede decides not to sell SM&P, Employee will be placed in the same employment position he or she would have been had no sale process taken place. If prior to June 30, 2008 the Company has entered into a definitive agreement for the Transaction, then the Termination Date shall be extended (i) until thirty (30) days following the Closing or (ii) until such definitive agreement is terminated without Closing.

5. Arbitration. Employee agrees that any dispute between Employee and the Company arising out of this Agreement will be resolved through arbitration. Any party may demand arbitration by providing notice to the other parties. The parties shall agree upon an arbitrator, who shall be registered and in good standing with an arbitration association, or, if they cannot agree within 20 days of demand, the demanding party shall request the American Arbitration Association or National Arbitration Forum provide an arbitrator. Any arbitrator shall apply substantive law consistent with the Federal Arbitration Act, 9 U.S.C. Sections 1 -16. Each party shall bear their own expenses resulting from the arbitration, and shall split the joint costs of such arbitration proceeding fifty percent between Employee, on the one hand, and Company, on the other. The foregoing does not preclude Laclede from seeking injunctive or other relief from a court of law or equity to enjoin any breach by Employee and pursuing consequential damages for any such breach in the same forum. Any arbitration or litigation shall be held in St. Louis County, Missouri.

6. Miscellaneous.This Agreement is not an agreement of employment and does not in any way impact Employee’s status as an at-will employee. This Agreement shall be interpreted in accordance with and governed by the laws of the State of Missouri without regard to the principles of conflicts of law which might otherwise apply. No modification, amendment or waiver of any provision of this Agreement shall be effective unless in writing specifically referring hereto and signed by the parties hereto. Captions in this Agreement are for reference purposes only. Any notice to be given by any party hereunder shall be in writing and shall be deemed to have been duly given if delivered or mailed, certified or registered mail, postage prepaid, as follows:

TO COMPANY:

The Laclede Group, Inc.

720 Olive Street

St. Louis, MO 63101

Attn: Mark C. Darrell, General Counsel

and to Employee at his or her address as it appears on the payroll records of SM&P, or to such other address as may have been furnished by any party to the other parties by written notice.

7. Severability. If any provision of this Agreement shall for any reason be held excessively broad or unreasonable as to time, matter or interest to be protected, the court is hereby empowered and requested to construe such provision by narrowing it so as to make it reasonable and enforceable to the extent allowed by law. The covenants and agreements contained in this Agreement are separate and severable, and in the event any portion or portions of such paragraphs are declared invalid or unenforceable, the validity of the remaining paragraphs of this Agreement will not be affected.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year first above written.

THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

THE LACLEDE GROUP, INC.

By: /s/ Douglas H. Yaeger

Douglas H. Yaeger

Chairman, President and CEO

SM&P UTILITY RESOURCES, INC.

By: /s/ Douglas H. Yaeger

Douglas H. Yaeger

Chief Executive Officer

EMPLOYEE

/s/ Robert E. Shively

Robert E. Shively

Exhibit A

Retention Payment

Retention Payment Amount = $285,000

Performance Payment Amount = $57,000

Exhibit B

Sample Form Certification Letter

Mark C. Darrell

General Counsel

The Laclede Group, Inc.

720 Olive Street, Suite 1504

Saint Louis, Missouri 63101

Re: Employee Certification in Accordance with Retention Agreement

Dear Mark:

In accordance with Section 1(b) of the September __, 2007 Retention Agreement with The Laclede Group, Inc. and SM&P Utility Resources, Inc. (“Retention Agreement”), I hereby certify that since the Closing of the Transaction as defined in the Retention Agreement, I have not breached any of the terms of the Retention Agreement.

Sincerely,

______________________________

Employee

Commission File Number	Exact Name of Registrant as Specified in its Charter and Principal Office Address and Telephone Number	States of Incorporation	I.R.S. Employer Identification Number
1-16681	The Laclede Group, Inc. 720 Olive Street St. Louis, MO 63101 314-342-0500	Missouri	74-2976504
1-1822	Laclede Gas Company 720 Olive Street St. Louis, MO 63101 314-342-0500	Missouri	43-0368139

Name of Registrant	Title of Each Class	Name of Each Exchange On Which Registered
The Laclede Group, Inc.	Common Stock $1.00 par value	New York Stock Exchange
The Laclede Group, Inc.	Preferred Share Purchase Rights	New York Stock Exchange
Laclede Gas Company	None

