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exv10w2

 

EXHIBIT 10.2

APPENDIX A

CHANGE IN CONTROL SEVERANCE AGREEMENT

Mr. John Werner Haugsland

15110 N. Dallas Parkway, Suite 600

Dallas, Texas 75248

Dear Mr. Haugsland:

     Greyhound Lines, Inc. (the “Company”) recognizes that, as is the case for most companies, the
possibility of a change in control exists. The Company wishes to ensure that its senior executives
are not distracted from performing their duties in the event of a proposed or actual transaction
involving a change in control. Accordingly, the Company has determined that as an additional
inducement for you (the “Executive”) to continue to remain in the employ of the Company and to
assure itself of both present and future continuity of management, the Company agrees to provide
the Executive with severance benefits under the following circumstances pursuant to the following
terms and conditions (the “Agreement”):

          1. Defined Terms. In addition to terms defined elsewhere herein, the following terms
have the following meanings when used in this Agreement with initial capital letters:

               (a) “Base Pay” means the Executive’s annual base salary rate as in effect from time to
time.

               (b) “Board” means the Board of Directors of Laidlaw International, Inc. (“Laidlaw”).

               (c) “Cause” means that, prior to any termination pursuant to Section 3(b), the
Executive shall have:

                    (i) engaged in misconduct which is materially injurious to the Company
or Laidlaw, monetarily or otherwise;

                    (ii) committed an act of fraud, embezzlement or theft in connection
with his duties or in the course of his employment with the Company, Laidlaw
or any Subsidiary;

                    (iii) intentionally damaged property of the Company, Laidlaw or any
Subsidiary;

                    (iv) committed wrongful disclosure of secret processes or confidential
information of the Company, Laidlaw or any Subsidiary; or

                    (v) engaged in any Competitive Activity; and any such act shall have
been demonstrably and materially harmful to the Company.

 

 

Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for “Cause” hereunder unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the Board then in office
(excluding the Executive if he is a Director) at a meeting of the Board
called and held for such purpose, after reasonable notice to the Executive
and an opportunity for the Executive, together with the Executive’s counsel
(if the Executive chooses to have counsel present at such meeting), to be
heard before the Board, finding that, in the good faith opinion of the
Board, the Executive had committed an act constituting “Cause” as herein
defined and specifying the particulars thereof in detail. Nothing herein
will limit the right of the Executive or his beneficiaries to contest the
validity or propriety of any such determination;

(d) “Change in Control” means the occurrence after the date hereof and during the Term,
of any of the following events:

                    (i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the then-outstanding Voting Stock of the
Company or Laidlaw; provided, however, that the following acquisitions shall
not constitute a Change in Control: (A) any acquisition directly from the
Company or Laidlaw, (B) any acquisition by the Company or Laidlaw, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company, Laidlaw or any Subsidiary or (D) any acquisition
by any Person pursuant to a transaction that complies with clauses (A), (B)
and (C) of subsection (iii) of this Section 1(d);

                    (ii) individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason (other than death or disability) to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s stockholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for director, without
objection to such nomination) shall be considered as though such individual
were a member of the Incumbent Board, but excluding for this purpose, any
such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest (within the meaning of Rule 14a-11 of
the Exchange Act) with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board;

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                    (iii) consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company (a “Business Combination”), unless, in each case, immediately
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners of Voting Stock of
the Company immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of the
entity resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions
relative to each other as their ownership, immediately prior to such
Business Combination, of the Voting Stock of the Company, (B) no Person
(excluding any entity resulting from such Business Combination or any
employee benefit plan (or related trust) sponsored or maintained by the
Company, any Subsidiary or such entity resulting from such Business
Combination) beneficially owns, directly or indirectly, 15% or more of the
then outstanding shares of common stock of the entity resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such entity except to the extent such ownership existed
prior to the Business Combination and (C) at least a majority of the members
of the board of directors of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution
of the initial agreement or of the action of the Board providing for such
Business Combination; or

                    (iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

               (e) “Competitive Activity” means the Executive’s participation, without the written
consent of the Board, as an employee, officer, consultant or director of any business
enterprise if such enterprise engages in substantial and direct competition with Laidlaw or
the Company and such enterprise’s sales of any product or service competitive with any
product or service of Laidlaw or the Company amounted to 10% of such enterprise’s net sales
for its most recently completed fiscal year and if the Laidlaw’s or the Company’s net sales
of said product or service amounted to 10% of Laidlaw’s or the Company’s net sales for its
most recently completed fiscal year. “Competitive Activity” will not include (i) the mere
ownership of securities in any such enterprise and the exercise of rights appurtenant
thereto or (ii) participation in the management of any such enterprise other than in
connection with the competitive operations of such enterprise.

               (f) “Employee Benefits” means the perquisites, benefits and service credit for benefits
as provided under any and all employee retirement income and welfare

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benefit policies, plans, programs or arrangements in which Executive is entitled to
participate, including, without limitation, any stock option, performance share, performance
unit, stock purchase, stock appreciation, savings, pension, supplemental executive
retirement, or other retirement income or welfare benefit, compensation, incentive
compensation, group or other life, health, medical/hospital or other insurance (whether
funded by actual insurance or self-insured by the Company, Laidlaw or a Subsidiary),
disability, salary continuation, expense reimbursement and other employee benefit policies,
plans, programs or arrangements.

          (g) “Exchange Act” means the Securities Exchange Act of 1934.

          (h) “Incentive Pay” means an annual bonus, incentive or other payment of compensation,
in addition to Base Pay, made or to be made in regard to services rendered in any year or
other period pursuant to any bonus, incentive, profit-sharing, performance, discretionary
pay or similar agreement, policy, plan, program or arrangement (whether or not funded) of
the Company, Laidlaw or a Subsidiary, or any successor thereto.

          (i) “Laidlaw” means Laidlaw International, Inc., a Delaware corporation and parent of
the Company.

          (j) “Retirement Plans” means the retirement income, supplemental executive retirement,
excess benefits and retiree medical, life and similar benefit plans, programs or
arrangements of Laidlaw or the Company in which the Executive is entitled to participate.

          (k) “Severance Period” means the period of time commencing on the date of the first
occurrence of a Change in Control and continuing until the earlier of (i) the second
anniversary of the occurrence of the Change in Control, or (ii) the Executive’s death.

          (l) “Subsidiary” means an entity in which the Company or Laidlaw directly or indirectly
beneficially owns 50% or more of the outstanding Voting Stock.

          (m) “Term” means the period commencing as of the date hereof and expiring as of the
later of (i) the close of business on August 31, 2005, or (ii) the expiration of the
Severance Period; provided, however, that (A) commencing on September 1, 2005 and each
September 1 thereafter, the term of this Agreement will automatically be extended for an
additional year unless, not later than June 30 of the immediately preceding year, the
Company or the Executive shall have given notice that it or the Executive, as the case may
be, does not wish to have the Term extended and (B) subject to the last sentence of Section
9, if, prior to a Change in Control, the Executive ceases for any reason to be an employee
of the Company and any Subsidiary, thereupon without further action the Term shall be deemed
to have expired and this Agreement will immediately terminate and be of no further effect.
For purposes of this Section 1(m), the Executive shall not be deemed to have ceased to be an
employee of the Company and any

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Subsidiary by reason of the transfer of Executive’s employment between the Company and
Laidlaw or between the Company and any Subsidiary, or among any Subsidiaries.

          (n) “Termination Date” means the date on which the Executive’s employment is terminated
(the effective date of which shall be the date of termination, or such other date that may
be specified by the Executive if the termination is pursuant to Section 3(b)).

          (o) “Voting Stock” means securities entitled to vote generally in the election of
directors.

     2. Operation of Agreement. This Agreement will be effective and binding immediately
upon its execution, but, anything in this Agreement to the contrary notwithstanding, except as
provided in Sections 8 and 9, this Agreement will not be operative unless and until a Change in
Control occurs. Upon the occurrence of a Change in Control at any time during the Term, without
further action, this Agreement shall become immediately operative.

     3. Termination Following a Change in Control.

          (a) In the event of the occurrence of a Change in Control, the Executive’s employment
may be terminated by the Company or a Subsidiary during the Severance Period and the
Executive shall be entitled to the benefits provided by Section 4 unless such termination is
the result of the occurrence of one or more of the following events:

                    (i) The Executive’s death;

                    (ii) If the Executive becomes permanently disabled within the meaning
of, and begins actually to receive disability benefits pursuant to, the
long-term disability plan in effect for, or applicable to, Executive
immediately prior to the Change in Control; or

                    (iii) Cause.

     If, during the Severance Period, the Executive’s employment is terminated by the Company or
any Subsidiary other than pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), the Executive will be
entitled to the benefits provided by Section 4 hereof.

