Exhibit 10.1
[EXECUTION COPY]
 
$150,000,000
REVOLVING CREDIT AGREEMENT
Dated as of September 11, 2008
among
CONSUMERS ENERGY COMPANY,
as the Company,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Banks,
UNION BANK OF CALIFORNIA, N.A.,
as Agent and an LC Issuer,
BARCLAYS BANK PLC,
THE ROYAL BANK OF SCOTLAND PLC,
AND
UBS LOAN FINANCE LLC,
as Co-Syndication Agents,
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Documentation Agent
 
UNION BANK OF CALIFORNIA, N.A.,
as Sole Lead Arranger and Sole Bookrunner
 

 

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TABLE OF CONTENTS

              Page  
ARTICLE I DEFINITIONS
    1  
1.1 Definitions
    1  
1.2 Interpretation
    12  
1.3 Accounting Terms
    12  
 
       
ARTICLE II THE ADVANCES
    13  
2.1 Commitment
    13  
2.2 Repayment
    13  
2.3 Ratable Loans
    13  
2.4 Types of Advances
    13  
2.5 Fees and Changes in Commitments
    13  
2.6 Minimum Amount of Advances
    14  
2.7 Optional Principal Payments
    14  
2.8 Method of Selecting Types and Interest Periods for New Advances
    14  
2.9 Conversion and Continuation of Outstanding Advances
    14  
2.10 Interest Rates, Interest Payment Dates
    15  
2.11 Rate after Maturity
    16  
2.12 Method of Payment
    16  
2.13 Bonds; Record-keeping; Telephonic Notices
    16  
2.14 Lending Installations
    17  
2.15 Non-Receipt of Funds by the Agent
    17  
 
       
ARTICLE III LETTER OF CREDIT FACILITY
    17  
3.1 Issuance
    17  
3.2 Participations
    18  
3.3 Notice
    18  
3.4 LC Fees
    18  
3.5 Administration; Reimbursement by Banks
    19  
3.6 Reimbursement by Company
    19  
3.7 Obligations Absolute
    20  
3.8 Actions of LC Issuers
    20  
3.9 Indemnification
    20  
3.10 Banks’ Indemnification
    21  
3.11 Rights as a Bank
    21  
 
       
ARTICLE IV CHANGE IN CIRCUMSTANCES
    21  
4.1 Yield Protection
    21  
4.2 Replacement Bank
    23  
4.3 Availability of Eurodollar Rate Loans
    23  
4.4 Funding Indemnification
    23  
4.5 Taxes
    23  
4.6 Bank Certificates, Survival of Indemnity
    25  

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              Page  
ARTICLE V REPRESENTATIONS AND WARRANTIES
    26  
5.1 Incorporation and Good Standing
    26  
5.2 Corporate Power and Authority: No Conflicts
    26  
5.3 Governmental Approvals
    26  
5.4 Legally Enforceable Agreements
    26  
5.5 Financial Statements
    26  
5.6 Litigation
    27  
5.7 Margin Stock
    27  
5.8 ERISA
    27  
5.9 Insurance
    27  
5.10 Taxes
    27  
5.11 Investment Company Act
    27  
5.12 Bonds
    27  
5.13 Disclosure
    27  
5.14 OFAC
    28  
 
       
ARTICLE VI AFFIRMATIVE COVENANTS
    28  
6.1 Payment of Taxes, Etc
    28  
6.2 Maintenance of Insurance
    28  
6.3 Preservation of Corporate Existence, Etc
    28  
6.4 Compliance with Laws, Etc
    28  
6.5 Visitation Rights
    28  
6.6 Keeping of Books
    28  
6.7 Reporting Requirements
    28  
6.8 Use of Proceeds
    30  
6.9 Maintenance of Properties, Etc
    30  
6.10 Bonds
    30  
 
       
ARTICLE VII NEGATIVE COVENANTS
    31  
7.1 Liens
    31  
7.2 Sale of Assets
    32  
7.3 Mergers, Etc
    32  
7.4 Compliance with ERISA
    32  
7.5 Change in Nature of Business
    32  
7.6 Off-Balance Sheet Liabilities
    33  
7.7 Transactions with Affiliates
    33  
 
       
ARTICLE VIII FINANCIAL COVENANT
    33  
 
       
ARTICLE IX EVENTS OF DEFAULT
    33  
9.1 Events of Default
    33  
9.2 Remedies
    35  
 
       
ARTICLE X WAIVERS, AMENDMENTS AND REMEDIES
    36  
10.1 Amendments
    36  
10.2 Preservation of Rights
    36  

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              Page  
ARTICLE XI CONDITIONS PRECEDENT
    37  
11.1 Initial Credit Extension
    37  
11.2 Each Credit Extension
    38  
 
       
ARTICLE XII GENERAL PROVISIONS
    38  
12.1 Successors and Assigns
    38  
12.2 Survival of Representations
    40  
12.3 Governmental Regulation
    40  
12.4 Taxes
    40  
12.5 Choice of Law
    40  
12.6 Headings
    41  
12.7 Entire Agreement
    41  
12.8 Expenses; Indemnification
    41  
12.9 Severability of Provisions
    41  
12.10 Setoff
    41  
12.11 Ratable Payments
    42  
12.12 Nonliability
    42  
12.13 Other Agents
    42  
12.14 USA Patriot Act
    43  
12.15 Electronic Delivery
    43  
 
       
ARTICLE XIII THE AGENT
    44  
13.1 Appointment
    44  
13.2 Powers
    44  
13.3 General Immunity
    44  
13.4 No Responsibility for Recitals, Etc
    44  
13.5 Action on Instructions of Banks
    45  
13.6 Employment of Agents and Counsel
    45  
13.7 Reliance on Documents; Counsel
    45  
13.8 Agent’s Reimbursement and Indemnification
    45  
13.9 Rights as a Bank
    45  
13.10 Bank Credit Decision
    46  
13.11 Successor Agent
    46  
13.12 Agent and Arranger Fees
    47  
 
       
ARTICLE XIV NOTICES
    47  
14.1 Giving Notice
    47  
14.2 Change of Address
    47  
 
       
ARTICLE XV COUNTERPARTS
    47  
 
       
ARTICLE XVI RELEASE OF BONDS
    47  

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      SCHEDULES    
 
   
Schedule 1
  Pricing Schedule
Schedule 2
  Commitment Schedule

      EXHIBITS    
 
   
Exhibit A
  Form of Supplemental Indenture
Exhibit B
  Required Opinions from James E. Brunner, Esq., General Counsel of the Company
Exhibit C
  Form of Compliance Certificate
Exhibit D
  Form of Assignment and Assumption Agreement
Exhibit E
  Terms of Subordination (Junior Subordinated Debt)
Exhibit F
  Terms of Subordination (Guaranty of Hybrid Equity Securities/Hybrid Preferred
Securities)
Exhibit G
  Form of Bond Delivery Agreement

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REVOLVING CREDIT AGREEMENT
     This REVOLVING CREDIT AGREEMENT, dated as of September 11, 2008, is among
CONSUMERS ENERGY COMPANY, a Michigan corporation (the “Company”), the financial
institutions listed on the signature pages hereof (together with their
respective successors and assigns, the “Banks”) and UNION BANK OF CALIFORNIA,
N.A., as Agent and as an LC Issuer.
W I T N E S S E T H:
     WHEREAS, the Company has requested, and the Banks have agreed to enter
into, a credit facility in an aggregate amount of $150,000,000;
     NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
     1.1 Definitions. As used in this Agreement:
     “Accounting Changes” – see Section 1.3.
     “Administrative Questionnaire” means an administrative questionnaire,
substantially in the form supplied by the Agent, completed by a Bank and
furnished to the Agent in connection with this Agreement.
     “Advance” means a group of Loans made by the Banks hereunder of the same
Type, made, converted or continued on the same day and, in the case of
Eurodollar Rate Loans, having the same Interest Period.
     “Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling (including all directors and officers of such Person),
controlled by, or under direct or indirect common control with such Person. A
Person shall be deemed to control another entity if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise.
     “Agent” means Union Bank of California, N.A., in its capacity as
administrative agent for the Banks pursuant to Article XIII, and not in its
individual capacity as a Bank, and any successor Agent appointed pursuant to
Article XIII.
     “Aggregate Commitment” means the aggregate amount of the Commitments of all
Banks.
     “Aggregate Outstanding Credit Exposure” means, at any time, the aggregate
of the Outstanding Credit Exposure of all the Banks.

 

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     “Agreement” means this Revolving Credit Agreement, as amended from time to
time.
     “Alternate Base Rate” means, for any day, a rate per annum equal to the
higher of (i) the Reference Rate for such day and (ii) the sum of the Federal
Funds Effective Rate for such day plus 1/2% per annum.
     “Applicable Margin” means, with respect to Advances of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Advances of such Type as set forth in Schedule 1.
     “Arranger” means Union Bank of California, N.A.
     “Assignment Agreement” – see Section 12.1(e).
     “Available Aggregate Commitment” means, at any time, the Available
Commitment then in effect minus the Aggregate Outstanding Credit Exposure at
such time.
     “Available Commitment” means, at any time, the lesser of (i) the Aggregate
Commitment and (ii) the face amount of the Bonds.
     “Banks” – see the preamble.
     “Base Eurodollar Rate” means, with respect to a Eurodollar Advance for the
relevant Interest Period, the per annum interest rate determined by the offered
rate per annum at which deposits in U.S. dollars, for a period equal or
comparable to such Interest Period, appears on page 3750 (or any successor page)
of the Dow Jones Market Service as of 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, or in the event such offered
rate is not available from the Dow Jones Market Service page, the average rate
offered on deposits in U.S. dollars, for a period equal or comparable to such
Interest Period, to the Agent by prime banks in the London interbank market at
approximately 11:00 a.m. (London time), two Business Days prior to the first day
of such Interest Period, and in an amount substantially equal to the amount of
Union Bank’s relevant Eurodollar Rate Loan for such Interest Period (or, in the
event that Union Bank is not a Bank hereunder, in the amount of $5,000,000).
     “Bond Delivery Agreement” means a bond delivery agreement whereby the Agent
(x) acknowledges delivery of the Bonds and (y) agrees to hold the Bonds for the
benefit of the Banks and to distribute all payments made by the Company on
account thereof to the Banks, substantially in the form of Exhibit G.
     “Bonds” means a series of interest-bearing First Mortgage Bonds created
under the Supplemental Indenture issued in favor of, and in form and substance
satisfactory to, the Agent.
     “Borrowing Date” means a date on which a Credit Extension is made
hereunder.
     “Borrowing Notice” – see Section 2.8.
     “Business Day” means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are

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open in New York, New York and Los Angeles, California for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in New York, New York and Los Angeles, California for the conduct of
substantially all of their commercial lending activities and interbank wire
transfers can be made on the Fedwire system.
     “Capital Lease” means any lease which has been or would be capitalized on
the books of the lessee in accordance with GAAP.
     “CMS” means CMS Energy Corporation, a Michigan corporation.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     “Collateral Shortfall Amount” – see Section 9.2.
     “Commitment” means, for each Bank, the obligation of such Bank to make
Loans to, and participate in Facility LCs issued upon the application of, the
Company in an aggregate amount not exceeding the amount set forth on Schedule 2
or as set forth in any Assignment Agreement that has become effective pursuant
to Section 12.1, as such amount may be modified from time to time.
     “Commitment Fee” – see Section 2.5.
     “Commitment Fee Rate” means, at any time, the percentage rate per annum at
which Commitment Fees are accruing on the Unused Commitment as set forth in
Schedule 1.
     “Company” – see the preamble.
     “Consolidated Subsidiary” means any Subsidiary the accounts of which are or
are required to be consolidated with the accounts of the Company in accordance
with GAAP.
     “Credit Documents” means this Agreement, the Facility LC Applications (if
any), the Supplemental Indenture, the Bond Delivery Agreement, the Fee Letter,
any promissory note issued pursuant to Section 2.13(a) and the Bonds.
     “Credit Extension” means the making of an Advance or the issuance of a
Facility LC hereunder.
     “Debt” means, with respect to any Person, and without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all indebtedness of such
Person for the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business which are not
overdue), (c) liabilities for accumulated funding deficiencies (prior to the
effectiveness of the applicable provisions of the Pension Protection Act of 2006
with respect to a Plan) and liabilities for failure to make a payment required
to satisfy the minimum funding standard within the meaning of Section 412 of the
Code or Section 302 of ERISA (on and after the effectiveness of the applicable
provisions of the Pension Protection Act of 2006 with respect to a Plan),
(d) all liabilities arising in connection with any withdrawal liability under

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ERISA to any Multiemployer Plan, (e) all obligations of such Person arising
under acceptance facilities, (f) all obligations of such Person as lessee under
Capital Leases, (g) all obligations of such Person arising under any interest
rate swap, “cap”, “collar” or other hedging agreement; provided that for
purposes of the calculation of Debt for this clause (g) only, the actual amount
of Debt of such Person shall be determined on a net basis to the extent such
agreements permit such amounts to be calculated on a net basis, and (h) all
guaranties, endorsements (other than for collection in the ordinary course of
business) and other contingent obligations of such Person to assure a creditor
against loss (whether by the purchase of goods or services, the provision of
funds for payment, the supply of funds to invest in any Person or otherwise) in
respect of indebtedness or obligations of any other Person of the kinds referred
to in clauses (a) through (g) above.
     “Default” means an event which but for the giving of notice or lapse of
time, or both, would constitute an Event of Default.
     “Designated Officer” means the Chief Financial Officer, the Treasurer, an
Assistant Treasurer, any Vice President in charge of financial or accounting
matters or the principal accounting officer of the Company.
     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any governmental agency or authority relating in
any way to the environment, preservation or reclamation of natural resources,
the management, release or threatened release of any Hazardous Substance or to
health and safety matters.
     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Substance,
(c) exposure to any Hazardous Substance, (d) the release or threatened release
of any Hazardous Substance into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
     “ERISA Affiliate” means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company or is under common control (within
the meaning of Section 414(c) of the Code) with the Company.
     “Eurodollar Advance” means an Advance consisting of Eurodollar Rate Loans.
     “Eurodollar Rate” means, with respect to a Eurodollar Advance for the
relevant Interest Period, an interest rate per annum equal to the sum of (i) the
quotient obtained by dividing (a) the Base Eurodollar Rate applicable to such
Interest Period by (b) one minus the Reserve

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Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable Margin.
     “Eurodollar Rate Loan” means a Loan which bears interest by reference to
the Eurodollar Rate.
     “Event of Default” means an event described in Article IX.
     “Excluded Taxes” means, in the case of each Bank, LC Issuer or applicable
Lending Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Bank, such LC Issuer or the Agent is incorporated or organized or (ii) the
jurisdiction in which the Agent’s, such LC Issuer’s or such Bank’s principal
executive office or such Bank’s or such LC Issuer’s applicable Lending
Installation is located.
     “Facility LC” – see Section 3.1.
     “Facility LC Application” – see Section 3.3.
     “Facility LC Collateral Account” means a special, interest-bearing account
maintained (pursuant to arrangements satisfactory to the Agent) at the Agent’s
office at the address specified pursuant to Article XIV, which account shall be
in the name of the Company but under the sole dominium and control of the Agent,
for the benefit of the Banks.
     “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 11:00 a.m. (Los
Angeles, California time) on such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the Agent in
its sole discretion.
     “Fee Letter” – see Section 13.12.
     “First Mortgage Bonds” means bonds issued by the Company pursuant to the
Indenture.
     “Fitch” means Fitch Inc. or any successor thereto.
     “Floating Rate” means a rate per annum equal to (i) the Alternate Base Rate
plus (ii) the Applicable Margin, changing when and as the Alternate Base Rate or
the Applicable Margin changes.
     “Floating Rate Advance” means an Advance consisting of Floating Rate Loans.
     “Floating Rate Loan” means a Loan which bears interest at the Floating
Rate.

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     “FMB Release Date” means the date on which the Bonds are released pursuant
to Article XVI.
     “FRB” means the Board of Governors of the Federal Reserve System or any
successor thereto.
     “GAAP” means generally accepted accounting principles in the United States
of America as in effect on the date hereof, applied on a basis consistent with
those used in the preparation of the financial statements referred to in
Section 5.5 (except, for purposes of the financial statements required to be
delivered pursuant to Sections 6.7(b) and (c), for changes concurred in by the
Company’s independent public accountants).
     “Hazardous Substance” means any waste, substance or material identified as
hazardous, dangerous or toxic by any office, agency, department, commission,
board, bureau or instrumentality of the United States or of the State or
locality in which the same is located having or exercising jurisdiction over
such waste, substance or material.
     “Hybrid Equity Securities” means securities issued by the Company or a
Hybrid Equity Securities Subsidiary that (i) are classified as possessing a
minimum of at least two of the following: (x) “intermediate equity content” by
S&P; (y) “Basket C equity credit” by Moody’s; and (z) “50% equity credit” by
Fitch and (ii) require no repayment, prepayment, mandatory redemption or
mandatory repurchase prior to the date that is at least 91 days after the later
of the termination of the Commitments and the repayment in full of all
Obligations.
     “Hybrid Equity Securities Subsidiary” means any Delaware business trust (or
similar entity) (i) all of the common equity interest of which is owned (either
directly or indirectly through one or more wholly-owned Subsidiaries of the
Company) at all times by the Company or a wholly-owned direct or indirect
Subsidiary of the Company, (ii) that has been formed for the purpose of issuing
Hybrid Equity Securities and (iii) substantially all of the assets of which
consist at all times solely of Junior Subordinated Debt issued by the Company or
a wholly-owned direct or indirect Subsidiary of the Company (as the case may be)
and payments made from time to time on such Junior Subordinated Debt.
     “Hybrid Preferred Securities” means any preferred securities issued by a
Hybrid Preferred Securities Subsidiary, where such preferred securities have the
following characteristics:
     (i) such Hybrid Preferred Securities Subsidiary lends substantially all of
the proceeds from the issuance of such preferred securities to the Company or a
wholly-owned direct or indirect Subsidiary of the Company in exchange for Junior
Subordinated Debt issued by the Company or such wholly-owned direct or indirect
Subsidiary, respectively;
     (ii) such preferred securities contain terms providing for the deferral of
interest payments corresponding to provisions providing for the deferral of
interest payments on such Junior Subordinated Debt; and

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     (iii) the Company or a wholly-owned direct or indirect Subsidiary of the
Company (as the case may be) makes periodic interest payments on such Junior
Subordinated Debt, which interest payments are in turn used by the Hybrid
Preferred Securities Subsidiary to make corresponding payments to the holders of
the preferred securities.
     “Hybrid Preferred Securities Subsidiary” means any Delaware business trust
(or similar entity) (i) all of the common equity interest of which is owned
(either directly or indirectly through one or more wholly-owned Subsidiaries of
the Company) at all times by the Company or a wholly-owned direct or indirect
Subsidiary of the Company, (ii) that has been formed for the purpose of issuing
Hybrid Preferred Securities and (iii) substantially all of the assets of which
consist at all times solely of Junior Subordinated Debt issued by the Company or
a wholly-owned direct or indirect Subsidiary of the Company (as the case may be)
and payments made from time to time on such Junior Subordinated Debt.
     “Indenture” means the Indenture, dated as of September 1, 1945, as
supplemented and amended from time to time, from the Company to The Bank of New
York Mellon, as successor Trustee.
     “Initial Borrowing Date” means September 11, 2008.
     “Interest Period” means, with respect to a Eurodollar Advance, a period of
one, two, three or six months, or such shorter period agreed to by the Company
and the Banks, commencing on a Business Day selected by the Company pursuant to
this Agreement. Such Interest Period shall end on the day which corresponds
numerically to such date one, two, three or six months thereafter (or such
shorter period agreed to by the Company and the Banks); provided that if there
is no such numerically corresponding day in such next, second, third or sixth
succeeding month (or such shorter period, as applicable), such Interest Period
shall end on the last Business Day of such next, second, third or sixth
succeeding month (or such shorter period, as applicable). If an Interest Period
would otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day; provided that if said next
succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day. The Company may not select
any Interest Period that ends after the scheduled Termination Date.
     “Junior Subordinated Debt” means any unsecured Debt of the Company or a
Subsidiary of the Company that is (i) issued in exchange for the proceeds of
Hybrid Equity Securities or Hybrid Preferred Securities and (ii) subordinated to
the rights of the Banks hereunder and under the other Credit Documents pursuant
to terms of subordination substantially similar to those set forth in Exhibit E,
or pursuant to other terms and conditions satisfactory to the Majority Banks.
     “LC Fee” – see Section 3.4.
     “LC Issuer” means Union Bank (or any subsidiary or affiliate of Union Bank
designated by Union Bank) in its capacity as an issuer of Facility LCs
hereunder, and any other Bank designated by the Company that (i) agrees to be an
issuer of Facility LCs hereunder and (ii) is approved by the Agent (such
approval not to be unreasonably withheld or delayed).

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     “LC Obligations” means, at any time, the sum, without duplication, of
(i) the aggregate undrawn stated amount under all Facility LCs outstanding at
such time plus (ii) the aggregate unpaid amount at such time of all
Reimbursement Obligations.
     “LC Payment Date” – see Section 3.5.
     “Lending Installation” means any office, branch, subsidiary or affiliate of
a Bank.
     “Lien” means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
     “Loan” – see Section 2.1.
     “Majority Banks” means, as of any date of determination, Banks in the
aggregate having more than 50% of the Aggregate Commitment as of such date or,
if the Aggregate Commitment has been terminated, Banks in the aggregate holding
more than 50% of the aggregate unpaid principal amount of the Aggregate
Outstanding Credit Exposure as of such date.
     “Material Adverse Change” means any event, development or circumstance that
has had or could reasonably be expected to have a material adverse effect on
(a) the financial condition or results of operations of the Company and its
Consolidated Subsidiaries, taken as a whole, (b) the Company’s ability to
perform its obligations under any Credit Document or (c) the validity or
enforceability of any Credit Document or the rights or remedies of the Agent or
the Banks thereunder.
     “Modify” and “Modification” – see Section 3.1.
     “Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.
     “Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA.
     “Net Proceeds” means, with respect to any sale or issuance of securities or
incurrence of Debt by any Person, the excess of (i) the gross cash proceeds
received by or on behalf of such Person in respect of such sale, issuance or
incurrence (as the case may be) over (ii) customary underwriting commissions,
auditing and legal fees, printing costs, rating agency fees and other customary
and reasonable fees and expenses incurred by such Person in connection
therewith.
     “Net Worth” means, with respect to any Person, the excess of such Person’s
total assets over its total liabilities, total assets and total liabilities each
to be determined in accordance with GAAP consistently applied, excluding from
the determination of total assets (i) goodwill, organizational expenses,
research and development expenses, trademarks, trade names, copyrights, patents,
patent applications, licenses and rights in any thereof, and other similar
intangibles, (ii) cash held in a sinking or other analogous fund established for
the purpose of redemption, retirement or prepayment of capital stock or Debt,
and (iii) any item not included in clause (i) or (ii) above, that is treated as
an intangible asset in conformity with GAAP.

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     “Obligations” means all unpaid principal of and accrued and unpaid interest
on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all
other obligations of the Company to the Banks or to any Bank, any LC Issuer or
the Agent arising under the Credit 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 Capital 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 sheet of such Person, but excluding from this clause
(iv) Operating Leases.
     “Operating Lease” of a Person means any lease of Property (other than a
Capital Lease) by such Person as lessee.
     “Other Taxes” – see Section 4.5(b).
     “Outstanding Credit Exposure” means, as to any Bank at any time, the sum of
(i) the aggregate principal amount of its Loans outstanding at such time, plus
(ii) an amount equal to its Pro Rata Share of the LC Obligations at such time.
     “Payment Date” means the second Business Day of each calendar quarter
occurring after the Initial Borrowing Date.
     “PBGC” means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
     “Person” means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
     “Plan” means any employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Company or any ERISA Affiliate and covered by
Title IV of ERISA.
     “Plan Termination Event” means (a) a Reportable Event described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
Reportable Event not subject to the provision for 30-day notice to the PBGC
under such regulations), (b) the withdrawal of the Company or any ERISA
Affiliate from a Plan during a plan year in which it was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice
of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of proceedings
to terminate a Plan by the PBGC or to appoint a trustee to administer any Plan.
     “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.

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     “Pro Rata Share” means, with respect to a Bank, a portion equal to a
fraction the numerator of which is such Bank’s Commitment and the denominator of
which is the Aggregate Commitment.
     “Reference Rate” means the variable rate of interest per annum established
by Union Bank from time to time as its “reference rate”. Such “reference rate”
is set by Union Bank as a general reference rate of interest, taking into
account such factors as Union Bank may deem appropriate, it being understood
that many of Union Bank’s commercial or other loans are priced in relation to
such rate, that it is not necessarily the lowest or best rate actually charged
to any customer and that Union Bank may make various commercial or other loans
at rates of interest having no relationship to such rate. For purposes of this
Agreement, each change in the Reference Rate shall be effective as of the
opening of business on the date announced as the effective date of any change in
such “reference rate”.
     “Regulation D” means Regulation D of the FRB from time to time in effect
and shall include any successor or other regulation or official interpretation
of the FRB relating to reserve requirements applicable to member banks of the
Federal Reserve System.
     “Regulation U” means Regulation U of the FRB from time to time in effect
and shall include any successor or other regulation or official interpretation
of the FRB relating to the extension of credit by banks, non-banks and
non-broker-dealers for the purpose of purchasing or carrying margin stocks.
     “Reimbursement Obligations” means, at any time, the aggregate of all
obligations of the Company then outstanding under Article III to reimburse the
applicable LC Issuer for amounts paid by such LC Issuer in respect of any one or
more drawings under Facility LCs issued by such LC Issuer.
     “Reportable Event” has the meaning assigned to that term in Title IV of
ERISA.
     “Reserve Requirement” means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
     “S&P” means Standard and Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
     “SEC” means the Securities and Exchange Commission or any governmental
authority which may be substituted therefor.
     “Securitized Bonds” means nonrecourse bonds or similar asset-backed
securities issued by a special-purpose Subsidiary of the Company which are
payable solely from specialized charges authorized by the utility commission of
the relevant state in connection with the recovery of (x) stranded regulatory
costs, (y) stranded clean air and pension costs and (z) other “Qualified Costs”
(as defined in M.C.L. §460.10h(g)) authorized to be securitized by the Michigan
Public Service Commission.
     “Senior Debt” means the First Mortgage Bonds.