The Laclede Group, Inc.:	Yes	[ X ]	No	[ ]

Laclede Gas Company:	Yes	[ ]	No	[ X ]

The Laclede Group, Inc.:	Yes	[ ]	No	[ X ]

Laclede Gas Company:	Yes	[ ]	No	[ X ]

The Laclede Group, Inc.:	Yes	[ X ]	No	[ ]

Laclede Gas Company:	Yes	[ X ]	No	[ ]

The Laclede Group, Inc.:	Large accelerated filer	[ ]	Accelerated filer	[ X ]	Non-accelerated filer	[ ]

Laclede Gas Company:	Large accelerated filer	[ ]	Accelerated filer	[ ]	Non-accelerated filer	[ X ]

		Shares Outstanding At
Registrant	Description of Common Stock	October 31, 2007
The Laclede Group, Inc.:	Common Stock ($1.00 Par Value)	21,665,462
Laclede Gas Company:	Common Stock ($1.00 Par Value)	10,307 *

	TABLE OF CONTENTS
		Page
PART I

Forward-Looking Statements		5

Item 1	Business	5
Item 1A	Risk Factors	10
Item 1B	Unresolved Staff Comments	13
Item 2	Properties	13
Item 3	Legal Proceedings	13
Item 4	Submission of Matters to a Vote of Security Holders	13

Executive Officers of the Registrants (Item 401(b) of Regulation S-K)		14

PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6	Selected Financial Data	18
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	34
Item 8	Financial Statements and Supplementary Data	35
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	72
Item 9A	Controls and Procedures	72
Item 9B	Other Information	72

PART III
Item 10	Directors, Executive Officers and Corporate Governance	73
Item 11	Executive Compensation	73
Item 12	Security Ownership of Certain Beneficial Owners and Management
	and Related Stockholder Matters	73
Item 13	Certain Relationships and Related Transactions, and Director Independence	74
Item 14	Principal Accounting Fees and Services	74

PART IV
Item 15	Exhibits, Financial Statement Schedules	75

SIGNATURES		76

FINANCIAL STATEMENT SCHEDULES		78

INDEX TO EXHIBITS		80

•	weather conditions and catastrophic events, particularly severe weather in the natural gas producing areas of the country;
•	volatility in gas prices, particularly sudden and sustained spikes in natural gas prices;
•	the impact of higher natural gas prices on our competitive position in relation to suppliers of alternative heating sources, such as electricity;
•	changes in gas supply and pipeline availability; particularly those changes that impact supply for and access to our market area;
•	legislative, regulatory and judicial mandates and decisions, some of which may be retroactive, including those affecting
	•	allowed rates of return
	•	incentive regulation
	•	industry structure
	•	purchased gas adjustment provisions
	•	rate design structure and implementation
	•	franchise renewals
	•	environmental or safety matters
	•	taxes
	•	pension and other postretirement benefit liabilities and funding obligations
	•	accounting standards;
•	the results of litigation;
•	retention of, ability to attract, ability to collect from and conservation efforts of customers;
•	capital and energy commodity market conditions, including the ability to obtain funds for necessary capital expenditures and general operations and the terms and conditions imposed for obtaining sufficient gas supply;
•	discovery of material weakness in internal controls; and
•	employee workforce issues.

(Thousands)	2007		2006		2005
Regulated Gas Distribution	$	1,131,554	$	1,141,011	$	978,195
Non-Regulated Services		165,733		162,523		141,478
Non-Regulated Gas Marketing		718,704		689,572		469,559
Non-Regulated Other		5,603		4,445		7,800
Total Operating Revenues	$	2,021,594	$	1,997,551	$	1,597,032

Regulated Gas Distribution Operating Revenues

(Thousands)	2007		2006		2005
Residential	$	675,756	$	689,347	$	586,227
Commercial & Industrial		271,872		284,174		223,446
Interruptible		3,771		5,644		3,688
Transportation		15,601		15,257		14,726
Off-System and Capacity Release		156,103		139,501		144,195
Provision for Refunds and Other		8,451		7,088		5,913
Total	$	1,131,554	$	1,141,011	$	978,195

Regulated Gas Distribution Customers (End of Period)