               (b) In the event of the occurrence of a Change in Control, the Executive may terminate
employment with the Company and any Subsidiary during the Severance Period with the right to
severance compensation as provided in Section 4 upon the occurrence of one or more of the
following events (regardless of whether any other reason, other than Cause as hereinabove
provided, for such termination exists or has occurred, including, without limitation, other
employment):

                    (i) Failure to elect or reelect or otherwise to maintain the Executive
in the office or the position, or a substantially equivalent office or
position, of or with the Company and/or a Subsidiary (or any successor

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thereto by operation of law of or otherwise), as the case may be, which
the Executive held immediately prior to a Change in Control, or the removal
of the Executive as a director of the Company and/or a Subsidiary (or any
successor thereto) if the Executive shall have been a director of the
Company and/or a Subsidiary immediately prior to the Change in Control;

                    (ii) (A) A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached to the
position with the Company and any Subsidiary which the Executive held
immediately prior to the Change in Control, (B) a reduction in the aggregate
of the Executive’s Base Pay received from the Company and any Subsidiary or
the Executive’s Incentive Pay opportunity from the Company or its
Subsidiaries, or (C) the termination or denial of the Executive’s rights to
Employee Benefits or a reduction in the scope or value thereof to a level
that is substantially lower in the aggregate from the level in effect at the
time of the Change in Control, any of which is not remedied by the Company
within 10 calendar days after receipt by the Company of written notice from
the Executive of such change, reduction, denial or termination, as the case
may be;

                    (iii) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all of its
business and/or assets, unless the successor or successors (by liquidation,
merger, consolidation, reorganization, transfer or otherwise) to which all
or substantially all of its business and/or assets have been transferred (by
operation of law or otherwise) assumed all duties and obligations of the
Company under this Agreement pursuant to Section 12(a);

                    (iv) The Company relocates its principal executive offices (if such
offices are the principal location of Executive’s work), or requires the
Executive to have his principal location of work changed, to any location
that, in either case, is in excess of 50 miles from the location thereof
immediately prior to the Change in Control, or requires the Executive to
travel away from his office in the course of discharging his
responsibilities or duties hereunder at least 20% more (in terms of
aggregate days in any calendar year or in any calendar quarter when
annualized for purposes of comparison to any prior year) than was required
of Executive in any of the three full years immediately prior to the Change
in Control without, in either case, his prior written consent; or

                    (v) Without limiting the generality or effect of the foregoing, any
material breach of this Agreement by the Company or any successor thereto
which is not remedied by the Company within 10 calendar days after receipt
by the Company of written notice from the Executive of such breach.

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               (c) In the event of the occurrence of a Change in Control, the Executive may terminate
employment with the Company and any Subsidiary during the thirty (30) day period following
the first anniversary of the Change in Control for any or no reason with the right to
severance compensation as provided in Section 4.

               (d) Except as otherwise provided herein, a termination by the Company pursuant to
Section 3(a) or by the Executive pursuant to Section 3(b) or (c) will not affect any rights
that the Executive may have pursuant to any agreement, policy, plan, program or arrangement
of the Company or Subsidiary providing Employee Benefits, which rights shall be governed by
the terms thereof, except for any rights to severance compensation to which Executive may be
entitled upon termination of employment pursuant to Paragraph 6(b)(i) of the Executive’s
employment agreement, effective as of January 1, 2005, which rights shall, during the
Severance Period, be superseded by this Agreement.

          4. Severance Compensation.

               (a) If, following the occurrence of a Change in Control, the Company or Subsidiary
terminates the Executive’s employment during the Severance Period other than pursuant to
Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or if the Executive terminates his employment
pursuant to Section 3(b) or (c), the Company shall pay to the Executive the amounts
described in Annex A within five business days after the Termination Date and shall provide
to the Executive the benefits described on Annex A for the periods described therein.

               (b) Without limiting the rights of the Executive at law or in equity, in the event it
is determined that the Company fails to make any payment or provide any benefit required to
be made or provided hereunder on a timely basis, the Company shall pay interest on the
amount or value thereof at an annualized rate of interest equal to the so-called composite
“prime rate” as quoted from time to time during the relevant period in The Wall Street
Journal, plus 4%. Any change in such prime rate shall be effective on and as of the date of
such change.

               (c) Notwithstanding any provision of this Agreement to the contrary, the parties’
respective rights and obligations under this Section 4 and under Sections 5, 7, 8 and the
last sentence of Section 9 will survive any termination or expiration of this Agreement or
the termination of the Executive’s employment following a Change in Control for any reason
whatsoever.

               (d) Notwithstanding any provision to the contrary in any applicable plan, program or
agreement, upon the occurrence of a Change in Control, all equity incentive awards held by
the Executive shall become fully vested and all stock options held by the Executive shall
become fully exercisable.

          5. Parachute Payments

               (a) Anything in this Agreement to the contrary notwithstanding, but subject to Section
4(d)(8), in the event that it shall be determined (as hereafter provided)

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that any payment (other than the Gross-Up payments provided for in this Section 5) or
distribution by Laidlaw, the Company or any of their affiliates to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option, performance share,
performance unit, stock appreciation right or similar right, or the lapse or termination of
any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”) (or any successor provision thereto) by reason of being
considered “contingent on a change in ownership or control” of the Company or of Parent,
within the meaning of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or penalties with respect to
such tax (such tax or taxes, together with any such interest and penalties, being hereafter
collectively referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment or payments (collectively, a “Gross-Up Payment”);
provided, however, that no Gross-up Payment shall be made with respect to
the Excise Tax, if any, attributable to (a) any incentive stock option, as defined by
Section 422 of the Code (“ISO”) granted prior to the initial execution of the Original
Agreement (as such term is defined in the Prior Agreement), or (b) any stock appreciation or
similar right, whether or not limited, granted in tandem with any ISO described in clause
(a). The Gross-Up Payment shall be in an amount such that, after payment by the Executive
of all taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

          (b) Subject to the provisions of Section 5(f), all determinations required to be made
under this Section 5, including whether an Excise Tax is payable by the Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is required to be paid by the
Company to the Executive and the amount of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the “Accounting Firm”) selected by the Executive in
his sole discretion. The Executive shall direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Company and the Executive
within 30 calendar days after the date of termination of the Executive’s employment, if
applicable, and any such other time or times as may be requested by the Company or the
Executive. If the Accounting Firm determines that any Excise Tax is payable by the
Executive, the Company shall pay the required Gross-Up Payment to the Executive within five
business days after receipt of such determination and calculations with respect to any
Payment to the Executive. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall, at the same time as it makes such determination, furnish the
Company and the Executive an opinion that the Executive has substantial authority not to
report any Excise Tax on his federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999 of the Code (or any successor
provision thereto) and the possibility of similar uncertainty regarding applicable state or
local tax law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company should have
been made (an

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“Underpayment”), consistent with the calculations required to be made hereunder. In
the event that the Company exhausts or fails to pursue its remedies pursuant to Section 5(f)
and the Executive thereafter is required to make a payment of any Excise Tax, the Executive
shall direct the Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting calculations to both the
Company and the Executive as promptly as possible. Any such Underpayment shall be promptly
paid by the Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.

               (c) The Company and the Executive shall each provide the Accounting Firm access to and
copies of any books, records and documents in the possession of the Company or the
Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by Section 5(b). Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon the Company
and the Executive.

               (d) The federal, state and local income or other tax returns filed by the Executive
shall be prepared and filed on a consistent basis with the determination of the Accounting
Firm with respect to the Excise Tax payable by the Executive. The Executive shall make
proper payment of the amount of any Excise Tax, and at the request of the Company, provide
to the Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior to the
filing of the Executive’s federal income tax return, or corresponding state or local tax
return, if relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, the Executive shall within five business days pay to the Company the
amount of such reduction.

               (e) The fees and expenses of the Accounting Firm for its services in connection with
the determinations and calculations contemplated by Section 5(b) shall be borne by the
Company. If such fees and expenses are initially paid by the Executive, the Company shall
reimburse the Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence of his
payment thereof.

               (f) The Executive shall notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification shall be given as promptly as
practicable but no later than 10 business days after the Executive actually receives notice
of such claim and the Executive shall further apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid (in each case, to the extent
known by the Executive). The Executive shall not pay such claim prior to the earlier of (a)
the expiration of the 30-calendar-day period following the date on which he gives such
notice to the Company and (b) the date that any payment of amount with respect to such claim
is due. If the Company notifies the

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Executive in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:

                    (i) provide the Company with any written records or documents in his
possession relating to such claim reasonably requested by the Company;

                    (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including
without limitation accepting legal representation with respect to such claim
by an attorney competent in respect of the subject matter and reasonably
selected by the Company;

                    (iii) cooperate with the Company in good faith in order effectively to
contest such claim; and

                    (iv) permit the Company to participate in any proceedings relating to
such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such contest and shall
indemnify and hold harmless the Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the foregoing provisions of
this Section 4(d)(6), the Company shall control all proceedings taken in connection with the
contest of any claim contemplated by this Section 5(f) and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim (provided, however, that the Executive may participate therein
at his own cost and expense) and may, at its option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay the tax claimed
and sue for a refund, the Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income or other tax, including interest or penalties with respect thereto,
imposed with respect to such advance; and provided further, however, that
any extension of the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which the contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company’s control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

               (g) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 5(f), the Executive receives any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of

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Section 5(f)) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to Section 5(f), a
determination is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its intent to contest
such denial or refund prior to the expiration of 30 calendar days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and the amount of
any such advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to this Section 5.