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     “Single Employer Plan” means a Plan maintained by the Company or any ERISA
Affiliate for employees of the Company or any ERISA Affiliate.
     “Subsidiary” means, as to any Person, any corporation or other entity of
which at least a majority of the securities or other ownership interests having
ordinary voting power (absolutely or contingently) for the election of directors
or other Persons performing similar functions are at the time owned directly or
indirectly by such Person. Unless otherwise specified, all references herein to
a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries
of the Company.
     “Supplemental Indenture” means a supplemental indenture substantially in
the form of Exhibit A.
     “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.
     “Termination Date” means the earlier of (i) September 9, 2009 and (ii) the
date on which the Commitments are terminated.
     “Total Consolidated Capitalization” means, at any date of determination,
without duplication, the sum of (a) Total Consolidated Debt plus all amounts
excluded from Total Consolidated Debt pursuant to clauses (ii), (iii), (iv),
(vi) and (vii) of the proviso to the definition of such term (but only, in the
case of securities of the type described in clause (iii) or (iv) of such
proviso, to the extent such securities have been deemed to be equity pursuant to
Financial Accounting Standards Board Statement No. 150), (b) equity of the
common stockholders of the Company, (c) equity of the preference stockholders of
the Company and (d) equity of the preferred stockholders of the Company, in each
case determined at such date.
     “Total Consolidated Debt” means, at any date of determination, the
aggregate Debt of the Company and its Consolidated Subsidiaries; provided that
Total Consolidated Debt shall exclude, without duplication, (i) the principal
amount of any Securitized Bonds, (ii) any Junior Subordinated Debt owned by any
Hybrid Equity Securities Subsidiary or Hybrid Preferred Securities Subsidiary,
(iii) Hybrid Equity Securities or Hybrid Preferred Securities outstanding as of
December 31, 2002 (including any guaranty by the Company of payments with
respect to such Hybrid Equity Securities or Hybrid Preferred Securities,
provided that such guaranty is subordinated to the rights of the Banks hereunder
and under the other Credit Documents pursuant to terms of subordination
substantially similar to those set forth in Exhibit F, or pursuant to other
terms and conditions satisfactory to the Majority Banks), (iv) such percentage
of the Net Proceeds from any issuance of hybrid debt/equity securities (other
than Junior Subordinated Debt, Hybrid Equity Securities and Hybrid Preferred
Securities) by the Company or any Consolidated Subsidiary as shall be agreed to
be deemed equity by the Agent and the Company prior to the issuance thereof
(which determination shall be based on, among other things, the treatment (if
any) given to such securities by the applicable rating agencies), (v) if all or
any portion of the disposition of the Company’s Palisades Nuclear Plant is
required to be accounted for as a financing under GAAP rather than as a sale,
the amount of liabilities reflected on the Company’s consolidated balance sheet
as the result of such disposition, (vi) obligations of the

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Company and its Consolidated Subsidiaries of the type described in Section 1.3,
(vii) Debt of any Affiliate of the Company that is (1) consolidated on the
financial statements of the Company solely as a result of the effect and
application of Financial Accounting Standards Board No. 46 and of Accounting
Research Bulletin No. 51, Consolidated Financial Statements, as modified by
Statement of Financial Accounting Standards No. 94, and (2) non-recourse to the
Company or any of its Affiliates (other than the primary obligor of such Debt
and any of its Subsidiaries), (viii) Debt of the Company and its Affiliates that
is re-categorized as such from certain lease obligations pursuant to Emerging
Issues Task Force (“EITF”) Issue 01-8, any subsequent EITF Issue or
recommendation or other interpretation, bulletin or other similar document by
the Financial Accounting Standards Board on or related to such re-categorization
and (ix) any non-cash obligations resulting from the adoption of Financial
Accounting Standards Board Statement No. 158 and any proposed amendment thereto,
to the extent such obligations are required to be treated as debt.
     “Type” – see Section 2.4.
     “Union Bank” means Union Bank of California, N.A., in its individual
capacity, and its successors and assigns.
     “Unused Commitment” means, at any time, the Aggregate Commitment then in
effect minus the Aggregate Outstanding Credit Exposure at such time.
     “USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56, 115 Stat. 272 (2001), as amended.
     1.2 Interpretation.
     (a) The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
     (b) The words “include,” “includes” and “including” shall be deemed to be
followed by the phrase “without limitation.”
     (c) Unless otherwise specified, each reference to an Article, Section,
Exhibit and Schedule means an Article or Section of or an Exhibit or Schedule to
this Agreement.
     1.3 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. If any changes in generally accepted
accounting principles are hereafter required or permitted and are adopted by the
Company or any of its Subsidiaries, or the Company or any of its Subsidiaries
shall change its application of generally accepted accounting principles with
respect to any Off-Balance Sheet Liabilities (including the application of
Financial Accounting Standards Board Interpretation Nos. 45 and 46 and Financial
Accounting Standards Board Statement No. 150), in each case with the agreement
of its independent certified public accountants, and such changes result in a
change in the method of calculation of any of the financial covenants, tests,
restrictions or standards herein or in the related definitions or terms used
therein (“Accounting Changes”), the parties hereto agree, at the Company’s
request, to enter into negotiations, in good faith, in order to amend such
provisions in

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a credit neutral manner so as to reflect equitably such changes with the desired
result that the criteria for evaluating the Company’s and its Subsidiaries’
financial condition shall be the same after such changes as if such changes had
not been made; provided that, until such provisions are amended in a manner
reasonably satisfactory to the Majority Banks, no Accounting Change shall be
given effect in such calculations. In the event such amendment is entered into,
all references in this Agreement to GAAP shall mean generally accepted
accounting principles as of the date of such amendment.
ARTICLE II
THE ADVANCES
     2.1 Commitment. From and including the Initial Borrowing Date and prior to
the Termination Date, each Bank severally agrees, on the terms and conditions
set forth in this Agreement, (a) to make loans to the Company from time to time
(the “Loans”), and (b) to participate in Facility LCs issued upon the request of
the Company from time to time; provided that, after giving effect to the making
of each such Loan and the issuance of each such Facility LC, such Bank’s
Outstanding Credit Exposure shall not exceed its Commitment. In no event may the
Aggregate Outstanding Credit Exposure exceed the Available Commitment. Subject
to the terms and conditions of this Agreement, the Company may borrow, repay and
reborrow at any time prior to the Termination Date. The Commitments shall expire
on the Termination Date.
     2.2 Repayment. The Aggregate Outstanding Credit Exposure and all other
unpaid obligations of the Company hereunder shall be paid in full on the
Termination Date.
     2.3 Ratable Loans. Each Advance shall consist of Loans made by the several
Banks ratably according to their Pro Rata Shares.
     2.4 Types of Advances. The Advances may be Floating Rate Advances or
Eurodollar Advances (each a “Type” of Advance), or a combination thereof, as
selected by the Company in accordance with Sections 2.8 and 2.9.
     2.5 Fees and Changes in Commitments.
     (a) The Company agrees to pay to the Agent for the account of each Bank
according to its Pro Rata Share a commitment fee (the “Commitment Fee”) at the
Commitment Fee Rate on the daily Unused Commitment from the Initial Borrowing
Date to but not including the date on which this Agreement is terminated in full
and all of the Obligations hereunder have been paid in full. The Commitment Fee
shall be payable quarterly in arrears on each Payment Date (for the quarter then
most recently ended) and on the Termination Date (for the period then ended for
which such fee has not previously been paid) and shall be calculated for actual
days elapsed on the basis of a 360 day year.
     (b) The Company may permanently reduce the Aggregate Commitment in whole,
or in part ratably among the Banks in the minimum amount of $10,000,000 (and in
multiples of $1,000,000 if in excess thereof), upon at least five Business Days’
prior written notice to the Agent, which notice shall specify the amount of any
such reduction; provided that the Aggregate Commitment may not be reduced below
the Aggregate Outstanding Credit Exposure. All

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accrued Commitment Fees shall be payable on the effective date of any
termination of the obligation of the Banks to make Credit Extensions hereunder.
     2.6 Minimum Amount of Advances. Each Advance shall be in the minimum amount
of $10,000,000 (and in integral multiples of $1,000,000 if in excess thereof);
provided that any Floating Rate Advance may be in the amount of the Available
Aggregate Commitment (rounded down, if necessary, to an integral multiple of
$1,000,000).
     2.7 Optional Principal Payments. The Company may from time to time prepay,
without penalty or premium, all outstanding Floating Rate Advances or, in a
minimum aggregate amount of $10,000,000 or a higher integral multiple of
$1,000,000, any portion of the outstanding Floating Rate Advances upon one
Business Day’s prior written notice to the Agent. The Company may from time to
time pay, subject to the payment of any funding indemnification amounts required
by Section 4.4 but without penalty or premium, all outstanding Eurodollar
Advances or, in a minimum aggregate amount of $10,000,000 or a higher integral
multiple of $1,000,000, any portion of any outstanding Eurodollar Advance upon
three Business Days’ prior written notice to the Agent; provided that if after
giving effect to any such prepayment the principal amount of any Eurodollar
Advance is less than $10,000,000, such Eurodollar Advance shall automatically
convert into a Floating Rate Advance.
     2.8 Method of Selecting Types and Interest Periods for New Advances. The
Company shall select the Type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable thereto from time to time. The Company
shall give the Agent irrevocable notice (a “Borrowing Notice”) not later than
10:00 a.m. (Los Angeles, California time) on the Borrowing Date of each Floating
Rate Advance and not later than 10:00 a.m. (Los Angeles, California time) three
Business Days before the Borrowing Date for each Eurodollar Advance, specifying:
     (i) the Borrowing Date, which shall be a Business Day;
     (ii) the aggregate amount of such Advance;
     (iii) the Type of Advance selected; and
     (iv) in the case of each Eurodollar Advance, the initial Interest Period
applicable thereto.
Promptly after receipt thereof, the Agent will notify each Bank of the contents
of each Borrowing Notice. Not later than 12:00 noon (Los Angeles, California
time) on each Borrowing Date, each Bank shall make available its Loan in funds
immediately available in Los Angeles, California to the Agent at its address
specified pursuant to Section 14.1. To the extent funds are received from the
Banks, the Agent will make such funds available to the Company at the Agent’s
aforesaid address. No Bank’s obligation to make any Loan shall be affected by
any other Bank’s failure to make any Loan.
     2.9 Conversion and Continuation of Outstanding Advances. Floating Rate
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into Eurodollar Advances pursuant to this
Section 2.9 or are repaid in accordance with

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Section 2.2 or 2.7. Each Eurodollar Advance shall continue as a Eurodollar
Advance until the end of the then applicable Interest Period therefor, at which
time such Eurodollar Advance shall be automatically converted into a Floating
Rate Advance unless (x) such Eurodollar Advance is or was repaid in accordance
with Section 2.2 or 2.7 or (y) the Company shall have given the Agent a
Conversion/Continuation Notice (as defined below) requesting that, at the end of
such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance
for the same or another Interest Period. Subject to the terms of Section 2.6,
the Company may elect from time to time to convert all or any part of a Floating
Rate Advance into a Eurodollar Advance. The Company shall give the Agent
irrevocable notice (a “Conversion/Continuation Notice”) of each conversion of a
Floating Rate Advance into a Eurodollar Advance or continuation of a Eurodollar
Advance not later than 10:00 a.m. (Los Angeles, California time) at least three
Business Days prior to the date of the requested conversion or continuation,
specifying:
     (i) the requested date, which shall be a Business Day, of such conversion
or continuation;
     (ii) the aggregate amount and Type of the Advance which is to be converted
or continued; and
     (iii) the amount of the Advance which is to be converted into or continued
as a Eurodollar Advance and the duration of the Interest Period applicable
thereto;
provided that no Advance may be continued as, or converted into, a Eurodollar
Advance if (x) such continuation or conversion would violate any provision of
this Agreement or (y) a Default or Event of Default exists.
     2.10 Interest Rates, Interest Payment Dates. (a) Subject to Section 2.11,
each Advance shall bear interest as follows:
     (i) at any time such Advance is a Floating Rate Advance, at a rate per
annum equal to the Floating Rate from time to time in effect; and
     (ii) at any time such Advance is a Eurodollar Advance, at a rate per annum
equal to the Eurodollar Rate for each applicable Interest Period.
Changes in the rate of interest on that portion or any Advance maintained as a
Floating Rate Advance will take effect simultaneously with each change in the
Floating Rate.
     (b) Interest accrued on each Floating Rate Advance shall be payable on each
Payment Date and on the Termination Date. Interest accrued on each Eurodollar
Advance shall be payable on the last day of its applicable Interest Period, on
any date on which such Eurodollar Advance is prepaid and on the Termination
Date. Interest accrued on each Eurodollar Advance 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 on Eurodollar
Advances, interest on Floating Rate Advances based on the Federal Funds
Effective Rate and the LC Fee shall be calculated for actual days elapsed on the
basis of a 360-day year. Interest on Floating Rate Advances based on the
Reference Rate shall be calculated for actual days elapsed on the basis of a
365- or 366-day year, as appropriate. Interest on each Advance shall accrue from
and

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including the date such Advance is made to but excluding the date payment
thereof is received in accordance with Section 2.12. If any payment of principal
of or interest on an Advance shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day (unless, in
the case of a Eurodollar Advance, such next succeeding Business Day falls in a
new calendar month, in which case such payment shall be due on the immediately
preceding Business Day) and, in the case of a principal payment, such extension
of time shall be included in computing interest in connection with such payment.
     2.11 Rate after Maturity. Any Advance not paid by the Company at maturity,
whether by acceleration or otherwise, shall bear interest until paid in full at
a rate per annum equal to the higher of (i) the rate otherwise applicable
thereto plus 1% or (ii) the Floating Rate plus 1%.
     2.12 Method of Payment. All payments of principal, interest and fees
hereunder shall be made in immediately available funds to the Agent at its
address specified on its signature page to this Agreement (or at any other
Lending Installation of the Agent specified in writing by the Agent to the
Company) not later than 10:00 a.m. (Los Angeles, California time) on the date
when due and shall (except in the case of Reimbursement Obligations for which
the applicable LC Issuer has not been fully indemnified by the Banks, or as
otherwise specifically required hereunder) be applied ratably by the Agent among
the Banks. Funds received after such time shall be deemed received on the
following Business Day unless the Agent shall have received from, or on behalf
of, the Company a Federal Reserve reference number with respect to such payment
before 1:00 p.m. (Los Angeles, California time) on the date of such payment.
Each payment delivered to the Agent for the account of any Bank shall be
delivered promptly by the Agent in the same type of funds received by the Agent
to such Bank at the address specified for such Bank in its Administrative
Questionnaire or at any Lending Installation specified in a notice received by
the Agent from such Bank. The Agent is hereby authorized to charge the account
of the Company maintained with Union Bank, if any, for each payment of
principal, interest, Reimbursement Obligations and fees as such payment becomes
due hereunder. Each reference to the Agent in this Section 2.12 shall also be
deemed to refer, and shall apply equally, to each LC Issuer, in the case of
payments required to be made by the Company to such LC Issuer pursuant to
Section 3.6.
     2.13 Bonds; Record-keeping; Telephonic Notices.
     (a) The obligation of the Company to repay the Obligations shall be
evidenced by one or more Bonds or, at the request of any Bank following the FMB
Release Date, a promissory note in form and substance reasonably satisfactory to
the Company, the Agent and such Bank.
     (b) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Company to such Bank
resulting from each Loan made by such Bank from time to time, including the
amounts of principal and interest payable and paid to such Bank from time to
time hereunder.
     (c) The Agent shall also maintain accounts in which it will record (i) the
amount of each Loan made hereunder, the Type thereof and, if applicable, the
Interest Period with respect thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Company to each
Bank hereunder, (iii) the original stated amount of each

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Facility LC and the amount of LC Obligations outstanding at any time, and
(iv) the amount of any sum received by the Agent hereunder from the Company and
each Bank’s share thereof.
     (d) The entries maintained in the accounts maintained pursuant to clauses
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the Obligations therein recorded; provided that the failure of the Agent or any
Bank to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Company to repay the Obligations in accordance with
their terms.
     (e) The Company hereby authorizes the Banks and the Agent to make Advances
based on telephonic notices made by any person or persons the Agent or any Bank
in good faith believes to be acting on behalf of the Company. The Company agrees
to deliver promptly to the Agent a written confirmation of each telephonic
notice signed by a Designated Officer. If the written confirmation differs in
any material respect from the action taken by the Agent and the Banks, the
records of the Agent and the Banks shall govern absent manifest error.
     2.14 Lending Installations. Subject to the provisions of Section 4.6, each
Bank may book its Loans and its participation in any LC Obligations and each LC
Issuer may book the Facility LCs issued by it at any Lending Installation
selected by such Bank or such LC Issuer, as the case may be, and may change its
Lending Installation from time to time. All terms of this Agreement shall apply
to any such Lending Installation and the Loans shall be deemed held by the
applicable Bank for the benefit of such Lending Installation. Each Bank may, by
written or facsimile notice to the Company, designate a Lending Installation
through which Loans will be made by it or Facility LCs will be issued by it and
for whose account payments on the Loans or payments with respect to Facility LCs
are to be made.
     2.15 Non-Receipt of Funds by the Agent. Unless a Bank or the Company, as
the case may be, notifies the Agent prior to the date on which it is scheduled
to make payment to the Agent of (i) in the case of a Bank, the proceeds of a
Loan or (ii) in the case of the Company, a payment of principal, interest or
fees to the Agent for the account of the Banks, that it does not intend to make
such payment, the Agent may assume that such payment has been made. The Agent
may, but shall not be obligated to, make the amount of such payment available to
the intended recipient in reliance upon such assumption. If such Bank or the
Company, as the case may be, has not in fact made such payment to the Agent, the
recipient of such payment shall, on demand by the Agent, repay to the 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 Agent until the date the Agent recovers such amount at a rate per annum
equal to (i) in the case of payment by a Bank, the Federal Funds Rate for such
day or (ii) in the case of payment by the Company, the interest rate applicable
to the relevant Loan.
ARTICLE III
LETTER OF CREDIT FACILITY
     3.1 Issuance. Each LC Issuer hereby agrees, on the terms and conditions set
forth in this Agreement, to issue standby and commercial letters of credit
denominated in U.S. dollars (each, a “Facility LC”) and to renew, extend,
increase, decrease or otherwise modify each Facility LC (“Modify,” and each such
action a “Modification”), from time to time from and

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including the date hereof and prior to the Termination Date upon the request of
the Company; provided, however, that in no event shall (i) immediately after
each such Facility LC is issued or Modified, the Aggregate Outstanding Credit
Exposure exceed the Available Commitment, (ii) a Facility LC be issued or
Modified unless each of the Banks consents, in its sole and absolute discretion,
to such issuance or Modification by providing written notice of such consent to
the Agent on or before the date of issuance or Modification (as the case may be)
of such Facility LC, and (iii) a Facility LC (x) be issued later than 30 days
prior to the scheduled Termination Date, (y) have an expiry date later than the
fifth Business Day (or, in the case of a commercial Facility LC, the 30th day)
prior to the scheduled Termination Date or (z) provide for time drafts.
     3.2 Participations. Upon the issuance or Modification by an LC Issuer of a
Facility LC in accordance with this Article III, such LC Issuer shall be deemed,
without further action by any party hereto, to have unconditionally and
irrevocably sold to each Bank, and each Bank shall be deemed, without further
action by any party hereto, to have unconditionally and irrevocably purchased
from such LC Issuer, a participation in such Facility LC (and each Modification
thereof) and the related LC Obligations in proportion to its Pro Rata Share.
     3.3 Notice. Subject to Section 3.1, the Company shall give the Agent and
the applicable LC Issuer notice prior to 10:00 a.m. (Los Angeles, California
time) at least three Business Days prior to the proposed date of issuance or
Modification of each Facility LC, specifying the beneficiary, the proposed date
of issuance (or Modification) and the expiry date of such Facility LC, and
describing the proposed terms of such Facility LC and the nature of the
transactions proposed to be supported thereby. Upon receipt of such notice, the
Agent shall promptly notify each Bank, of the contents thereof and of the amount
of such Bank’s participation in such proposed Facility LC. Each Bank, shall
within (2) Business Days following the date on which it receives such notice
from the Agent, notify the Agent whether such Bank consents to the issuance or
Modification of such Facility LC (which consent shall be in the sole and
absolute discretion of such Bank), it being understood and agreed that unless
and until each Bank consents in writing to such issuance or Modification, such
Facility LC will not be issued or Modified by the applicable LC Issuer. The
issuance or Modification by an LC Issuer of any Facility LC shall, in addition
to the conditions precedent set forth in Article XI (the satisfaction of which
such LC Issuer shall have no duty to ascertain), be subject to the conditions
precedent that such Facility LC shall be satisfactory to such LC Issuer and that
the Company shall have executed and delivered such application agreement and/or
such other instruments and agreements relating to such Facility LC as such LC
Issuer shall have reasonably requested (each, a “Facility LC Application”). In
the event of any conflict between the terms of this Agreement and the terms of
any Facility LC Application, the terms of this Agreement shall control.
     3.4 LC Fees. The Company shall pay to the Agent, for the account of the
Banks ratably in accordance with their respective Pro Rata Shares, a letter of
credit fee (the “LC Fee”) at a per annum rate equal to the Applicable Margin for
Eurodollar Rate Loans in effect from time to time on the daily undrawn stated
amount of each Facility LC, such fee to be payable in arrears on each Payment
Date and the Termination Date (and, if applicable, thereafter on demand). The
Company shall also pay to each LC Issuer for its own account (a) a fronting fee
for each Facility LC at the time and in the amount (i) in the case of Union
Bank, set forth in the Fee Letter, and (ii) in the case of any other LC Issuer,
separately agreed by the Company and such LC Issuer, and (b) documentary and
processing charges in connection with the issuance or Modification of

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and draws under Facility LCs in accordance with such LC Issuer’s standard
schedule for such charges as in effect from time to time.
     3.5 Administration; Reimbursement by Banks. Upon receipt from the
beneficiary of any Facility LC of any demand for payment under such Facility LC,
the applicable LC Issuer shall notify the Agent and the Agent shall promptly
notify the Company and each other Bank as to the amount to be paid by such LC
Issuer as a result of such demand and the proposed payment date (the “LC Payment
Date”). The responsibility of an LC Issuer to the Company and each Bank shall be
only to determine that the documents (including each demand for payment)
delivered under each Facility LC issued by such LC Issuer in connection with
such presentment shall be in conformity in all material respects with such
Facility LC. Each LC Issuer shall endeavor to exercise the same care in the
issuance and administration of the Facility LCs as it does with respect to
letters of credit in which no participations are granted, it being understood
that in the absence of any gross negligence or willful misconduct by such LC
Issuer, each Bank shall be unconditionally and irrevocably liable without regard
to the occurrence of any Default or any condition precedent whatsoever, to
reimburse such LC Issuer on demand for (i) such Bank’s Pro Rata Share of the
amount of each payment made by such LC Issuer under each Facility LC issued by
it to the extent such amount is not reimbursed by the Company pursuant to
Section 3.6 below, plus (ii) interest on the foregoing amount to be reimbursed
by such Bank, for each day from the date of such LC Issuer’s demand for such
Reimbursement (or, if such demand is made after 10:00 a.m. (Los Angeles,
California time) on such date, from the next succeeding Business Day) to the
date on which such Bank pays the amount to be reimbursed by it, at a rate of
interest per annum equal to the Federal Funds Effective Rate for the first three
days and, thereafter, at a rate of interest equal to the rate applicable to
Floating Rate Advances.
     3.6 Reimbursement by Company. The Company shall be irrevocably and
unconditionally obligated to reimburse the applicable LC Issuer on the
applicable LC Payment Date for any amounts to be paid by such LC Issuer upon any
drawing under any Facility LC issued by it, without presentment, demand, protest
or other formalities of any kind; provided that neither the Company nor any Bank
shall hereby be precluded from asserting any claim for direct (but not
consequential) damages suffered by the Company or such Bank to the extent, but
only to the extent, caused by (i) the willful misconduct or gross negligence of
such LC Issuer in determining whether a request presented under any Facility LC
issued by it complied with the terms of such Facility LC or (ii) such LC
Issuer’s failure to pay under any Facility LC issued by it after the
presentation to it of a request strictly complying with the terms and conditions
of such Facility LC. All such amounts paid by the applicable LC Issuer and
remaining unpaid by the Company shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to (x) the rate applicable to Floating
Rate Advances for such day if such day falls on or before the applicable LC
Payment Date and (y) the sum of 1% plus the rate applicable to Floating Rate
Advances for such day if such day falls after such LC Payment Date. The
applicable LC Issuer will pay to each Bank ratably in accordance with its Pro
Rata Share all amounts received by such LC Issuer from the Company for
application in payment, in whole or in part, of the Reimbursement Obligation in
respect of any Facility LC issued by such LC Issuer, but only to the extent such
Bank has made payment to such LC Issuer in respect of such Facility LC pursuant
to Section 3.5. Subject to the terms and conditions of this Agreement (including
the submission of a Borrowing Notice in compliance with Section 2.8 and the
satisfaction of the

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applicable conditions precedent set forth in Article XI), the Company may
request an Advance hereunder for the purpose of satisfying any Reimbursement
Obligation.
     3.7 Obligations Absolute. The Company’s obligations under this Article III
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the Company
may have or have had against any LC Issuer, any Bank or any beneficiary of a
Facility LC. The Company further agrees with the LC Issuers and the Banks that
the LC Issuers and the Banks shall not be responsible for, and the Company’s
Reimbursement Obligation in respect of any Facility LC shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
the Company, any of its affiliates, the beneficiary of any Facility LC or any
financing institution or other party to whom any Facility LC may be transferred
or any claims or defenses whatsoever of the Company or of any of its affiliates
against the beneficiary of any Facility LC or any such transferee. No LC Issuer
shall be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Facility LC. The Company agrees that any action taken or
omitted by any LC Issuer or any Bank under or in connection with a Facility LC
and the related drafts and documents, if done without gross negligence or
willful misconduct, shall be binding upon the Company and shall not put any LC
Issuer or any Bank under any liability to the Company. Nothing in this
Section 3.7 is intended to limit the right of the Company to make a claim
against any LC Issuer for damages as contemplated by the proviso to the first
sentence of Section 3.6.
     3.8 Actions of LC Issuers. Each LC Issuer shall be entitled to rely, and
shall be fully protected in relying, upon any Facility LC, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by such LC Issuer.
Each LC Issuer shall be fully justified in failing or refusing to take any
action under this Agreement unless it shall first have received such advice or
concurrence of the Majority Banks as it reasonably deems appropriate or it shall
first be indemnified to its reasonable satisfaction by the Banks against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Notwithstanding any other provision of this
Article III, each LC Issuer shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement in accordance with a request of
the Majority Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Banks and any future holders of a
participation in any Facility LC.
     3.9 Indemnification. The Company hereby agrees to indemnify and hold
harmless each Bank, each LC Issuer and the Agent, and their respective
directors, officers, agents and employees from and against any and all claims
and damages, losses, liabilities, reasonable costs or expenses which such Bank,
such LC Issuer or the Agent may incur (or which may be claimed against such
Bank, such LC Issuer or the Agent by any Person whatsoever) by reason of or in
connection with the issuance, execution and delivery or transfer of or payment
or failure to pay under any Facility LC or any actual or proposed use of any
Facility LC, including any claims,

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damages, losses, liabilities, costs or expenses which any LC Issuer may incur by
reason of or in connection with (i) the failure of any other Bank to fulfill or
comply with its obligations to such LC Issuer hereunder (but nothing herein
contained shall affect any rights the Company may have against any defaulting
Bank) or (ii) by reason of or on account of such LC Issuer issuing any Facility
LC which specifies that the term “Beneficiary” included therein includes any
successor by operation of law of the named Beneficiary, but which Facility LC
does not require that any drawing by any such successor Beneficiary be
accompanied by a copy of a legal document, satisfactory to such LC Issuer,
evidencing the appointment of such successor Beneficiary; provided that the
Company shall not be required to indemnify any Bank, any LC Issuer or the Agent
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by (x) the willful misconduct or gross negligence
of any LC Issuer in determining whether a request presented under any Facility
LC issued by it complied with the terms of such Facility LC or (y) any LC
Issuer’s failure to pay under any Facility LC issued by it after the
presentation to it of a request strictly complying with the terms and conditions
of such Facility LC. Nothing in this Section 3.9 is intended to limit the
obligations of the Company under any other provision of this Agreement.
     3.10 Banks’ Indemnification. Each Bank shall, ratably in accordance with
its Pro Rata Share, indemnify each LC Issuer, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Company) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees’ gross negligence or willful
misconduct or such LC Issuer’s failure to pay under any Facility LC issued by it
after the presentation to it of a request strictly complying with the terms and
conditions of the Facility LC) that such indemnitees may suffer or incur in
connection with this Article III or any action taken or omitted by such
indemnitees hereunder (in such LC Issuer’s capacity as an LC Issuer).
     3.11 Rights as a Bank. In its capacity as a Bank, each LC Issuer shall have
the same rights and obligations as any other Bank.
ARTICLE IV
CHANGE IN CIRCUMSTANCES
     4.1 Yield Protection.
     (a) If any change in law or any governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law), or any
interpretation thereof by any agency or authority having jurisdiction over any
Bank or any LC Issuer,
     (i) subjects any Bank, any LC Issuer or any applicable Lending Installation
to any increased tax, duty, charge or withholding on or from payments due from
the Company (excluding taxation measured by or attributable to the overall net
income of such Bank, such LC Issuer or such applicable Lending Installation,
whether overall or in any geographic area), or changes the rate of taxation of
payments to any Bank or any LC Issuer in respect of its Credit Extensions
(including any participations in Facility LCs) or other amounts due it
hereunder, or

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     (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 any Bank, any LC
Issuer or any applicable Lending Installation (including any reserve costs under
Regulation D with respect to Eurocurrency liabilities (as defined in
Regulation D)), or
     (iii) imposes any other condition the result of which is to increase the
cost to any Bank, any LC Issuer or any applicable Lending Installation of
making, funding or maintaining Credit Extensions (including any participations
in Facility LCs), or reduces any amount receivable by any Bank, any LC Issuer or
any applicable Lending Installation in connection with Credit Extensions
(including any participations in Facility LCs) or requires any Bank, any LC
Issuer or any applicable Lending Installation to make any payment calculated by
reference to its Outstanding Credit Exposure or interest received by it, by an
amount deemed material by such Bank or such LC Issuer, or
     (iv) affects the amount of capital required or expected to be maintained by
any Bank, any LC Issuer or any applicable Lending Installation or any
corporation controlling any Bank or any LC Issuer and such Bank or such LC
Issuer, as applicable, determines the amount of capital required is increased by
or based upon the existence of this Agreement or its obligation to make Credit
Extensions (including any participations in Facility LCs) hereunder or of
commitments of this type,
then, upon presentation by such Bank or such LC Issuer to the Company of a
certificate (as referred to in the immediately succeeding sentence of this
Section 4.1) setting forth the basis for such determination and the additional
amounts reasonably determined by such Bank or such LC Issuer for the period of
up to 90 days prior to the date on which such certificate is delivered to the
Company and the Agent, to be sufficient to compensate such Bank or such LC
Issuer, as applicable, in light of such circumstances, the Company shall within
30 days of such delivery of such certificate pay to the Agent for the account of
such Bank or such LC Issuer, as applicable, the specified amounts set forth on
such certificate. The affected Bank or LC Issuer, as applicable, shall deliver
to the Company and the Agent a certificate setting forth the basis of the claim
and specifying in reasonable detail the calculation of such increased expense,
which certificate shall be prima facie evidence as to such increase and such
amounts. An affected Bank or LC Issuer, as applicable, may deliver more than one
certificate to the Company during the term of this Agreement. In making the
determinations contemplated by the above-referenced certificate, any Bank and
any LC Issuer may make such reasonable estimates, assumptions, allocations and
the like that such Bank or such LC Issuer, as applicable, in good faith
determines to be appropriate, and such Bank’s or such LC Issuer’s selection
thereof in accordance with this Section 4.1 shall be conclusive and binding on
the Company, absent manifest error.
     (b) No Bank or LC Issuer shall be entitled to demand compensation or be
compensated hereunder to the extent that such compensation relates to any period
of time more than 90 days prior to the date upon which such Bank or such LC
Issuer, as applicable, first notified the Company of the occurrence of the event
entitling such Bank or such LC Issuer, as applicable, to such compensation
(unless, and to the extent, that any such compensation so demanded shall relate
to the retroactive application of any event so notified to the Company).