	2007	2006	2005
Residential	590,337	590,392	589,082
Commercial & Industrial	41,062	40,909	40,474
Interruptible	15	17	16
Transportation	145	148	150
Total Customers	631,559	631,466	629,722

Name, Age, and Position with Company *		Appointed (1)

D. H. Yaeger, Age 58
	Laclede Group
	------------------
	Chairman, President and Chief Executive Officer	October 2000

	Laclede Gas
	---------------
	Chairman, President and Chief Executive Officer	January 1999
	President and Chief Executive Officer	January 1999

	SM&P
	--------
	Chief Executive Officer	January 2002

	LER
	-----
	President	January 1999

K. J. Neises, Age 66
	Laclede Gas
	---------------
	Executive Vice President – Energy and Administrative Services	January 2002

	LER
	-----
	Vice President	February 2002

M. D. Waltermire, Age 49
	Laclede Group
	------------------
	Chief Financial Officer	October 2007

	Laclede Gas
	---------------
	Senior Vice President and Chief Financial Officer	October 2007
	Vice President – Operations & Marketing	April 2003
	Vice President – Operations & Marketing Planning	February 2003
	Assistant Vice President – Planning	May 2001

	LER
	---------------
	Vice President	October 2007

M. C. Darrell, Age 49
	Laclede Group
	------------------
	General Counsel (2)	May 2004

	Laclede Gas
	---------------
	Senior Vice President and General Counsel	October 2007
	General Counsel	May 2004

R. A. Skau, Age 50
	Laclede Gas
	------------------
	Senior Vice President – Human Resources	October 2007
	Vice President – Human Resources	February 2004
	Assistant Vice President – Human Resources	September 2001

M. R. Spotanski, Age 47
	Laclede Gas
	---------------
	Senior Vice President – Operations and Marketing	October 2007
	Vice President – Finance	January 2001

M. C. Kullman, Age 47
	Laclede Group
	------------------
	Chief Governance Officer and Corporate Secretary	February 2004
	Corporate Secretary	October 2000

	Laclede Gas
	---------------
	Secretary and Associate General Counsel	February 2001

	SM&P
	--------
	Secretary	January 2002

	LER
	------
	Secretary	February 1998

M. C. Geiselhart, Age 48
	Laclede Group
	---------------
	Vice President – Strategic Development and Planning (3)	August 2006

	Laclede Gas
	---------------
	Vice President – Strategic Development and Planning	August 2006

M. C. Pendergast, Age 51
	Laclede Gas
	---------------
	Vice President – Associate General Counsel	January 2002

R. E. Shively, Age 45
	SM&P
	--------
	President	March 2002

	Laclede Gas
	---------------
	Senior Vice President – Business and Services Development	January 2001 through December 2006

K. F. Beauchamp, Age 50
	SM&P
	--------
	Chief Financial Officer (4)	August 2006

J. A. Fallert, Age 52
	Laclede Gas
	---------------
	Controller	February 1998

	Fiscal 2007		Fiscal 2006
	High	Low	High	Low
1st Quarter	37.51	31.60	33.19	28.60
2nd Quarter	36.03	29.32	35.55	29.09
3rd Quarter	33.24	29.29	34.75	31.70
4th Quarter	34.17	28.84	35.65	31.29

	Fiscal 2007	Fiscal 2006
1st Quarter	$.365	$.345
2nd Quarter	$.365	$.355
3rd Quarter	$.365	$.355
4th Quarter	$.365	$.355

	Aggregate
	Purchase Price		Number
Date of Sale	(millions)		of Shares

January 20, 2005	$	1.1	31
May 10, 2005		1.0	29
August 15, 2005		1.0	29
December 15, 2005		1.0	30
February 21, 2006		0.9	26
May 24, 2006		0.9	25
August 15, 2006		0.9	27
March 23, 2007		1.9	55
May 21, 2007		1.0	27
August 10, 2007		1.0	28

	Fiscal Years Ended September 30
(Thousands, Except Per Share Amounts)	2007			2006			2005			2004			2003
Summary of Operations
Operating Revenues:
Regulated
Gas distribution	$	1,131,554		$	1,141,011		$	978,195		$	868,905		$	774,772
Non-Regulated
Services		165,733			162,523			141,478			104,239			100,168
Gas marketing		718,704			689,572			469,559			270,328			163,861
Other		5,603			4,445			7,800			6,848			11,529
Total Operating Revenues		2,021,594			1,997,551			1,597,032			1,250,320			1,050,330

