Document:

EX-4-251

Exhibit 4-251

 

EIGHTH SUPPLEMENTAL INDENTURE

FROM

MICHIGAN CONSOLIDATED GAS COMPANY

TO

CITIBANK, N.A.

TRUSTEE

 

Dated as of August 1, 2008

SUPPLEMENT TO INDENTURE

Dated as of June 1, 1998

Providing for

5.94% Senior Notes, 2008 Series H due 2015

6.36% Senior Notes, 2008 Series I due 2020

 

 

 

     This EIGHTH SUPPLEMENTAL INDENTURE is made as of the 1st day of August, 2008, by and between
MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and existing under the laws of the
State of Michigan (the “Company”), and CITIBANK, N.A., a national banking association incorporated
and existing under and by virtue of the laws of the United States of America, as trustee (the
“Trustee”).

RECITALS OF THE COMPANY:

     WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated
as of June 1, 1998 (the “Original Indenture”), as amended, supplemented and modified (as so
amended, supplemented and modified, the “Indenture”), providing for the issuance by the Company
from time to time of its senior debt securities (the “Securities”); and

     WHEREAS, the Company desires to provide for the issuance of two series of its Securities
pursuant to the Indenture; and

     WHEREAS, the Company, in the exercise of the power and authority conferred upon and
reserved to it under the provisions of the Original Indenture, including Section 10.1 thereof, and
pursuant to appropriate resolutions of the Board of Directors, has duly determined to make, execute
and deliver to the Trustee this Supplemental Indenture to the Original Indenture as permitted by
Section 2.1 and Section 3.1 of the Original Indenture in order to establish the form or terms of,
and to provide for the creation and issue of two series of its Securities under the Original
Indenture, which shall be known as the “5.94% Senior Notes, 2008 Series H due 2015,” and the “6.36%
Senior Notes, 2008 Series I due 2020”; and

     WHEREAS, all things necessary to make such Securities, when executed by the Company
and authenticated and delivered by the Trustee or any Authenticating Agent and issued upon the
terms and subject to the conditions hereinafter and in the Original Indenture set forth against
payment therefor, the valid, binding and legal obligations of the Company and to make this
Supplemental Indenture a valid, binding and legal agreement of the Company, have been done;

     NOW, THEREFORE, in order to establish the terms of a series of Securities, and for
and in consideration of the premises and of the covenants contained in the Original Indenture and
in this Supplemental Indenture and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, it is mutually covenanted and agreed as follows:

Article I

RELATION TO INDENTURE; DEFINITIONS

     Section 1.01.

     This Supplemental Indenture constitutes an integral part of the Indenture.

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     Section 1.02.

     For all purposes of this Supplemental Indenture:

     (a) Capitalized terms used but not otherwise defined herein shall have the respective meanings
assigned to such terms in the Indenture;

     (b) All references herein to Articles and Sections, unless otherwise specified, refer to the
corresponding Articles and Sections of this Supplemental Indenture; and

     (c) The terms “hereof,” “herein,” “hereby,” “hereto,” “hereunder,” and “herewith” refer to
this Supplemental Indenture.

     (d) The following terms shall have the meaning set forth below:

“Institutional Investor” has the meaning set forth in the Purchase Agreement.

“Original Issue Date” means August 20, 2008.

“Purchase Agreement” means the Note Purchase Agreement dated as of June 27, 2008, among
the Company and the several initial purchasers named therein.

“Restricted Securities Legend” means the legend set forth in Section 2.03(b) herein.

“Securities Act” means the Securities Act of 1933, as amended.

Article II

THE SECURITIES

     Section 2.01. Title of the Securities; Stated Maturity.

     This Supplemental Indenture hereby establishes two series of Securities, known as and entitled
“5.94% Senior Notes, 2008 Series H due 2015” (the “Series H Notes”), and “6.36% Senior Notes, 2008
Series I due 2020” (the “Series I Notes” and together with the Series H Notes, the “Senior Notes”).
The aggregate principal amount of the Series H Notes shall be limited initially to One hundred
forty million Dollars ($140,000,000), and the aggregate principal amount of the Series I Notes
shall be limited initially to Fifty million Dollars ($50,000,000) (except, in each case, for
Senior Notes authenticated and delivered upon transfer of, or in exchange for, or in lieu of, other
Senior Notes).