               (h) Notwithstanding any provision of this Agreement to the contrary, if (a) but for
this sentence, the Company would be obligated to make a Gross-Up Payment to the Executive,
(b) the aggregate “present value” of the “parachute payments” to be paid or provided to the
Executive under this Agreement or otherwise does not exceed 1.15 multiplied by three times
the Executive’s “base amount,” and (c) but for this sentence, the net after-tax benefit to
the Executive of the Gross-Up Payment would not exceed $50,000 (taking into account both
income taxes and any Excise Tax), then the payments and benefits to be paid or provided
under this Agreement will be reduced to the minimum extent necessary (but in no event to
less than zero) so that no portion of any payment or benefit to the Executive, as so
reduced, constitutes an “excess parachute payment.” For purposes of this Section 5(h), the
terms “excess parachute payment,” “present value,” “parachute payment,” and “base amount”
will have the meanings assigned to them by Section 280G of the Code. The determination of
whether any reduction in such payments or benefits to be provided under this Agreement is
required pursuant to the preceding sentence will be made at the expense of the Company, if
requested by the Executive or the Company, by the Accounting Firm. The fact that the
Executive’s right to payments or benefits may be reduced by reason of the limitations
contained in this Section 5(h) will not of itself limit or otherwise affect any other rights
of the Executive other than pursuant to this Agreement. In the event that any payment or
benefit intended to be provided under this Agreement or otherwise is required to be reduced
pursuant to this Section 5(h), the Executive will be entitled to designate the payments
and/or benefits to be so reduced in order to give effect to this Section 5(h). The Company
will provide the Executive with all information reasonably requested by the Executive to
permit the Executive to make such designation. In the event that the Executive fails to
make such designation within 10 business days of the date of termination of the Executive’s
employment, the Company may effect such reduction in any manner it deems appropriate.

          6. No Mitigation Obligation. The Company hereby acknowledges that it will be
difficult and may be impossible for the Executive to find reasonably comparable employment
following the Termination Date. Accordingly, the payment of the severance compensation by the
Company to the Executive in accordance with the terms of this Agreement is hereby acknowledged by
the Company to be reasonable, and the Executive will not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of

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the Executive hereunder or otherwise, except as expressly provided in the last sentence of
Section 2 set forth on Annex A.

     7. Legal Fees and Expenses. It is the intent of the Company that the Executive not be
required to incur legal fees and the related expenses associated with the interpretation,
enforcement or defense of Executive’s rights under this Agreement by litigation or otherwise
because the cost and expense thereof would substantially detract from the benefits intended to be
extended to the Executive hereunder. Accordingly, if the Executive reasonably believes that the
Company has failed to comply with any of its obligations under this Agreement or in the event that
the Company or any other person takes or threatens to take any action to declare this Agreement
void or unenforceable, or institutes any litigation or other action or proceeding designed to deny,
or to recover from, the Executive the benefits provided or intended to be provided to the Executive
hereunder, subject to the other provisions of this Section 7, the Company irrevocably authorizes
the Executive from time to time to retain counsel of Executive’s choice, at the expense of the
Company to the extent and as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including, without limitation, the
initiation or defense of any litigation or other legal action, whether by or against the Company or
any director, officer, stockholder or other person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive’s entering into an
attorney-client relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the Executive and such
counsel. The Company will pay and be solely responsible for any and all attorneys’ and related
fees and expenses incurred by the Executive in connection with any of the foregoing, except to the
extent that the Executive fails to prevail on a material claim in any such proceeding described in
this Section 7.

     8. Confidentiality. The Executive acknowledges that in the course of his employment
by the Company, he will or may have access to and become informed of confidential or proprietary
information (as defined in this Section 8) of the Company. The Executive hereby covenants and
agrees that he will not, without the prior written consent of the Company, during the Term or
thereafter disclose to any person not employed by the Company, or use in connection with engaging
in competition with the Company, any confidential or proprietary information of the Company. For
purposes of this Agreement, the term “confidential or proprietary information” will include all
information of any nature and in any form that is owned by the Company and that is not publicly
available (other than by Executive’s breach of this Section 8) or generally known to persons
engaged in businesses similar or related to those of the Company. Confidential or proprietary
information will include, without limitation, the Company’s financial matters, customers,
employees, industry contracts, strategic business plans, product development (or other proprietary
product data), marketing plans, and all other secrets and all other information of a confidential
or proprietary nature. For purposes of the preceding two sentences, the term “Company” will also
include any Subsidiary (collectively, the “Restricted Group”). The foregoing obligations imposed
by this Section 8 will not apply (i) during the Term, in the course of the business of and for the
benefit of the Company, (ii) if such confidential or proprietary information will have become,
through no fault of the Executive, generally known to the public or (iii) if the Executive is
required by law to make disclosure (after giving the Company notice and an opportunity to contest
such requirement).

12

 

     9. Employment Rights. Nothing expressed or implied in this Agreement will create any
right or duty on the part of the Company or the Executive to have the Executive remain in the
employment of the Company or any Subsidiary prior to or following any Change in Control. Any
termination of employment of the Executive or the removal of the Executive from the office or
position in the Company or any Subsidiary that occurs (i) not more than 90 days prior to the date
on which a Change in Control occurs, and (ii) following the commencement of any discussion with a
third person that ultimately results in a Change in Control, shall be deemed to be a termination or
removal of the Executive after a Change in Control for purposes of this Agreement.

     10. Post-termination Assistance. Executive shall provide such information and
assistance to the Company as the Company may reasonably request, upon reasonable notice, in
connection with any litigation in which it or any of its affiliates is or may become a party. The
Company shall reimburse the Executive for any expenses, including travel expenses, incurred by the
Executive in connection with providing such information and assistance.

     11. Withholding of Taxes. The Company may withhold from any amounts payable under
this Agreement all federal, state, city or other taxes as the Company is required to withhold
pursuant to any applicable law, regulation or ruling.

     12. Successors and Binding Agreement.

               (a) The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or substantially all of the
business or assets of the Company, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement will be binding upon and inure to the benefit of
the Company and any successor to the Company, including, without limitation, any persons
acquiring directly or indirectly all or substantially all of the business or assets of the
Company whether by purchase, merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the “Company” for the purposes of this Agreement), but
will not otherwise be assignable, transferable or delegable by the Company.

               (b) This Agreement will inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees and legatees.

               (c) This Agreement is personal in nature and neither of the parties hereto shall,
without the consent of the other, assign, transfer or delegate this Agreement or any rights
or obligations hereunder except as expressly provided in Sections 12(a) and 12(b). Without
limiting the generality or effect of the foregoing, the Executive’s right to receive
payments hereunder will not be assignable, transferable or delegable, whether by pledge,
creation of a security interest, or otherwise, other than by a transfer by Executive’s will
or by the laws of descent and distribution and, in the event of any

13

 

attempted assignment or transfer contrary to this Section 12(c), the Company shall have
no liability to pay any amount so attempted to be assigned, transferred or delegated.

     13. Notices. For all purposes of this Agreement, all communications, including,
without limitation, notices, consents, requests or approvals, required or permitted to be given
hereunder will be in writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or five
business days after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been sent by a nationally
recognized overnight courier service (such as Federal Express or UPS) addressed to the Company (to
the attention of the Secretary of the Company) at its principal executive office and to the
Executive at his principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

     14. Governing Law. The validity, interpretation, construction and performance of this
Agreement will be governed by and construed in accordance with the substantive laws of the State of
Delaware, without giving effect to the principles of conflict of laws of such State.

     15. Validity. If any provision of this Agreement or the application of any provision
hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the
remainder of this Agreement and the application of such provision to any other person or
circumstances will not be affected, and the provision so held to be invalid, unenforceable or
otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it
enforceable, valid or legal.

     16. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Executive and the Company. No waiver by either party hereto at any time of any breach by the other
party hereto or compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral or otherwise,
expressed or implied with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. References to Sections are to references to
Sections of this Agreement.

     17. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
agreement.

14

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered
on this ___day of January, 2005.

	 	 	 	 	 	 	 
	 	 	GREYHOUND LINES, INC.
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	 	 	Name: Stephen E. Gorman
	 	 	Title: President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	LAIDLAW INTERNATIONAL INC.
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	 	 	Name: Kevin Benson
	 	 	Title: President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE
	 
	 	 	 	 	 	 
	 	 	

	 	 	John Werner Haugsland

15

 

Annex A

     1. The Company shall pay to the Executive a lump sum payment in an amount equal to three (3)
times the sum of (A) Base Pay (at the highest rate in effect for any period prior to the
Termination Date), plus (B) Incentive Pay (in an amount equal to not less than the higher of (x)
the highest aggregate Incentive Pay earned in any fiscal year after the Change in Control or in any
of the three fiscal years immediately preceding the year in which the Change in Control occurred or
(y) the plan target for which the year in which the Change in Control occurred).

     2. The Company shall, for a period of thirty-six (36) months following the Termination Date
(the “Continuation Period”), arrange to provide the Executive with Employee Benefits that are
welfare benefits (but not stock option, stock purchase, stock appreciation or similar compensatory
benefits) substantially similar to those that the Executive was receiving or entitled to receive
immediately prior to the Termination Date (or, if greater, immediately prior to the reduction,
termination or denial described in Section 3(b)(ii)), except that the level of any such Employee
Benefits to be provided to the Executive may be reduced in the event of a corresponding reduction
generally applicable to all recipients of or participants in such Employee Benefits, which
Continuation Period will be considered service with the Company for the purpose of determining
service credits and benefits due and payable to the Executive under the Company’s retirement
income, supplemental executive retirement and other benefit plans of the Company applicable to the
Executive, his dependents or his beneficiaries immediately prior to the Termination Date.