Operating Expenses:
Regulated
Natural and propane gas		797,924			821,721			676,931			575,691			483,742
Other operation expenses		131,798			128,180			125,364			121,596			118,550
Maintenance		24,306			21,198			19,226			18,705			18,759
Depreciation and amortization		34,080			30,904			23,036			22,385			22,229
Taxes, other than income taxes		68,361			71,038			62,859			60,077			56,102
Total Regulated Operating Expenses		1,056,469			1,073,041			907,416			798,454			699,382
Non-Regulated
Services		156,658			155,133			129,636			99,511			102,093
Gas marketing		698,962			662,391			462,348			265,394			159,105
Other		4,239			3,711			7,803			6,400			10,615
Total Operating Expenses		1,916,328			1,894,276			1,507,203			1,169,759			971,195
Operating Income		105,266			103,275			89,829			80,561			79,135
Allowance for Funds Used During Construction		(17	)		(45	)		(100	)		(123	)		(107	)
Other Income and (Income Deductions) - Net		6,829			5,553			1,706			3,758			1,242
Interest Charges:
Interest on long-term debt		22,502			22,329			22,835			22,010			20,169
Interest on long-term debt to unconsolidated affiliate trust		3,573			3,573			3,573			3,573			2,828
Other interest charges		11,154			10,277			4,141			3,231			3,974
Total Interest Charges		37,229			36,179			30,549			28,814			26,971
Income Before Income Taxes and Dividends on
Redeemable Preferred Stock – Laclede Gas		74,849			72,604			60,886			55,382			53,299
Income Tax Expense		25,035			23,567			20,761			19,264			18,652
Dividends on Redeemable Preferred
Stock – Laclede Gas		43			48			55			62			62
Net Income	$	49,771		$	48,989		$	40,070		$	36,056		$	34,585

(1)	Officers of Laclede are normally reappointed at the Annual Meeting of the Board of Directors in January of each year to serve at the pleasure of the Board of Directors for the ensuing year and until their successors are elected and qualify.
(2)	Mr. Darrell served as Assistant General Counsel for NiSource, Inc. since 2002.
(3)	Mr. Geiselhart served as the Corporate Finance Consultant for Callaway Partners, LLC since 2003. During that time, he also served as Chief Financial Officer for both TowerLink Corporation, Inc. and Transcender Telecom Acquisition Corporation, Inc. Prior to that he was the founding Chief Financial Officer and Consultant for private equity firms for Quiet Water Associates, LLC from 2002 through 2003 and Vice President, Finance and Corporate Development for Evolution Networks, Inc. from 2000 through 2002.
(4)	Previously, Mr. Beauchamp served as Vice President of Operations of The Steak ‘n Shake Company from 1997 through 2005, as well as Vice President and Controller from 1993 through 1997.

Years Ended September 30	2007		2006		2005
Regulated Gas Distribution	$	32.1	$	28.8	$	30.6
Non-Regulated Services		3.3		2.4		5.0
Non-Regulated Gas Marketing		13.3		17.1		4.4
Non-Regulated Other		1.1		0.7		0.1
Net Income	$	49.8	$	49.0	$	40.1

	•	the effect of higher system gas sales volumes, primarily due to colder weather and other variations totaling $6.7 million;
	•	the benefit of the general rate increase, effective August 1, 2007, totaling $5.3 million; and,
	•	higher Infrastructure System Replacement Surcharge (ISRS) revenues totaling $2.6 million.

	•	increases in operation and maintenance expenses totaling $6.7 million; and,
	•	higher depreciation and amortization expense totaling $3.2 million resulting from the implementation of new depreciation rates effective January 1, 2006, as authorized by the MoPSC, and additional depreciable property.

	•	increases in operation and maintenance expenses, excluding the provision for uncollectible accounts, totaling $9.3 million;
	•	higher depreciation expense totaling $7.9 million resulting from the implementation of new rates effective February 1, 2005 and January 1, 2006 as authorized by the MoPSC, and additional depreciable property;
	•	net lower ISRS totaling $4.5 million. These surcharges were reset to zero effective October 1, 2005, as the ISRS-related costs were being recovered through base rates effective on that same date. A new ISRS was subsequently implemented June 15, 2006; and,
	•	the net effect of lower system gas sales volumes totaling $2.7 million, primarily due to conservation efforts of our customers.