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     4.2 Replacement Bank.
     (a) If any Bank shall make a demand for payment under Section 4.1, then
within 30 days after such demand, the Company may, with the approval of the
Agent (which approval shall not be unreasonably withheld) and provided that no
Default or Event of Default shall then have occurred and be continuing, demand
that such Bank assign to one or more financial institutions designated by the
Company and approved by the Agent all (but not less than all) of such Bank’s
Commitment and Outstanding Credit Exposure within the period ending on the later
of such 30th day and the last day of the longest of the then current Interest
Periods or maturity dates for such Outstanding Credit Exposure. Any such
assignment shall be consummated on terms satisfactory to the assigning Bank;
provided that such Bank’s consent to such assignment shall not be unreasonably
withheld.
     (b) If the Company shall elect to replace a Bank pursuant to clause (a)
above, the Company shall prepay the Outstanding Credit Exposure of such Bank,
and the financial institution or institutions selected by the Company shall
replace such Bank as a Bank hereunder pursuant to an instrument satisfactory to
the Company, the Agent and the Bank being replaced by making Credit Extensions
to the Company in the amount of the Outstanding Credit Exposure of such
assigning Bank and assuming all the same rights and responsibilities hereunder
as such assigning Bank and having the same Commitment as such assigning Bank.
     4.3 Availability of Eurodollar Rate Loans. If
     (a) any Bank determines that maintenance of a Eurodollar Rate Loan at a
suitable Lending Installation would violate any applicable law, rule, regulation
or directive, whether or not having the force of law, or
     (b) the Majority Banks determine that (i) deposits of a type and maturity
appropriate to match fund Eurodollar Rate Loans are not available or (ii) the
Base Eurodollar Rate does not accurately reflect the cost of making or
maintaining a Eurodollar Rate Loan,
then the Agent shall suspend the availability of Eurodollar Rate Loans and, in
the case of clause (a), require any outstanding Eurodollar Rate Loans to be
converted to Floating Rate Loans on such date as is required by the applicable
law, rule, regulation or directive.
     4.4 Funding Indemnification. If any payment of a Eurodollar Rate Loan
occurs on a date which is not the last day of an applicable Interest Period,
whether because of prepayment or otherwise, or a Eurodollar Rate Loan is not
made on the date specified by the Company for any reason other than default by
the Banks, the Company will indemnify each Bank for any loss or cost (but not
lost profits) incurred by it resulting therefrom, including any loss or cost in
liquidating or employing deposits acquired to fund or maintain such Eurodollar
Rate Loan; provided that the Company shall not be liable for any of the
foregoing to the extent they arise because of acceleration by any Bank.
     4.5 Taxes.
     (a) All payments by the Company to or for the account of any Bank, any LC
Issuer or the Agent hereunder or under any Bond or Facility LC Application shall
be made free and clear

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of and without deduction for any and all Taxes. If the Company shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder to
any Bank, any LC Issuer or the 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 4.5) such Bank, such LC
Issuer or the 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 Company shall
make such deductions, (iii) the Company shall pay the full amount deducted to
the relevant authority in accordance with applicable law and (iv) the Company
shall furnish to the Agent the original copy of a receipt evidencing payment
thereof within 30 days after such payment is made.
     (b) In addition, the Company hereby agrees to pay 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 Bond or
Facility LC Application or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Bond or Facility LC Application (“Other
Taxes”).
     (c) The Company hereby agrees to indemnify the Agent, each LC Issuer and
each Bank for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed on amounts payable under this Section 4.5) paid by the
Agent, such LC Issuer or such Bank 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 Agent,
such LC Issuer or such Bank makes demand therefor pursuant to Section 4.6.
     (d) Each Bank that is not incorporated under the laws of the United States
of America or a state thereof (each a “Non-U.S. Bank”) agrees that it will, not
more than ten Business Days after the date hereof, or, if later, not more than
ten Business Days after becoming a Bank hereunder, (i) deliver to each of the
Company and the Agent two duly completed copies of United States Internal
Revenue Service Form W-8BEN or W-8ECI, certifying in either case that such Bank
is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, and (ii) deliver to each
of the Company and the Agent a United States Internal Revenue Form W-8 or W-9,
as the case may be, and certify that it is entitled to an exemption from United
States backup withholding tax. Each Non-U.S. Bank further undertakes to deliver
to each of the Company and the 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 Company or the Agent. All forms or
amendments described in the preceding sentence shall certify that such Bank is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless an event
(including 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 Bank from duly completing
and delivering any such form or amendment with respect to it and such Bank
advises the Company and the Agent that it is not capable of receiving payments
without any deduction or withholding of United States federal income tax.

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     (e) For any period during which a Non-U.S. Bank has failed to provide the
Company with an appropriate form pursuant to clause (d), above (unless such
failure is due to a change in treaty, 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. Bank shall not be entitled to indemnification under
this Section 4.5 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Bank which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its failure
to deliver a form required under clause (d) above, the Company shall take such
steps as such Non-U.S. Bank shall reasonably request to assist such Non-U.S.
Bank to recover such Taxes.
     (f) Any Bank that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Bond
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
the Company (with a copy to the 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.
     (g) If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political subdivision
thereof asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Bank (because the appropriate form was
not delivered or properly completed, because such Bank failed to notify the
Agent of a change in circumstances which rendered its exemption from withholding
ineffective, or for any other reason), such Bank shall indemnify the Agent fully
for all amounts paid, directly or indirectly, by the Agent as tax, withholding
therefor, or otherwise, including penalties and interest, and including taxes
imposed by any jurisdiction on amounts payable to the Agent under this clause
(g), together with all costs and expenses related thereto (including attorneys
fees and time charges of attorneys for the Agent, which attorneys may be
employees of the Agent). The obligations of the Banks under this clause (g)
shall survive the payment of the Obligations and termination of this Agreement.
     4.6 Bank Certificates, Survival of Indemnity. To the extent reasonably
possible, each Bank shall designate an alternate Lending Installation with
respect to Eurodollar Rate Loans to reduce any liability of the Company to such
Bank under Section 4.1 or to avoid the unavailability of Eurodollar Rate Loans
under Section 4.3, so long as such designation is not disadvantageous to such
Bank. A certificate of such Bank as to the amount due under Section 4.1, 4.4 or
4.5 shall be final, conclusive and binding on the Company in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Rate Loan shall be calculated as though each Bank
funded each Eurodollar Rate Loan through the purchase of a deposit of the type
and maturity corresponding to the deposit used as a reference in determining the
Base Eurodollar Rate applicable to such Loan whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in any certificate
shall be payable on demand after receipt by the Company of such certificate. The
obligations of the Company under Sections 4.1, 4.4 and 4.5 shall survive payment
of the Obligations and termination of this Agreement; provided that no Bank
shall be entitled to compensation to the extent that such compensation relates
to any period of time more than 90 days after the termination of this Agreement.

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ARTICLE V
REPRESENTATIONS AND WARRANTIES
     The Company hereby represents and warrants that:
     5.1 Incorporation and Good Standing. The Company is duly incorporated,
validly existing and in good standing under the laws of the State of Michigan.
     5.2 Corporate Power and Authority: No Conflicts. The execution, delivery
and performance by the Company of the Credit Documents are within the Company’s
corporate powers, have been duly authorized by all necessary corporate action
and do not (i) violate the Company’s charter, bylaws or any applicable law, or
(ii) breach or result in an event of default under any indenture or material
agreement, and do not result in or require the creation of any Lien upon or with
respect to any of its properties (except the Lien of the Indenture securing the
Bonds and any Lien in favor of the Agent on the Facility LC Collateral Account
or any funds therein).
     5.3 Governmental Approvals. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the Company
of any Credit Document, except for the authorization to issue, sell or guarantee
secured and/or unsecured short-term debt granted by the Federal Energy
Regulatory Commission, which authorization has been obtained and is in full
force and effect.
     5.4 Legally Enforceable Agreements. Each Credit Document constitutes a
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, subject to (a) the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (b) the application of general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
     5.5 Financial Statements. The audited balance sheet of the Company and its
Consolidated Subsidiaries as at December 31, 2007, and the related statements of
income and cash flows of the Company and its Consolidated Subsidiaries for the
fiscal year then ended, as set forth in the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2007 (copies of which have been furnished
to each Bank), fairly present the financial condition of the Company and its
Consolidated Subsidiaries as at such date and the results of operations of the
Company and its Consolidated Subsidiaries for the fiscal year ended on such
date, all in accordance with GAAP. The unaudited balance sheet of the Company
and its Consolidated Subsidiaries as at June 30, 2008, and the related unaudited
statements of income and cash flows of the Company and its Consolidated
Subsidiaries for the six-month period then ended, as set forth in the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 (copies of
which have been furnished to each Bank), fairly present (subject to year-end
audit adjustments) the financial condition of the Company and its Consolidated
Subsidiaries as at such date and the results of operations of the Company and
its Consolidated Subsidiaries for the six-month period ended on such date, all
in accordance with GAAP, and since June 30, 2008, there has been no Material
Adverse Change.

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     5.6 Litigation. Except (i) to the extent described in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007 and Quarterly Report on
Form 10-Q for the quarter ended June 30, 2008, in each case as filed with the
SEC, and (ii) such other similar actions, suits and proceedings predicated on
the occurrence of the same events giving rise to any actions, suits and
proceedings described in the Reports referred to in the foregoing clause (i)
(all matters described in clauses (i) and (ii) above, the “Disclosed Matters”),
there is no pending or threatened action, suit, investigation or proceeding
against the Company or any of its Consolidated Subsidiaries before any court,
governmental agency or arbitrator, which, if adversely determined, might
reasonably be expected to result in a Material Adverse Change. As of the Initial
Borrowing Date, (a) there is no litigation challenging the validity or the
enforceability of any of the Credit Documents and (b) there have been no adverse
developments with respect to the Disclosed Matters that have resulted, or could
reasonably be expected to result, in a Material Adverse Change.
     5.7 Margin Stock. The Company is not engaged in the business of extending
credit for the purpose of buying or carrying margin stock (within the meaning of
Regulation U), and no proceeds of any Credit Extension will be used to buy or
carry any margin stock or to extend credit to others for the purpose of buying
or carrying any margin stock.
     5.8 ERISA. No Plan Termination Event has occurred or is reasonably expected
to occur with respect to any Plan. Neither the Company nor any ERISA Affiliate
is an employer under or has any liability with respect to a Multiemployer Plan.
     5.9 Insurance. All insurance required by Section 6.2 is in full force and
effect.
     5.10 Taxes. The Company and its Subsidiaries have filed all tax returns
(Federal, state and local) required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, or, to the extent the Company or
any of its Subsidiaries is contesting in good faith an assertion of liability
based on such returns, has provided adequate reserves for payment thereof in
accordance with GAAP.
     5.11 Investment Company Act. The Company is not an investment company
(within the meaning of the Investment Company Act of 1940, as amended).
     5.12 Bonds. The issuance to the Agent of Bonds as evidence of the
Obligations (i) will not violate any provision of the Indenture or any other
agreement or instrument, or any law or regulation, or judicial or regulatory
order, judgment or decree, to which the Company or any of its Subsidiaries is a
party or by which any of the foregoing is bound and (ii) will, prior to the FMB
Release Date, provide the Banks, as beneficial holders of the Bonds through the
Agent, the benefit of the Lien of the Indenture equally and ratably with the
holders of other First Mortgage Bonds.
     5.13 Disclosure. The Company has not withheld any fact from the Agent or
the Banks in regard to the occurrence of a Material Adverse Change; and all
financial information delivered by the Company to the Agent and the Banks on and
after the date of this Agreement is true and correct in all material respects as
at the dates and for the periods indicated therein.

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     5.14 OFAC. Neither the Company nor any Subsidiary or Affiliate of the
Company is named on the United States Department of the Treasury’s Specially
Designated Nationals or Blocked Persons list available through
http://www.treas.gov/offices/eotffc/ofac/sdn/t11sdn.pdf or as otherwise
published from time.
ARTICLE VI
AFFIRMATIVE COVENANTS
     So long as any Obligations shall remain unpaid, any Facility LC shall
remain outstanding or any Bank shall have any Commitment under this Agreement,
the Company shall:
     6.1 Payment of Taxes, Etc. Pay and discharge, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property, and (b) all lawful claims which, if
unpaid, might by law become a Lien upon its property; provided that the Company
shall not be required to pay or discharge any such tax, assessment, charge or
claim (i) which is being contested by it in good faith and by proper procedures
or (ii) the non-payment of which will not result in a Material Adverse Change.
     6.2 Maintenance of Insurance. Maintain insurance in such amounts and
covering such risks with respect to its business and properties as is usually
carried by companies engaged in similar businesses and owning similar
properties, either with reputable insurance companies or, in whole or in part,
by establishing reserves or one or more insurance funds, either alone or with
other corporations or associations.
     6.3 Preservation of Corporate Existence, Etc. Preserve and maintain its
corporate existence, rights and franchises, and qualify and remain qualified as
a foreign corporation in each jurisdiction in which such qualification is
necessary in view of its business and operations or the ownership of its
properties; provided that the Company shall not be required to preserve any such
right or franchise or to remain so qualified unless the failure to do so would
reasonably be expected to result in a Material Adverse Change.
     6.4 Compliance with Laws, Etc. Comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority,
the non-compliance with which would reasonably be expected to result in a
Material Adverse Change.
     6.5 Visitation Rights. Subject to any necessary approval from the Nuclear
Regulatory Commission, at any reasonable time and from time to time, permit the
Agent, any of the Banks or any agents or representatives thereof to examine and
make copies of and abstracts from its records and books of account, visit its
properties and discuss its affairs, finances and accounts with any of its
officers.
     6.6 Keeping of Books. Keep, and cause each Consolidated Subsidiary to keep,
adequate records and books of account, in which full and correct entries shall
be made of all of its financial transactions and its assets and business so as
to permit the Company and its Consolidated Subsidiaries to present financial
statements in accordance with GAAP.
     6.7 Reporting Requirements. Furnish to the Agent, with sufficient copies
for each of the Banks:

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     (a) as soon as practicable and in any event within five Business Days after
becoming aware of the occurrence of any Default or Event of Default, a statement
of a Designated Officer as to the nature thereof, and as soon as practicable and
in any event within five Business Days thereafter, a statement of a Designated
Officer as to the action which the Company has taken, is taking or proposes to
take with respect thereto;
     (b) as soon as available and in any event within 60 days after the end of
each of the first three quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries as
at the end of such quarter, and the related consolidated statements of income,
cash flows and common stockholder’s equity of the Company and its Consolidated
Subsidiaries as at the end of and for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
date or period of the preceding fiscal year, or statements providing
substantially similar information (which requirement shall be deemed satisfied
by the delivery of the Company’s quarterly report on Form 10-Q for such
quarter), all in reasonable detail and duly certified (subject to the absence of
footnotes and to year-end audit adjustments) by a Designated Officer as having
been prepared in accordance with GAAP, together with (i) a certificate of a
Designated Officer (which certificate shall also accompany the financial
statements delivered pursuant to clause (c) below) stating that such officer has
no knowledge (having made due inquiry with respect thereto) that a Default or
Event of Default has occurred and is continuing, or, if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the actions which the Company has taken, is taking or proposes to take with
respect thereto, and (ii) a certificate of a Designated Officer, in
substantially the form of Exhibit C hereto, setting forth the Company’s
computation of the financial ratio specified in Article VIII as of the end of
the immediately preceding fiscal quarter or year, as the case may be, of the
Company;
     (c) as soon as available and in any event within 120 days after the end of
each fiscal year of the Company, a copy of the Company’s Annual Report on Form
10-K (or any successor form) for such year, including therein the consolidated
balance sheet of the Company and its Consolidated Subsidiaries as at the end of
such year and the consolidated statements of income, cash flows and common
stockholder’s equity of the Company and its Consolidated Subsidiaries as at the
end of and for such year, or statements providing substantially similar
information, in each case certified by independent public accountants of
recognized national standing selected by the Company (and not objected to by the
Majority Banks), together with a certificate of such accounting firm addressed
to the Banks stating that, in the course of its examination of the consolidated
financial statements of the Company and its Consolidated Subsidiaries, which
examination was conducted by such accounting firm in accordance with GAAP,
(1) such accounting firm has obtained no knowledge that an Event of Default,
insofar as such Event of Default related to accounting or financial matters, has
occurred and is continuing, or if, in the opinion of such accounting firm, such
an Event of Default has occurred and is continuing, a statement as to the nature
thereof, and (2) such accounting firm has examined a certificate prepared by the
Company setting forth the computations made by the Company in determining, as of
the end of such fiscal year, the ratio specified in Article VIII, which
certificate shall be attached to the certificate of such accounting firm, and
such accounting firm confirms that such computations accurately reflect such
ratios;

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     (d) promptly after the sending or filing thereof, copies of all proxy
statements which the Company sends to its stockholders, copies of all regular,
periodic and special reports (other than those which relate solely to employee
benefit plans) which the Company files with the SEC and notice of the sending or
filing of (and, upon the request of the Agent or any Bank, a copy of) any final
prospectus filed with the SEC;
     (e) as soon as possible and in any event (i) within 30 days after the
Company or any ERISA Affiliate knows or has reason to know that any Plan
Termination Event described in clause (a) of the definition of Plan Termination
Event with respect to any Plan has occurred and (ii) within ten days after the
Company or any ERISA Affiliate knows or has reason to know that any other Plan
Termination Event with respect to any Plan has occurred, a statement of the
Chief Financial Officer of the Company describing such Plan Termination Event
and the action, if any, which the Company or such ERISA Affiliate, as the case
may be, proposes to take with respect thereto;
     (f) promptly upon becoming aware thereof, notice of any upgrading or
downgrading of the rating of the Senior Debt by Moody’s, S&P or Fitch;
     (g) as soon as possible and in any event within five days after the
occurrence of any default under any agreement to which the Company or any of its
Subsidiaries is a party, which default would reasonably be expected to result in
a Material Adverse Change, and which is continuing on the date of such
certificate, a certificate of the president or chief financial officer of the
Company setting forth the details of such default and the action which the
Company or any such Subsidiary proposes to take with respect thereto; and
     (h) promptly, such other information respecting the business, properties or
financial condition of the Company as the Agent or any Bank through the Agent
may from time to time reasonably request.
     6.8 Use of Proceeds. The Company will use the proceeds of the Credit
Extensions for general corporate purposes and working capital. The Company will
not, nor will it permit any Subsidiary to, use any of the proceeds of the Credit
Extensions to purchase or carry any “margin stock” (as defined in Regulation U).
     6.9 Maintenance of Properties, Etc. The Company shall, and shall cause each
of its Subsidiaries to, maintain in all material respects all of its respective
owned and leased Property in good and safe condition and repair to the same
degree as other companies engaged in similar businesses and owning similar
properties, and not permit, commit or suffer any waste or abandonment of any
such Property, and from time to time make or cause to be made all material
repairs, renewals and replacements thereof, including any capital improvements
which may be required; provided that such Property may be altered or renovated
in the ordinary course of the Company’s or its Subsidiaries’ business; and
provided, further, that the foregoing shall not restrict the sale of any asset
of the Company or any Subsidiary to the extent not prohibited by Section 7.2.
     6.10 Bonds. Beginning on the Initial Borrowing Date and continuing until
the earlier of (i) the FMB Release Date and (ii) the date on which the
Commitments and Facility LCs have

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terminated and all Obligations have been paid in full, cause the face amount of
all Bonds to at all times be equal to or greater than the greater of (a) the
Aggregate Commitment and (b) the Aggregate Outstanding Credit Exposure.
ARTICLE VII
NEGATIVE COVENANTS
     So long as any Obligations shall remain unpaid, any Facility LC shall
remain outstanding or any Bank shall have any Commitment under this Agreement,
the Company shall not:
     7.1 Liens. Create, incur, assume or suffer to exist any Lien upon or with
respect to any of its properties, now owned or hereafter acquired, except:
     (a) Liens created pursuant to the Indenture securing the First Mortgage
Bonds and any Lien in favor of the Agent on the Facility LC Collateral Account
or any funds therein;
     (b) Liens securing pollution control bonds, or bonds issued to refund or
refinance pollution control bonds (including Liens securing obligations
(contingent or otherwise) of the Company under letter of credit agreements or
other reimbursement or similar credit enhancement agreements with respect to
pollution control bonds); provided that the aggregate face amount of any such
bonds so issued shall not exceed the aggregate face amount of such pollution
control bonds, as the case may be, so refunded or refinanced;
     (c) Liens in (and only in) assets acquired to secure Debt incurred to
finance the acquisition of such assets;
     (d) Statutory and common law banker’s Liens on bank deposits;
     (e) Liens in respect of accounts receivable sold, transferred or assigned
by the Company;
     (f) Liens for taxes, assessments or other governmental charges or levies
not at the time delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;
     (g) Liens of carriers, warehousemen, mechanics, materialmen and landlords
incurred in the ordinary course of business for sums not overdue or being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books;
     (h) Liens incurred in the ordinary course of business in connection with
workers’ compensation, unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds;

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     (i) Judgment Liens in existence less than 30 days after the entry thereof
or with respect to which execution has been stayed or the payment of which is
covered (subject to a customary deductible) by insurance;
     (j) Zoning restrictions, easements, licenses, covenants, reservations,
utility company rights, restrictions on the use of real property or minor
irregularities of title incident thereto which do not in the aggregate
materially detract from the value of the property or assets of the Company or
materially impair the operation of its business;
     (k) Liens arising in connection with the financing of the Company’s fuel
resources, including nuclear fuel;
     (l) Liens arising pursuant to M.C.L. 324.20138; provided that the aggregate
amount of all obligations secured by such Liens (excluding any such Liens of
which the Company has no knowledge or which are permitted by clause (f) above)
shall not exceed $20,000,000;
     (m) Liens arising in connection with Securitized Bonds;
     (n) Liens on natural gas, oil and mineral, or on stock in trade, material
or supplies manufactured or acquired for the purpose of sale and or resale in
the usual course of business or consumable in the operation of any of the
properties of the Company; provided that such Liens secure obligations not
exceeding $500,000,000 in aggregate principal amount; and
     (o) Other Liens securing obligations in an aggregate amount not in excess
of $500,000,000.
     7.2 Sale of Assets. Sell, lease, assign, transfer or otherwise dispose of
25% or more of its assets calculated with reference to total assets as reflected
on the Company’s consolidated balance sheet as at December 31, 2007, during the
term of this Agreement.
     7.3 Mergers, Etc. Merge with or into or consolidate with or into any other
Person, except that the Company may merge with any other Person; provided that,
in each case, immediately after giving effect thereto, (a) no event shall occur
and be continuing which constitutes a Default or Event of Default, (b) the
Company is the surviving corporation, (c) the Company shall not be liable with
respect to any Debt or allow its Property to be subject to any Lien which it
could not become liable with respect to or allow its Property to become subject
to under this Agreement on the date of such transaction and (d) the Company’s
Net Worth shall be equal to or greater than its Net Worth immediately prior to
such merger.
     7.4 Compliance with ERISA. Permit to exist any occurrence of any Reportable
Event, or any other event or condition which presents a material (in the
reasonable opinion of the Majority Banks) risk of a termination by the PBGC of
any Plan, which termination will result in any material (in the reasonable
opinion of the Majority Banks) liability of the Company or such ERISA Affiliate
to the PBGC.
     7.5 Change in Nature of Business. Make any material change in the nature of
its business as carried on as of the date hereof.

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     7.6 Off-Balance Sheet Liabilities. Create, incur, assume or suffer to
exist, or permit any Subsidiary to create, incur, assume or suffer to exist,
Off-Balance Sheet Liabilities (exclusive of obligations arising in connection
with the Purchase Agreement among the Company, Consumers Receivables Funding II,
LLC, Falcon Asset Securitization Corporation and JPMorgan Chase Bank, N.A.,
dated as of May 22, 2003, as amended, restated or otherwise modified from time
to time and any similar agreement entered into in replacement thereof) in the
aggregate in excess of $250,000,000 at any time.
     7.7 Transactions with Affiliates. Enter into, or permit any Subsidiary to
enter into, any transaction with any of its Affiliates (other than the Company
or any Subsidiary) unless such transaction is on terms no less favorable to the
Company or such Subsidiary than if the transaction had been negotiated in good
faith on an arm’s-length basis with a non-Affiliate; provided that the foregoing
shall not prohibit (a) the payment by the Company or any Subsidiary of dividends
or other distributions on, or redemptions of, its capital stock, (b) the
purchase, acquisition or retirement by the Company or any Subsidiary of the
Company’s capital stock or (c) intercompany loans and advances not otherwise
prohibited by this Agreement.
ARTICLE VIII
FINANCIAL COVENANT
     So long as any of the Obligations shall remain unpaid, any Facility LC
shall remain outstanding or any Bank shall have any Commitment under this
Agreement, the Company shall at all times maintain a ratio of Total Consolidated
Debt to Total Consolidated Capitalization of not greater than 0.70 to 1.0.
ARTICLE IX
EVENTS OF DEFAULT
     9.1 Events of Default. The occurrence of any of the following events shall
constitute an “Event of Default”:
     (a) The Company shall fail to pay (i) any principal of any Advance when due
and payable, or (ii) any Reimbursement Obligation within one day after the same
becomes due, or (iii) any interest on any Advance or any fee or other Obligation
payable hereunder within five days after such interest or fee or other
Obligation becomes due and payable;
     (b) Any representation or warranty made by the Company (or any of its
officers) in this Agreement or any other Credit Document or in any certificate,
document, report, financial or other written statement furnished at any time
pursuant to any Credit Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made;
     (c) The Company shall fail to perform or observe any term, covenant or
agreement contained in Section 6.10, Article VII or Article VIII; or the Company
shall fail to perform or observe any other term, covenant or agreement on its
part to be performed or observed in this Agreement or in any other Credit
Document and such failure shall continue for 30 consecutive days after the
earlier of (i) a Designated Officer obtaining knowledge of such breach and (ii)
written notice thereof by means of facsimile, regular mail or written notice
delivered in person

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(or telephonic notice thereof confirmed in writing) having been given to the
Company by the Agent or the Majority Banks;
     (d) The Company shall: (i) fail to pay any Debt (other than the payment
obligations described in clause (a) above) in excess of $50,000,000, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the instrument or
agreement relating to such Debt; or (ii) fail to perform or observe any term,
covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such Debt, when required to be performed
or observed, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, the maturity of such Debt, unless
the obligee under or holder of such Debt shall have waived in writing such
circumstance, or such circumstance has been cured, so that such circumstance is
no longer continuing; or (iii) any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), in each case in accordance with the terms of such agreement or
instrument, prior to the stated maturity thereof; or (iv) generally not, or
shall admit in writing its inability to, pay its debts as such debts become due;
     (e) The Company: (i) shall make an assignment for the benefit of creditors,
or petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (ii) shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iii) shall have had any
such petition or application filed or any such proceeding shall have been
commenced, against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of 30 consecutive days or more; or (iv) by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
custodian, receiver or trustee for all or any substantial part of its property;
or (v) shall suffer any such custodianship, receivership or trusteeship to
continue undischarged for a period of 30 days or more; or (vi) shall take any
corporate action to authorize any of the actions set forth above in this clause
(e);
     (f) One or more judgments, decrees or orders for the payment of money in
excess of $50,000,000 in the aggregate shall be rendered against the Company and
either (i) enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order or (ii) there shall be any period of more than
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
     (g) Any Plan Termination Event with respect to a Plan shall have occurred,
and 30 days after notice thereof shall have been given to the Company by the
Agent, (i) such Plan Termination Event (if correctable) shall not have been
corrected and (ii) the then present value of such Plan’s vested benefits exceeds
the then current value of the assets accumulated in such Plan by more than the
amount of $25,000,000 (or in the case of a Plan Termination Event involving the
withdrawal of a “substantial employer” (as defined in Section 4001(A)(2) of
ERISA), the withdrawing employer’s proportionate share of such excess shall
exceed such amount).

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     (h) Prior to the FMB Release Date, (i) any Bond shall cease to be in full
force and effect or (ii) the Company shall deny that it has any liability or
obligation under any Bond or purport to revoke, terminate, rescind or redeem any
Bond (other than in accordance with the terms of the Bonds and the Indenture).
     9.2 Remedies.
     (a) If any Event of Default shall occur and be continuing, the Agent shall
upon the request, or may with the consent, of the Majority Banks, by notice to
the Company, (i) declare the Commitments and the obligations and powers of the
LC Issuers to issue Facility LCs to be terminated or suspended, whereupon the
same shall forthwith terminate, and/or (ii) declare the Obligations to be
forthwith due and payable, whereupon the Aggregate Outstanding Credit Exposure
and all other Obligations shall become and be forthwith due and payable, and/or
(iii) in addition to the continuing right to demand payment of all amounts
payable under this Agreement, make demand on the Company to pay, and the Company
will, forthwith upon such demand and without any further notice or act, pay to
the Agent the Collateral Shortfall Amount (as defined below), which funds shall
be deposited in the Facility LC Collateral Account, in each case without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Company; provided that in the case of an Event of
Default referred to in Section 9.1(e), the Commitments shall automatically
terminate, the obligations and powers of the LC Issuers to issue Facility LCs
shall automatically terminate and the Obligations shall automatically become due
and payable without notice, presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by the Company, and the
Company will be and become thereby unconditionally obligated, without any
further notice, act or demand, to pay to the Agent an amount in immediately
available funds, which funds shall be held in the Facility LC Collateral
Account, equal to the difference of (x) the amount of LC Obligations at such
time, less (y) the amount on deposit in the Facility LC Collateral Account at
such time which is free and clear of all rights and claims of third parties and
has not been applied against the Obligations (such difference, the “Collateral
Shortfall Amount”).
     (b) If at any time while any Event of Default is continuing, the Agent
determines that the Collateral Shortfall Amount at such time is greater than
zero, the Agent may make demand on the Company to pay, and the Company will,
forthwith upon such demand and without any further notice or act, pay to the
Agent the Collateral Shortfall Amount, which funds shall be deposited in the
Facility LC Collateral Account.
     (c) The Agent may, at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to the payment
of the Obligations and any other amounts as shall from time to time have become
due and payable by the Company to the Banks or the LC Issuers under the Credit
Documents. The Company hereby pledges, assigns and grants to the Agent, on
behalf of and for the ratable benefit of the Banks and the LC Issuers, a
security interest in all of the Company’s right, title and interest in and to
all funds which may from time to time be on deposit in the Facility LC
Collateral Account to secure the prompt and complete payment and performance of
the Obligations. The Agent will invest any funds on deposit from time to time in
the Facility LC Collateral Account in certificates of deposit of Union Bank
having a maturity not exceeding 30 days.