     3. In addition to the retirement income, supplemental executive retirement, and other benefits
to which Executive is entitled under the Retirement Plans, a lump sum payment in an amount equal to
the actuarial equivalent of the excess of (x) the retirement pension and the medical, life and
other benefits that would be payable to the Executive under the Retirement Plans if Executive
continued to be employed through the Continuation Period given the Executive’s Base Pay (as
determined in Section 1) (without regard to any amendment to the Retirement Plans made subsequent
to a Change in Control which adversely affects in any manner the computation of retirement or
welfare benefits thereunder), over (y) the retirement pension and the medical, life and other
benefits that the Executive is entitled to receive (either immediately or on a deferred basis)
under the Retirement Plans. For purposes of this Section, “actuarial equivalent” shall be
determined using the actuarial assumptions mandated under Section 417(e)(3) of the Code in effect
for the month second preceding the date of payment and the Continuation Period will be considered
service with the Company for the purpose of determining service credits and benefits due and
payable to the Executive under the Company’s retirement pension and medical, life and other benefit
plans of the Company applicable to the Executive, his dependents or his beneficiaries immediately
prior to the Termination Date.

Annex - 1<PAGE>

                                                                     EXHIBIT 4 g

================================================================================

                          REGISTRATION RIGHTS AGREEMENT

                           Dated as of August 17, 2004

                                       by

                            Consumers Energy Company

                                       and

                              Barclays Capital Inc.
                          Citigroup Global Markets Inc.
               Merrill Lynch, Pierce, Fenner & Smith Incorporated
                              Goldman, Sachs & Co.
                              ABN AMRO Incorporated
                          BNP Paribas Securities Corp.
                            Comerica Securities, Inc.
                          Fifth Third Securities, Inc.
                            Huntington Capital Corp.
                           J.P. Morgan Securities Inc.
                         Wedbush Morgan Securities Inc.

================================================================================

<PAGE>

      This Registration Rights Agreement (this "Agreement") is made and entered
into as of August 17, 2004 by Consumers Energy Company, a Michigan corporation
(the "Company"), and Barclays Capital Inc., Citigroup Global Markets Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., ABN
AMRO Incorporated, BNP Paribas Securities Corp., Comerica Securities, Inc.,
Fifth Third Securities, Inc., Huntington Capital Corp., J.P. Morgan Securities
Inc. and Wedbush Morgan Securities Inc. (each an "Initial Purchaser" and,
collectively, the "Initial Purchasers"), which have agreed to purchase the
Company's $150,000,000 4.40% First Mortgage Bonds due 2009, Series K (the
"Series K Bonds"), $300,000,000 5.00% First Mortgage Bonds due 2012, Series L
(the "Series L Bonds") and $350,000,000 5.50% First Mortgage Bonds due 2016,
Series M (the "Series M Bonds" and, together with the Series K Bonds and the
Series L Bonds, the "Restricted Bonds") pursuant to the Purchase Agreement (as
defined below).

      This Agreement is made pursuant to the Purchase Agreement, dated August
11, 2004 (the "Purchase Agreement"), by the Company and the Initial Purchasers.
In order to induce the Initial Purchasers to purchase the Restricted Bonds, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers in the Purchase Agreement.

      The parties hereby agree as follows:

SECTION 1. DEFINITIONS

      Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Purchase Agreement. As used in this Agreement, the
following capitalized terms shall have the following meanings:

      Act: The Securities Act of 1933, as amended.

      Advice: As defined in Section 6(d) hereof.

      Agreement: As defined in the first paragraph hereof.

      Bonds: The Restricted Bonds and the Exchange Bonds.

      Broker-Dealer: Any broker or dealer registered under the Exchange Act.

      Broker-Dealer Transfer Restricted Securities: Exchange Bonds that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Restricted
Bonds that such Broker-Dealer acquired for its own account as a result of
market-making activities or other trading activities (other than Restricted
Bonds acquired directly from the Company or any of its affiliates).

      Business Day: Any day except a Saturday, Sunday or other day in The City
of New York, or in the city of the primary corporate trust office of the
Trustee, on which banks are authorized to close.

      Certificated Securities: Bonds that are not in Global Bond form.

<PAGE>

      Closing Date: The date hereof.

      Commission: The Securities and Exchange Commission.

      Company: As defined in the first paragraph hereof.

      Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Exchange
Bonds to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the minimum period required
pursuant to Section 3(b) hereof and (c) the delivery by the Company to the
Registrar of the Series N Bonds in the same aggregate principal amount as the
aggregate principal amount of the Series K Bonds tendered by Holders thereof,
the delivery by the Company to the Registrar of the Series O Bonds in the same
aggregate principal amount as the aggregate principal amount of the Series L
Bonds tendered by Holders thereof and the delivery by the Company to the
Registrar of the Series P Bonds in the same aggregate principal amount as the
aggregate principal amount of the Series M Bonds tendered by holders thereof, in
each case, pursuant to the Exchange Offer.

      Damages Payment Date: With respect to the Restricted Bonds, each Interest
Payment Date.

      Exchange Act: The Securities Exchange Act of 1934, as amended.

      Exchange Bonds: The Series N Bonds, the Series O Bonds and the Series P
Bonds.

      Exchange Offer: The Series K Exchange Offer, the Series L Exchange Offer
and/or the Series M Exchange Offer, as the case may be.

      Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.

      Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Restricted Bonds to certain "qualified institutional buyers", as
such term is defined in Rule 144A under the Act, or to persons who are not "U.S.
persons", as such term is defined in Regulation S under the Act.

      Global Bond: As defined in the Bonds.

      Global Bond Holder: As defined in the Bonds.

      Holder: As defined in Section 2 hereof.

      Indemnified Holder: As defined in Section 8(a) hereof.

      Indemnified Person: As defined in Section 8(c) hereof.

      Indemnifying Person: As defined in Section 8(c) hereof.

                                       2
<PAGE>

      Indenture: Indenture dated as of September 1, 1945, between the Company
and the Trustee, as supplemented by various supplemental indentures.

      Initial Purchaser: As defined in the first paragraph hereof.

      Initial Purchasers: As defined in the first paragraph hereof.

      Interest Payment Date: As defined in the Bonds.

      NASD: National Association of Securities Dealers, Inc.

      Person: An individual, partnership, corporation, trust, limited liability
company, unincorporated organization, or a government or agency or political
subdivision thereof.

      Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.

      Purchase Agreement: As defined in the second paragraph hereof.

      Record Holder: With respect to any Damages Payment Date, each Person who
is a Holder of Bonds on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.

      Registrar: As defined in the Indenture.

      Registration Default: As defined in Section 5 hereof.

      Registration Statement: Any registration statement of the Company relating
to (a) an offering of Exchange Bonds pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, in each case, (i) which is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.

      Restricted Bonds: As defined in the first paragraph hereof.

      Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.

      Series K Bonds: As defined in the first paragraph hereof.

      Series K Exchange Offer: The registration by the Company under the Act of
the Series N Bonds pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities relating to Series K Bonds the opportunity to
exchange all such outstanding Transfer Restricted Securities relating to Series
K Bonds for Series N Bonds in an aggregate principal amount equal to the
aggregate

                                       3
<PAGE>

principal amount of the Transfer Restricted Securities relating to Series K
Bonds tendered in such exchange offer by such Holders.

      Series L Bonds: As defined in the first paragraph hereof.

      Series L Exchange Offer: The registration by the Company under the Act of
the Series O Bonds pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities relating to Series L Bonds the opportunity to
exchange all such outstanding Transfer Restricted Securities relating to Series
L Bonds for Series O Bonds in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities relating to
Series L Bonds tendered in such exchange offer by such Holders.

      Series M Bonds: As defined in the first paragraph hereof.

      Series M Exchange Offer: The registration by the Company under the Act of
the Series P Bonds pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities relating to Series M Bonds the opportunity to
exchange all such outstanding Transfer Restricted Securities relating to Series
M Bonds for Series P Bonds in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities relating to
Series M Bonds tendered in such exchange offer by such Holders.

      Series N Bonds: The Company's 4.40% First Mortgage Bonds due 2009, Series
N, to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon
the request of any Holder of Series K Bonds covered by a Shelf Registration
Statement, in exchange for such Series K Bonds.

      Series O Bonds: The Company's 5.00% First Mortgage Bonds due 2012, Series
O, to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon
the request of any holder of Series L Bonds covered by a Shelf Registration
Statement, in exchange for such Series L Bonds.

      Series P Bonds: The Company's 5.50% First Mortgage Bonds due 2016, Series
P, to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon
the request of any Holder of Series M Bonds covered by a Shelf Registration
Statement, in exchange for such Series M Bonds.

      Shelf Filing Date: As defined in Section 4(a) hereof.

      Shelf Registration Statement: As defined in Section 4(a) hereof.

      TIA: The Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as
in effect on the date of the Indenture.

      Transfer Restricted Securities: Each Restricted Bond, until the earliest
to occur of (a) the date on which such Restricted Bond is exchanged in the
Exchange Offer and entitled to be resold to the public by the Holder thereof
without complying with the prospectus delivery requirements

                                       4
<PAGE>

of the Act, (b) the date on which such Restricted Bond has been disposed of in
accordance with a Shelf Registration Statement, (c) the date on which such
Restricted Bond is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Restricted Bond is distributed to the public pursuant to Rule 144
under the Act.

      Trustee: JPMorgan Chase Bank (ultimate successor to City Bank Farmers
Trust Company), as trustee under the Indenture.

      Underwritten Offering or Underwritten Registration: An offering or
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.

SECTION 2. HOLDERS

      A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.

SECTION 3. REGISTERED EXCHANGE OFFER

      (a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) hereof have been complied
with), the Company shall (i) cause to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 180 days after
the Closing Date, the Exchange Offer Registration Statement, (ii) use its
reasonable best efforts to cause such Exchange Offer Registration Statement to
become effective at the earliest possible time, but in no event later than 270
days after the Closing Date, (iii) in connection with the foregoing, (A) file
all pre-effective amendments to such Exchange Offer Registration Statement as
may be necessary in order to cause such Exchange Offer Registration Statement to
become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the Exchange Bonds to be made under the blue sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Exchange Bonds to be offered in
exchange for the Restricted Bonds that are Transfer Restricted Securities and to
permit sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) hereof.