	•	the benefit of the general rate increase, effective October 1, 2005, totaling $9.7 million;
	•	the recovery of gas inventory carrying costs through the Utility’s PGA Clause, effective October 1, 2005, totaling $5.6 million; and,
	•	a lower provision for uncollectible accounts totaling $4.5 million.

	Millions
Lower wholesale gas costs passed on to Utility customers (subject to prudence review by the MoPSC)	$	(111.6	)
Higher system sales volumes, primarily due to colder weather, and other variations		80.6
Higher off-system sales volumes (reflecting more favorable market conditions as described in greater
detail in the Results of Operations)		48.1
Lower prices charged for off-system sales		(34.5	)
General rate increase, effective August 1, 2007		5.3
Higher ISRS revenues implemented June 15, 2006, January 2, 2007, and June 16, 2007		2.6
Total Variation	$	(9.5	)

	Millions
Higher wholesale gas costs passed on to Utility customers (subject to prudence review by the MoPSC)	$	196.0
Lower system sales volumes and other variations, primarily due to the conservation efforts of customers due to higher natural gas prices		(36.4	)
Lower off-system sales volumes		(32.5	)
Higher prices charged for off-system sales		27.2
Net effect of the general rate increase, recovery of gas inventory carrying costs, and resetting the ISRS to zero, effective October 1, 2005, combined with the subsequent implementation of a new ISRS effective June 15, 2006		8.5
Total Variation	$	162.8

	Allowances for doubtful accounts – Estimates of the collectibility of trade accounts receivable are based on historical trends, age of receivables, economic conditions, credit risk of specific customers, and other factors. The Utility’s provision for uncollectible accounts is dependent on the regulatory treatment provided for such costs. Beginning in fiscal 2006, as approved by the MoPSC, the Utility is allowed to defer for future recovery certain costs associated with amendments to the Cold Weather Rule. For details on the Cold Weather Rule, see the Regulatory Matters section on page 28.

	Employee benefits and postretirement obligations – Pension and postretirement obligations are calculated by actuarial consultants that utilize several statistical factors and other assumptions related to future events, such as discount rates, returns on plan assets, compensation increases, and mortality rates. For the Utility, the amount of expense recognized and the amounts reflected in other comprehensive income are dependent upon the regulatory treatment provided for such costs, as discussed further below. Certain liabilities related to group medical benefits and workers’ compensation claims, portions of which are self-insured and/or contain “stop-loss” coverage with third-party insurers to limit exposure, are established based on historical trends.

Pension Plan Benefits:

			Estimated				Estimated
			Increase/				Increase/
			(Decrease) to				(Decrease) to
			Projected				Annual
			Benefit				Net Pension
	Increase/		Obligation				Cost*
Actuarial Assumptions	(Decrease)		(Thousands)				(Thousands)

Discount Rate	0.25	%	$	(7,620	)	$	(170	)
	(0.25	)		7,820			160

Rate of Future Compensation Increase	0.25	%		5,800			720
	(0.25	)		(5,600	)		(700	)

Expected Return on Plan Assets	0.25	%		—			(610	)
	(0.25	)		—			610

Postretirement Benefits:

				Estimated			Estimated
				Increase/			Increase/
				(Decrease) to			(Decrease) to
				Projected			Annual Net
				Postretirement			Postretirement
				Benefit			Benefit
	Increase/			Obligation			Cost*
Actuarial Assumptions	(Decrease)			(Thousands)			(Thousands)

Discount Rate	0.25	%	$	(1,370	)	$	(89	)
	(0.25	)		1,410			90

Expected Return on Plan Assets	0.25	%		—			(57	)
	(0.25	)		—			57

Annual Medical Cost Trend	1.00	%		2,930			720
	(1.00	)		(2,660	)		(630	)

* Excludes the impact of regulatory deferral mechanism. See Note 2, Pension Plans and Other Postretirement Benefits, of the Notes to Consolidated Financial Statements for information regarding the regulatory treatment of these costs.