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     (d) At any time while any Event of Default is continuing, neither the
Company nor any Person claiming on behalf of or through the Company shall have
any right to withdraw any of the funds held in the Facility LC Collateral
Account. After all of the Obligations have been indefeasibly paid in full, all
Facility LCs have expired or been terminated and the Aggregate Commitment has
been terminated, any funds remaining in the Facility LC Collateral Account shall
be returned by the Agent to the Company or paid to whomever may be legally
entitled thereto at such time.
ARTICLE X
WAIVERS, AMENDMENTS AND REMEDIES
     10.1 Amendments. Subject to the provisions of this Article X, the Majority
Banks (or the Agent with the consent in writing of the Majority Banks) and the
Company may enter into written agreements supplemental hereto for the purpose of
adding or modifying any provisions to the Credit Documents (other than the Fee
Letter, which may be amended or otherwise modified solely with the consent of
the parties thereto) or changing in any manner the rights of the Banks or the
Company hereunder or waiving any Event of Default hereunder; provided that no
such supplemental agreement shall, without the consent of all of the Banks:
     (a) Extend the maturity of any Loan or reduce the principal amount thereof,
or extend the expiry date of any Facility LC to a date after the scheduled
Termination Date, or reduce the rate or extend the time of payment of interest
thereon or fees thereon or Reimbursement Obligations related thereto.
     (b) Modify the percentage specified in the definition of Majority Banks.
     (c) Extend the Termination Date or increase the amount of the Commitment of
any Bank hereunder or the commitment to issue Facility LCs, or permit the
Company to assign its rights under this Agreement.
     (d) Amend Section 3.1, Section 6.10, this Section 10.1 or Section 12.11.
     (e) Make any change in an express right in this Agreement of a single Bank
to give its consent, make a request or give a notice.
     (f) Authorize the Agent to vote in favor of the release of all or
substantially all of the collateral securing the Bonds.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent, and no amendment of any
provision relating to any LC Issuer shall be effective without the written
consent of such LC Issuer.
     10.2 Preservation of Rights. No delay or omission of the Banks, the LC
Issuers or the Agent to exercise any right under the Credit Documents shall
impair such right or be construed to be a waiver of any Default or Event of
Default or an acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or Event of Default or the inability
of the Company to satisfy the conditions precedent to such Credit Extension
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude

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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 Credit Documents whatsoever shall be valid unless in writing signed by the
Banks required pursuant to Section 10.1, and then only to the extent in such
writing specifically set forth. All remedies contained in the Credit Documents
or by law afforded shall be cumulative and all shall be available to the Agent,
the LC Issuers and the Banks until the Obligations have been paid in full.
ARTICLE XI
CONDITIONS PRECEDENT
     11.1 Initial Credit Extension. The Banks shall not be required to make the
initial Credit Extension hereunder unless the Company has furnished to the Agent
with sufficient copies for the Banks:
     (a) Counterparts of this Agreement executed by the Company and the Banks.
     (b) Copies of the Restated Articles of Incorporation of the Company,
together with all amendments, certified by the Secretary or an Assistant
Secretary of the Company, and a certificate of good standing, certified by the
appropriate governmental officer in its jurisdiction of incorporation.
     (c) Copies, certified by the Secretary or an Assistant Secretary of the
Company, of its bylaws and of its Board of Directors’ resolutions (and
resolutions of other bodies, if any are deemed necessary by counsel for any
Bank) authorizing the execution of the Credit Documents.
     (d) An incumbency certificate, executed by the Secretary or an Assistant
Secretary of the Company, which shall identify by name and title and bear the
original or facsimile signature of the officers of the Company authorized to
sign the Credit Documents and the officers or other employees authorized to make
borrowings hereunder, upon which certificate the Banks shall be entitled to rely
until informed of any change in writing by the Company.
     (e) A certificate, signed by a Designated Officer of the Company, stating
that on the date hereof (i) no Default or Event of Default has occurred and is
continuing and (ii) each representation or warranty contained in Article V is
true and correct.
     (f) Evidence satisfactory to the Agent of the issuance of the Bonds in the
form set forth in the Supplemental Indenture and in an aggregate principal
amount of $150,000,000 pursuant to the Bond Delivery Agreement.
     (g) The Supplemental Indenture duly executed by the Company and The Bank of
New York Mellon, as Trustee.
     (h) The Bond Delivery Agreement duly executed by the Company.
     (i) A favorable opinion of James E. Brunner, Esq., General Counsel of the
Company, as to the matters set forth in Exhibit B and as to such other matters
as the Agent may reasonably request. Such opinion shall be addressed to the
Agent, the LC Issuers and the Banks and shall be satisfactory in form and
substance to the Agent.

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     (j) Evidence, in form and substance satisfactory to the Agent, that the
Company has obtained all governmental approvals, if any, necessary for it to
enter into the Credit Documents.
     (k) Such other documents as any Bank or its counsel may have reasonably
requested. It shall be a further condition precedent to the making of the
initial Credit Extension hereunder that the Company shall have paid (i) to the
Agent for the account of the Banks the fees required to be paid on the Initial
Borrowing Date and (ii) to the Agent and the Arranger the fees required to be
paid to them pursuant to the Fee Letter.
     11.2 Each Credit Extension. The Banks shall not be required to make any
Credit Extension if on the applicable Borrowing Date, (i) any Default or Event
of Default exists, (ii) any representation or warranty contained in Article V is
not true and correct as of such Borrowing Date, (iii) prior to the FMB Release
Date, after giving effect to such Credit Extension the Aggregate Outstanding
Credit Exposure would exceed the face amount of all Bonds or (iv) all legal
matters incident to the making of such Credit Extension are not satisfactory to
the Banks and their counsel; provided that, on any date following the Initial
Borrowing Date on which the ratings of the Senior Debt from Moody’s and S&P are
Baa2 or higher and BBB or higher, respectively, the Company shall not be
required to make the representation and warranty (x) regarding no Material
Adverse Change set forth in Section 5.5 or (y) set forth in the first sentence
of Section 5.6. Each Borrowing Notice and each request for issuance of a
Facility LC shall constitute a representation and warranty by the Company that
the conditions contained in clauses (i), (ii) and (iii) above will be satisfied
on the relevant Borrowing Date. For the avoidance of doubt, the conversion or
continuation of an Advance shall not be considered the making of a Credit
Extension.
ARTICLE XII
GENERAL PROVISIONS
     12.1 Successors and Assigns. (a) The terms and provisions of the Credit
Documents shall be binding upon and inure to the benefit of the Company and the
Banks and their respective successors and assigns, except that the Company shall
not have the right to assign its rights under the Credit Documents. Any Bank may
sell participations in all or a portion of its rights and obligations under this
Agreement pursuant to clause (b) below and any Bank may assign all or any part
of its rights and obligations under this Agreement pursuant to clause (c) below.
     (b) Any Bank may sell participations to one or more banks or other entities
(other than the Borrower and its Affiliates) (each a “Participant”) in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and its Outstanding Credit Exposure); provided that
(i) such Bank’s obligations under this Agreement (including its Commitment to
the Company hereunder) shall remain unchanged, (ii) such Bank shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall remain the holder of the Outstanding Credit
Exposure of such Bank for all purposes of this Agreement and (iv) the Company
shall continue to deal solely and directly with such Bank in connection with
such Bank’s rights and obligations under this Agreement. Each Bank shall retain
the sole right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Credit Documents other
than any amendment, modification or waiver with respect to any Loan or
Commitment in

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which such Participant has an interest which would require consent of all of the
Banks pursuant to the terms of Section 10.1 or of any other Credit Document. The
Company agrees that each Participant shall be deemed to have the right of setoff
provided in Section 12.10 in respect of its participating interest in amounts
owing under the Credit Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under the Credit
Documents; provided that each Bank shall retain the right of setoff provided in
Section 12.10 with respect to the amount of participating interests sold to each
Participant. The Banks agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 12.10, agrees
to share with each Bank, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with Section 12.11 as
if each Participant were a Bank. The Company further agrees that each
Participant shall be entitled to the benefits of Sections 4.1, 4.3, 4.4 and 4.5
to the same extent as if it were a Bank and had acquired its interest by
assignment pursuant to Section 12.1(c); provided that (i) a Participant shall
not be entitled to receive any greater payment under Section 4.1, 4.3, 4.4 or
4.5 than the Bank that sold the participating interest to such Participant would
have received had it retained such interest for its own account, unless the sale
of such interest to such Participant is made with the prior written consent of
the Company, and (ii) any Participant not incorporated under the laws of the
United States of America or any State thereof agrees to comply with the
provisions of Section 4.5 to the same extent as if it were a Bank.
     (c) Any Bank may, in the ordinary course of its business and in accordance
with applicable law, at any time assign to one or more financial institutions or
other Persons (other than the Borrower and its Affiliates) all or any part of
its rights and obligations under this Agreement; provided that (i) unless such
assignment is to another Bank, an affiliate of such assigning Bank or any direct
or indirect contractual counterparty in any swap agreement relating to the Loans
to the extent required in connection with the settlement of such Bank’s
obligations pursuant thereto, such Bank has received the prior written consent
of the Agent, the Company (so long as no Event of Default exists) and each LC
Issuer, which consents of the Company and the LC Issuers shall not be
unreasonably withheld or delayed, and (ii) the minimum principal amount of any
such assignment (other than assignments to a Federal Reserve Bank, to another
Bank, to an affiliate of such assigning Bank or to any direct or indirect
contractual counterparty in any swap agreement relating to the Loans to the
extent required in connection with the settlement of such Bank’s obligations
pursuant thereto) shall be $5,000,000 (or such lesser amount consented to by the
Agent and, so long as no Event of Default shall be continuing, the Company,
which consents shall not be unreasonably withheld or delayed); provided that
after giving effect to such assignment the assigning Bank shall have a
Commitment of not less than $5,000,000 (unless otherwise consented to by the
Agent and, so long as no Event of Default shall be continuing, the Company),
unless such assignment constitutes an assignment of all of the assigning Bank’s
Commitment, Loans and other rights and obligations hereunder to a single
assignee. Notwithstanding the foregoing sentence, (x) any Bank may at any time,
without the consent of the Company, any LC Issuer or the Agent, pledge or assign
all or any portion of its rights under this Agreement to a Federal Reserve Bank;
provided that no such assignment shall release the transferor Bank from its
obligations hereunder; and (y) no assignment by a Bank to any affiliate of such
Bank shall release such Bank from its obligations hereunder unless (I) the Agent
and, so long as no Event of Default exists, the Company have approved such
assignment or (II) the creditworthiness of such affiliate (as determined in
accordance with customary standards of the banking industry) is no less than
that of the assigning Bank.

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     (d) Any Bank may, in connection with any sale or participation or proposed
sale or participation pursuant to this Section 12.1, disclose to the purchaser
or participant or proposed purchaser or participant any information relating to
the Company furnished to such Bank by or on behalf of the Company; provided that
prior to any such disclosure of non-public information, the purchaser or
participant or proposed purchaser or participant (which purchaser or participant
is not an affiliate of a Bank) shall agree to preserve the confidentiality of
any confidential information (except any such disclosure as may be required by
law or regulatory process) relating to the Company received by it from such
Bank.
     (e) Assignments under this Section 12.1 shall be made pursuant to an
agreement (an “Assignment Agreement”) substantially in the form of Exhibit D
hereto or in such other form as may be agreed to by the parties thereto and
shall not be effective until a $3,500 fee has been paid to the Agent by the
assignee, which fee shall cover the cost of processing such assignment; provided
that such fee shall not be incurred in the event of an assignment by any Bank of
all or a portion of its rights under this Agreement to (i) a Federal Reserve
Bank or (ii) a Bank or an affiliate of the assigning Bank or (iii) to any direct
or indirect contractual counterparties in swap agreements relating to the Loans
to the extent required in connection with the settlement of any Bank’s
obligations pursuant thereto.
     12.2 Survival of Representations. All representations and warranties of the
Company contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.
     12.3 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no LC Issuer or Bank shall be obligated to extend
credit to the Company in violation of any limitation or prohibition provided by
any applicable statute or regulation.
     12.4 Taxes. Any taxes (excluding income taxes) payable or ruled payable by
any Federal or State authority in respect of the execution of the Credit
Documents shall be paid by the Company, together with interest and penalties, if
any.
     12.5 Choice of Law. THE CREDIT DOCUMENTS SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO THE LAW OF
CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY CREDIT DOCUMENT AND THE COMPANY HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT. EACH OF THE COMPANY, THE AGENT, THE LC ISSUERS AND
THE BANKS HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN ANY ACTION OR ARISING
HEREUNDER OR UNDER ANY CREDIT DOCUMENT.

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     12.6 Headings. Section headings in the Credit Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Credit Documents.
     12.7 Entire Agreement. The Credit Documents embody the entire agreement and
understanding between the Company, the LC Issuers, the Agent and the Banks and
supersede all prior agreements and understandings between the Company, the LC
Issuers, the Agent and the Banks relating to the subject matter thereof.
     12.8 Expenses; Indemnification. The Company shall reimburse the Agent and
the Arranger for (a) any reasonable costs, internal charges and out-of-pocket
expenses (including reasonable attorneys’ fees, time charges and expenses of
counsel for the Agent) paid or incurred by the Agent or the Arranger in
connection with the preparation, review, execution, delivery, syndication,
distribution (including via the internet), administration, amendment and
modification of the Credit Documents and (b) any reasonable costs, internal
charges and out-of-pocket expenses (including reasonable attorneys’ fees, time
charges and expenses of counsel) paid or incurred by the Agent or the Arranger
on its own behalf or on behalf of any LC Issuer or any Bank and, on or after the
date upon which an Event of Default specified in Section 9.1(a) or 9.1(e) has
occurred and is continuing, each Bank, in connection with the collection and
enforcement of the Credit Documents. The Company further agrees to indemnify the
Agent, the Arranger, each LC Issuer, each Bank and their respective Affiliates,
and the directors, officers, employees and agents of the foregoing (all of the
foregoing, the “Indemnified Persons), against all losses, claims, damages,
penalties, judgments, liabilities and reasonable expenses (including all
reasonable expenses of litigation or preparation therefor whether or not an
Indemnified Person is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Credit Documents, the
transactions contemplated hereby, the direct or indirect application or proposed
application of the proceeds of any Credit Extension hereunder, any actual or
alleged presence or release of any Hazardous Substance on or from any property
owned or operated by the Company or any Subsidiary or any Environmental
Liability related in any way to the Company or any Subsidiary; provided that the
Company shall not be liable to any Indemnified Person for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of such
Indemnified Person. Without limiting the foregoing, the Company shall pay any
civil penalty or fine assessed by the Office of Foreign Assets Control against
any Indemnified Person, and all reasonable costs and expenses (including
reasonable fees and expenses of counsel to such Indemnified Person) incurred in
connection with defense thereof, as a result of any breach or inaccuracy of the
representation made in Section 5.14. The obligations of the Company under this
Section shall survive the termination of this Agreement.
     12.9 Severability of Provisions. Any provision in any Credit 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 Credit Documents are declared to be severable.
     12.10 Setoff. In addition to, and without limitation of, any rights of the
Banks under applicable law, if the Company becomes insolvent, however evidenced,
or any Default or Event of Default occurs, any indebtedness from any Bank or any
of its Affiliates to the Company

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(including all account balances, whether provisional or final and whether or not
collected or available) may be offset and applied toward the payment of the
Obligations owing to such Bank or such Affiliate, whether or not the
Obligations, or any part hereof, shall then be due. The Company agrees that any
purchaser or participant under Section 12.1 may, to the fullest extent permitted
by law, exercise all its rights of payment with respect to such purchase or
participation as if it were the direct creditor of the Company in the amount of
such purchase or participation.
     12.11 Ratable Payments. If any Bank, whether by setoff or otherwise, has
payment made to it upon its Outstanding Credit Exposure in a greater proportion
than that received by any other Bank, such Bank agrees, promptly upon demand, to
purchase a portion of the Aggregate Outstanding Credit Exposure held by the
other Banks so that after such purchase each Bank will hold its Pro Rata Share
of the Aggregate Outstanding Credit Exposure. If any Bank, whether in connection
with setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Bank agrees, promptly upon demand, to take such action
necessary such that all Banks share in the benefits of such collateral ratably
in proportion to their respective Pro Rata Share of the Aggregate Outstanding
Credit Exposure. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
     12.12 Nonliability. The relationship between the Company, on the one hand,
and the Banks, the Arranger, the LC Issuers and the Agent, on the other hand,
shall be solely that of borrower and lender. None of the Agent, the Arranger,
any LC Issuer or any Bank shall have any fiduciary responsibilities to the
Company. None of the Agent, the Arranger, any LC Issuer or any Bank undertakes
any responsibility to the Company to review or inform the Company of any matter
in connection with any phase of the Company’s business or operations. The
Company shall rely entirely upon its own judgment with respect to its business,
and any review, inspection, supervision or information supplied to the Company
by the Banks is for the protection of the Banks and neither the Company nor any
third party is entitled to rely thereon. The Company agrees that none of the
Agent, the Arranger, any LC Issuer or any Bank shall have liability to the
Company (whether sounding in tort, contract or otherwise) for losses suffered by
the Company in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Credit
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. None of the
Agent, the Arranger, any LC Issuer or any Bank shall have any liability with
respect to, and the Company hereby waives, releases and agrees not to sue for,
any special, indirect, consequential or punitive damages suffered by the Company
in connection with, arising out of, or in any way related to the Credit
Documents or the transactions contemplated thereby.
     12.13 Other Agents. The Banks identified on the signature pages of this
Agreement or otherwise herein, or in any amendment hereof or other document
related hereto, as being a “Co-Syndication Agent” or the “Documentation Agent”
(the “Other Agents”) shall have no rights, powers, obligations, liabilities,
responsibilities or duties under this Agreement other than those applicable to
all Banks as such. Without limiting the foregoing, the Other Agents shall not
have or be deemed to have any fiduciary relationship with any Bank. Each Bank
acknowledges that it

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has not relied, and will not rely, on the Other Agents in deciding to enter into
this Agreement or in taking or refraining from taking any action hereunder or
pursuant hereto.
     12.14 USA Patriot Act. Each Bank hereby notifies the Company that pursuant
to requirements of the USA Patriot Act, such Bank is required to obtain, verify
and record information that identifies the Company, which information includes
the name and address of the Company and other information that will allow such
Bank to identify the Company in accordance with the USA Patriot Act.
     12.15 Electronic Delivery.
     (a) The Company shall use its commercially reasonable best efforts to
transmit to the Agent all information, documents and other materials that it is
obligated to furnish to the Agent pursuant to this Agreement and the other
Credit Documents, including all notices, requests, financial statements,
financial and other reports, certificates and other information materials, but
excluding (i) any Borrowing Notice, Conversion/Continuation Notice or notice of
prepayment, (ii) any notice of a Default or an Event of Default or (iii) any
communication that is required to be delivered to satisfy any condition
precedent to the effectiveness of this Agreement and/or any Advance hereunder
(all such non-excluded communications, collectively, “Communications”), in an
electronic/soft medium in a format reasonably acceptable to the Agent to such
e-mail address as designated by the Agent from time to time. In addition, the
Company shall continue to provide Communications to the Agent or any Bank in the
manner specified in this Agreement but only to the extent requested by the Agent
or such Bank. Each Bank and the Company further agrees that the Agent may make
Communications available to the Banks by posting Communications on IntraLinks or
a substantially similar electronic transmission system (the “Platform”);
provided, that upon written notice to the Agent and the Company, any Bank (such
bank, a “Declining Bank”) may decline to receive Communications via the Platform
and shall direct the Company to provide, and the Company shall so provide, such
Communications to such Declining Bank by delivery to such Declining Bank’s
address in accordance with Section 14.1. Subject to the conditions set forth in
the proviso in the immediately preceding sentence, nothing in this Section 12.15
shall prejudice the right of the Agent to make Communications available to the
Banks in any other manner specified herein.
     (b) Each Bank (other than a Declining Bank) agrees that e-mail notice to it
(at the address provided pursuant to the next sentence and deemed delivered as
provided in clause (c) below) specifying that a Communication has been posted to
the Platform shall constitute effective delivery of such Communication to such
Bank for purposes of this Agreement. Each Bank (other than a Declining Bank)
agrees (i) to notify the Agent in writing (including by electronic
communication) from time to time to ensure that the Agent has on record an
effective e-mail address for such Bank to which the foregoing notice may be sent
by electronic transmission and (ii) that the foregoing notice may be sent to
such e-mail address.
     (c) Each party hereto (other than a Declining Bank) agrees that any
electronic Communication referred to in this Section 12.15 shall be deemed
delivered upon the posting of a record of such Communication as “sent” in the
e-mail system of the sending party or, in the case of any such Communication to
the Agent, upon the posting of a record of such Communication as “received” in
the e-mail system of the Agent, provided that if such Communication is not so

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received by a Person during the normal business hours of such Person, such
Communication shall be deemed delivered at the opening of business on the next
business day for such Person.
     (d) Each party hereto acknowledges that the distribution of material
through an electronic medium is not necessarily secure and there are
confidentiality and other risks associated with such distribution.
     (e) EACH PARTY HERETO FURTHER ACKNOWLEDGES AND AGREES THAT:
     (i) NONE OF THE AGENT OR ITS AFFILIATES OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, THE “AGENT PARTIES”) WARRANTS THE ADEQUACY OF THE PLATFORM OR THE
ACCURACY OR COMPLETENESS OF ANY COMMUNICATION, AND EACH AGENT PARTY EXPRESSLY
DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN ANY COMMUNICATION; AND
     (ii) NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
ANY AGENT PARTY IN CONNECTION WITH ANY COMMUNICATION OR THE PLATFORM.
ARTICLE XIII
THE AGENT
     13.1 Appointment. Union Bank of California, N.A. is hereby appointed Agent
hereunder, and each of the Banks irrevocably authorizes the Agent to act as the
contractual representative on behalf of such Bank. The Agent agrees to act as
such upon the express conditions contained in this Article XIII. The Agent shall
not have a fiduciary relationship in respect of any Bank by reason of this
Agreement.
     13.2 Powers. The Agent shall have and may exercise such powers hereunder as
are specifically delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. The Agent shall not have any
implied duties to the Banks or any obligation to the Banks to take any action
hereunder except any action specifically provided by this Agreement to be taken
by the Agent.
     13.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Banks or any Bank for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith except for its or their own gross negligence or willful misconduct.
     13.4 No Responsibility for Recitals, Etc. The Agent shall not be
responsible to the Banks for any recitals, reports, statements, warranties or
representations herein or in any Credit

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Document or be bound to ascertain or inquire as to the performance or observance
of any of the terms of this Agreement.
     13.5 Action on Instructions of Banks. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Credit Document in accordance with written instructions signed by the Majority
Banks (or all of the Banks if required by Section 10.1), and such instructions
and any action taken or failure to act pursuant thereto shall be binding on all
of the Banks. The Banks hereby acknowledge that the 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 Credit Document unless it shall be
requested in writing to do so by the Majority Banks. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Credit Document unless it shall first be indemnified to its satisfaction
by the Banks 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.
     13.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder by or through employees, agents and attorneys-in-fact
and shall not be answerable to the Banks, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder.
     13.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any notice, consent, certificate, affidavit, letter, telegram, 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 opinion of counsel selected by the Agent, which counsel may be
employees of the Agent.
     13.8 Agent’s Reimbursement and Indemnification. The Banks agree to
reimburse and indemnify the Agent ratably in accordance with their respective
Pro Rata Shares (i) for any amounts not reimbursed by the Company for which the
Agent is entitled to reimbursement by the Company under the Credit Documents,
(ii) for any other expenses reasonably incurred by the Agent on behalf of the
Banks, in connection with the preparation, execution, delivery, administration
and enforcement of the Credit Documents, and for which the Agent is not entitled
to reimbursement by the Company under the Credit Documents, and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any other document delivered in
connection with this Agreement or the transactions contemplated hereby or the
enforcement of any of the terms hereof or of any such other documents, and for
which the Agent is not entitled to reimbursement by the Company under the Credit
Documents; provided that no Bank shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct of the Agent.
     13.9 Rights as a Bank. With respect to its Commitment and any Credit
Extension made by it, the Agent shall have the same rights and powers hereunder
as any Bank and may exercise the same as though it were not the Agent, and the
term “Bank” or “Banks” shall, unless

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the context otherwise indicates, include Union Bank in its individual capacity.
The Agent may accept deposits from, lend money to, and generally engage in any
kind of banking or trust business with the Company or any Subsidiary as if it
were not the Agent.
     13.10 Bank Credit Decision. (a) Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements prepared by the Company and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank 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.
     (b) Without limiting clause (a) above, each Bank acknowledges and agrees
that neither such Bank nor any of its Affiliates, participants or assignees may
rely on the Agent to carry out such Bank’s or other Person’s customer
identification program, or other obligations required or imposed under or
pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 C.F.R. 103.121 (as amended or replaced, the “CIP
Regulations”), or any other applicable law, rule, regulation or order of any
governmental authority, including any program involving any of the following
items relating to or in connection with the Company or any of its Subsidiaries
or Affiliates or agents, the Credit Documents or the transactions contemplated
hereby: (i) any identity verification procedure; (ii) any recordkeeping;
(iii) any comparison with a government list; (iv) any customer notice or (v) any
other procedure required under the CIP Regulations or such other law, rule,
regulation or order.
     (c) Within 10 days after the date of this Agreement and at such other times
as are required under the USA Patriot Act, each Bank and each assignee and
participant that is not incorporated under the laws of the United States of
America or a state thereof (and is not excepted from the certification
requirement contained in Section 313 of the USA Patriot Act and the applicable
regulations because it is both (i) an affiliate of a depository institution or
foreign bank that maintains a physical presence in the United States or foreign
country and (ii) subject to supervision by a banking authority regulating such
affiliated depository institution or foreign bank) shall deliver to the Agent a
certification, or, if applicable, recertification, certifying that such Bank is
not a “shell” and certifying as to other matters as required by Section 313 of
the USA Patriot Act and the applicable regulations.
     13.11 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Banks and the Company, and the Agent may be removed at any
time with or without cause by written notice received by the Agent from the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint, on behalf of the Banks, a successor Agent. If no
successor Agent shall have been so appointed by the Majority Banks and shall
have accepted such appointment within thirty days after the retiring Agent’s
giving notice of resignation, then the retiring Agent may appoint, on behalf of
the Banks, a successor Agent. Such successor Agent shall be a commercial bank
having capital and retained earnings of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be

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discharged from its duties and obligations hereunder. After any retiring Agent’s
resignation hereunder as Agent, the provisions of this Article XIII shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Agent hereunder.
     13.12 Agent and Arranger Fees. The Company agrees to pay to the Agent and
the Arranger, for their respective accounts, the fees agreed to by the Company,
the Agent and the Arranger pursuant to the fee letter agreement, dated the date
hereof (as amended, amended and restated, supplemented or otherwise modified
from time to time, the “Fee Letter”), or as otherwise agreed from time to time.
ARTICLE XIV
NOTICES
     14.1 Giving Notice. Except as otherwise permitted by Section 2.13 (e) with
respect to borrowing notices, all notices, requests and other communications to
any party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party:
(x) in the case of the Company, the Agent or Union Bank in its capacity as an LC
Issuer, at its address or facsimile number set forth on the signature pages
hereof, (y) in the case of any Bank, at its address or facsimile number set
forth in its Administrative Questionnaire or (z) in the case of any party, at
such other address or facsimile number as such party may hereafter specify for
such purpose by notice to the Agent and the Company in accordance with the
provisions of this Section 14.1. 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 Agent under Article II shall not be effective until
received.
     14.2 Change of Address. The Company, the Agent, any LC Issuer and any Bank
may each change the address for service of notice upon it by a notice in writing
to the other parties hereto.
ARTICLE XV
COUNTERPARTS
     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 be
effective when it has been executed by the Company, the Agent, the LC Issuers
and the Banks and each party has notified the Agent by facsimile or telephone
that it has taken such action.
ARTICLE XVI
RELEASE OF BONDS
     The Agent will release the Bonds without any further action or consent by
the Banks, and deliver, at the Company’s expense, such documents to the Company
or the trustee under the

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Indenture as the Company may reasonably require to evidence such release, upon
written request by the Company accompanied by a certificate of a Designated
Officer certifying that (a) no Default or Event of Default exists prior to or
after giving effect to such release and (b) at least two of the three then
current ratings of the Company’s senior unsecured long-term debt (without
third-party credit enhancement) are as follows: (i) Baa2 or higher in the case
of Moody’s, (ii) BBB or higher in the case of S&P and (iii) BBB or higher in the
case of Fitch.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

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     IN WITNESS WHEREOF, the Company, the Banks, the LC Issuers and the Agent
have executed this Agreement as of the date first above written.