      (b) The Company shall use its reasonable best efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 Business Days. The Company shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
Bonds shall be included in the Exchange Offer Registration Statement. The
Company shall use its best efforts to cause the Exchange Offer to be Consummated
on the earliest practicable date after the

                                       5
<PAGE>

Exchange Offer Registration Statement has become effective, but in no event
later than 30 days thereafter.

      (c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Restricted Bonds that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Restricted Bonds (other than Transfer Restricted
Securities acquired directly from the Company or any affiliate of the Company)
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an "underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of each Exchange Bond received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Bonds held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.

      The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) hereof to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of one year from the date on which the Exchange Offer is
Consummated.

      The Company shall promptly provide sufficient copies of the latest version
of such Prospectus to such Restricted Broker-Dealers promptly upon request, and
in no event later than one day after such request, at any time during such
one-year period in order to facilitate such sales.

SECTION 4. SHELF REGISTRATION

      (a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the Exchange Bonds because
the Exchange Offer is not permitted by applicable law or Commission policy
(after the procedures set forth in Section 6(a)(i) hereof have been complied
with) or (ii) any Holder of Transfer Restricted Securities shall notify the
Company within 20 Business Days following the Consummation of the Exchange Offer
that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the
Exchange Bonds acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, the Company shall (x) cause to be filed on or prior to 90 days after the
date on which the Company determines that it is not required to file the
Exchange Offer Registration Statement

                                       6
<PAGE>

pursuant to clause (i) above or 90 days after the date on which the Company
receives the notice specified in clause (ii) above (each such date, a "Shelf
Filing Date") a shelf registration statement pursuant to Rule 415 under the Act
(which may be an amendment to the Exchange Offer Registration Statement (in
either event, the "Shelf Registration Statement")), relating to all Transfer
Restricted Securities the Holders of which shall have provided the information
required pursuant to Section 4(b) hereof, and (y) use its best efforts to cause
such Shelf Registration Statement to become effective on or prior to 180 days
after the Shelf Filing Date. If the Company is not eligible to use Act Form S-3
on a Shelf Filing Date, then its obligation to file a Shelf Registration
Statement shall be deferred until the 30th day after the earliest time that such
eligibility is restored. If, after the Company has filed an Exchange Offer
Registration Statement which satisfies the requirements of Section 3(a) hereof,
the Company is required to file and make effective a Shelf Registration
Statement solely because the Exchange Offer shall not be permitted under
applicable federal law, then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above. Such
an event shall have no effect on the requirements of clause (y) above. The
Company shall use its reasonable best efforts to keep the Shelf Registration
Statement discussed in this Section 4(a) continuously effective, supplemented
and amended as required by and subject to the provisions of Sections 6(b) and
(c) hereof to the extent necessary to ensure that it is available for sales of
Transfer Restricted Securities by the Holders thereof entitled to the benefit of
this Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(c)(i) hereof) following the date on which such Shelf
Registration Statement first becomes effective under the Act.

      (b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, such
information specified in Item 507 of Regulation S-K for use in connection with
any Shelf Registration Statement or Prospectus or preliminary Prospectus
included therein. No Holder of Transfer Restricted Securities shall be entitled
to liquidated damages pursuant to Section 5 hereof unless and until such Holder
shall have used its best efforts to provide all such information. Each Holder as
to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.

SECTION 5. LIQUIDATED DAMAGES

      If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement, (iii) the Exchange Offer has not been Consummated within 30
calendar days after the Exchange Offer Registration Statement is first declared
effective by the Commission or (iv) any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
within 15 Business Days by a post-

                                       7
<PAGE>

effective amendment to such Registration Statement that cures such failure and
that is itself declared effective within five Business Days (each such event
referred to in clauses (i) through (iv), a "Registration Default"), then the
Company agrees to pay liquidated damages in the form of additional interest on
the Transfer Restricted Securities to each Holder of Transfer Restricted
Securities, from and including the date on which any Registration Default shall
occur to, but excluding, the date on which such Registration Default has been
cured, at a rate of 0.50% per annum. Notwithstanding anything to the contrary
set forth herein, (1) upon filing of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of clause
(i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of clause (ii) above, (3) upon Consummation of the Exchange Offer, in the case
of clause (iii) above, or (4) upon the filing of a post-effective amendment to
the Registration Statement or an additional Registration Statement that causes
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement) to again be declared effective or made usable, in the
case of clause (iv) above, the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.

      All additional interest shall be paid on each payment date to the Global
Bond Holder by wire transfer of immediately available funds or by federal funds
check and to Holders of Certificated Securities by mailing checks to their
registered addresses on the books of the Company or the Trustee for such
payment. All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such security shall have
been satisfied in full.

SECTION 6. REGISTRATION PROCEDURES

      (a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company shall comply with all applicable provisions of Section 6(c)
hereof, shall use its reasonable best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:

            (i) If, following the date hereof, there has been published a change
      in Commission policy with respect to exchange offers such as the Exchange
      Offer, such that in the reasonable opinion of counsel to the Company there
      is a substantial question as to whether the Exchange Offer is permitted by
      applicable federal law, the Company hereby agrees to seek a no-action
      letter or other favorable decision from the Commission allowing the
      Company to Consummate an Exchange Offer for the Restricted Bonds. The
      Company hereby agrees to pursue the issuance of such a decision to the
      Commission staff level. In connection with the foregoing, the Company
      hereby agrees to take all such other actions as are reasonably requested
      by the Commission or otherwise required in connection with the issuance of
      such decision, including without limitation (A) participating in
      telephonic conferences with the Commission, (B) delivering to the
      Commission staff an analysis prepared by counsel to the Company setting
      forth the legal bases, if any, upon which such counsel has concluded that
      such an

                                       8
<PAGE>

      Exchange Offer should be permitted and (C) diligently pursuing a
      resolution (which need not be favorable) by the Commission staff of such
      submission.

            (ii) As a condition to its participation in the Exchange Offer
      pursuant to the terms of this Agreement, each Holder of Transfer
      Restricted Securities shall furnish upon the request of the Company, prior
      to the Consummation of the Exchange Offer, a written representation to the
      Company (which may be contained in the letter of transmittal contemplated
      by the Exchange Offer Registration Statement) to the effect that (A) it is
      not an affiliate of the Company, (B) it is not engaged in, and does not
      intend to engage in, and has no arrangement or understanding with any
      Person to participate in, a distribution of the Exchange Bonds to be
      issued in the Exchange Offer and (C) it is acquiring the Exchange Bonds in
      its ordinary course of business. Each Holder hereby acknowledges and
      agrees that any Broker-Dealer and any such Holder using the Exchange Offer
      to participate in a distribution of the securities to be acquired in the
      Exchange Offer (1) could not under Commission policy as in effect on the
      date of this Agreement rely on the position of the Commission enunciated
      in Morgan Stanley and Co. Inc. (available June 5, 1991) and Exxon Capital
      Holdings Corp. (available May 13, 1988), as interpreted in the
      Commission's letter to Shearman & Sterling (available July 2, 1993), and
      similar no-action letters (including, if applicable, any no-action letter
      obtained pursuant to clause (i) above), and (2) must comply with the
      registration and prospectus delivery requirements of the Act in connection
      with a secondary resale transaction and that such a secondary resale
      transaction must be covered by an effective registration statement
      containing the selling security holder information required by Item 507 or
      508, as applicable, of Regulation S-K if the resales are of Exchange Bonds
      obtained by such Holder in exchange for Restricted Bonds acquired by such
      Holder directly from the Company or an affiliate thereof.

            (iii) Prior to effectiveness of the Exchange Offer Registration
      Statement, the Company shall provide a supplemental letter to the
      Commission (A) stating that the Company is registering the Exchange Offer
      in reliance on the position of the Commission enunciated in Exxon Capital
      Holdings Corp. (available May 13, 1988), Morgan Stanley and Co. Inc.
      (available June 5, 1991) and, if applicable, any no-action letter obtained
      pursuant to clause (i) above, (B) including a representation that the
      Company has not entered into any arrangement or understanding with any
      Person to distribute the Exchange Bonds to be received in the Exchange
      Offer and that, to the best of the Company's information and belief, each
      Holder participating in the Exchange Offer is acquiring the Exchange Bonds
      in its ordinary course of business and has no arrangement or understanding
      with any Person to participate in the distribution of the Exchange Bonds
      received in the Exchange Offer and (C) any other undertaking or
      representation required by the Commission as set forth in any no-action
      letter obtained pursuant to clause (i) above.

      (b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) hereof and shall use

                                       9
<PAGE>

its best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
will prepare and file with the Commission a Registration Statement relating to
the registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance with
the intended method or methods of distribution thereof within the time periods
and otherwise in accordance with the provisions hereof.