	The Utility’s PGA Clause allows Laclede Gas to flow through to customers, subject to prudence review, the cost of purchased gas supplies, including the costs, cost reductions and related carrying costs associated with the Utility’s use of natural gas financial instruments to hedge the purchase price of natural gas. The difference between actual costs incurred and costs recovered through the application of the PGA are recorded as regulatory assets and regulatory liabilities that are recovered or refunded in a subsequent period. Effective October 1, 2005, the Utility was authorized to implement the recovery of gas inventory carrying costs through its PGA rates to recover costs it incurs to finance its investment in gas supplies that are purchased during the storage injection season for sale during the heating season. The MoPSC also approved the application of carrying costs to all over- or under-recoveries of gas costs, including costs and cost reductions associated with the use of financial instruments. Previously, carrying costs were applicable only to certain gas cost components exceeding a predetermined threshold. Effective October 1, 2007, pursuant to the 2007 rate case, the PGA Clause also provides for a portion of income from off-system sales and capacity release revenues to be flowed through to customers.

	The Company records deferred tax liabilities and assets measured by enacted tax rates for the net tax effect of all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax purposes. Changes in enacted tax rates, if any, and certain property basis differences will be reflected by entries to regulatory asset or liability accounts for regulated companies, and will be reflected as income or loss for non-regulated companies. Pursuant to the direction of the MoPSC, Laclede Gas’ provision for income tax expense for financial reporting purposes reflects an open-ended method of tax depreciation. Laclede Gas’ provision for income tax expense also records the income tax effect associated with the difference between overheads capitalized to construction for financial reporting purposes and those recognized for tax purposes without recording an offsetting deferred income tax expense. These two methods are consistent with the regulatory treatment prescribed by the MoPSC.

	Asset retirement obligations are recorded in accordance with SFAS No. 143, “Accounting for Asset Retirement Obligations” and Financial Accounting Standards Board Interpretation Number (FIN) 47, “Accounting for Conditional Asset Retirement Obligations.” Asset retirement obligations are calculated using various assumptions related to the timing, method of settlement, inflation, and profit margins that third parties would demand to settle the future obligations. These assumptions require the use of judgment and estimates and may change in future periods as circumstances dictate. As authorized by the MoPSC, Laclede Gas accrues future removal costs associated with its property, plant and equipment through its depreciation rates, even if a legal obligation does not exist as defined by SFAS No. 143 and FIN 47. The difference between removal costs recognized in depreciation rates and the accretion expense and depreciation expense recognizable under SFAS No. 143 and FIN 47 is a timing difference between the recovery of these costs in rates and their recognition for financial reporting purposes. Accordingly, consistent with SFAS No. 71, these differences are deferred as regulatory liabilities.

	The amount of net periodic pension and other postretirement benefit cost recognized in the financial statements related to the Utility’s qualified pension plans and other postretirement benefit plans is based upon allowances, as approved by the MoPSC, which have been established in the rate-making process for the recovery of these costs from customers. The differences between these amounts and actual pension and other postretirement benefit costs incurred for financial reporting purposes are deferred as regulatory assets or regulatory liabilities. SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” requires that changes that affect the funded status of pension and other postretirement benefit plans, but that are not yet required to be recognized as components of pension and other postretirement benefit cost, be reflected in other comprehensive income. For the Utility’s qualified pension plans and other postretirement benefit plans, amounts that would otherwise be reflected in other comprehensive income are deferred with entries to regulatory assets or regulatory liabilities.

•	a pilot program in which residential customers could lock in for a twelve-month period the cost per therm of gas included in their monthly bills;
•	a conservation program that would provide customers an opportunity to earn a rebate by conserving natural gas during the peak winter heating months;
•	a three-year base rate moratorium; and,
•	an earnings sharing mechanism in which the Utility would share with its customers up to 90 percent of earnings in excess of its authorized return, depending on the level of earnings achieved, to the extent that the Utility would achieve any such additional earnings as a result of its efforts to make utility service more efficient and sell gas in markets outside of its traditional service territory.