            CONSUMERS ENERGY COMPANY
      By:   /s/ Laura L. Mountcastle         Name:   Laura L. Mountcastle       
Title:   Vice President and Treasurer        Address:

One Energy Plaza
Jackson, MI 49201
Attention: Beverly S. Burger
Facsimile No.: (517) 788-0412
Confirmation (Phone) No: (517) 788-2541
E-Mail Address: bsburger@cmsenergy.com
                       

Signature page to Consumers Energy Company Revolving Credit Agreement

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            UNION BANK OF CALIFORNIA, N.A., as
Agent, as an LC Issuer and as a Bank
      By:   /s/ Bryan P. Read         Name:   BRYAN P. READ        Title:   VICE
PRESIDENT        Address:

445 South Figueroa Street
Los Angeles, CA 90071
Attention: Kevin Zitar, Senior Vice President
Facsimile No.: (213) 236-4096
Confirmation (Phone) No.: (213) 236-5503
E-Mail Address: kevin.zitar@uboc.com
                       

Signature page to Consumers Energy Company Revolving Credit Agreement

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            BARCLAYS BANK PLC, as a Bank
      By:   /s/ Nicholes A. Bell         Name:   Nicholes A. Bell       
Title:   Director     

Signature page to Consumers Energy Company Revolving Credit Agreement

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            THE ROYAL BANK OF SCOTLAND plc, as a Bank
      By:   /s/ Belinda Tucker         Name:   Belinda Tucker        Title:  
Senior Vice President     

Signature page to Consumers Energy Company Revolving Credit Agreement

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            UBS LOAN FINANCE LLC, as a Bank
      By:   /s/ Irja R. Otsa         Name:   Irja R. Otsa        Title:  
Associate Director Banking Products Services, US              By:   /s/ Mary E.
Evans         Name:   Mary E. Evans        Title:   Associate Director Banking
Products Services, US     

Signature page to Consumers Energy Company Revolving Credit Agreement

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            DEUTSCHE BANK TRUST COMPANY
AMERICAS, as a Bank
      By:   /s/ Marcus M. Tarkington         Name:   Marcus M. Tarkington       
Title:   Director              By:   /s/ Dusan Lazarov         Name:   Dusan
Lazarov         Title:   Vice President     

Signature page to Consumers Energy Company Revolving Credit Agreement

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            BNP PARIBAS, as a Bank
      By:   /s/ Francis J. Delaney         Name:   FRANCIS J. DELANEY       
Title:   Managing Director              By:   /s/ Denis O’Meara         Name:  
DENIS O’MEARA        Title:   Managing Director     

Signature page to Consumers Energy Company Revolving Credit Agreement

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            JPMORGAN CHASE BANK, N.A., as a Bank
      By:   /s/ Juan Javellana         Name:   Juan Javellana        Title:  
Vice President     

Signature page to Consumers Energy Company Revolving Credit Agreement

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            WACHOVIA BANK, NATIONAL
ASSOCIATION, as a Bank
      By:   /s/ Frederick W. Price         Name:   Frederick W. Price       
Title:   Managing Director     

Signature page to Consumers Energy Company Revolving Credit Agreement

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            CITIBANK, N.A., as a Bank
      By:   /s/ Amit Vasani         Name:   AMIT VASANI        Title:   VP     

Signature page to Consumers Energy Company Revolving Credit Agreement

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EXHIBIT A
[FORM OF SUPPLEMENTAL INDENTURE]
ONE HUNDRED NINTH SUPPLEMENTAL INDENTURE
Providing among other things for
FIRST MORTGAGE BONDS,
2008-1 Collateral Series (Interest Bearing)
 
Dated as of September 11, 2008
 
CONSUMERS ENERGY COMPANY
TO
THE BANK OF NEW YORK MELLON,
TRUSTEE
Counterpart ____ of 90

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     THIS ONE HUNDRED NINTH SUPPLEMENTAL INDENTURE, dated as of September 11,
2008 (herein sometimes referred to as “this Supplemental Indenture”), made and
entered into by and between CONSUMERS ENERGY COMPANY, a corporation organized
and existing under the laws of the State of Michigan, with its principal
executive office and place of business at One Energy Plaza, in Jackson, Jackson
County, Michigan 49201, formerly known as Consumers Power Company (hereinafter
sometimes referred to as the “Company”), and THE BANK OF NEW YORK MELLON (as
successor to The Bank of New York), a New York banking corporation, with its
corporate trust offices at 101 Barclay St., New York, New York 10286
(hereinafter sometimes referred to as the “Trustee”), as Trustee under the
Indenture dated as of September 1, 1945 between Consumers Power Company, a Maine
corporation (hereinafter sometimes referred to as the “Maine corporation”), and
City Bank Farmers Trust Company (Citibank, N.A., successor, hereinafter
sometimes referred to as the “Predecessor Trustee”), securing bonds issued and
to be issued as provided therein (hereinafter sometimes referred to as the
“Indenture”),
     WHEREAS, at the close of business on January 30, 1959, City Bank Farmers
Trust Company was converted into a national banking association under the title
“First National City Trust Company”; and
     WHEREAS, at the close of business on January 15, 1963, First National City
Trust Company was merged into First National City Bank; and
     WHEREAS, at the close of business on October 31, 1968, First National City
Bank was merged into The City Bank of New York, National Association, the name
of which was thereupon changed to First National City Bank; and
     WHEREAS, effective March 1, 1976, the name of First National City Bank was
changed to Citibank, N.A.; and
     WHEREAS, effective July 16, 1984, Manufacturers Hanover Trust Company
succeeded Citibank, N.A. as Trustee under the Indenture; and
     WHEREAS, effective June 19, 1992, Chemical Bank succeeded by merger to
Manufacturers Hanover Trust Company as Trustee under the Indenture; and
     WHEREAS, effective July 15, 1996, The Chase Manhattan Bank (National
Association), merged with and into Chemical Bank which thereafter was renamed
The Chase Manhattan Bank; and
     WHEREAS, effective November 11, 2001, The Chase Manhattan Bank merged with
Morgan Guaranty Trust Company of New York and the surviving corporation was
renamed JPMorgan Chase Bank; and
     WHEREAS, effective November 13, 2004, the name of JPMorgan Chase Bank was
changed to JPMorgan Chase Bank, N.A.; and

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     WHEREAS, effective October 2, 2006, The Bank of New York assumed the rights
and obligations of JPMorgan Chase Bank, N.A. under the Indenture; and
     WHEREAS, effective July 1, 2008, the name of The Bank of New York was
changed to The Bank of New York Mellon; and
     WHEREAS, the Indenture was executed and delivered for the purpose of
securing such bonds as may from time to time be issued under and in accordance
with the terms of the Indenture, the aggregate principal amount of bonds to be
secured thereby being limited to $5,000,000,000 at any one time outstanding
(except as provided in Section 2.01 of the Indenture), and the Indenture
describes and sets forth the property conveyed thereby and is filed in the
Office of the Secretary of State of the State of Michigan and is of record in
the Office of the Register of Deeds of each county in the State of Michigan in
which this Supplemental Indenture is to be recorded; and
     WHEREAS, the Indenture has been supplemented and amended by various
indentures supplemental thereto, each of which is filed in the Office of the
Secretary of State of the State of Michigan and is of record in the Office of
the Register of Deeds of each county in the State of Michigan in which this
Supplemental Indenture is to be recorded; and
     WHEREAS, the Company and the Maine corporation entered into an Agreement of
Merger and Consolidation, dated as of February 14, 1968, which provided for the
Maine corporation to merge into the Company; and
     WHEREAS, the effective date of such Agreement of Merger and Consolidation
was June 6, 1968, upon which date the Maine corporation was merged into the
Company and the name of the Company was changed from “Consumers Power Company of
Michigan” to “Consumers Power Company”; and
     WHEREAS, the Company and the Predecessor Trustee entered into a Sixteenth
Supplemental Indenture, dated as of June 4, 1968, which provided, among other
things, for the assumption of the Indenture by the Company; and
     WHEREAS, said Sixteenth Supplemental Indenture became effective on the
effective date of such Agreement of Merger and Consolidation; and
     WHEREAS, the Company has succeeded to and has been substituted for the
Maine corporation under the Indenture with the same effect as if it had been
named therein as the mortgagor corporation; and
     WHEREAS, effective March 11, 1997, the name of Consumers Power Company was
changed to Consumers Energy Company; and
     WHEREAS, the Company has entered into a Revolving Credit Agreement dated as
of September 11, 2008 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”) with various
financial institutions and Union Bank of California, N.A., as administrative
agent (in such capacity, the “Agent”) for the Banks (as such term is defined in
the Credit Agreement), providing for the making of certain financial

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accommodations thereunder, and pursuant to such Credit Agreement the Company has
agreed to issue to the Agent, as evidence of and security for the Obligations
(as such term is defined in the Credit Agreement), a new series of bonds under
the Indenture; and
     WHEREAS, for such purposes the Company desires to issue a new series of
bonds, to be designated First Mortgage Bonds, 2008-1 Collateral Series (Interest
Bearing), each of which bonds shall also bear the descriptive title “First
Mortgage Bond” (hereinafter provided for and hereinafter sometimes referred to
as the “2008-1 Collateral Bonds”), the bonds of which series are to be issued as
registered bonds without coupons and are to bear interest at the rate per annum
specified herein and are to mature on the Termination Date (as such term is
defined in the Credit Agreement); and
     WHEREAS, each of the registered bonds without coupons of the 2008-1
Collateral Bonds and the Trustee’s Authentication Certificate thereon are to be
substantially in the following form, to wit:

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[FORM OF REGISTERED BOND
OF THE 2008-1 COLLATERAL BONDS]
[FACE]
CONSUMERS ENERGY COMPANY
FIRST MORTGAGE BOND
2008-1 COLLATERAL SERIES (INTEREST BEARING)

     No. 1   $150,000,000          

     CONSUMERS ENERGY COMPANY, a Michigan corporation (hereinafter called the
“Company”), for value received, hereby promises to pay to Union Bank of
California, N.A., as administrative agent (in such capacity, the “Agent”) for
the Banks under and as defined in the Revolving Credit Agreement, dated as of
September 11, 2008, among the Company, the Banks named therein and from time to
time party thereto, Union Bank of California, N.A., as an LC Issuer (as defined
therein), and the Agent (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), or registered
assigns, the principal sum of One Hundred and Fifty Million Dollars
($150,000,000) or such lesser principal amount as shall be equal to the
aggregate principal amount of the Loans (as defined in the Credit Agreement) and
Reimbursement Obligations (as defined in the Credit Agreement) included in the
Obligations (as defined in the Credit Agreement) outstanding on the Termination
Date (as defined in the Credit Agreement) (the “Maturity Date”), but not in
excess, however, of the principal amount of this bond, and to pay interest
thereon at the Interest Rate (as defined below) until the principal hereof is
paid or duly made available for payment on the Maturity Date, or, in the event
of redemption of this bond, until the redemption date, or, in the event of
default in the payment of the principal hereof, until the Company’s obligations
with respect to the payment of such principal shall be discharged as provided in
the Indenture (as defined on the reverse hereof). Interest on this bond shall be
payable on each Interest Payment Date (as defined below), commencing on the
first Interest Payment Date next succeeding September 11, 2008. If the Maturity
Date falls on a day which is not a Business Day, as defined below, principal and
any interest and/or fees payable with respect to the Maturity Date will be paid
on the immediately preceding Business Day. The interest payable, and punctually
paid or duly provided for, on any Interest Payment Date will, subject to certain
exceptions, be paid to the person in whose name this bond (or one or more
predecessor bonds) is registered at the close of business on the Record Date (as
defined below); provided, however, that interest payable on the Maturity Date
will be payable to the person to whom the principal hereof shall be payable.
Should the Company default in the payment of interest (“Defaulted Interest”),
the Defaulted Interest shall be paid to the person in whose name this bond (or
one or more predecessor bonds) is registered on a subsequent record date fixed
by the Company, which subsequent record date shall be fifteen (15) days prior to
the payment of such Defaulted Interest. As used herein, (A) “Business Day” shall
mean any day, other than a Saturday or Sunday, on which banks generally are open
in New York, New York and Los Angeles, California for the conduct of
substantially all of their commercial lending activities and on which interbank
wire transfers can be made on the Fedwire system; (B) “Interest Payment Date”
shall mean each date on which Obligations constituting interest and/or fees are
due and payable from time to time pursuant to the Credit Agreement; (C)

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“Interest Rate” shall mean a rate of interest per annum, adjusted as necessary,
to result in an interest payment equal to the aggregate amount of Obligations
constituting interest and fees due under the Credit Agreement on the applicable
Interest Payment Date; and (D) “Record Date” with respect to any Interest
Payment Date shall mean the day (whether or not a Business Day) immediately next
preceding such Interest Payment Date.
     Payment of the principal of and interest on this bond will be made in
immediately available funds at the office or agency of the Company maintained
for that purpose in the City of Jackson, Michigan, in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
     The provisions of this bond are continued on the reverse hereof and such
continued provisions shall for all purposes have the same effect as though fully
set forth at this place.
     This bond shall not be valid or become obligatory for any purpose unless
and until it shall have been authenticated by the execution by the Trustee or
its successor in trust under the Indenture of the certificate hereon.

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     IN WITNESS WHEREOF, Consumers Energy Company has caused this bond to be
executed in its name by its Chairman of the Board, its President or one of its
Vice Presidents by his or her signature or a facsimile thereof, and its
corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon
and attested by its Secretary or one of its Assistant Secretaries by his or her
signature or a facsimile thereof.

                 
 
               
 
          CONSUMERS ENERGY COMPANY    
 
               
Dated:
               
 
          By:
                                                                        
            
 
          Printed: Laura L. Mountcastle    
 
          Title: Vice President and Treasurer    
 
               
Attest:
               
 
 
 
           

TRUSTEE’S AUTHENTICATION CERTIFICATE
     This is one of the bonds, of the series designated therein, described in
the within-mentioned Indenture.

            THE BANK OF NEW YORK MELLON, Trustee
      By:           Authorized Officer           

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[REVERSE]
CONSUMERS ENERGY COMPANY
FIRST MORTGAGE BOND
2008-1 COLLATERAL SERIES (INTEREST BEARING)
     This bond is one of the bonds of a series designated as First Mortgage
Bonds, 2008-1 Collateral Series (Interest Bearing) (sometimes herein referred to
as the “2008-1 Collateral Bonds”) issued under and in accordance with and
secured by an Indenture dated as of September 1, 1945, given by the Company (or
its predecessor, Consumers Power Company, a Maine corporation) to City Bank
Farmers Trust Company (The Bank of New York Mellon, successor) (hereinafter
sometimes referred to as the “Trustee”), together with indentures supplemental
thereto, heretofore or hereafter executed, to which indenture and indentures
supplemental thereto (hereinafter referred to collectively as the “Indenture”)
reference is hereby made for a description of the property mortgaged and
pledged, the nature and extent of the security and the rights, duties and
immunities thereunder of the Trustee and the rights of the holders of said bonds
and of the Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the bonds to be
secured thereby are issuable in series which may vary as to date, amount, date
of maturity, rate of interest and in other respects as provided in the
Indenture.
     The 2008-1 Collateral Bonds are to be issued and delivered to the Agent in
order to evidence and secure the obligation of the Company under the Credit
Agreement to make payments to the Banks under the Credit Agreement and to
provide the Banks the benefit of the lien of the Indenture with respect to the
2008-1 Collateral Bonds.
     The obligation of the Company to make payments with respect to the
principal of 2008-1 Collateral Bonds shall be fully or partially, as the case
may be, satisfied and discharged to the extent that, at the time that any such
payment shall be due, the then due principal of the Loans and/or the
Reimbursement Obligations included in the Obligations shall have been fully or
partially paid. Satisfaction of any obligation to the extent that payment is
made with respect to the Loans and/or the Reimbursement Obligations means that
if any payment is made on the principal of the Loans and/or the Reimbursement
Obligations, a corresponding payment obligation with respect to the principal of
the 2008-1 Collateral Bonds shall be deemed discharged in the same amount as the
payment with respect to the Loans and/or the Reimbursement Obligations
discharges the outstanding obligation with respect to such Loans and/or
Reimbursement Obligations. No such payment of principal shall reduce the
principal amount of the 2008-1 Collateral Bonds.
     The obligation of the Company to make payments with respect to the interest
on 2008-1 Collateral Bonds shall be fully or partially, as the case may be,
satisfied and discharged to the extent that, at the time that any such payment
shall be due, the then due interest and/or fees under the Credit Agreement shall
have been fully or partially paid. Satisfaction of any obligation to the extent
that payment is made with respect to the interest and/or fees under the Credit
Agreement means that if any payment is made on the interest and/or fees under
the Credit Agreement, a

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corresponding payment obligation with respect to the interest on the 2008-1
Collateral Bonds shall be deemed discharged in the same amount as the payment
with respect to the interest and/or fees under the Credit Agreement discharges
the outstanding obligation under the Credit Agreement with respect to such
interest and/or fees.
     The Trustee may at any time and all times conclusively assume that the
obligation of the Company to make payments with respect to the principal of and
interest on this bond, so far as such payments at the time have become due, has
been fully satisfied and discharged unless and until the Trustee shall have
received a written notice from the Agent stating (i) that timely payment of
principal and interest on the 2008-1 Collateral Bonds has not been made,
(ii) that the Company is in arrears as to the payments required to be made by it
to the Agent in connection with the Obligations pursuant to the Credit
Agreement, and (iii) the amount of the arrearage.
     If an Event of Default (as defined in the Credit Agreement) with respect to
the payment of the principal of the Loans and/or the Reimbursement Obligations
shall have occurred, it shall be deemed to be a default for purposes of
Section 11.01 of the Indenture in the payment of the principal of the 2008-1
Collateral Bonds equal to the amount of such unpaid principal or Reimbursement
Obligations (but in no event in excess of the principal amount of the 2008-1
Collateral Bonds). If an Event of Default (as defined in the Credit Agreement)
with respect to the payment of interest on the Loans and/or the Reimbursement
Obligations or any fees shall have occurred, it shall be deemed to be a default
for purposes of Section 11.01 of the Indenture in the payment of the interest on
the 2008-1 Collateral Bonds equal to the amount of such unpaid interest or fees.
     This bond is not redeemable except upon written demand of the Agent
following the occurrence of an Event of Default under the Credit Agreement and
the acceleration of the Obligations, as provided in Section 9.2 of the Credit
Agreement. This bond is not redeemable by the operation of the improvement fund
or the maintenance and replacement provisions of the Indenture or with the
proceeds of released property.
     In case of certain defaults as specified in the Indenture, the principal of
this bond may be declared or may become due and payable on the conditions, at
the time, in the manner and with the effect provided in the Indenture. The
holders of certain specified percentages of the bonds at the time outstanding,
including in certain cases specified percentages of bonds of particular series,
may in certain cases, to the extent and as provided in the Indenture, waive
certain defaults thereunder and the consequences of such defaults.
     The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than seventy-five per centum in
principal amount of the bonds (exclusive of bonds disqualified by reason of the
Company’s interest therein) at the time outstanding, including, if more than one
series of bonds shall be at the time outstanding, not less than sixty per centum
in principal amount of each series affected, to effect, by an indenture
supplemental to the Indenture, modifications or alterations of the Indenture and
of the rights and obligations of the Company and the rights of the holders of
the bonds and coupons; provided, however, that no such modification or
alteration shall be made without the written approval or consent of the holder
hereof which will (a) extend the maturity of this bond or reduce the rate or
extend the time of payment of interest hereon or reduce the amount of the
principal hereof, or

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(b) permit the creation of any lien, not otherwise permitted, prior to or on a
parity with the lien of the Indenture, or (c) reduce the percentage of the
principal amount of the bonds the holders of which are required to approve any
such supplemental indenture.
     The Company reserves the right, without any consent, vote or other action
by holders of the 2008-1 Collateral Bonds or any other series created after the
Sixty-eighth Supplemental Indenture, to amend the Indenture to reduce the
percentage of the principal amount of bonds the holders of which are required to
approve any supplemental indenture (other than any supplemental indenture which
is subject to the proviso contained in the immediately preceding sentence)
(a) from not less than seventy-five per centum (including sixty per centum of
each series affected) to not less than a majority in principal amount of the
bonds at the time outstanding or (b) in case fewer than all series are affected,
not less than a majority in principal amount of the bonds of all affected
series, voting together.
     No recourse shall be had for the payment of the principal of or interest on
this bond, or for any claim based hereon, or otherwise in respect hereof or of
the Indenture, to or against any incorporator, stockholder, director or officer,
past, present or future, as such, of the Company, or of any predecessor or
successor company, either directly or through the Company, or such predecessor
or successor company, or otherwise, under any constitution or statute or rule of
law, or by the enforcement of any assessment or penalty, or otherwise, all such
liability of incorporators, stockholders, directors and officers, as such, being
waived and released by the holder and owner hereof by the acceptance of this
bond and being likewise waived and released by the terms of the Indenture.
     This bond shall be exchangeable for other registered bonds of the same
series, in the manner and upon the conditions prescribed in the Indenture, upon
the surrender of such bonds at the Investor Services Department of the Company,
as transfer agent. However, notwithstanding the provisions of Section 2.05 of
the Indenture, no charge shall be made upon any registration of transfer or
exchange of bonds of said series other than for any tax or taxes or other
governmental charge required to be paid by the Company.
     The Agent shall surrender this bond to the Trustee when all of the
principal of and interest on the Loans and Reimbursement Obligations arising
under the Credit Agreement, and all of the fees payable pursuant to the Credit
Agreement with respect to the Obligations, shall have been duly paid, no
Facility LC shall be outstanding, and the Credit Agreement (including, without
limitation, all Commitments thereunder) shall have been terminated.
[END OF FORM OF REGISTERED BOND
OF THE 2008-1 COLLATERAL BONDS]
 

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     AND WHEREAS all acts and things necessary to make the 2008-1 Collateral
Bonds (the “Collateral Bonds”), when duly executed by the Company and
authenticated by the Trustee or its agent and issued as prescribed in the
Indenture, as heretofore supplemented and amended, and this Supplemental
Indenture provided, the valid, binding and legal obligations of the Company, and
to constitute the Indenture, as supplemented and amended as aforesaid, as well
as by this Supplemental Indenture, a valid, binding and legal instrument for the
security thereof, have been done and performed, and the creation, execution and
delivery of this Supplemental Indenture and the creation, execution and issuance
of bonds subject to the terms hereof and of the Indenture, as so supplemented
and amended, have in all respects been duly authorized;
     NOW, THEREFORE, in consideration of the premises, of the acceptance and
purchase by the holders thereof of the bonds issued and to be issued under the
Indenture, as supplemented and amended as above set forth, and of the sum of One
Dollar duly paid by the Trustee to the Company, and of other good and valuable
considerations, the receipt whereof is hereby acknowledged, and for the purpose
of securing the due and punctual payment of the principal of and premium, if
any, and interest on all bonds now outstanding under the Indenture and the
$150,000,000 principal amount of the Collateral Bonds and all other bonds which
shall be issued under the Indenture, as supplemented and amended from time to
time, and for the purpose of securing the faithful performance and observance of
all covenants and conditions therein, and in any indenture supplemental thereto,
set forth, the Company has given, granted, bargained, sold, released,
transferred, assigned, hypothecated, pledged, mortgaged, confirmed, set over,
warranted, alienated and conveyed and by these presents does give, grant,
bargain, sell, release, transfer, assign, hypothecate, pledge, mortgage,
confirm, set over, warrant, alien and convey unto The Bank of New York Mellon,
as Trustee, as provided in the Indenture, and its successor or successors in the
trust thereby and hereby created and to its or their assigns forever, all the
right, title and interest of the Company in and to all the property, described
in Section 11 hereof, together (subject to the provisions of Article X of the
Indenture) with the tolls, rents, revenues, issues, earnings, income, products
and profits thereof, excepting, however, the property, interests and rights
specifically excepted from the lien of the Indenture as set forth in the
Indenture.
     TOGETHER WITH all and singular the tenements, hereditaments and
appurtenances belonging or in any wise appertaining to the premises, property,
franchises and rights, or any thereof, referred to in the foregoing granting
clause, with the reversion and reversions, remainder and remainders and (subject
to the provisions of Article X of the Indenture) the tolls, rents, revenues,
issues, earnings, income, products and profits thereof, and all the estate,
right, title and interest and claim whatsoever, at law as well as in equity,
which the Company now has or may hereafter acquire in and to the aforesaid
premises, property, franchises and rights and every part and parcel thereof.
     SUBJECT, HOWEVER, with respect to such premises, property, franchises and
rights, to excepted encumbrances as said term is defined in Section 1.02 of the
Indenture, and subject also to all defects and limitations of title and to all
encumbrances existing at the time of acquisition. TO HAVE AND TO HOLD all said
premises, property, franchises and rights hereby conveyed, assigned, pledged or
mortgaged, or intended so to be, unto the Trustee, its successor or successors
in trust and their assigns forever;

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     BUT IN TRUST, NEVERTHELESS, with power of sale for the equal and
proportionate benefit and security of the holders of all bonds now or hereafter
authenticated and delivered under and secured by the Indenture and interest
coupons appurtenant thereto, pursuant to the provisions of the Indenture and of
any supplemental indenture, and for the enforcement of the payment of said bonds
and coupons when payable and the performance of and compliance with the
covenants and conditions of the Indenture and of any supplemental indenture,
without any preference, distinction or priority as to lien or otherwise of any
bond or bonds over others by reason of the difference in time of the actual
authentication, delivery, issue, sale or negotiation thereof or for any other
reason whatsoever, except as otherwise expressly provided in the Indenture; and
so that each and every bond now or hereafter authenticated and delivered
thereunder shall have the same lien, and so that the principal of and premium,
if any, and interest on every such bond shall, subject to the terms thereof, be
equally and proportionately secured, as if it had been made, executed,
authenticated, delivered, sold and negotiated simultaneously with the execution
and delivery thereof.
     AND IT IS EXPRESSLY DECLARED by the Company that all bonds authenticated
and delivered under and secured by the Indenture, as supplemented and amended as
above set forth, are to be issued, authenticated and delivered, and all said
premises, property, franchises and rights hereby and by the Indenture and
indentures supplemental thereto conveyed, assigned, pledged or mortgaged, or
intended so to be, are to be dealt with and disposed of under, upon and subject
to the terms, conditions, stipulations, covenants, agreements, trusts, uses and
purposes expressed in the Indenture, as supplemented and amended as above set
forth, and the parties hereto mutually agree as follows:
     SECTION 1. There is hereby created a series of bonds (the “2008-1
Collateral Bonds”) designated as hereinabove provided, which shall also bear the
descriptive title “First Mortgage Bond”, and the forms thereof shall be
substantially as hereinbefore set forth (collectively, the “Sample Bond”). The
2008-1 Collateral Bonds shall be issued in the aggregate principal amount of
$150,000,000, shall mature on the Termination Date (as such term is defined in
the Credit Agreement) and shall be issued only as registered bonds without
coupons in denominations of $1,000 and any multiple thereof. The serial numbers
of the Collateral Bonds shall be such as may be approved by any officer of the
Company, the execution thereof by any such officer either manually or by
facsimile signature to be conclusive evidence of such approval. The Collateral
Bonds are to be issued to and registered in the name of the Agent under the
Credit Agreement (as such terms are defined in the Sample Bonds) to evidence and
secure any and all Obligations (as such term is defined in the Credit Agreement)
of the Company under the Credit Agreement.
     The 2008-1 Collateral Bonds shall bear interest as set forth in the Sample
Bond. The principal of and the interest on said bonds shall be payable as set
forth in the Sample Bond.
     The obligation of the Company to make payments with respect to the
principal of 2008-1 Collateral Bonds shall be fully or partially, as the case
may be, satisfied and discharged to the extent that, at the time that any such
payment shall be due, the then due principal of the Loans and/or the
Reimbursement Obligations included in the Obligations shall have been fully or
partially paid. Satisfaction of any obligation to the extent that payment is
made with respect to the Loans and/or the Reimbursement Obligations means that
if any payment is made on the principal of the Loans and/or the Reimbursement
Obligations, a corresponding payment

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obligation with respect to the principal of the 2008-1 Collateral Bonds shall be
deemed discharged in the same amount as the payment with respect to the Loans
and/or the Reimbursement Obligations discharges the outstanding obligation with
respect to such Loans and/or Reimbursement Obligations. No such payment of
principal shall reduce the principal amount of the 2008-1 Collateral Bonds.
     The obligation of the Company to make payments with respect to interest on
2008-1 Collateral Bonds shall be fully or partially, as the case may be,
satisfied and discharged to the extent that, at the time that any such payment
shall be due, the then due interest and/or fees under the Credit Agreement shall
have been fully or partially paid. Satisfaction of any obligation to the extent
that payment is made with respect to the interest and/or fees under the Credit
Agreement means that if any payment is made on the interest and/or fees under
the Credit Agreement, a corresponding payment obligation with respect to the
interest on the 2008-1 Collateral Bonds shall be deemed discharged in the same
amount as the payment with respect to the interest and/or fees under the Credit
Agreement discharges the outstanding obligation under the Credit Agreement with
respect to such interest and/or fees.
     The Trustee may at any time and all times conclusively assume that the
obligation of the Company to make payments with respect to the principal of and
interest on the Collateral Bonds, so far as such payments at the time have
become due, has been fully satisfied and discharged unless and until the Trustee
shall have received a written notice from the Agent stating (i) that timely
payment of principal and interest on the 2008-1 Collateral Bonds has not been
made, (ii) that the Company is in arrears as to the payments required to be made
by it to the Agent pursuant to the Credit Agreement, and (iii) the amount of the
arrearage.
     The Collateral Bonds shall be exchangeable for other registered bonds of
the same series, in the manner and upon the conditions prescribed in the
Indenture, upon the surrender of such bonds at the Investor Services Department
of the Company, as transfer agent. However, notwithstanding the provisions of
Section 2.05 of the Indenture, no charge shall be made upon any registration of
transfer or exchange of bonds of said series other than for any tax or taxes or
other governmental charge required to be paid by the Company.
     SECTION 2. The Collateral Bonds are not redeemable by the operation of the
maintenance and replacement provisions of this Indenture or with the proceeds of
released property.
     SECTION 3. Upon the occurrence of an Event of Default under the Credit
Agreement and the acceleration of the Obligations, the Collateral Bonds shall be
redeemable in whole upon receipt by the Trustee of a written demand from the
Agent stating that there has occurred under the Credit Agreement both an Event
of Default and a declaration of acceleration of the Obligations and demanding
redemption of the Collateral Bonds (including a description of the amount of
principal, interest and fees which comprise such Obligations). The Company
waives any right it may have to prior notice of such redemption under the
Indenture. Upon surrender of the Collateral Bonds by the Agent to the Trustee,
the Collateral Bonds shall be redeemed at a redemption price equal to the
aggregate amount of the Obligations.