      (c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus, to the extent that the
same are required to be available to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers), the Company shall:

            (i) use its best efforts to keep such Registration Statement
      continuously effective and provide all requisite financial statements for
      the period specified in Section 3 or 4 hereof, as applicable. Upon the
      occurrence of any event that would cause any such Registration Statement
      or the Prospectus contained therein (A) to contain a material misstatement
      or omission or (B) not to be effective and usable for resale of Transfer
      Restricted Securities during the period required by this Agreement, the
      Company shall file promptly an appropriate amendment to such Registration
      Statement, (1) in the case of clause (A), correcting any such misstatement
      or omission, and (2) in the case of clauses (A) and (B), using its best
      efforts to cause such amendment to be declared effective and such
      Registration Statement and the related Prospectus to become usable for
      their intended purpose(s) as soon as practicable thereafter;

            (ii) prepare and file with the Commission such amendments and
      post-effective amendments to the Registration Statement as may be
      necessary to keep the Registration Statement effective for the applicable
      period set forth in Section 3 or 4 hereof, or such shorter period as will
      terminate when all Transfer Restricted Securities covered by such
      Registration Statement have been sold; cause the Prospectus to be
      supplemented by any required Prospectus supplement, and as so supplemented
      to be filed pursuant to Rule 424 under the Act, and to comply fully with
      Rules 424, 430A and 462, as applicable, under the Act in a timely manner;
      and comply with the provisions of the Act with respect to the disposition
      of all securities covered by such Registration Statement during the
      applicable period in accordance with the intended method or methods of
      distribution by the sellers thereof set forth in such Registration
      Statement or supplement to the Prospectus;

            (iii) advise the underwriter(s), if any, and selling Holders
      promptly and, if requested by such Persons, confirm such advice in
      writing, (A) when the Prospectus or any Prospectus supplement or
      post-effective amendment has been filed, and, with respect to any
      Registration Statement or any post-effective amendment thereto, when the
      same has become effective, (B) of any request by the Commission for
      amendments to the Registration Statement or amendments or

                                       10
<PAGE>

      supplements to the Prospectus or for additional information relating
      thereto, (C) of the issuance by the Commission of any stop order
      suspending the effectiveness of the Registration Statement under the Act
      or of the suspension by any state securities commission of the
      qualification of the Transfer Restricted Securities for offering or sale
      in any jurisdiction, or the initiation of any proceeding for any of the
      preceding purposes, (D) of the existence of any fact or the happening of
      any event that makes any statement of a material fact made in the
      Registration Statement, the Prospectus, any amendment or supplement
      thereto or any document incorporated by reference therein untrue, or that
      requires the making of any additions to or changes in the Registration
      Statement in order to make the statements therein not misleading, or that
      requires the making of any additions to or changes in the Prospectus in
      order to make the statements therein, in the light of the circumstances
      under which they were made, not misleading. If at any time the Commission
      shall issue any stop order suspending the effectiveness of the
      Registration Statement, or any state securities commission or other
      regulatory authority shall issue an order suspending the qualification or
      exemption from qualification of the Transfer Restricted Securities under
      state securities or blue sky laws, the Company shall use its best efforts
      to obtain the withdrawal or lifting of such order at the earliest possible
      time;

            (iv) furnish to the Initial Purchaser(s), each selling Holder named
      in any Registration Statement or Prospectus and each of the underwriter(s)
      in connection with such sale, if any, before filing with the Commission,
      copies of any Registration Statement or any Prospectus included therein or
      any amendments or supplements to any such Registration Statement or
      Prospectus (including all documents incorporated by reference after the
      initial filing of such Registration Statement), which documents will be
      subject to the review and comment of such Holders and underwriter(s) in
      connection with such sale, if any, for a period of at least five Business
      Days, and the Company will not file any such Registration Statement or
      Prospectus or any amendment or supplement to any such Registration
      Statement or Prospectus (including all such documents incorporated by
      reference) to which the selling Holders of the Transfer Restricted
      Securities covered by such Registration Statement or the underwriter(s) in
      connection with such sale, if any, shall reasonably object within five
      Business Days after the receipt thereof;

            (v) promptly prior to the filing of any document that is to be
      incorporated by reference into a Registration Statement or Prospectus,
      provide copies of such document to the selling Holders and to the
      underwriter(s) in connection with such sale, if any, make the Company's
      representatives available for discussion of such document and other
      customary due diligence matters, and include such information in such
      document prior to the filing thereof as such selling Holders or
      underwriter(s), if any, reasonably may request;

            (vi) make available at reasonable times for inspection by the
      selling Holders, any managing underwriter participating in any disposition
      pursuant to such Registration Statement and any attorney or accountant
      retained by such

                                       11
<PAGE>

      selling Holders or any of such underwriter(s), all financial and other
      records, material corporate documents and properties of the Company and
      cause the Company's officers, directors and employees to supply all
      information reasonably requested by any such Holder, underwriter, attorney
      or accountant in connection with such Registration Statement or any
      post-effective amendment thereto subsequent to the filing thereof and
      prior to its effectiveness;

            (vii) if requested by any selling Holders or the underwriter(s) in
      connection with such sale, if any, promptly include in any Registration
      Statement or Prospectus, pursuant to a supplement or post-effective
      amendment if necessary, such information as such selling Holders and
      underwriter(s), if any, may reasonably request to have included therein,
      including, without limitation, information relating to the "Plan of
      Distribution" of the Transfer Restricted Securities, information with
      respect to the principal amount of Transfer Restricted Securities being
      sold to such underwriter(s), the purchase price being paid therefor and
      any other terms of the offering of the Transfer Restricted Securities to
      be sold in such offering; and make all required filings of such Prospectus
      supplement or post-effective amendment as soon as practicable after the
      Company is notified of the matters to be included in such Prospectus
      supplement or post-effective amendment;

            (viii) if requested in writing by any selling Holder and each of the
      underwriter(s) in connection with such sale, if any, furnish, without
      charge, at least one copy of the Registration Statement, as first filed
      with the Commission, and of each amendment thereto, including all
      documents incorporated by reference therein and all exhibits (including
      exhibits incorporated therein by reference);

            (ix) if requested in writing by any selling Holder and each of the
      underwriter(s), if any, deliver, without charge, as many copies of the
      Prospectus (including each preliminary Prospectus) and any amendment or
      supplement thereto as such Persons reasonably may request; the Company
      hereby consents to the use (in accordance with law) of the Prospectus and
      any amendment or supplement thereto by each of the selling Holders and
      each of the underwriter(s), if any, in connection with the offering and
      the sale of the Transfer Restricted Securities covered by the Prospectus
      or any amendment or supplement thereto;

            (x) enter into such agreements (including an underwriting or similar
      agreement) and make such representations and warranties and take all such
      other actions in connection therewith in order to expedite or facilitate
      the disposition of the Transfer Restricted Securities pursuant to any
      Registration Statement contemplated by this Agreement as may be reasonably
      requested by any Holder of Transfer Restricted Securities or underwriter
      in connection with any sale or resale pursuant to any Registration
      Statement contemplated by this Agreement, and in such connection, whether
      or not an underwriting or similar agreement is entered into and whether or
      not the registration is an Underwritten Registration, the Company shall:

                                       12
<PAGE>

                  (A) furnish (or in the case of clauses (2) and (3) below, use
            its best efforts to furnish) to each selling Holder and each
            underwriter, if any, upon the effectiveness of the Shelf
            Registration Statement and to each Restricted Broker-Dealer upon
            Consummation of the Exchange Offer:

                        (1) a certificate, dated the date of Consummation of the
                  Exchange Offer or the date of effectiveness of the Shelf
                  Registration Statement, as the case may be, signed on behalf
                  of the Company by (x) the President or any Vice President and
                  (y) a principal financial or accounting officer of the
                  Company, confirming, as of the date thereof, the matters set
                  forth in Sections 10(d) and 10(e) of the Purchase Agreement
                  and such other similar matters as the Holders, underwriter(s)
                  and/or Restricted Broker-Dealers may reasonably request;

                        (2) an opinion, dated the date of Consummation of the
                  Exchange Offer or the date of effectiveness of the Shelf
                  Registration Statement, as the case may be, of counsel for the
                  Company covering matters similar to those set forth in Section
                  10(b)(i) of the Purchase Agreement and such other matters as
                  the Holders, underwriter(s) and/or Restricted Broker-Dealers
                  may reasonably request, and in any event including a statement
                  to the effect that such counsel has participated in
                  conferences with officers and other representatives of the
                  Company, representatives of the independent public accountants
                  for the Company and have considered the matters required to be
                  stated therein and the statements contained therein, although
                  such counsel has not independently verified the accuracy,
                  completeness or fairness of such statements; and that such
                  counsel advises that, on the basis of the foregoing (relying
                  as to materiality to a large extent upon facts provided to
                  such counsel by officers and other representatives of the
                  Company and without independent check or verification), no
                  facts came to such counsel's attention that caused such
                  counsel to believe that the applicable Registration Statement,
                  at the time such Registration Statement or any post-effective
                  amendment thereto became effective and, in the case of the
                  Exchange Offer Registration Statement, as of the date of
                  Consummation of the Exchange Offer, contained an untrue
                  statement of a material fact or omitted to state a material
                  fact required to be stated therein or necessary to make the
                  statements therein not misleading, or that the Prospectus
                  contained in such Registration Statement as of its date and,
                  in the case of the opinion dated the date of Consummation of
                  the Exchange Offer, as of the date of Consummation,

                                       13
<PAGE>

                  contained an untrue statement of a material fact or omitted to
                  state a material fact necessary in order to make the
                  statements therein, in the light of the circumstances under
                  which they were made, not misleading. Without limiting the
                  foregoing, such counsel may state further that such counsel
                  assumes no responsibility for, and has not independently
                  verified, the accuracy, completeness or fairness of the
                  financial statements, Bonds and schedules and other financial
                  data included in any Registration Statement contemplated by
                  this Agreement or the related Prospectus; and