•	an increase of $38.6 million in non-gas revenues effective August 1, 2007, including $5.5 million already being billed to customers through an ISRS which would no longer be collected, although the Utility retains the right to file for authorization to reinstate an ISRS based on future eligible infrastructure-related costs;
•	enhancements to the Utility’s weather mitigation rate design to further stabilize the impact of weather fluctuations on its customers and its ability to better ensure recovery of its fixed costs and margins, despite variations in sales volumes due to the impacts of weather and other factors that affect customer usage;
•	a provision, effective October 1, 2007, for the Utility to retain a share in the pre-tax income from off-system sales and capacity release revenues ranging from 15% to 30% of the first $6 million in annual income earned (depending on the level of income earned) and 30% of income over $6 million each year, along with reduced PGA rates beginning in November 2007 to facilitate the timely flow-through of the customer share of such income;
•	modifications to provisions that afford the Utility an opportunity to retain a portion of any savings it may achieve in connection with the procurement of gas supplies; and,
•	low income and energy efficiency/conservation programs for customers, in which the Utility will fund $1.1 million annually, and invest up to an additional $5.3 million over the next three-year period to be collected in future rates.

Type of Facility	S&P	Moody’s	Fitch
Laclede Group Corporate Rating	A		A-
Laclede Gas First Mortgage Bonds	A	A3	A+
Laclede Gas Commercial Paper	A-1	P-2
Laclede Capital Trust I Trust Preferred Securities	A-	Baa3	BBB+

			Payments due by period
			Less than		1-3		3-5		More than
Contractual Obligations	Total		1 Year		Years		Years		5 Years
Principal Payments on Long-Term Debt	$	396.4	$	40.0	$	—	$	25.0	$	331.4
Interest Payments on Long-Term Debt		492.4		24.6		46.1		43.7		378.0
Operating Leases (a)		17.1		6.3		7.4		2.4		1.0
Purchase Obligations – Natural Gas (b)		537.7		358.6		87.0		44.9		47.2
Purchase Obligations – Other (c)		113.4		15.4		18.6		16.3		63.1
Total (d)	$	1,557.0	$	444.9	$	159.1	$	132.3	$	820.7

(a)	Operating lease obligations are primarily for office space, vehicles, and power operated equipment in the gas distribution and non-regulated services segments. Additional payments will be incurred if renewal options are exercised under the provisions of certain agreements.
(b)	These purchase obligations represent the minimum payments required under existing natural gas transportation and storage contracts and natural gas supply agreements in the utility gas distribution and non-regulated gas marketing segments. These amounts reflect fixed obligations as well as obligations to purchase natural gas at future market prices, calculated using September 30, 2007 New York Mercantile Exchange futures prices. Laclede Gas recovers the costs related to its purchases, transportation, and storage of natural gas through the operating of its Purchased Gas Adjustment Clause, subject to prudence review; however, variations in the timing of collections of gas costs from customers affect short-term cash requirements. Additional contractual commitments are generally entered into prior to or during the heating season.
(c)	These purchase obligations reflect miscellaneous agreements for the purchase of materials and the procurement of services necessary for normal operations.
(d)	The categories of Capital Leases and Other Long-Term liabilities have been excluded from the table above because there are no applicable amounts of contractual obligations under these categories. Also, commitments related to pension and postretirement benefit plans have been excluded from the table above. The Company expects to make contributions to its qualified, trusteed pension plans totaling $0.8 million in fiscal year 2008. Laclede Gas anticipates a $0.4 million contribution relative to its non-qualified pension plans during fiscal year 2008. With regard to the postretirement benefits, the Company anticipates Laclede Gas will contribute $8.2 million to the qualified trusts and $0.3 million directly to participants from Laclede Gas’ funds during fiscal year 2008. For further discussion of the Company’s pension and postretirement benefit plans, refer to Note 2, Pension Plans and Other Postretirement Benefits, of the Notes to Consolidated Financial Statements.

September 30	2007			2006

ASSETS
Utility Plant	$	1,187,828		$	1,149,104
Less – Accumulated depreciation and amortization		394,034			385,277
Net Utility Plant		793,794			763,827
Goodwill		33,595			33,595

Non-utility property (net of accumulated depreciation and
amortization, 2007, $17,598; 2006, $15,780)		11,270			13,362
Other investments		45,436			42,731
Other Property and Investments		56,706			56,093

Current Assets:
Cash and cash equivalents		52,746			50,778
Accounts receivable:
Gas customers – billed and unbilled		102,224			91,519
Other		86,713			84,728
Allowances for doubtful accounts		(11,268	)		(13,105	)
Inventories:
Natural gas stored underground at LIFO cost		138,256			137,476
Propane gas at FIFO cost		19,950			19,385
Materials, supplies and merchandise at average cost		4,990			5,973
Derivative instrument assets		31,057			19,117
Unamortized purchased gas adjustments		12,813			44,381
Prepayments and other		29,854			19,594
Total Current Assets		467,335			459,846