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     SECTION 4. The Company reserves the right, without any consent, vote or
other action by the holder of the Collateral Bonds or of any subsequent series
of bonds issued under the Indenture, to make such amendments to the Indenture,
as supplemented, as shall be necessary in order to amend Section 17.02 to read
as follows:
     SECTION 17.02. With the consent of the holders of not less than a majority
in principal amount of the bonds at the time outstanding or their
attorneys-in-fact duly authorized, or, if fewer than all series are affected,
not less than a majority in principal amount of the bonds at the time
outstanding of each series the rights of the holders of which are affected,
voting together, the Company, when authorized by a resolution, and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or modifying the rights and obligations of the Company
and the rights of the holders of any of the bonds and coupons; provided,
however, that no such supplemental indenture shall (1) extend the maturity of
any of the bonds or reduce the rate or extend the time of payment of interest
thereon, or reduce the amount of the principal thereof, or reduce any premium
payable on the redemption thereof, without the consent of the holder of each
bond so affected, or (2) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of this Indenture, without the
consent of the holders of all the bonds then outstanding, or (3) reduce the
aforesaid percentage of the principal amount of bonds the holders of which are
required to approve any such supplemental indenture, without the consent of the
holders of all the bonds then outstanding. For the purposes of this Section,
bonds shall be deemed to be affected by a supplemental indenture if such
supplemental indenture adversely affects or diminishes the rights of holders
thereof against the Company or against its property. The Trustee may in its
discretion determine whether or not, in accordance with the foregoing, bonds of
any particular series would be affected by any supplemental indenture and any
such determination shall be conclusive upon the holders of bonds of such series
and all other series. Subject to the provisions of Sections 16.02 and 16.03
hereof, the Trustee shall not be liable for any determination made in good faith
in connection herewith.
     Upon the written request of the Company, accompanied by a resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of bondholders as aforesaid
(the instrument or instruments evidencing such consent to be dated within one
year of such request), the Trustee shall join with the Company in the execution
of such supplemental indenture unless such supplemental indenture affects the
Trustee’s own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion but shall not be obligated to enter
into such supplemental indenture.

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     It shall not be necessary for the consent of the bondholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
     The Company and the Trustee, if they so elect, and either before or after
such consent has been obtained, may require the holder of any bond consenting to
the execution of any such supplemental indenture to submit his bond to the
Trustee or to ask such bank, banker or trust company as may be designated by the
Trustee for the purpose, for the notation thereon of the fact that the holder of
such bond has consented to the execution of such supplemental indenture, and in
such case such notation, in form satisfactory to the Trustee, shall be made upon
all bonds so submitted, and such bonds bearing such notation shall forthwith be
returned to the persons entitled thereto.
     Prior to the execution by the Company and the Trustee of any supplemental
indenture pursuant to the provisions of this Section, the Company shall publish
a notice, setting forth in general terms the substance of such supplemental
indenture, at least once in one daily newspaper of general circulation in each
city in which the principal of any of the bonds shall be payable, or, if all
bonds outstanding shall be registered bonds without coupons or coupon bonds
registered as to principal, such notice shall be sufficiently given if mailed,
first class, postage prepaid, and registered if the Company so elects, to each
registered holder of bonds at the last address of such holder appearing on the
registry books, such publication or mailing, as the case may be, to be made not
less than thirty days prior to such execution. Any failure of the Company to
give such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
     SECTION 5. As supplemented and amended as above set forth, the Indenture is
in all respects ratified and confirmed, and the Indenture and all indentures
supplemental thereto shall be read, taken and construed as one and the same
instrument.
     SECTION 6. Nothing contained in this Supplemental Indenture shall, or shall
be construed to, confer upon any person other than a holder of bonds issued
under the Indenture, as supplemented and amended as above set forth, the
Company, the Trustee and the Agent, for the benefit of the Banks (as such term
is defined in the Credit Agreement), any right or interest to avail himself of
any benefit under any provision of the Indenture, as so supplemented and
amended.
     SECTION 7. The Trustee assumes no responsibility for or in respect of the
validity or sufficiency of this Supplemental Indenture or of the Indenture as
hereby supplemented or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein (other than those
contained in the sixth, seventh and eighth recitals hereof), all of which
recitals and statements are made solely by the Company.

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     SECTION 8. This Supplemental Indenture may be simultaneously executed in
several counterparts and all such counterparts executed and delivered, each as
an original, shall constitute but one and the same instrument.
     SECTION 9. In the event the date of any notice required or permitted
hereunder shall not be a Business Day, then (notwithstanding any other provision
of the Indenture or of any supplemental indenture thereto) such notice need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the date fixed for such notice.
“Business Day” means, with respect to this Section 9, any day, other than a
Saturday or Sunday, on which banks generally are open in New York, New York and
Los Angeles, California for the conduct of substantially all of their commercial
lending activities and on which interbank wire transfers can be made on the
Fedwire system.
     SECTION 10. This Supplemental Indenture and the Collateral Bonds shall be
governed by and deemed to be a contract under, and construed in accordance with,
the laws of the State of Michigan, and for all purposes shall be construed in
accordance with the laws of such state, except as may otherwise be required by
mandatory provisions of law.
     SECTION 11. Detailed Description of Property Mortgaged:
I.
ELECTRIC GENERATING PLANTS AND DAMS
     All the electric generating plants and stations of the Company, constructed
or otherwise acquired by it and not heretofore described in the Indenture or any
supplement thereto and not heretofore released from the lien of the Indenture,
including all powerhouses, buildings, reservoirs, dams, pipelines, flumes,
structures and works and the land on which the same are situated and all water
rights and all other lands and easements, rights of way, permits, privileges,
towers, poles, wires, machinery, equipment, appliances, appurtenances and
supplies and all other property, real or personal, forming a part of or
appertaining to or used, occupied or enjoyed in connection with such plants and
stations or any of them, or adjacent thereto.
II.
ELECTRIC TRANSMISSION LINES
     All the electric transmission lines of the Company, constructed or
otherwise acquired by it and not heretofore described in the Indenture or any
supplement thereto and not heretofore released from the lien of the Indenture,
including towers, poles, pole lines, wires, switches, switch racks,
switchboards, insulators and other appliances and equipment, and all other
property, real or personal, forming a part of or appertaining to or used,
occupied or enjoyed in connection with such transmission lines or any of them or
adjacent thereto; together with all real property, rights of way, easements,
permits, privileges, franchises and rights for or relating to the construction,
maintenance or operation thereof, through, over, under or upon any private
property or any public streets or highways, within as well as without the
corporate limits of any municipal corporation. Also all the real property,
rights of way, easements, permits, privileges

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and rights for or relating to the construction, maintenance or operation of
certain transmission lines, the land and rights for which are owned by the
Company, which are either not built or now being constructed.
III.
ELECTRIC DISTRIBUTION SYSTEMS
     All the electric distribution systems of the Company, constructed or
otherwise acquired by it and not heretofore described in the Indenture or any
supplement thereto and not heretofore released from the lien of the Indenture,
including substations, transformers, switchboards, towers, poles, wires,
insulators, subways, trenches, conduits, manholes, cables, meters and other
appliances and equipment, and all other property, real or personal, forming a
part of or appertaining to or used, occupied or enjoyed in connection with such
distribution systems or any of them or adjacent thereto; together with all real
property, rights of way, easements, permits, privileges, franchises, grants and
rights, for or relating to the construction, maintenance or operation thereof,
through, over, under or upon any private property or any public streets or
highways within as well as without the corporate limits of any municipal
corporation.
IV.
ELECTRIC SUBSTATIONS, SWITCHING STATIONS AND SITES
     All the substations, switching stations and sites of the Company,
constructed or otherwise acquired by it and not heretofore described in the
Indenture or any supplement thereto and not heretofore released from the lien of
the Indenture, for transforming, regulating, converting or distributing or
otherwise controlling electric current at any of its plants and elsewhere,
together with all buildings, transformers, wires, insulators and other
appliances and equipment, and all other property, real or personal, forming a
part of or appertaining to or used, occupied or enjoyed in connection with any
of such substations and switching stations, or adjacent thereto, with sites to
be used for such purposes.
V.
GAS COMPRESSOR STATIONS, GAS PROCESSING PLANTS, DESULPHURIZATION
STATIONS, METERING STATIONS, ODORIZING STATIONS, REGULATORS AND
SITES
     All the compressor stations, processing plants, desulphurization stations,
metering stations, odorizing stations, regulators and sites of the Company,
constructed or otherwise acquired by it and not heretofore described in the
Indenture or any supplement thereto and not heretofore released from the lien of
the Indenture, for compressing, processing, desulphurizing, metering, odorizing
and regulating manufactured or natural gas at any of its plants and elsewhere,
together with all buildings, meters and other appliances and equipment, and all
other property, real or personal, forming a part of or appertaining to or used,
occupied or enjoyed in connection with any of such purposes, with sites to be
used for such purposes.

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VI.
GAS STORAGE FIELDS
     The natural gas rights and interests of the Company, including wells and
well lines (but not including natural gas, oil and minerals), the gas gathering
system, the underground gas storage rights, the underground gas storage wells
and injection and withdrawal system used in connection therewith, constructed or
otherwise acquired by it and not heretofore described in the Indenture or any
supplement thereto and not heretofore released from the lien of the Indenture:
In the Overisel Gas Storage Field, located in the Township of Overisel, Allegan
County, and in the Township of Zeeland, Ottawa County, Michigan; in the
Northville Gas Storage Field located in the Township of Salem, Washtenaw County,
Township of Lyon, Oakland County, and the Townships of Northville and Plymouth
and City of Plymouth, Wayne County, Michigan; in the Salem Gas Storage Field,
located in the Township of Salem, Allegan County, and in the Township of
Jamestown, Ottawa County, Michigan; in the Ray Gas Storage Field, located in the
Townships of Ray and Armada, Macomb County, Michigan; in the Lenox Gas Storage
Field, located in the Townships of Lenox and Chesterfield, Macomb County,
Michigan; in the Ira Gas Storage Field, located in the Township of Ira, St.
Clair County, Michigan; in the Puttygut Gas Storage Field, located in the
Township of Casco, St. Clair County, Michigan; in the Four Corners Gas Storage
Field, located in the Townships of Casco, China, Cottrellville and Ira, St.
Clair County, Michigan; in the Swan Creek Gas Storage Field, located in the
Township of Casco and Ira, St. Clair County, Michigan; and in the Hessen Gas
Storage Field, located in the Townships of Casco and Columbus, St. Clair,
Michigan.
VII.
GAS TRANSMISSION LINES
     All the gas transmission lines of the Company, constructed or otherwise
acquired by it and not heretofore described in the Indenture or any supplement
thereto and not heretofore released from the lien of the Indenture, including
gas mains, pipes, pipelines, gates, valves, meters and other appliances and
equipment, and all other property, real or personal, forming a part of or
appertaining to or used, occupied or enjoyed in connection with such
transmission lines or any of them or adjacent thereto; together with all real
property, right of way, easements, permits, privileges, franchises and rights
for or relating to the construction, maintenance or operation thereof, through,
over, under or upon any private property or any public streets or highways,
within as well as without the corporate limits of any municipal corporation.
VIII.
GAS DISTRIBUTION SYSTEMS
     All the gas distribution systems of the Company, constructed or otherwise
acquired by it and not heretofore described in the Indenture or any supplement
thereto and not heretofore released from the lien of the Indenture, including
tunnels, conduits, gas mains and pipes, service pipes, fittings, gates, valves,
connections, meters and other appliances and equipment, and all other property,
real or personal, forming a part of or appertaining to or used, occupied or
enjoyed

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in connection with such distribution systems or any of them or adjacent thereto;
together with all real property, rights of way, easements, permits, privileges,
franchises, grants and rights, for or relating to the construction, maintenance
or operation thereof, through, over, under or upon any private property or any
public streets or highways within as well as without the corporate limits of any
municipal corporation.
IX.
OFFICE BUILDINGS, SERVICE BUILDINGS, GARAGES, ETC.
     All office, garage, service and other buildings of the Company, wherever
located, in the State of Michigan, constructed or otherwise acquired by it and
not heretofore described in the Indenture or any supplement thereto and not
heretofore released from the lien of the Indenture, together with the land on
which the same are situated and all easements, rights of way and appurtenances
to said lands, together with all furniture and fixtures located in said
buildings.
X.
TELEPHONE PROPERTIES AND
RADIO COMMUNICATION EQUIPMENT
     All telephone lines, switchboards, systems and equipment of the Company,
constructed or otherwise acquired by it and not heretofore described in the
Indenture or any supplement thereto and not heretofore released from the lien of
the Indenture, used or available for use in the operation of its properties, and
all other property, real or personal, forming a part of or appertaining to or
used, occupied or enjoyed in connection with such telephone properties or any of
them or adjacent thereto; together with all real estate, rights of way,
easements, permits, privileges, franchises, property, devices or rights related
to the dispatch, transmission, reception or reproduction of messages,
communications, intelligence, signals, light, vision or sound by electricity,
wire or otherwise, including all telephone equipment installed in buildings used
as general and regional offices, substations and generating stations and all
telephone lines erected on towers and poles; and all radio communication
equipment of the Company, together with all property, real or personal (except
any in the Indenture expressly excepted), fixed stations, towers, auxiliary
radio buildings and equipment, and all appurtenances used in connection
therewith, wherever located, in the State of Michigan.
XI.
OTHER REAL PROPERTY
     All other real property of the Company and all interests therein, of every
nature and description (except any in the Indenture expressly excepted) wherever
located, in the State of Michigan, acquired by it and not heretofore described
in the Indenture or any supplement thereto and not heretofore released from the
lien of the Indenture. Such real property includes but is not limited to the
following described property, such property is subject to any interests that
were excepted or reserved in the conveyance to the Company:

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ALCONA COUNTY
     Certain land in Caledonia Township, Alcona County, Michigan described as:
     The East 330 feet of the South 660 feet of the SW 1/4 of the SW 1/4 of
Section 8, T28N, R8E, except the West 264 feet of the South 330 feet thereof;
said land being more particularly described as follows: To find the place of
beginning of this description, commence at the Southwest corner of said section,
run thence East along the South line of said section 1243 feet to the place of
beginning of this description, thence continuing East along said South line of
said section 66 feet to the West 1/8 line of said section, thence N 02 degrees
09’ 30” E along the said West 1/8 line of said section 660 feet, thence West 330
feet, thence S 02 degrees 09’ 30” W, 330 feet, thence East 264 feet, thence S 02
degrees 09’ 30” W, 330 feet to the place of beginning.
ALLEGAN COUNTY
     Certain land in Lee Township, Allegan County, Michigan described as:
     The NE 1/4 of the NW 1/4 of Section 16, T1N, R15W.
ALPENA COUNTY
     Certain land in Wilson and Green Townships, Alpena County, Michigan
described as:
     All that part of the S’ly 1/2 of the former Boyne City-Gaylord and Alpena
Railroad right of way, being the Southerly 50 feet of a 100 foot strip of land
formerly occupied by said Railroad, running from the East line of Section 31,
T31N, R7E, Southwesterly across said Section 31 and Sections 5 and 6 of T30N,
R7E and Sections 10, 11 and the E 1/2 of Section 9, except the West 1646 feet
thereof, all in T30N, R6E.
ANTRIM COUNTY
     Certain land in Mancelona Township, Antrim County, Michigan described as:
     The S 1/2 of the NE 1/4 of Section 33, T29N, R6W, excepting therefrom all
mineral, coal, oil and gas and such other rights as were reserved unto the State
of Michigan in that certain deed running from the State of Michigan to August W.
Schack and Emma H. Schack, his wife, dated April 15, 1946 and recorded May 20,
1946 in Liber 97 of Deeds on page 682 of Antrim County Records.
ARENAC COUNTY
     Certain land in Standish Township, Arenac County, Michigan described as:

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     A parcel of land in the SW 1/4 of the NW 1/4 of Section 12, T18N, R4E,
described as follows: To find the place of beginning of said parcel of land,
commence at the Northwest corner of Section 12, T18N, R4E; run thence South
along the West line of said section, said West line of said section being also
the center line of East City Limits Road 2642.15 feet to the W 1/4 post of said
section and the place of beginning of said parcel of land; running thence N 88
degrees 26’ 00” E along the East and West 1/4 line of said section, 660.0 feet;
thence North parallel with the West line of said section, 310.0 feet; thence S
88 degrees 26’ 00” W, 330.0 feet; thence South parallel with the West line of
said section, 260.0 feet; thence S 88 degrees 26’ 00” W, 330.0 feet to the West
line of said section and the center line of East City Limits Road; thence South
along the said West line of said section, 50.0 feet to the place of beginning.
BARRY COUNTY
     Certain land in Johnstown Township, Barry County, Michigan described as:
     A strip of land 311 feet in width across the SW 1/4 of the NE 1/4 of
Section 31, T1N, R8W, described as follows: To find the place of beginning of
this description, commence at the E 1/4 post of said section; run thence N 00
degrees 55’ 00” E along the East line of said section, 555.84 feet; thence N 59
degrees 36’ 20” W, 1375.64 feet; thence N 88 degrees 30’ 00” W, 130 feet to a
point on the East 1/8 line of said section and the place of beginning of this
description; thence continuing N 88 degrees 30’ 00” W, 1327.46 feet to the North
and South 1/4 line of said section; thence S 00 degrees 39’35” W along said
North and South 1/4 line of said section, 311.03 feet to a point, which said
point is 952.72 feet distant N’ly from the East and West 1/4 line of said
section as measured along said North and South 1/4 line of said section; thence
S 88 degrees 30’ 00” E, 1326.76 feet to the East 1/8 line of said section;
thence N 00 degrees 47’ 20” E along said East 1/8 line of said section, 311.02
feet to the place of beginning.
BAY COUNTY
     Certain land in Frankenlust Township, Bay County, Michigan described as:
     The South 250 feet of the N 1/2 of the W 1/2 of the W 1/2 of the SE 1/4 of
Section 9, T13N, R4E.
BENZIE COUNTY
     Certain land in Benzonia Township, Benzie County, Michigan described as:
     A parcel of land in the Northeast 1/4 of Section 7, Township 26 North,
Range 14 West, described as beginning at a point on the East line of said
Section 7, said point being 320 feet North measured along the East

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line of said section from the East 1/4 post; running thence West 165 feet;
thence North parallel with the East line of said section 165 feet; thence East
165 feet to the East line of said section; thence South 165 feet to the place of
beginning.
BRANCH COUNTY
     Certain land in Girard Township, Branch County, Michigan described as:
     A parcel of land in the NE 1/4 of Section 23 T5S, R6W, described as
beginning at a point on the North and South quarter line of said section at a
point 1278.27 feet distant South of the North quarter post of said section, said
distance being measured along the North and South quarter line of said section,
running thence S89 degrees21’E 250 feet, thence North along a line parallel with
the said North and South quarter line of said section 200 feet, thence N89
degrees21’W 250 feet to the North and South quarter line of said section, thence
South along said North and South quarter line of said section 200 feet to the
place of beginning.
CALHOUN COUNTY
     Certain land in Convis Township, Calhoun County, Michigan described as:
     A parcel of land in the SE 1/4 of the SE 1/4 of Section 32, T1S, R6W,
described as follows: To find the place of beginning of this description,
commence at the Southeast corner of said section; run thence North along the
East line of said section 1034.32 feet to the place of beginning of this
description; running thence N 89 degrees 39’ 52” W, 333.0 feet; thence North
290.0 feet to the South 1/8 line of said section; thence S 89 degrees 39’ 52” E
along said South 1/8 line of said section 333.0 feet to the East line of said
section; thence South along said East line of said section 290.0 feet to the
place of beginning. (Bearings are based on the East line of Section 32, T1S,
R6W, from the Southeast corner of said section to the Northeast corner of said
section assumed as North.)
CASS COUNTY
     Certain easement rights located across land in Marcellus Township, Cass
County, Michigan described as:
     The East 6 rods of the SW 1/4 of the SE 1/4 of Section 4, T5S, R13W.
CHARLEVOIX COUNTY
     Certain land in South Arm Township, Charlevoix County, Michigan described
as:

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     A parcel of land in the SW 1/4 of Section 29, T32N, R7W, described as
follows: Beginning at the Southwest corner of said section and running thence
North along the West line of said section 788.25 feet to a point which is 528
feet distant South of the South 1/8 line of said section as measured along the
said West line of said section; thence N 89 degrees 30’ 19” E, parallel with
said South 1/8 line of said section 442.1 feet; thence South 788.15 feet to the
South line of said section; thence S 89 degrees 29’ 30” W, along said South line
of said section 442.1 feet to the place of beginning.
CHEBOYGAN COUNTY
     Certain land in Inverness Township, Cheboygan County, Michigan described
as:
     A parcel of land in the SW frl 1/4 of Section 31, T37N, R2W, described as
beginning at the Northwest corner of the SW frl 1/4, running thence East on the
East and West quarter line of said Section, 40 rods, thence South parallel to
the West line of said Section 40 rods, thence West 40 rods to the West line of
said Section, thence North 40 rods to the place of beginning.
CLARE COUNTY
     Certain land in Frost Township, Clare County, Michigan described as:
     The East 150 feet of the North 225 feet of the NW 1/4 of the NW 1/4 of
Section 15, T20N, R4W.
CLINTON COUNTY
     Certain land in Watertown Township, Clinton County, Michigan described as:
     The NE 1/4 of the NE 1/4 of the SE 1/4 of Section 22, and the North 165
feet of the NW 1/4 of the NE 1/4 of the SE 1/4 of Section 22, T5N, R3W.
CRAWFORD COUNTY
     Certain land in Lovells Township, Crawford County, Michigan described as:
     A parcel of land in Section 1, T28N, R1W, described as: Commencing at NW
corner said section; thence South 89 degrees53’30” East along North section line
105.78 feet to point of beginning; thence South 89 degrees53’30” East along
North section line 649.64 feet; thence South 55 degrees 42’30” East 340.24 feet;
thence South 55 degrees 44’ 37”“ East 5,061.81 feet to the East section line;
thence South 00 degrees 00’ 08”“ West along East section line 441.59 feet;
thence North 55

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degrees 44’ 37” West 5,310.48 feet; thence North 55 degrees 42’30” West 877.76
feet to point of beginning.
EATON COUNTY
     Certain land in Eaton Township, Eaton County, Michigan described as:
     A parcel of land in the SW 1/4 of Section 6, T2N, R4W, described as
follows: To find the place of beginning of this description commence at the
Southwest corner of said section; run thence N 89 degrees 51’ 30” E along the
South line of said section 400 feet to the place of beginning of this
description; thence continuing N 89 degrees 51’ 30” E, 500 feet; thence N 00
degrees 50’ 00” W, 600 feet; thence S 89 degrees 51’ 30” W parallel with the
South line of said section 500 feet; thence S 00 degrees 50’ 00” E, 600 feet to
the place of beginning.
EMMET COUNTY
     Certain land in Wawatam Township, Emmet County, Michigan described as:
     The West 1/2 of the Northeast 1/4 of the Northeast 1/4 of Section 23, T39N,
R4W.
GENESEE COUNTY
     Certain land in Argentine Township, Genesee County, Michigan described as:
     A parcel of land of part of the SW 1/4 of Section 8, T5N, R5E, being more
particularly described as follows:
     Beginning at a point of the West line of Duffield Road, 100 feet wide, (as
now established) distant 829.46 feet measured N01 degrees42’56”W and 50 feet
measured S88 degrees14’04”W from the South quarter corner, Section 8, T5N, R5E;
thence S88 degrees14’04”W a distance of 550 feet; thence N01 degrees42’56”W a
distance of 500 feet to a point on the North line of the South half of the
Southwest quarter of said Section 8; thence N88 degrees14’04”E along the North
line of South half of the Southwest quarter of said Section 8 a distance 550
feet to a point on the West line of Duffield Road, 100 feet wide (as now
established); thence S01 degrees42’56”E along the West line of said Duffield
Road a distance of 500 feet to the point of beginning.
GLADWIN COUNTY
     Certain land in Secord Township, Gladwin County, Michigan described as:
     The East 400 feet of the South 450 feet of Section 2, T19N, R1E.

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GRAND TRAVERSE COUNTY
     Certain land in Mayfield Township, Grand Traverse County, Michigan
described as:
     A parcel of land in the Northwest 1/4 of Section 3, T25N, R11W, described
as follows: Commencing at the Northwest corner of said section, running thence S
89 degrees19’15” E along the North line of said section and the center line of
Clouss Road 225 feet, thence South 400 feet, thence N 89 degrees19’15” W 225
feet to the West line of said section and the center line of Hannah Road, thence
North along the West line of said section and the center line of Hannah Road 400
feet to the place of beginning for this description.
GRATIOT COUNTY
     Certain land in Fulton Township, Gratiot County, Michigan described as:
     A parcel of land in the NE 1/4 of Section 7, Township 9 North, Range 3
West, described as beginning at a point on the North line of George Street in
the Village of Middleton, which is 542 feet East of the North and South
one-quarter (1/4) line of said Section 7; thence North 100 feet; thence East 100
feet; thence South 100 feet to the North line of George Street; thence West
along the North line of George Street 100 feet to place of beginning.
HILLSDALE COUNTY
     Certain land in Litchfield Village, Hillsdale County, Michigan described
as:
     Lot 238 of Assessors Plat of the Village of Litchfield.
HURON COUNTY
     Certain easement rights located across land in Sebewaing Township, Huron
County, Michigan described as:
     The North 1/2 of the Northwest 1/4 of Section 15, T15N, R9E.
INGHAM COUNTY
     Certain land in Vevay Township, Ingham County, Michigan described as:
     A parcel of land 660 feet wide in the Southwest 1/4 of Section 7 lying
South of the centerline of Sitts Road as extended to the North-South 1/4 line of
said Section 7, T2N, R1W, more particularly described as follows: Commence at
the Southwest corner of said Section 7, thence North along the West line of said
Section 2502.71 feet to the centerline of Sitts Road; thence South 89
degrees54’45” East along said centerline

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2282.38 feet to the place of beginning of this description; thence continuing
South 89 degrees54’45” East along said centerline and said centerline extended
660.00 feet to the North-South 1/4 line of said section; thence South 00
degrees07’20” West 1461.71 feet; thence North 89 degrees34’58” West 660.00 feet;
thence North 00 degrees07’20” East 1457.91 feet to the centerline of Sitts Road
and the place of beginning.
IONIA COUNTY
     Certain land in Sebewa Township, Ionia County, Michigan described as:
     A strip of land 280 feet wide across that part of the SW 1/4 of the NE 1/4
of Section 15, T5N, R6W, described as follows:
     To find the place of beginning of this description commence at the E 1/4
corner of said section; run thence N 00 degrees 05’ 38” W along the East line of
said section, 1218.43 feet; thence S 67 degrees 18’ 24” W, 1424.45 feet to the
East 1/8 line of said section and the place of beginning of this description;
thence continuing S 67 degrees 18’ 24” W, 1426.28 feet to the North and South
1/4 line of said section at a point which said point is 105.82 feet distant N’ly
of the center of said section as measured along said North and South 1/4 line of
said section; thence N 00 degrees 04’ 47” E along said North and South 1/4 line
of said section, 303.67 feet; thence N 67 degrees 18’ 24” E, 1425.78 feet to the
East 1/8 line of said section; thence S 00 degrees 00’ 26” E along said East 1/8
line of said section, 303.48 feet to the place of beginning. (Bearings are based
on the East line of Section 15, T5N, R6W, from the E 1/4 corner of said section
to the Northeast corner of said section assumed as N 00 degrees 05’ 38” W.)
IOSCO COUNTY
     Certain land in Alabaster Township, Iosco County, Michigan described as:
     A parcel of land in the NW 1/4 of Section 34, T21N, R7E, described as
follows: To find the place of beginning of this description commence at the N
1/4 post of said section; run thence South along the North and South 1/4 line of
said section, 1354.40 feet to the place of beginning of this description; thence
continuing South along the said North and South 1/4 line of said section, 165.00
feet to a point on the said North and South 1/4 line of said section which said
point is 1089.00 feet distant North of the center of said section; thence West
440.00 feet; thence North 165.00 feet; thence East 440.00 feet to the said North
and South 1/4 line of said section and the place of beginning.
ISABELLA COUNTY
     Certain land in Chippewa Township, Isabella County, Michigan described as:

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     The North 8 rods of the NE 1/4 of the SE 1/4 of Section 29, T14N, R3W.
JACKSON COUNTY
     Certain land in Waterloo Township, Jackson County, Michigan described as:
     A parcel of land in the North fractional part of the N fractional 1/2 of
Section 2, T1S, R2E, described as follows: To find the place of beginning of
this description commence at the E 1/4 post of said section; run thence N 01
degrees 03’ 40” E along the East line of said section 1335.45 feet to the North
1/8 line of said section and the place of beginning of this description; thence
N 89 degrees 32’ 00” W, 2677.7 feet to the North and South 1/4 line of said
section; thence S 00 degrees 59’ 25” W along the North and South 1/4 line of
said section 22.38 feet to the North 1/8 line of said section; thence S 89
degrees 59’ 10” W along the North 1/8 line of said section 2339.4 feet to the
center line of State Trunkline Highway M-52; thence N 53 degrees 46’ 00” W along
the center line of said State Trunkline Highway 414.22 feet to the West line of
said section; thence N 00 degrees 55’ 10” E along the West line of said section
74.35 feet; thence S 89 degrees 32’ 00” E, 5356.02 feet to the East line of said
section; thence S 01 degrees 03’ 40” W along the East line of said section 250
feet to the place of beginning.
KALAMAZOO COUNTY
     Certain land in Alamo Township, Kalamazoo County, Michigan described as:
     The South 350 feet of the NW 1/4 of the NW 1/4 of Section 16, T1S, R12W,
being more particularly described as follows: To find the place of beginning of
this description, commence at the Northwest corner of said section; run thence S
00 degrees 36’ 55” W along the West line of said section 971.02 feet to the
place of beginning of this description; thence continuing S 00 degrees 36’ 55” W
along said West line of said section 350.18 feet to the North 1/8 line of said
section; thence S 87 degrees 33’ 40” E along the said North 1/8 line of said
section 1325.1 feet to the West 1/8 line of said section; thence N 00 degrees
38’ 25” E along the said West 1/8 line of said section 350.17 feet; thence N 87
degrees 33’ 40” W, 1325.25 feet to the place of beginning.
KALKASKA COUNTY
     Certain land in Kalkaska Township, Kalkaska County, Michigan described as:
     The NW 1/4 of the SW 1/4 of Section 4, T27N, R7W, excepting therefrom all
mineral, coal, oil and gas and such other rights as were reserved unto the State
of Michigan in that certain deed running from the Department of Conservation for
the State of Michigan to George Welker

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and Mary Welker, his wife, dated October 9, 1934 and recorded December 28, 1934
in Liber 39 on page 291 of Kalkaska County Records, and subject to easement for
pipeline purposes as granted to Michigan Consolidated Gas Company by first party
herein on April 4, 1963 and recorded June 21, 1963 in Liber 91 on page 631 of
Kalkaska County Records.
KENT COUNTY
     Certain land in Caledonia Township, Kent County, Michigan described as:
     A parcel of land in the Northwest fractional 1/4 of Section 15, T5N, R10W,
described as follows: To find the place of beginning of this description
commence at the North 1/4 corner of said section, run thence S 0 degrees 59’ 26”
E along the North and South 1/4 line of said section 2046.25 feet to the place
of beginning of this description, thence continuing S 0 degrees 59’ 26” E along
said North and South 1/4 line of said section 332.88 feet, thence S 88 degrees
58’ 30” W 2510.90 feet to a point herein designated “Point A” on the East bank
of the Thornapple River, thence continuing S 88 degrees 53’ 30” W to the center
thread of the Thornapple River, thence NW’ly along the center thread of said
Thornapple River to a point which said point is S 88 degrees 58’ 30” W of a
point on the East bank of the Thornapple River herein designated “Point B”, said
“Point B” being N 23 degrees 41’ 35” W 360.75 feet from said above-described
“Point A”, thence N 88 degrees 58’ 30” E to said “Point B”, thence continuing N
88 degrees 58’ 30” E 2650.13 feet to the place of beginning. (Bearings are based
on the East line of Section 15, T5N, R10W between the East 1/4 corner of said
section and the Northeast corner of said section assumed as N 0 degrees 59’ 55”
W.)
LAKE COUNTY
     Certain land in Pinora and Cherry Valley Townships, Lake County, Michigan
described as:
     A strip of land 50 feet wide East and West along and adjoining the West
line of highway on the East side of the North 1/2 of Section 13 T18N, R12W. Also
a strip of land 100 feet wide East and West along and adjoining the East line of
the highway on the West side of following described land: The South 1/2 of NW
1/4, and the South 1/2 of the NW 1/4 of the SW 1/4, all in Section 6, T18N,
R11W.
LAPEER COUNTY
     Certain land in Hadley Township, Lapeer County, Michigan described as:
     The South 825 feet of the W 1/2 of the SW 1/4 of Section 24, T6N, R9E,
except the West 1064 feet thereof.