                        (3) a customary comfort letter, dated as of the date of
                  effectiveness of the Shelf Registration Statement or the date
                  of Consummation of the Exchange Offer, as the case may be,
                  from the Company's independent accountants, in the customary
                  form and covering matters of the type customarily covered in
                  comfort letters to underwriters in connection with primary
                  underwritten offerings, and affirming the matters set forth in
                  the comfort letters delivered pursuant to Section 10(c)(i) and
                  Section 10(c)(ii) of the Purchase Agreement, without
                  exception;

                  (B) set forth in full or incorporate by reference in the
            underwriting or similar agreement, if any, in connection with any
            sale or resale pursuant to any Shelf Registration Statement, the
            indemnification provisions and procedures of Section 8 hereof with
            respect to all parties to be indemnified pursuant to said Section 8;
            and

                  (C) deliver such other documents and certificates as may be
            reasonably requested by the selling Holders, the underwriter(s), if
            any, and Restricted Broker-Dealers, if any, to evidence compliance
            with clause (A) above and with any customary conditions contained in
            the underwriting agreement or other agreement entered into by the
            Company pursuant to this clause (C);

the above shall be done at each closing under such underwriting or similar
agreement, as and to the extent required thereunder, and if at any time the
representations and warranties of the Company contemplated in clause (A)(1)
above cease to be true and correct, the Company shall so advise the
underwriter(s), if any, the selling Holders and each Restricted Broker-Dealer
promptly and, if requested by such Persons, shall confirm such advice in
writing;

            (xi) prior to any public offering of Transfer Restricted Securities,
      cooperate with the selling Holders, the underwriter(s), if any, and their
      respective counsel in connection with the registration and qualification
      of the Transfer Restricted Securities under the securities or blue sky
      laws of such jurisdictions as the selling Holders or underwriter(s), if
      any, may request and do any and all other

                                       14
<PAGE>

      acts or things necessary or advisable to enable the disposition in such
      jurisdictions of the Transfer Restricted Securities covered by the
      applicable Registration Statement; provided, however, that the Company
      shall not be required to register or qualify as a foreign corporation
      where it is not now so qualified or to take any action that would subject
      it to the service of process in suits or to taxation, other than as to
      matters and transactions relating to the Registration Statement, in any
      jurisdiction where it is not now so subject;

            (xii) (A) issue, upon the request of any Holder of Series K Bonds
      covered by any Shelf Registration Statement contemplated by this
      Agreement, Series N Bonds having an aggregate principal amount equal to
      the aggregate principal amount of Series K Bonds surrendered to the
      Company by such Holder in exchange therefor or being sold by such Holder;
      such Series N Bonds to be registered in the name of such Holder or in the
      name of the purchaser(s) of such Bonds, as the case may be; in return, the
      Series K Bonds held by such Holder shall be surrendered to the Company for
      cancellation;

                  (B) issue, upon the request of any Holder of Series L Bonds
      covered by any Shelf Registration Statement contemplated by this
      Agreement, Series O Bonds having an aggregate principal amount equal to
      the aggregate principal amount of Series L Bonds surrendered to the
      Company by such Holder in exchange therefor or being sold by such Holder;
      such Series O Bonds to be registered in the name of such Holder or in the
      name of the purchaser(s) of such Bonds, as the case may be; in return, the
      Series L Bonds held by such Holder shall be surrendered to the Company for
      cancellation;

                  (C) issue, upon the request of any Holder of Series M Bonds
      covered by any Shelf Registration Statement contemplated by this
      Agreement, Series P Bonds having an aggregate principal amount equal to
      the aggregate principal amount of Series M Bonds surrendered to the
      Company by such Holder in exchange therefor or being sold by such Holder;
      such Series P Bonds to be registered in the name of such Holder or in the
      name of the purchaser(s) of such Bonds, as the case may be; in return, the
      Series M Bonds held by such Holder shall be surrendered to the Company for
      cancellation;

            (xiii) in connection with any sale of Transfer Restricted Securities
      that will result in such securities no longer being Transfer Restricted
      Securities, cooperate with the selling Holders and the underwriter(s), if
      any, to facilitate the timely preparation and delivery of certificates
      representing Transfer Restricted Securities to be sold and not bearing any
      restrictive legends; and to register such Transfer Restricted Securities
      in such denominations and such names as the Holders or the underwriter(s),
      if any, may request at least two Business Days prior to such sale of
      Transfer Restricted Securities;

            (xiv) use its best efforts to cause the disposition of the Transfer
      Restricted Securities covered by the Registration Statement to be
      registered with or approved by such other governmental agencies or
      authorities as may be

                                       15
<PAGE>

      necessary to enable the seller or sellers thereof or the underwriter(s),
      if any, to consummate the disposition of such Transfer Restricted
      Securities, subject to the proviso contained in clause (xi) above;

            (xv) subject to clause (i) above, if any fact or event contemplated
      by clause (iii)(D) above shall exist or have occurred, prepare a
      supplement or post-effective amendment to the Registration Statement or
      related Prospectus or any document incorporated therein by reference or
      file any other required document so that, as thereafter delivered to the
      purchasers of Transfer Restricted Securities, the Prospectus will not
      contain an untrue statement of a material fact or omit to state any
      material fact necessary to make the statements therein, in the light of
      the circumstances under which they were made, not misleading;

            (xvi) provide CUSIP numbers for all Transfer Restricted Securities
      not later than the effective date of a Registration Statement covering
      such Transfer Restricted Securities and provide the Trustee with printed
      certificates for the Transfer Restricted Securities which are in a form
      eligible for deposit with The Depository Trust Company;

            (xvii) cooperate and assist in any filings required to be made with
      the NASD and in the performance of any due diligence investigation by any
      underwriter (including any "qualified independent underwriter") that is
      required to be retained in accordance with the rules and regulations of
      the NASD, and use its best efforts to cause such Registration Statement to
      become effective and approved by such governmental agencies or authorities
      as may be necessary to enable the Holders selling Transfer Restricted
      Securities to consummate the disposition of such Transfer Restricted
      Securities;

            (xviii) otherwise use its best efforts to comply with all applicable
      rules and regulations of the Commission, and make generally available to
      its security holders with regard to any applicable Registration Statement,
      as soon as practicable, a consolidated earning statement meeting the
      requirements of Rule 158 under the Act (which need not be audited)
      covering a twelve-month period beginning after the effective date of the
      Registration Statement (as such term is defined in paragraph (c) of Rule
      158 under the Act);

            (xix) cause the Indenture to be qualified under the TIA not later
      than the effective date of the first Registration Statement required by
      this Agreement and, in connection therewith, cooperate with the Trustee
      and the Holders of Bonds to effect such changes to the Indenture as may be
      required for such Indenture to be so qualified in accordance with the
      terms of the TIA; and execute and use its best efforts to cause the
      Trustee to execute all documents that may be required to effect such
      changes and all other forms and documents required to be filed with the
      Commission to enable such Indenture to be so qualified in a timely manner;
      and

                                       16
<PAGE>

            (xx) provide promptly to each Holder upon request each document
      filed with the Commission pursuant to the requirements of Section 13 or
      Section 15(d) of the Exchange Act.

      (d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of a notice of actions to be
taken as referred to in Section 6(c)(i) hereof or any notice from the Company of
the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof,
such Holder will forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 6(c)(xv) hereof, or until it is advised in writing by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus (the "Advice"). If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of either such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D) hereof
to and including the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xv) hereof or shall have received the
Advice.

SECTION 7. REGISTRATION EXPENSES

      (a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees; (ii) all fees and expenses of compliance with
federal securities and state blue sky or securities laws; (iii) all expenses of
printing (including printing certificates for the Exchange Bonds to be issued in
the Exchange Offer and printing of Prospectuses), messenger and delivery
services and telephone; (iv) all fees and disbursements of counsel for the
Company and (other than in connection with the Exchange Offer) the Holders of
Transfer Restricted Securities; (v) all application and filing fees, if any, in
connection with listing the Bonds on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).

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

      (b) In connection with the Shelf Registration Statement, the Company will
reimburse the Holders of Transfer Restricted Securities registered pursuant to
the Shelf Registration Statement for the reasonable fees and disbursements of
not more than one counsel, who shall be chosen by the Holders of a majority in
principal amount of the Transfer Restricted Securities for

                                       17
<PAGE>

whose benefit the Shelf Registration Statement is being prepared in consultation
with the Company.

SECTION 8. INDEMNIFICATION AND CONTRIBUTION

      (a) The Company agrees, to the extent permitted by law, to indemnify and
hold harmless each Holder and each Person, if any, who controls any Holder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act or otherwise
("Indemnified Holder"), and to reimburse the Holders and such controlling Person
or Persons, if any, for any legal or other expenses incurred by them in
connection with defending any action, suit or proceeding (including governmental
investigations) as provided in Section 8(c) hereof, insofar as such losses,
claims, damages, liabilities or actions, suits or proceedings (including
governmental investigations) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement, or, if any Registration Statement shall be amended or supplemented,
in the Registration Statement as so amended or supplemented, or arise out of or
are based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any such untrue statement or alleged
untrue statement or omission or alleged omission which was made in the
Registration Statement or in the Registration Statement as so amended or
supplemented, in reliance upon and in conformity with information furnished in
writing to the Company by any Holder expressly for use therein.