Deferred Charges:
Prepaid pension cost		—			65,794
Regulatory assets		285,054			185,644
Other		4,669			5,361
Total Deferred Charges		289,723			256,799

Total Assets	$	1,641,153		$	1,570,160

	Common Stock Issued			Paid-in			Retained			Accum. Other Comp.
(Thousands, Except for Shares and Per Share Amounts)	Shares	Amount		Capital			Earnings			Income			Total

BALANCE OCTOBER 1, 2004	20,981,165	$	20,981	$	116,058		$	220,483		$	(1,607	)	$	355,915
Net income	—		—		—			40,070			—			40,070
Common stock offering	—		—		(96	)		—			—			(96	)
Dividend reinvestment plan	131,144		131		3,839			—			—			3,970
Stock-based compensation costs	—		—		13			—			—			13
Stock options exercised	59,700		60		1,428			—			—			1,488
Tax benefit – stock compensation	—		—		263			—			—			263
Dividends declared:
Common stock ($1.375 per share)	—		—		—			(29,002	)		—			(29,002	)
Other comprehensive income (loss)	—		—		—			—			(6,096	)		(6,096	)
BALANCE SEPTEMBER 30, 2005	21,172,009	$	21,172	$	121,505		$	231,551		$	(7,703	)	$	366,525
Net income	—		—		—			48,989			—			48,989
Dividend reinvestment plan	114,255		114		3,604			—			—			3,718
Stock-based compensation costs	—		—		1,544			—			—			1,544
Stock options exercised	24,375		25		591			—			—			616
Performance-contingent restricted stock award	51,000		51		(51	)		—			—			—
Non-employee directors’ restricted stock award	—		—		(145	)		—			—			(145	)
Tax benefit – stock compensation	—		—		77			—			—			77
Dividends declared:
Common stock ($1.41 per share)	—		—		—			(30,045	)		—			(30,045	)
Other comprehensive income (loss)	—		—		—			—			11,358			11,358
BALANCE SEPTEMBER 30, 2006	21,361,639	$	21,362	$	127,125		$	250,495		$	3,655		$	402,637
Net income	—		—		—			49,771			—			49,771
Dividend reinvestment plan	116,973		117		3,690			—			—			3,807
Stock-based compensation costs	—		—		2,388			—			—			2,388
Stock options exercised	108,025		108		2,946			—			—			3,054
Performance-contingent restricted stock award	59,000		59		(59	)		—			—			—
Non-employee directors’ restricted stock award	—		—		(292	)		—			—			(292	)
Tax benefit – stock compensation	—		—		263			—			—			263
Dividends declared:
Common stock ($1.46 per share)	—		—		—			(31,505	)		—			(31,505	)
Other comprehensive income (loss)	—		—		—			—			(674	)		(674	)
Adoption of SFAS No. 158, net of tax	—		—		—			—			(1,124	)		(1,124	)
BALANCE SEPTEMBER 30, 2007	21,645,637	$	21,646	$	136,061		$	268,761		$	1,857		$	428,325

	Thousands
Balance at September 30, 2006	$	26,018
Liabilities incurred during the period		603
Liabilities settled during the period		(2,372	)
Accretion		1,506
Revisions in estimated cash flows		370
Balance at September 30, 2007	$	26,125

	•	Previously, the Utility’s tariffs allowed for scheduled gas cost adjustments in the months of November, January, March and June. Effective October 1, 2005, the tariffs allow the Utility flexibility to make up to three discretionary PGA changes during each year, in addition to its mandatory November PGA change, so long as such changes are separated by at least two months.
	•	Effective October 1, 2005, the Utility was authorized to implement the recovery of gas inventory carrying costs through its PGA rates to recover costs it incurs to finance its investment in gas supplies that are purchased during the storage injection season for sale during the heating season. The MoPSC also approved the application of carrying costs to all over- or under-recoveries of gas costs, including costs and cost reductions associated with the use of financial instruments. Previously, carrying costs were applicable only to certain gas cost components exceeding a predetermined threshold.