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LEELANAU COUNTY
     Certain land in Cleveland Township, Leelanau County, Michigan described as:
     The North 200 feet of the West 180 feet of the SW 1/4 of the SE 1/4 of
Section 35, T29N, R13W.
LENAWEE COUNTY
     Certain land in Madison Township, Lenawee County, Michigan described as:
     A strip of land 165 feet wide off the West side of the following described
premises: The E 1/2 of the SE 1/4 of Section 12. The E 1/2 of the NE 1/4 and the
NE 1/4 of the SE 1/4 of Section 13, being all in T7S, R3E, excepting therefrom a
parcel of land in the E 1/2 of the SE 1/4 of Section 12, T7S, R3E, beginning at
the Northwest corner of said E 1/2 of the SE 1/4 of Section 12, running thence
East 4 rods, thence South 6 rods, thence West 4 rods, thence North 6 rods to the
place of beginning.
LIVINGSTON COUNTY
     Certain land in Cohoctah Township, Livingston County, Michigan described
as:
     Parcel 1
     The East 390 feet of the East 50 rods of the SW 1/4 of Section 30, T4N,
R4E.
     Parcel 2
     A parcel of land in the NW 1/4 of Section 31, T4N, R4E, described as
follows: To find the place of beginning of this description commence at the N
1/4 post of said section; run thence N 89 degrees 13’ 06” W along the North line
of said section, 330 feet to the place of beginning of this description; running
thence S 00 degrees 52’ 49” W, 2167.87 feet; thence N 88 degrees 59’ 49” W, 60
feet; thence N 00 degrees 52’ 49” E, 2167.66 feet to the North line of said
section; thence S 89 degrees 13’ 06” E along said North line of said section, 60
feet to the place of beginning.
MACOMB COUNTY
     Certain land in Macomb Township, Macomb County, Michigan described as:
     A parcel of land commencing on the West line of the E 1/2 of the NW 1/4 of
fractional Section 6, 20 chains South of the NW corner of said E 1/2 of the NW
1/4 of Section 6; thence South on said West line and the East line of A. Henry
Kotner’s Hayes Road Subdivision #15, according to the recorded plat thereof, as
recorded in Liber 24 of Plats, on page 7, 24.36

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chains to the East and West 1/4 line of said Section 6; thence East on said East
and West 1/4 line 8.93 chains; thence North parallel with the said West line of
the E 1/2 of the NW 1/4 of Section 6, 24.36 chains; thence West 8.93 chains to
the place of beginning, all in T3N, R13E.
MANISTEE COUNTY
     Certain land in Manistee Township, Manistee County, Michigan described as:
     A parcel of land in the SW 1/4 of Section 20, T22N, R16W, described as
follows: To find the place of beginning of this description, commence at the
Southwest corner of said section; run thence East along the South line of said
section 832.2 feet to the place of beginning of this description; thence
continuing East along said South line of said section 132 feet; thence North 198
feet; thence West 132 feet; thence South 198 feet to the place of beginning,
excepting therefrom the South 2 rods thereof which was conveyed to Manistee
Township for highway purposes by a Quitclaim Deed dated June 13, 1919 and
recorded July 11, 1919 in Liber 88 of Deeds on page 638 of Manistee County
Records.
MASON COUNTY
     Certain land in Riverton Township, Mason County, Michigan described as:
     Parcel 1
     The South 10 acres of the West 20 acres of the S 1/2 of the NE 1/4 of
Section 22, T17N, R17W.
     Parcel 2
     A parcel of land containing 4 acres of the West side of highway, said
parcel of land being described as commencing 16 rods South of the Northwest
corner of the NW 1/4 of the SW 1/4 of Section 22, T17N, R17W, running thence
South 64 rods, thence NE’ly and N’ly and NW’ly along the W’ly line of said
highway to the place of beginning, together with any and all right, title, and
interest of Howard C. Wicklund and Katherine E. Wicklund in and to that portion
of the hereinbefore mentioned highway lying adjacent to the E’ly line of said
above described land.
MECOSTA COUNTY
     Certain land in Wheatland Township, Mecosta County, Michigan described as:
     A parcel of land in the SW 1/4 of the SW 1/4 of Section 16, T14N, R7W,
described as beginning at the Southwest corner of said section; thence East
along the South line of Section 133 feet; thence North parallel

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to the West section line 133 feet; thence West 133 feet to the West line of said
Section; thence South 133 feet to the place of beginning.
MIDLAND COUNTY
     Certain land in Ingersoll Township, Midland County, Michigan described as:
     The West 200 feet of the W 1/2 of the NE 1/4 of Section 4, T13N, R2E.
MISSAUKEE COUNTY
     Certain land in Norwich Township, Missaukee County, Michigan described as:
     A parcel of land in the NW 1/4 of the NW 1/4 of Section 16, T24N, R6W,
described as follows: Commencing at the Northwest corner of said section,
running thence N 89 degrees 01’ 45” E along the North line of said section
233.00 feet; thence South 233.00 feet; thence S 89 degrees 01’ 45” W, 233.00
feet to the West line of said section; thence North along said West line of said
section 233.00 feet to the place of beginning. (Bearings are based on the West
line of Section 16, T24N, R6W, between the Southwest and Northwest corners of
said section assumed as North.)
MONROE COUNTY
     Certain land in Whiteford Township, Monroe County, Michigan described as:
     A parcel of land in the SW1/4 of Section 20, T8S, R6E, described as
follows: To find the place of beginning of this description commence at the S
1/4 post of said section; run thence West along the South line of said section
1269.89 feet to the place of beginning of this description; thence continuing
West along said South line of said section 100 feet; thence N 00 degrees 50’ 35”
E, 250 feet; thence East 100 feet; thence S 00 degrees 50’ 35” W parallel with
and 16.5 feet distant W’ly of as measured perpendicular to the West 1/8 line of
said section, as occupied, a distance of 250 feet to the place of beginning.
MONTCALM COUNTY
     Certain land in Crystal Township, Montcalm County, Michigan described as:
     The N 1/2 of the S 1/2 of the SE 1/4 of Section 35, T10N, R5W.
MONTMORENCY COUNTY
     Certain land in the Village of Hillman, Montmorency County, Michigan
described as:

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     Lot 14 of Hillman Industrial Park, being a subdivision in the South 1/2 of
the Northwest 1/4 of Section 24, T31N, R4E, according to the plat thereof
recorded in Liber 4 of Plats on Pages 32-34, Montmorency County Records.
MUSKEGON COUNTY
     Certain land in Casnovia Township, Muskegon County, Michigan described as:
     The West 433 feet of the North 180 feet of the South 425 feet of the SW 1/4
of Section 3, T10N, R13W.
NEWAYGO COUNTY
     Certain land in Ashland Township, Newaygo County, Michigan described as:
     The West 250 feet of the NE 1/4 of Section 23, T11N, R13W.
OAKLAND COUNTY
     Certain land in Wixcom City, Oakland County, Michigan described as:
     The E 75 feet of the N 160 feet of the N 330 feet of the W 526.84 feet of
the NW 1/4 of the NW 1/4 of Section 8, T1N, R8E, more particularly described as
follows: Commence at the NW corner of said Section 8, thence N 87 degrees 14’
29” E along the North line of said Section 8 a distance of 451.84 feet to the
place of beginning for this description; thence continuing N 87 degrees 14’ 29”
E along said North section line a distance of 75.0 feet to the East line of the
West 526.84 feet of the NW 1/4 of the NW 1/4 of said Section 8; thence S 02
degrees 37’ 09” E along said East line a distance of 160.0 feet; thence S 87
degrees 14’ 29” W a distance of 75.0 feet; thence N 02 degrees 37’ 09” W a
distance of 160.0 feet to the place of beginning.
OCEANA COUNTY
     Certain land in Crystal Township, Oceana County, Michigan described as:
     The East 290 feet of the SE 1/4 of the NW 1/4 and the East 290 feet of the
NE 1/4 of the SW 1/4, all in Section 20, T16N, R16W.
OGEMAW COUNTY
     Certain land in West Branch Township, Ogemaw County, Michigan described as:
     The South 660 feet of the East 660 feet of the NE 1/4 of the NE 1/4 of
Section 33, T22N, R2E.

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OSCEOLA COUNTY
     Certain land in Hersey Township, Osceola County, Michigan described as:
     A parcel of land in the North 1/2 of the Northeast 1/4 of Section 13, T17N,
R9W, described as commencing at the Northeast corner of said Section; thence
West along the North Section line 999 feet to the point of beginning of this
description; thence S 01 degrees 54’ 20” E 1327.12 feet to the North 1/8 line;
thence S 89 degrees 17’ 05” W along the North 1/8 line 330.89 feet; thence N 01
degrees 54’ 20” W 1331.26 feet to the North Section line; thence East along the
North Section line 331 feet to the point of beginning.
OSCODA COUNTY
     Certain land in Comins Township, Oscoda County, Michigan described as:
     The East 400 feet of the South 580 feet of the W 1/2 of the SW 1/4 of
Section 15, T27N, R3E.
OTSEGO COUNTY
     Certain land in Corwith Township, Otsego County, Michigan described as:
     Part of the NW 1/4 of the NE 1/4 of Section 28, T32N, R3W, described as:
Beginning at the N 1/4 corner of said section; running thence S 89 degrees 04’
06” E along the North line of said section, 330.00 feet; thence S 00 degrees 28’
43” E, 400.00 feet; thence N 89 degrees 04’ 06” W, 330.00 feet to the North and
South 1/4 line of said section; thence N 00 degrees 28’ 43” W along the said
North and South 1/4 line of said section, 400.00 feet to the point of beginning;
subject to the use of the N’ly 33.00 feet thereof for highway purposes.
OTTAWA COUNTY
     Certain land in Robinson Township, Ottawa County, Michigan described as:
     The North 660 feet of the West 660 feet of the NE 1/4 of the NW 1/4 of
Section 26, T7N, R15W.
PRESQUE ISLE COUNTY
     Certain land in Belknap and Pulawski Townships, Presque Isle County,
Michigan described as:
     Part of the South half of the Northeast quarter, Section 24, T34N, R5E, and
part of the Northwest quarter, Section 19, T34N, R6E, more fully described as:
Commencing at the East 1/4 corner of said Section 24;

A-33

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thence N 00 degrees15’47” E, 507.42 feet, along the East line of said Section 24
to the point of beginning; thence S 88 degrees15’36” W, 400.00 feet, parallel
with the North 1/8 line of said Section 24; thence N 00 degrees15’47” E, 800.00
feet, parallel with said East line of Section 24; thence N 88 degrees15’36”E,
800.00 feet, along said North 1/8 line of Section 24 and said line extended;
thence S 00 degrees15’47” W, 800.00 feet, parallel with said East line of
Section 24; thence S 88 degrees15’36” W, 400.00 feet, parallel with said North
1/8 line of Section 24 to the point of beginning.
     Together with a 33 foot easement along the West 33 feet of the Northwest
quarter lying North of the North 1/8 line of Section 24, Belknap Township,
extended, in Section 19, T34N, R6E.
ROSCOMMON COUNTY
     Certain land in Gerrish Township, Roscommon County, Michigan described as:
     A parcel of land in the NW 1/4 of Section 19, T24N, R3W, described as
follows: To find the place of beginning of this description commence at the
Northwest corner of said section, run thence East along the North line of said
section 1,163.2 feet to the place of beginning of this description (said point
also being the place of intersection of the West 1/8 line of said section with
the North line of said section), thence S 01 degrees 01’ E along said West 1/8
line 132 feet, thence West parallel with the North line of said section 132
feet, thence N 01 degrees 01’ W parallel with said West 1/8 line of said section
132 feet to the North line of said section, thence East along the North line of
said section 132 feet to the place of beginning.
SAGINAW COUNTY
     Certain land in Chapin Township, Saginaw County, Michigan described as:
     A parcel of land in the SW 1/4 of Section 13, T9N, R1E, described as
follows: To find the place of beginning of this description commence at the
Southwest corner of said section; run thence North along the West line of said
section 1581.4 feet to the place of beginning of this description; thence
continuing North along said West line of said section 230 feet to the center
line of a creek; thence S 70 degrees 07’ 00” E along said center line of said
creek 196.78 feet; thence South 163.13 feet; thence West 185 feet to the West
line of said section and the place of beginning.
SANILAC COUNTY
     Certain easement rights located across land in Minden Township, Sanilac
County, Michigan described as:

A-34

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     The Southeast 1/4 of the Southeast 1/4 of Section 1, T14N, R14E, excepting
therefrom the South 83 feet of the East 83 feet thereof.
SHIAWASSEE COUNTY
     Certain land in Burns Township, Shiawassee County, Michigan described as:
     The South 330 feet of the E 1/2 of the NE 1/4 of Section 36, T5N, R4E.
ST. CLAIR COUNTY
     Certain land in Ira Township, St. Clair County, Michigan described as:
     The N 1/2 of the NW 1/4 of the NE 1/4 of Section 6, T3N, R15E.
ST. JOSEPH COUNTY
     Certain land in Mendon Township, St. Joseph County, Michigan described as:
     The North 660 feet of the West 660 feet of the NW 1/4 of SW 1/4,
Section 35, T5S, R10W.
TUSCOLA COUNTY
     Certain land in Millington Township, Tuscola County, Michigan described as:
     A strip of land 280 feet wide across the East 96 rods of the South 20 rods
of the N 1/2 of the SE 1/4 of Section 34, T10N, R8E, more particularly described
as commencing at the Northeast corner of Section 3, T9N, R8E, thence S 89
degrees 55’ 35” W along the South line of said Section 34 a distance of 329.65
feet, thence N 18 degrees 11’ 50” W a distance of 1398.67 feet to the South 1/8
line of said Section 34 and the place of beginning for this description; thence
continuing N 18 degrees 11’ 50” W a distance of 349.91 feet; thence N 89 degrees
57’ 01” W a distance of 294.80 feet; thence S 18 degrees 11’ 50” E a distance of
350.04 feet to the South 1/8 line of said Section 34; thence S 89 degrees 58’
29” E along the South 1/8 line of said section a distance of 294.76 feet to the
place of beginning.
VAN BUREN COUNTY
     Certain land in Covert Township, Van Buren County, Michigan described as:
     All that part of the West 20 acres of the N 1/2 of the NE fractional 1/4 of
Section 1, T2S, R17W, except the West 17 rods of the North 80 rods, being more
particularly described as follows: To find the place of beginning of this
description commence at the N 1/4 post of said section;

A-35

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run thence N 89 degrees 29’ 20” E along the North line of said section 280.5
feet to the place of beginning of this description; thence continuing N 89
degrees 29’ 20” E along said North line of said section 288.29 feet; thence S 00
degrees 44’ 00” E, 1531.92 feet; thence S 89 degrees 33’ 30” W, 568.79 feet to
the North and South 1/4 line of said section; thence N 00 degrees 44’ 00” W
along said North and South 1/4 line of said section 211.4 feet; thence N 89
degrees 29’ 20” E, 280.5 feet; thence N 00 degrees 44’ 00” W, 1320 feet to the
North line of said section and the place of beginning.
WASHTENAW COUNTY
     Certain land in Manchester Township, Washtenaw County, Michigan described
as:
     A parcel of land in the NE 1/4 of the NW 1/4 of Section 1, T4S, R3E,
described as follows: To find the place of beginning of this description
commence at the Northwest corner of said section; run thence East along the
North line of said section 1355.07 feet to the West 1/8 line of said section;
thence S 00 degrees 22’ 20” E along said West 1/8 line of said section 927.66
feet to the place of beginning of this description; thence continuing S 00
degrees 22’ 20” E along said West 1/8 line of said section 660 feet to the North
1/8 line of said section; thence N 86 degrees 36’ 57” E along said North 1/8
line of said section 660.91 feet; thence N 00 degrees22’ 20” W, 660 feet; thence
S 86 degrees 36’ 57” W, 660.91 feet to the place of beginning.
WAYNE COUNTY
     Certain land in Livonia City, Wayne County, Michigan described as:
     Commencing at the Southeast corner of Section 6, T1S, R9E; thence North
along the East line of Section 6 a distance of 253 feet to the point of
beginning; thence continuing North along the East line of Section 6 a distance
of 50 feet; thence Westerly parallel to the South line of Section 6, a distance
of 215 feet; thence Southerly parallel to the East line of Section 6 a distance
of 50 feet; thence easterly parallel with the South line of Section 6 a distance
of 215 feet to the point of beginning.
WEXFORD COUNTY
     Certain land in Selma Township, Wexford County, Michigan described as:
     A parcel of land in the NW 1/4 of Section 7, T22N, R10W, described as
beginning on the North line of said section at a point 200 feet East of the West
line of said section, running thence East along said North section line 450
feet, thence South parallel with said West section line 350 feet, thence West
parallel with said North section line 450 feet, thence

A-36

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North parallel with said West section line 350 feet to the place of beginning.
     SECTION 12. The Company is a transmitting utility under Section 9501(2) of
the Michigan Uniform Commercial Code (M.C.L. 440.9501(2)) as defined in M.C.L.
440.9102(1)(aaaa).
     IN WITNESS WHEREOF, said Consumers Energy Company has caused this
Supplemental Indenture to be executed in its corporate name by its Chairman of
the Board, President, a Vice President or its Treasurer and its corporate seal
to be hereunto affixed and to be attested by its Secretary or an Assistant
Secretary, and The Bank of New York Mellon, as Trustee as aforesaid, to evidence
its acceptance hereof, has caused this Supplemental Indenture to be executed in
its corporate name by a Vice President and its corporate seal to be hereunto
affixed and to be attested by an Assistant Treasurer, in several counterparts,
all as of the day and year first above written.

A-37

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                        CONSUMERS ENERGY COMPANY    
 
               
(SEAL)
      By:        
 
               
 
      Name:   Laura L. Mountcastle    
Attest:
      Title:   Vice President and Treasurer    
 
               
 
Joyce H. Norkey
               
Assistant Secretary
               
 
               
Signed, sealed and delivered by CONSUMERS ENERGY COMPANY
in the presence of
               
 
               
 
Kimberly C. Wilson
               
 
               
 
Sharon K. Davis
               

             
 
           
STATE OF MICHIGAN
    )      
 
       ss.    
COUNTY OF JACKSON
    )      

     The foregoing instrument was acknowledged before me this
                     day of                     , 2008, by Laura L. Mountcastle,
Vice President and Treasurer of CONSUMERS ENERGY COMPANY, a Michigan
corporation, on behalf of the corporation.

     
 
   
 
   
 
  Margaret Hillman, Notary Public
 
   
[SEAL]
  State of Michigan, County of Jackson,
 
   
 
  My Commission
Expires:                                                            

S-1

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                        THE BANK OF NEW YORK MELLON,
AS TRUSTEE    
 
               
(SEAL)
      By:        
 
               
 
          [                              ]    
Attest:
          Vice President    
 
               
 
Assistant Treasurer
               
 
               
Signed, sealed and delivered
by THE BANK OF NEW YORK MELLON
in the presence of
               
 
               
 
               
 
               
 
               

             
 
           
STATE OF NEW YORK
    )      
 
    ss.    
COUNTY OF NEW YORK
    )      

     The foregoing instrument was acknowledged before me this
                     day of September, 2008, by [                    ], a Vice
President of THE BANK OF NEW YORK MELLON, a New York banking corporation, on
behalf of the bank, as trustee.

         
 
       
 
 
 
Notary Public    
 
       
[Seal]
  New York County, New York    
 
  My Commission Expires:    
 
       
Prepared by:
  When recorded, return to:    
Kimberly C. Wilson
  Consumers Energy Company    
One Energy Plaza
  Business Services Real Estate Dept.    
Jackson, MI 49201
  Attn: Tracy Van Woert EP7-438    
 
  One Energy Plaza    
 
  Jackson, MI 49201    

S-2

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EXHIBIT B
REQUIRED OPINIONS FROM
JAMES E. BRUNNER, ESQ.
     1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Michigan.
     2. The execution and delivery of the Credit Documents by the Company and
the performance by the Company of the Obligations have been duly authorized by
all necessary corporate action and proceedings on the part of the Company and
will not:
     (a) contravene the Company’s Restated Articles of Incorporation, as
amended, or bylaws;
     (b) contravene any law or any contractual restriction imposed by any
indenture or any other agreement or instrument evidencing or governing
indebtedness for borrowed money of the Company (including but not limited to the
Company Indentures (as defined below)); or
     (c) result in or require the creation of any Lien upon or with respect to
any of the Company’s properties except the lien of the Indenture securing the
Bonds and any Lien in favor of the Agent on the Facility LC Collateral Account
or any funds therein.
     As used in this paragraph 2, “Company Indentures” means collectively,
(i) the Indenture dated as of January 1, 1996, as supplemented and amended from
time to time, between the Company (formerly known as Consumers Power Company)
and The Bank of New York Mellon (formerly known as The Bank of New York), as
Trustee, and (ii) the Indenture dated as of February 1, 1998, as supplemented
and amended from time to time, between the Company and The Bank of New York
Mellon (successor trustee to JPMorgan Chase Bank, N.A.), as Trustee.
     3. The Credit Documents have been duly executed and delivered by the
Company.
     4. To the best of my knowledge, there is no pending or threatened action or
proceeding against the Company or any of its Consolidated Subsidiaries before
any court, governmental agency or arbitrator (except (i) to the extent described
in the Company’s annual report on Form 10-K for the year ended December 31, 2007
and quarterly report on Form 10-Q for the quarter ended June 30, 2008, in each
case as filed with the SEC, and (ii) such other similar actions, suits and
proceedings predicated on the occurrence of the same events giving rise to any
actions, suits and proceedings described in the reports filed with the SEC set
forth in clause (i) of this paragraph 4) which might reasonably be expected to
materially adversely affect the financial condition or results of operations of
the Company and its Consolidated Subsidiaries, taken as a whole, or that would
materially adversely affect the Company’s ability to perform its obligations
under any Credit Document. To the best of my knowledge, there is no litigation
challenging the validity or the enforceability of any of the Credit Documents.

B-1

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     5. No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Company of any Credit Document,
except for the authorization to issue, sell or guarantee secured and/or
unsecured short-term debt granted by the Federal Energy Regulatory Commission in
Docket No. ES08-47-000 (hereinafter the “FERC Order”). The FERC Order is in full
force and effect as of the date hereof.
     6. The Bonds, assuming due authentication in accordance with the terms of
the Indenture, are in due and proper form and, when delivered to the Agent
pursuant to the Bond Delivery Agreement, will evidence and secure the
Obligations owing under the Agreement and will be valid and enforceable
obligations of the Company in accordance with their terms, secured by the lien
of the Indenture on an equal and ratable basis with all other bonds issued
thereunder and otherwise entitled to the benefits provided by the Indenture.
     7. The Indenture has been qualified under the Trust Indenture Act of 1939,
as amended, and the execution and delivery of the Supplemental Indenture will
not cause the Indenture to not be so qualified.
     8. The Company is not an “investment company” or a company “controlled” by
an “investment company” as such terms are defined in the Investment Company Act
of 1940, as amended.
     9. In a properly presented case, a Michigan court or a federal court
applying Michigan choice of law rules should give effect to the choice of law
provisions of the Agreement and should hold that the Agreement is to be governed
by the laws of the State of New York rather than the laws of the State of
Michigan, except in the case of those provisions set forth in the Agreement the
enforcement of which would contravene a fundamental policy of the State of
Michigan. In the course of our review of the Agreement, nothing has come to my
attention to indicate that any of such provisions would do so. Notwithstanding
the foregoing, even if a Michigan court or a federal court holds that the
Agreement is to be governed by the laws of the State of Michigan, the Agreement
constitutes a legal, valid and binding obligation of the Company, enforceable
under Michigan law (including usury provisions) against the Company in
accordance with its terms, subject to (a) the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and (b) the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

B-2

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EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
     I,                                         ,                       
           of Consumers Energy Company, a Michigan corporation (the “Company”),
DO HEREBY CERTIFY in connection with the Revolving Credit Agreement, dated as of
September 11, 2008 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”; the terms defined therein being used herein as so
defined), among the Company, various financial institutions and Union Bank of
California, N.A., as Agent and an LC Issuer, that:
Article VIII of the Credit Agreement provides that the Company shall: “At all
times, maintain a ratio of Total Consolidated Debt to Total Consolidated
Capitalization of not greater than 0.70 to 1.0.”
The following calculations are made in accordance with the definitions of Total
Consolidated Debt and Total Consolidated Capitalization in the Credit Agreement
and are correct and accurate as of                                 , ___:

                 
 
                A.   Total Consolidated Debt        
 
               
 
  (a)   Indebtedness for borrowed money   $    
 
               
plus
  (b)   Indebtedness for deferred purchase price of property/services        
 
               
plus
  (c)   Liabilities for accumulated funding deficiencies (prior to the
effectiveness of the applicable provisions of the Pension Protection Act of 2006
with respect to a Plan) and liabilities for failure to make a payment required
to satisfy the minimum funding standard within the meaning of Section 412 of the
Code or Section 302 of ERISA (on and after the effectiveness of the applicable
provisions of the Pension Protection Act of 2006 with respect to a Plan).      
 
 
               
plus
  (d)   Liabilities in connection with withdrawal liability under ERISA        
 
               
plus
  (e)   Obligations under acceptance facilities        
 
               
plus
  (f)   Obligations under Capital Leases        

C-1

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plus
  (g)   Obligations under interest rate swap, “cap”, “collar” or other hedging
agreement        
 
               
plus
  (h)   Guaranties, endorsements and other contingent obligations        
 
               
minus
  (i)   Principal amount of any Securitized Bonds        
 
               
minus
  (j)   Junior Subordinated Debt owned by any Hybrid Equity Securities
Subsidiary or Hybrid Preferred Securities Subsidiary        
 
               
minus
  (k)   Hybrid Equity Securities and Hybrid Preferred Securities outstanding as
of December 31, 2002 (including subordinated guaranties by the Company of
payments with respect thereto)        
 
               
minus
  (l)   Agreed upon percentage of Net Proceeds from issuance of hybrid
debt/equity securities (other than Junior Subordinated Debt, Hybrid Equity
Securities and Hybrid Preferred Securities)        
 
               
minus
  (m)   Liabilities on the Company’s balance sheet resulting from the
disposition of the Palisades Nuclear Plant        
 
               
minus
  (n)   Obligations of the Company and its Consolidated Subsidiaries of the type
described in Section 1.3 of the Credit Agreement        
 
               
minus
  (o)   Debt of Affiliates of the Company of the type described in clause
(vii) of the definition of “Total Consolidated Debt”        

C-2

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minus
  (p)   Debt of the Company and its Affiliates that is re-categorized as such
from certain lease obligations pursuant to Emerging Issues Task Force Issue 01-8
       
 
               
minus
  (q)   Non-cash obligations resulting from the adoption of FASB 158 to the
extent such obligations are required to be treated as debt        
 
               
 
      Total $      
 
                B.   Total Consolidated Capitalization:        
 
               
 
  (a)   Total Consolidated Debt $      
 
               
plus
  (b)   The sum of Items A(j), A(k), A(l), A(n) and A(o) above1        
 
               
plus
  (c)   Equity of common stockholders        
 
               
plus
  (d)   Equity of preference stockholders   _____________                 
 
               
plus
  (e)   Equity of preferred stockholders   _____________                 
 
               
 
      Total $      
 
                C.   Debt to Capital Ratio   _____ to 1.00
 
  (total of A divided by total of B)        

     IN WITNESS WHEREOF, I have signed this Certificate this ___ day of
                    , ___.