      The Company's indemnity agreement contained in this Section 8(a), and the
covenants, representations and warranties of the Company contained in this
Agreement, shall remain in full force and effect regardless of any investigation
made by or on behalf of any Person, and the indemnity agreement contained in
this Section 8 shall survive any termination of this Agreement. The liabilities
of the Company in this Section 8 are in addition to any other liabilities of the
Company under this Agreement or otherwise.

      (b) Each Holder agrees, severally and not jointly, to the extent permitted
by law, to indemnify, hold harmless and reimburse the Company and each Person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent and upon the same terms as
the indemnity agreement of the Company set forth in Section 8(a) hereof, but
only with respect to alleged untrue statements or omissions made in the
Registration Statement or in the Registration Statement, as amended or
supplemented (if applicable), in reliance upon and in conformity with
information furnished in writing to the Company by such Holder expressly for use
therein.

      The indemnity agreement on the part of each Holder contained in this
Section 8(b) shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any other Person, and the
indemnity agreement contained in this Section 8(b) shall survive any termination
of this Agreement.

      (c) If a claim is made or an action, suit or proceeding (including
governmental investigations) is commenced or threatened against any person as to
which indemnity may be

                                       18
<PAGE>

sought under Section 8(a) or 8(b) hereof, such Person (the "Indemnified Person")
shall notify the Person against whom such indemnity may be sought (the
"Indemnifying Person") promptly after any assertion of such claim threatening to
institute an action, suit or proceeding or, if such an action, suit or
proceeding is commenced against such Indemnified Person, promptly after such
Indemnified Person shall have been served with a summons or other first legal
process, giving information as to the nature and basis of the claim. Failure to
so notify the Indemnifying Person shall not, however, relieve the Indemnifying
Person from any liability which it may have on account of the indemnity under
Section 8(a) or 8(b) hereof if the Indemnifying Person has not been prejudiced
in any material respect by such failure. Subject to the immediately succeeding
sentence, the Indemnifying Person shall assume the defense of any such
litigation or proceeding, including the employment of counsel and the payment of
all expenses, with such counsel being designated, subject to the immediately
succeeding sentence, in writing by a majority in principal amount of the Holders
in the case of parties indemnified pursuant to Section 8(b) hereof and by the
Company in the case of parties indemnified pursuant to Section 8(a) hereof. Any
Indemnified Person shall have the right to participate in such litigation or
proceeding and to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include (x) the Indemnifying Person and (y)
the Indemnified Person and, in the written opinion of counsel to such
Indemnified Person, representation of both parties by the same counsel would be
inappropriate due to actual or likely conflicts of interest between them, in
either of which cases the reasonable fees and expenses of counsel (including
disbursements) for such Indemnified Person shall be reimbursed by the
Indemnifying Person to the Indemnified Person. If there is a conflict as
described in clause (ii) above, and the Indemnified Persons have participated in
the litigation or proceeding utilizing separate counsel whose fees and expenses
have been reimbursed by the Indemnifying Person, and the Indemnified Persons, or
any of them, are found to be solely liable, such Indemnified Person shall repay
to the Indemnifying Parties such fees and expenses of such separate counsel as
the Indemnifying Person shall have reimbursed. It is understood that the
Indemnifying Person shall not, in connection with any litigation or proceeding
or related litigation or proceedings in the same jurisdiction as to which the
Indemnified Persons are entitled to such separate representation, be liable
under this Agreement for the reasonable fees and out-of-pocket expenses of more
than one separate firm (together with not more than one appropriate local
counsel) for all such Indemnified Persons. Subject to the next paragraph, all
such fees and expenses shall be reimbursed by payment to the Indemnified Persons
of such reasonable fees and expenses of counsel promptly after payment thereof
by the Indemnified Persons.

      In furtherance of the requirement above that fees and expenses of any
separate counsel for the Indemnified Persons shall be reasonable, the Holders
and the Company agree that the Indemnifying Person's obligations to pay such
fees and expenses shall be conditioned upon the following:

            (1) in case separate counsel is proposed to be retained by the
      Indemnified Persons pursuant to clause (ii) of the preceding paragraph,
      the Indemnified Persons shall in good faith fully consult with the
      Indemnifying Person in advance as to the selection of such counsel;

                                       19
<PAGE>

            (2) reimbursable fees and expenses of such separate counsel shall be
      detailed and supported in a manner reasonably acceptable to the
      Indemnifying Person (but nothing herein shall be deemed to require the
      furnishing to the Indemnifying Person of any information, including,
      without limitation, computer print-outs of lawyers' daily time entries, to
      the extent that, in the judgment of such counsel, furnishing such
      information might reasonably be expected to result in a waiver of any
      attorney-client privilege); and

            (3) the Company and the Holders shall cooperate in monitoring and
      controlling the fees and expenses of separate counsel for Indemnified
      Persons for which the Indemnifying Person is liable hereunder, and the
      Indemnified Person shall use every reasonable effort to cause such
      separate counsel to minimize the duplication of activities as between
      themselves and counsel to the Indemnifying Person.

      The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment against the Indemnified Person, the Indemnifying Person agrees, subject
to the provisions of this Section 8, to indemnify the Indemnified Person from
and against any loss, damage, liability or expenses by reason of such settlement
or judgment. The Indemnifying Person shall not, without the prior written
consent of the Indemnified Persons, effect any settlement of any pending or
threatened litigation, proceeding or claim in respect of which indemnity has
been properly sought by the Indemnified Persons hereunder, unless such
settlement includes an unconditional release by the claimant of all Indemnified
Persons from all liability with respect to claims which are the subject matter
of such litigation, proceeding or claim.

      (d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an Indemnified Person under this Section 8
in respect of any losses, claims, damages or liabilities (or actions, suits or
proceedings (including governmental investigations) in respect thereof) referred
to therein, then each Indemnifying Person under this Section 8 shall contribute
to the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Person on the one hand and the Indemnified Person on the other from
the sale of the Transfer Restricted Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each Indemnifying Person shall contribute to such amount paid or
payable by such Indemnified Person in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of each
Indemnifying Person, if any, on the one hand and the Indemnified Person on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions, suits or proceedings
(including governmental investigations) in respect thereof), as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
the Holders on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Holders were treated as one entity for such

                                       20
<PAGE>

purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 8. The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages or
liabilities (or actions, suits or proceedings (including governmental
proceedings) in respect thereof) referred to in this Section 8 shall be deemed
to include any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such actions, suits or
proceedings (including governmental proceedings) or claims, provided that the
provisions of this Section 8 have been complied with (in all material respects)
in respect of any separate counsel for such Indemnified Person. Notwithstanding
the provisions of this Section 8, no Holder shall be required to contribute any
amount greater than the excess of the amount by which the total received by such
Holder with respect to the sale of its Transfer Restricted Securities pursuant
to a Registration Statement exceeds the sum of (A) the amount paid by such
Holder for such Transfer Restricted Securities plus (B) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations in this Section 8 to
contribute are several in proportion to their respective obligations and not
joint.

      The agreement with respect to contribution contained in this Section 8
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any Holder, and shall survive any termination of
this Agreement.

SECTION 9. RULE 144A

      The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.

SECTION 10. UNDERWRITTEN REGISTRATIONS

      No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the terms
of such underwriting arrangements.

SECTION 11. SELECTION OF UNDERWRITERS

      For any Underwritten Offering, the investment banker or investment bankers
and manager or managers for any Underwritten Offering that will administer such
offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted

                                       21
<PAGE>

Securities included in such offering; provided, that such investment bankers and
managers must be reasonably satisfactory to the Company. The Holders of Transfer
Restricted Securities included in any such Underwritten Offering shall be
responsible for paying all underwriting or placement fees charged, or costs or
expenses incurred, by such investment bankers and managers in connection with
such Underwritten Offering. Such investment bankers and managers are referred to
herein as the "underwriters".

SECTION 12. MISCELLANEOUS

      (a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, in the Purchase Agreement or granted
by law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by the Company of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.

      (b) No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement in effect on the date
hereof.

      (c) Adjustments Affecting the Bonds. The Company will not take any action,
or voluntarily permit any change to occur, with respect to the Bonds that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.

      (d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or consent to or
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities subject to such Exchange Offer.

      (e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier, or air courier
guaranteeing overnight delivery:

                                       22
<PAGE>

            (i)  if to a Holder, at the address set forth on the records of the
      Registrar under the Indenture, with a copy to the Registrar; and

            (ii) if to the Company:

                 Consumers Energy Company
                 One Energy Plaza
                 Jackson, Michigan 49201
                 Telecopier No.: (517) 788-2186, Attention:
                                 Chief Financial Officer

            With a copy at the same address to:

                 Robert C. Shrosbree, Esq.
                 Telecopier No.: (313) 436-9225

      All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.

      Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

      (f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder.

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

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

      (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.

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

                                       23
<PAGE>

      (k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

                                       24
<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                       CONSUMERS ENERGY COMPANY

                                       By: /s/ Thomas J. Webb
                                          --------------------------------------
                                          Name: Thomas J. Webb
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

BARCLAYS CAPITAL INC.
CITIGROUP GLOBAL MARKETS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
              INCORPORATED
GOLDMAN, SACHS & CO.
ABN AMRO INCORPORATED
BNP PARIBAS SECURITIES CORP.
COMERICA SECURITIES, INC.
FIFTH THIRD SECURITIES, INC.
HUNTINGTON CAPITAL CORP.
J.P. MORGAN SECURITIES INC.
WEDBUSH MORGAN SECURITIES INC.

BY: BARCLAYS CAPITAL INC.

By: /s/ Pamela Kendall
    ---------------------------------
    Name: Pamela Kendall
    Title: Director

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