         
 
       
 
 
 
Name:    
 
  Title:    

 

1   In the case of securities of the type described in A(k) and A(l), only to
the extent such securities have been deemed to be equity pursuant to Financial
Accounting Standards Board Statement No. 150.

C-3

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EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
     This Assignment and Assumption (the “Assignment and Assumption”) is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Revolving Credit Agreement identified below (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.
The Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed
to and incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.
     For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Agent as contemplated below, the interest in and to all of the Assignor’s
rights and obligations in its capacity as a Bank under the Credit Agreement and
any other documents or instruments delivered pursuant thereto that represents
the amount and percentage interest identified below of all of the Assignor’s
outstanding rights and obligations under the respective facilities identified
below (including any letters of credit, guaranties and swingline loans included
in such facilities and, to the extent permitted to be assigned under applicable
law, all claims (including contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity), suits, causes of
action and any other right of the Assignor against any Person whether known or
unknown arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby) (the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

             
 
           
1.
  Assignor:        
 
     
 
   
 
           
2.
  Assignee:       [and is an affiliate of Assignor]
 
     
 
   
 
           
3.
  Borrower:   Consumers Energy Company    
 
            4.   Agent:   Union Bank of California, N.A., as the Agent under the
Credit Agreement.

              5.   Credit Agreement:   Revolving Credit Agreement, dated as of
September 11, 2008, among Consumers Energy Company, the Banks party thereto, and
Union Bank of California, N.A., as Agent and an LC Issuer.

D-1

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6.   Assigned Interest:

                  Aggregate Amount of   Amount of         Commitment/Outstanding
  Commitment/Outstanding   Percentage Assigned of     Credit Exposure for all  
Credit Exposure   Commitment/Outstanding Facility Assigned   Banks1   Assigned1
  Credit Exposure2
                    
  $    $                        %  
                    
  $    $                        %  
                    
  $    $                        %

7.   Trade Date:                                          3

Effective Date:                      ___, 20___ [TO BE INSERTED BY AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE AGENT.]
 

1   Amount to be adjusted by the counterparties to take into account any
payments or prepayments made between the Trade Date and the Effective Date.   2.
  Set forth, to at least 9 decimals, as a percentage of the
Commitment/Outstanding Credit Exposure of all Banks thereunder.   3.   Insert if
satisfaction of minimum amounts is to be determined as of the Trade Date.

D-2

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     The terms set forth in this Assignment and Assumption are hereby agreed to:

            ASSIGNOR

[NAME OF ASSIGNOR]
      By:           Name:           Title:           ASSIGNEE

[NAME OF ASSIGNEE]
      By:           Name:           Title:        

          [Consented to and]4 Accepted:    
 
        UNION BANK OF CALIFORNIA, N.A., as Agent    
 
       
By:
       
 
 
 
Name:    
 
  Title:    
 
        [Consented to:]5    
 
        [NAME OF RELEVANT PARTY]    
 
       
By:
       
 
 
 
Name:    
 
  Title:    

 

4.   To be added only if the consent of the Agent is required by the terms of
the Credit Agreement.   5.   To be added only if the consent of the Company
and/or other parties (e.g., the LC Issuers) is required by the terms of the
Credit Agreement.

D-3

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ANNEX 1
TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
     1. Representations and Warranties.
     1.1 Assignor. The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby. Neither the Assignor nor any of its officers, directors,
employees, agents or attorneys shall be responsible for (i) any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Credit Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency, perfection, priority, collectibility,
or value of the Credit Documents or any collateral thereunder, (iii) the
financial condition of the Company, any of its Subsidiaries or Affiliates or any
other Person obligated in respect of any Credit Document, (iv) the performance
or observance by the Company, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Credit Document,
(v) inspecting any of the property, books or records of the Company, or any
guarantor, or (vi) any mistake, error of judgment, or action taken or omitted to
be taken in connection with the Credit Extensions or the Credit Documents.
     1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Bank under the Credit Agreement, (ii) from
and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Bank thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Bank thereunder, (iii) agrees that its payment
instructions and notice instructions are as set forth in Schedule 1 to this
Assignment and Assumption, (iv) confirms that none of the funds, monies, assets
or other consideration being used to make the purchase and assumption hereunder
are “plan assets” as defined under ERISA and that its rights, benefits and
interests in and under the Credit Documents will not be “plan assets” under
ERISA, (v) agrees to indemnify and hold the Assignor harmless against all
losses, costs and expenses (including 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 and Assumption, (vi) it has received a copy of the Credit Agreement,
together with copies of financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision
independently and without reliance on the Agent or any other Bank, and
(vii) attached as Schedule 2 to this Assignment and Assumption is any
documentation required to be delivered by the Assignee with respect to its tax
status pursuant to the terms of the Credit Agreement, duly completed and
executed by the Assignee; (b) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; and (c) agrees that (i) it will,
independently and without reliance
Annex 1

 

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on the Agent, the Assignor or any other Bank, 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 the Credit Documents, and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Credit Documents are required to be performed by it as a
Bank.
     2. Payments. The Assignee shall pay the Assignor, on the Effective Date,
the amount agreed to by the Assignor and the Assignee. From and after the
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, Reimbursement Obligations,
fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.
     3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.
Annex 1

 

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SCHEDULE 1
ADMINISTRATIVE QUESTIONNAIRE
For Form, call Brian Zimmer at (213) 236-7201 or Tawny Palovchik at
(213) 236-5414

 

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SCHEDULE 2
US AND NON-US TAX INFORMATION REPORTING REQUIREMENTS

 

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EXHIBIT E
TERMS OF SUBORDINATION
[JUNIOR SUBORDINATED DEBT]
ARTICLE ___
SUBORDINATION
     Section ___.1. Applicability of Article; Securities Subordinated to Senior
Indebtedness.
     (a) This Article ___ shall apply only to the Securities of any series
which, pursuant to Section ___, are expressly made subject to this Article. Such
Securities are referred to in this Article ___ as “Subordinated Securities.”
     (b) The Issuer covenants and agrees, and each Holder of Subordinated
Securities by his acceptance thereof likewise covenants and agrees, that the
indebtedness represented by the Subordinated Securities and the payment of the
principal and interest, if any, on the Subordinated Securities is subordinated
and subject in right, to the extent and in the manner provided in this Article,
to the prior payment in full of all Senior Indebtedness.
     “Senior Indebtedness” means the principal of and premium, if any, and
interest on the following, whether outstanding on the date hereof or thereafter
incurred, created or assumed: (i) indebtedness of the Issuer for money borrowed
by the Issuer (including purchase money obligations) or evidenced by debentures
(other than the Subordinated Securities), notes, bankers’ acceptances or other
corporate debt securities, or similar instruments issued by the Issuer; (ii) all
capital lease obligations of the Issuer; (iii) all obligations of the Issuer
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Issuer and all obligations of the Issuer under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) obligations with respect to letters of
credit; (v) all indebtedness of others of the type referred to in the preceding
clauses (i) through (iv) assumed by or guaranteed in any manner by the Issuer or
in effect guaranteed by the Issuer; (vi) all obligations of the type referred to
in clauses (i) through (v) above of other persons secured by any lien on any
property or asset of the Issuer (whether or not such obligation is assumed by
the Issuer), except for (1) any such indebtedness that is by its terms
subordinated to or pari passu with the Subordinated Securities, as the case may
be, including all other debt securities and guaranties in respect of those debt
securities, issued to any other trusts, partnerships or other entities
affiliated with the Issuer which act as a financing vehicle of the Issuer in
connection with the issuance of preferred securities by such entity or other
securities which rank pari passu with, or junior to, the Preferred Securities,
and (2) any indebtedness between or among the Issuer and its affiliates; and/or
(vii) renewals, extensions or refundings of any of the indebtedness referred to
in the preceding clauses unless, in the case of any particular indebtedness,
renewal, extension or refunding, under the express provisions of the instrument
creating or evidencing the same or the assumption or guarantee of the same, or
pursuant to which the same is outstanding, such indebtedness or such renewal,
extension or refunding thereof is not superior in right of payment to the
Subordinated Securities.

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     This Article shall constitute a continuing obligation to all Persons who,
in reliance upon such provisions become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions.
     Section ___.2. Issuer Not to Make Payments with Respect to Subordinated
Securities in Certain Circumstances.
     (a) Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal thereof and premium and interest
thereon shall first be paid in full, or such payment duly provided for in cash
in a manner satisfactory to the holders of such Senior Indebtedness, before any
payment is made on account of the principal of, or interest on, Subordinated
Securities or to acquire any Subordinated Securities or on account of any
sinking fund provisions of any Subordinated Securities (except payments made in
capital stock of the Issuer or in warrants, rights or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before the maturity of such Senior
Indebtedness, and payments made through the exchange of other debt obligations
of the Issuer for such Subordinated Securities in accordance with the terms of
such Subordinated Securities, provided that such debt obligations are
subordinated to Senior Indebtedness at least to the extent that the Subordinated
Securities for which they are exchanged are so subordinated pursuant to this
Article ___).
     (b) Upon the happening and during the continuation of any default in
payment of the principal of, or interest on, any Senior Indebtedness when the
same becomes due and payable or in the event any judicial proceeding shall be
pending with respect to any such default, then, unless and until such default
shall have been cured or waived or shall have ceased to exist, no payment shall
be made by the Issuer with respect to the principal of, or interest on,
Subordinated Securities or to acquire any Subordinated Securities or on account
of any sinking fund provisions of Subordinated Securities (except payments made
in capital stock of the Issuer or in warrants, rights, or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before such default and notice thereof, and
payments made through the exchange of other debt obligations of the Issuer for
such Subordinated Securities in accordance with the terms of such Subordinated
Securities, provided that such debt obligations are subordinated to Senior
Indebtedness at least to the extent that the Subordinated Securities for which
they are exchanged are so subordinated pursuant to this Article ___).
     (c) In the event that, notwithstanding the provisions of this Section
___.2, the Issuer shall make any payment to the Trustee on account of the
principal of or interest on Subordinated Securities, or on account of any
sinking fund provisions of such Subordinated Securities, after the maturity of
any Senior Indebtedness as described in Section ___.2(a) above or after the
happening of a default in payment of the principal of or interest on any Senior
Indebtedness as described in Section ___.2(b) above, then, unless and until all
Senior Indebtedness which shall have matured, and all premium and interest
thereon, shall have been paid in full (or the declaration of acceleration
thereof shall have been rescinded or annulled), or such default shall have been
cured or waived or shall have ceased to exist, such payment (subject to the
provisions of Sections ___.6 and ___.7) shall be held by the Trustee, in trust
for the benefit of, and shall be

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paid forthwith over and delivered to, the holders of such Senior Indebtedness
(pro rata as to each of such holders on the basis of the respective amounts of
Senior Indebtedness held by them) or their representative or the trustee under
the indenture or other agreement (if any) pursuant to which such Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of all such Senior Indebtedness remaining unpaid to
the extent necessary to pay the same in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness. The Issuer shall give prompt written notice to the Trustee
of any default in the payment of principal of or interest on any Senior
Indebtedness.
     Section ___.3. Subordinated Securities Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Liquidation or Reorganization of Issuer.
Upon any distribution of assets of the Issuer in any dissolution, winding up,
liquidation or reorganization of the Issuer (whether voluntary or involuntary,
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise):
     (a) the holders of all Senior Indebtedness shall first be entitled to
receive payments in full of the principal thereof and premium and interest due
thereon, or provision shall be made for such payment, before the Holders of
Subordinated Securities are entitled to receive any payment on account of the
principal of or interest on such Subordinated Securities;
     (b) any payment or distribution of assets of the Issuer of any kind or
character, whether in cash, property or securities (other than securities of the
Issuer as reorganized or readjusted or securities of the Issuer or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article ___
with respect to Subordinated Securities, to the payment in full without
diminution or modification by such plan of all Senior Indebtedness), to which
the Holders of Subordinated Securities or the Trustee on behalf of the Holders
of Subordinated Securities would be entitled except for the provisions of this
Article ___ shall be paid or delivered by the liquidating trustee or agent or
other person making such payment or distribution directly to the holders of
Senior Indebtedness or their representative, or to the trustee under any
indenture under which Senior Indebtedness may have been issued (pro rata as to
each such holder, representative or trustee on the basis of the respective
amounts of unpaid Senior Indebtedness held or represented by each), to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution or
provision thereof to the holders of such Senior Indebtedness; and
     (c) in the event that notwithstanding the foregoing provisions of this
Section ___.3, any payment or distribution of assets of the Issuer of any kind
or character, whether in cash, property or securities (other than securities of
the Issuer as reorganized or readjusted or securities of the Issuer or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article ___
with respect to Subordinated Securities, to the payment in full without
diminution or modification by such plan of all Senior Indebtedness), shall be
received by the Trustee or the Holders of the Subordinated Securities on account
of principal of or interest on the Subordinated Securities before all Senior
Indebtedness is paid in full, or effective provision made for its payment, such
payment or distribution (subject to the provisions of Section ___.6 and ___.7)
shall be received

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and held in trust for and shall be paid over to the holders of the Senior
Indebtedness remaining unpaid or unprovided for or their representative, or to
the trustee under any indenture under which such Senior Indebtedness may have
been issued (pro rata as provided in clause (b) above), for application to the
payment of such Senior Indebtedness until all such Senior Indebtedness shall
have been paid in full, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Indebtedness.
     The Issuer shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Issuer.
     The consolidation of the Issuer with, or the merger of the Issuer into,
another corporation or the liquidation or dissolution of the Issuer following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided for
in Article ___ hereof shall not be deemed a dissolution, winding up, liquidation
or reorganization for the purposes of this Section ___.3 if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated such in Article ___.
     Section ___.4. Holders of Subordinated Securities to be Subrogated to Right
of Holders of Senior Indebtedness. Subject to the payment in full of all Senior
Indebtedness, the Holders of Subordinated Securities shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Issuer applicable to the Senior Indebtedness
until all amounts owing on Subordinated Securities shall be paid in full, and
for the purposes of such subrogation no payments or distributions to the holders
of the Senior Indebtedness by or on behalf of the Issuer or by or on behalf of
the Holders of Subordinated Securities by virtue of this Article ___ which
otherwise would have been made to the Holders of Subordinated Securities shall,
as between the Issuer, its creditors other than holders of Senior Indebtedness
and the Holders of Subordinated Securities, be deemed to be payment by the
Issuer to or on account of the Senior Indebtedness, it being understood that the
provisions of this Article ___ are and are intended solely for the purpose of
defining the relative rights of the Holders of the Subordinated Securities, on
the one hand, and the holders of the Senior Indebtedness, on the other hand.
     Section ___.5. Obligation of the Issuer Unconditional. Nothing contained in
this Article ___ or elsewhere in this Indenture or in any Subordinated Security
is intended to or shall impair, as among the Issuer, its creditors other than
holders of Senior Indebtedness and the Holders of Subordinated Securities, the
obligation of the Issuer, which is absolute and unconditional, to pay to the
Holders of Subordinated Securities the principal of, and interest on,
Subordinated Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of Subordinated Securities and creditors of the Issuer
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the Holder of any Subordinated Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article ___ of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Issuer received upon the exercise of any such remedy. Upon any payment or
distribution of assets of the Issuer referred to in this Article ___, the
Trustee and Holders of Subordinated Securities shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding up,

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liquidation or reorganization proceedings are pending, or, subject to the
provisions of Section ___ and ___, a certificate of the receiver, trustee in
bankruptcy, liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or the Holders of Subordinated Securities, for the
purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Issuer, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
___.
     Nothing contained in this Article ___ or elsewhere in this Indenture or in
any Subordinated Security is intended to or shall affect the obligation of the
Issuer to make, or prevent the Issuer from making, at any time except during the
pendency of any dissolution, winding up, liquidation or reorganization
proceeding, and, except as provided in subsections (a) and (b) of Section ___.2,
payments at any time of the principal of, or interest on, Subordinated
Securities.
     Section ___.6. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice. The Issuer shall give prompt written notice to the Trustee of
any fact known to the Issuer which would prohibit the making of any payment or
distribution to or by the Trustee in respect of the Subordinated Securities.
Notwithstanding the provisions of this Article ___ or any provision of this
Indenture, the Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment or
distribution to or by the Trustee, unless at least two Business Days prior to
the making of any such payment, the Trustee shall have received written notice
thereof from the Issuer or from one or more holders of Senior Indebtedness or
from any representative thereof or from any trustee therefor, together with
proof satisfactory to the Trustee of such holding of Senior Indebtedness or of
the authority of such representative or trustee; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections ___
and ___, shall be entitled to assume conclusively that no such facts exist. The
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness (or a
representative or trustee on behalf of the holder) to establish that such notice
has been given by a holder of Senior Indebtedness (or a representative of or
trustee on behalf of any such holder). In the event that the Trustee determines,
in good faith, that further evidence is required with respect to the right of
any Person as a holder of Senior Indebtedness to participate in any payments or
distribution pursuant of this Article ___, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, as to the extent to which
such Person is entitled to participate in such payment or distribution, and as
to other facts pertinent to the rights of such Person under this Article ___,
and if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment. The Trustee, however, shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness and nothing in this Article ___ shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
___.
     Section ___.7. Application by Trustee of Monies or Government Obligations
Deposited with It. Money or Government Obligations deposited in trust with the
Trustee pursuant to and in accordance with Section ___ shall be for the sole
benefit of Securityholders and, to the extent allocated for the payment of
Subordinated Securities, shall not be subject to the subordination

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provisions of this Article ___, if the same are deposited in trust prior to the
happening of any event specified in Section ___.2. Otherwise, any deposit of
monies or Government Obligations by the Issuer with the Trustee or any paying
agent (whether or not in trust) for the payment of the principal of, or interest
on, any Subordinated Securities shall be subject to the provisions of Section
___.1, ___.2 and ___.3 except that, if prior to the date on which by the terms
of this Indenture any such monies may become payable for any purposes
(including, without limitation, the payment of the principal of, or the
interest, if any, on any Subordinated Security) the Trustee shall not have
received with respect to such monies the notice provided for in Section ___.6,
then the Trustee or the paying agent shall have full power and authority to
receive such monies and Government Obligations and to apply the same to the
purpose for which they were received, and shall not be affected by any notice to
the contrary which may be received by it on or after such date. This Section
___.7 shall be construed solely for the benefit of the Trustee and paying agent
and, as to the first sentence hereof, the Securityholders, and shall not
otherwise effect the rights of holders of Senior Indebtedness.
     Section ___.8. Subordination Rights Not Impaired by Acts or Omissions of
Issuer or Holders of Senior Indebtedness. No rights of any present or future
holders of any Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Issuer or by any act or failure to act, in good faith, by
any such holders or by any noncompliance by the Issuer with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.
     Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Issuer may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Subordinated Securities, without incurring responsibility to the Holders of the
Subordinated Securities and without impairing or releasing the subordination
provided in this Article ___ or the obligations hereunder of the Holders of the
Subordinated Securities to the holders of such Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, such Senior Indebtedness, or
otherwise amend or supplement in any manner such Senior Indebtedness or any
instrument evidencing the same or any agreement under which such Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior Indebtedness;
(iii) release any Person liable in any manner for the collection for such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Issuer, as the case may be, and any other Person.
     Section ___.9. Securityholders Authorize Trustee to Effectuate
Subordination of Securities. Each Holder of Subordinated Securities by his
acceptance thereof authorizes and expressly directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article ___ and appoints the Trustee his
attorney-in-fact for such purpose, including in the event of any dissolution,
winding up, liquidation or reorganization of the Issuer (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise) the immediate filing of a claim for the unpaid balance
of his Subordinated Securities in the form required in said proceedings and
causing said claim to be approved. If the Trustee does not file a proper claim
or proof of debt in the form required in such proceeding prior to 30 days before
the expiration of the

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time to file such claim or claims, then the holders of Senior Indebtedness have
the right to file and are hereby authorized to file an appropriate claim for and
on behalf of the Holders of said Subordinated Securities.
     Section ___.10. Right of Trustee to Hold Senior Indebtedness. The Trustee
in its individual capacity shall be entitled to all of the rights set forth in
this Article ___ in respect of any Senior Indebtedness at any time held by it to
the same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
     With respect to the holders of Senior Indebtedness of the Issuer, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article ___, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Sections ___.2 and ___.3, the Trustee shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Holders of Subordinated Securities, the Issuer or any other Person money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article ___ or otherwise.
     Section ___.11. Article ___Not to Prevent Events of Defaults. The failure
to make a payment on account of principal or interest by reason of any provision
in this Article ___ shall not be construed as preventing the occurrence of an
Event of Default under Section ___.

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EXHIBIT F
TERMS OF SUBORDINATION
[GUARANTY OF HYBRID EQUITY SECURITIES/HYBRID PREFERRED SECURITIES]
     SECTION ___. This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all other
liabilities of the Guarantor and pari passu with any guarantee now or hereafter
entered into by the Guarantor in respect of the securities representing common
beneficial interests in the assets of the Issuer or of any preferred or
preference stock of any affiliate of the Guarantor.

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EXHIBIT G
FORM OF BOND DELIVERY AGREEMENT
BOND DELIVERY AGREEMENT
CONSUMERS ENERGY COMPANY
to
UNION BANK OF CALIFORNIA, N.A., as Agent
Dated as of September 11, 2008
 
Relating to
First Mortgage Bonds,
2008-1 Collateral Series (Interest Bearing)

 

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     THIS BOND DELIVERY AGREEMENT (this “Agreement”), dated as of September 11,
2008, is between Consumers Energy Company, a Michigan corporation (the
“Company”), and Union Bank of California, N.A., as administrative agent (in such
capacity, the “Agent”) for the Banks under the Revolving Credit Agreement, dated
as of September 11, 2008 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Company, the financial institutions parties thereto (the “Banks”), Union Bank of
California, N.A., as an LC Issuer, and the Agent. Capitalized terms used but not
otherwise defined herein have the respective meanings assigned to such terms in
the Credit Agreement.
     WHEREAS, the Company has entered into the Credit Agreement and may from
time to time make borrowings thereunder in accordance with the provisions
thereof;
     WHEREAS, the Company has established its First Mortgage Bonds, 2008-1
Collateral Series (Interest Bearing) in the aggregate principal amount of
$150,000,000 (the “Bonds”), to be issued under and in accordance with the One
Hundred Ninth Supplemental Indenture dated as of September 11, 2008 (the
“Supplemental Indenture”) to the Indenture of the Company to The Bank of New
York Mellon (as successor to The Bank of New York) dated as of September 1, 1945
(as amended and supplemented, the “Indenture”); and
     WHEREAS, the Company proposes to issue and deliver to the Agent, for the
benefit of the Banks, the Bonds in order to provide the Bonds as evidence of
(and the benefit of the lien of the Indenture with respect to the Bonds for) the
Obligations of the Company arising under the Credit Agreement.
     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the Company and the Agent hereby agree as follows:
ARTICLE I
The Bonds
Section 1.1 Delivery of Bonds.
     In order to provide the Bonds as evidence of (and through the Bonds the
benefit of the Lien of the Indenture for) the Obligations of the Company under
the Credit Agreement as aforesaid, the Company hereby delivers to the Agent the
Bonds in the aggregate principal amount of $150,000,000, maturing on the earlier
of (a) September 9, 2009 or such later date as may be fixed as the “Termination
Date” under and as defined in the Credit Agreement and (b) the “FMB Release
Date” (as defined in the Credit Agreement) and bearing interest as provided in
the Supplemental Indenture. The obligation of the Company to pay the principal
of and interest on the Bonds shall be deemed to have been satisfied and
discharged in full or in part, as the case may be, to the extent of payment by
the Company of Obligations constituting principal of the Loans, Reimbursement
Obligations, interest and/or fees payable under the Credit Agreement, all as set
forth in the Bonds and in Section 1 of the Supplemental Indenture.

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     The Bonds are registered in the name of the Agent and shall be owned and
held by the Agent, subject to the provisions of this Agreement, for the benefit
of the Banks, and the Company shall have no interest therein. The Agent shall be
entitled to exercise all rights of bondholders under the Indenture with respect
to the Bonds.
     The Agent hereby acknowledges receipt of the Bonds.
Section 1.2 Payments on the Bonds.
     Any payments received by the Agent on account of the principal of or
interest on the Bonds shall be deemed to be and treated in all respects as
payments of Obligations constituting principal of the Loans, Reimbursement
Obligations, interest and/or fees payable under the Credit Agreement, and such
payments shall be distributed by the Agent to the Banks in accordance with the
provisions of the Credit Agreement applicable to payments received by the Agent
in respect of such Obligations (and the Company hereby consents to such
distributions).
ARTICLE II
No Transfer of Bonds; Surrender of Bonds
Section 2.1 No Transfer of the Bonds.
     The Agent shall not sell, assign or otherwise transfer any Bonds delivered
to it under this Agreement except to a successor administrative agent under the
Credit Agreement. The Company may take such actions as it shall deem necessary,
desirable or appropriate to effect compliance with such restrictions on
transfer, including the issuance of stop-transfer instructions to the trustee
under the Indenture or any other transfer agent thereunder.
Section 2.2 Surrender of Bonds.
     The Agent shall forthwith surrender to or upon the order of the Company all
Bonds held by it at the first time at which all of the principal of and interest
on the Loans and Reimbursement Obligations arising under the Credit Agreement,
and all of the fees payable pursuant to the Credit Agreement with respect to the
Obligations, shall have been duly paid, no Facility LC shall be outstanding, and
the Credit Agreement (including, without limitation, all Commitments thereunder)
shall have been terminated.
ARTICLE III
Governing Law
     This Agreement shall be construed in accordance with and governed by the
internal laws (including Section 5-1401 of the General Obligations Law of New
York, but otherwise without regard to the conflict of laws provisions) of the
State of New York, but giving effect to Federal laws applicable to national
banks.
SIGNATURE PAGE FOLLOWS

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     IN WITNESS WHEREOF, the Company and the Agent have caused this Agreement to
be executed and delivered as of the date first above written.

            CONSUMERS ENERGY COMPANY
      By:           Name:   Laura L. Mountcastle        Title:   Vice President
and Treasurer     

            UNION BANK OF CALIFORNIA, N.A., as Agent
      By:           Name:           Title:      

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SCHEDULE 1
PRICING SCHEDULE
     The Applicable Margin shall be determined pursuant to the table below.

                              BBB+/ BBB+/   BBB/ BBB/   BBB-/BBB-/   BB+/
BB+/Ba1 Specified Rating   A-/A-/A3   Baa1   Baa2   Baa3   or lower Commitment
Fee Rate   0.080%   0.100%   0.125%   0.150   0.200%   Applicable Margin for
Eurodollar Advances/LC Fee Rate   0.650%   0.750%   0.875%     1.125%   1.500%  
Applicable Margin for Floating Rate Advances   0.000%   0.000%   0.000%  
  0.125%   0.500%

     For purposes of the foregoing:
     The “Rating” from S&P, Fitch or Moody’s shall mean (a) at any time prior to
the FMB Release Date, the rating issued by such rating agency and then in effect
with respect to the Senior Debt, and (b) at any time thereafter, the rating
issued by such rating agency and then in effect with respect to the Company’s
senior unsecured long-term debt (without credit enhancement).
     (a) If each of S&P, Fitch and Moody’s shall issue a Rating, the Specified
Rating shall be (i) if two of such Ratings are the same, such Ratings; and
(ii) if all such Ratings are different, the middle of such Ratings.
     (b) If only two of S&P, Fitch and Moody’s shall issue a Rating, the
Specified Rating shall be the higher of such Ratings; provided that if a split
of greater than one ratings category occurs between such Ratings, the Specified
Rating shall be the ratings category that is one category below the higher of
such Ratings.
     (c) If only one of S&P, Fitch and Moody’s shall issue a Rating, the
Specified Rating shall be such Rating.
     (d) If none of S&P, Fitch and Moody’s shall issue a Rating, the Specified
Rating shall be BB+/BB+/Ba1.

 

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SCHEDULE 2
COMMITMENT SCHEDULE

          BANK   COMMITMENT
Union Bank of California, N.A.
  $ 19,500,000.00  
Barclays Bank PLC
  $ 16,500,000.00  
The Royal Bank of Scotland plc
  $ 16,500,000.00  
UBS Loan Finance LLC
  $ 16,500,000.00  
Deutsche Bank Trust Company Americas
  $ 16,500,000.00  
BNP Paribas
  $ 16,500,000.00  
JPMorgan Chase Bank, N.A.
  $ 16,500,000.00  
Wachovia Bank, National Association
  $ 16,500,000.00  
Citibank, N.A.
  $ 15,000,000.00  
 
       
AGGREGATE COMMITMENT
  $ 150,000,000.00