     The Senior Notes issued on the Original Issue Date will be sold by the Company pursuant to the
Purchase Agreement.

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     The Senior Notes are not subject to repayment at the option of Holders thereof and are not
subject to any sinking fund. As provided in the forms of Series H Notes, and Series I Notes
attached hereto as Appendix I and Appendix II respectively, the Senior Notes are subject to
optional redemption, as a whole or in part, by the Company prior to the Stated Maturity of the
principal thereof on the terms set forth therein. Except as modified in the forms of the Senior
Notes, redemptions shall be effected in accordance with Article Twelve of the Original Indenture.

     The Senior Notes shall have such other terms and provisions as are set forth in the forms of
the Senior Notes attached hereto as Appendix I and Appendix II respectively, (which are
incorporated by reference in and made a part of this Supplemental Indenture as if set forth in full
at this place).

     Section 2.02. Amount and Denominations

     The Senior Notes shall be issuable only in fully registered form and, as permitted by Section
3.1 and Section 3.2 of the Original Indenture, in denominations of $1,000 and integral multiples
thereof.

     Section 2.03. Transfer and Exchange.

     (a) Transfer and Exchange of Definitive Securities. When Securities evidencing the Senior
Notes are presented to the Security Registrar with a request:

     (i) to register the transfer of such Securities; or

     (ii) to exchange such Securities for Securities of the same series of any authorized
denominations of the same aggregate principal amount and Stated Maturity, the Security Registrar
shall register the transfer or make the exchange as requested if its reasonable requirements for
such transaction are met; provided, however, that the Securities surrendered for transfer or
exchange:

     (A) shall be duly endorsed or be accompanied by a written instrument of transfer in form
reasonably satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing; and

     (B) are accompanied by the following additional information and documents, as
applicable:

     (x) if such Securities are being delivered to the Security Registrar by a Holder for
registration in the name of such Holder, without transfer, a certification from such
Holder to that effect (in the form set forth on the reverse side of the Transfer
Restricted Security); or

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     (y) if such Securities are being transferred to the Company, a certification to that
effect (in the form set forth on the reverse side of the Transfer Restricted Security);
or

     (z) if such Securities are being transferred pursuant to an exemption from
registration in accordance with Rule 144 under the Securities Act or in reliance upon
another exemption from the registration requirements of the Securities Act, (i) a
certification to that effect (in the form set forth on the reverse side of the Transfer
Restricted Security) and (ii) if the Company so requests, other evidence reasonably
satisfactory to it as to the compliance with the restrictions set forth in the legend set
forth in Section 2.03(b).

     In case of redemption, the Company shall not be required (i) to issue, register the transfer
of or exchange Senior Notes of any series during a period beginning at the opening of business 15
days before any selection of Senior Notes of that series to be redeemed and ending at the close of
business on the day of the mailing of the relevant notice of redemption, or (ii) to register the
transfer of or exchange any Senior Notes so selected for redemption, in whole or in part, except
the unredeemed portion of any Senior Notes being redeemed in part.

     (b) Legends for Securities. Each Security certificate evidencing the Senior Notes (and all
Securities issued in exchange therefor or in substitution thereof) shall bear a legend in
substantially the following form (each defined term in the legend being defined as such for
purposes of the legend only):

     THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. IN CONNECTION
WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES
AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.

Article III

DELIVERY AND TRANSFER OF 2008 SERIES H COLLATERAL BONDS

     The Company hereby delivers and transfers to the Trustee in connection with the issuance of
the Series H Notes, One hundred forty million Dollars ($140,000,000) aggregate principal amount of
a related issue of Collateral Bonds of the Company designated “2008 Series H Collateral Bonds” (the
“Series H Bonds” and, together with all other First Mortgage Bonds issued under the First Mortgage
Indenture as security for Securities issued under the Indenture, “Collateral Bonds”), which has
been fully registered in the name of the Trustee in such capacity, to be held in trust for the
benefit of the Holders from time to time of the Series H Notes as security for any and all

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obligations of the Company in respect of the Series H Notes under the Indenture, this
Supplemental Indenture and the Series H Notes, including but not limited to (1) the full and prompt
payment of the interest on, principal of, and Make-Whole Amount, if any, on the Series H Notes when
and as the same shall become due and payable in accordance with the terms and provisions of the
Indenture and this Supplemental Indenture and the Series H Notes, either at the Stated Maturity,
upon acceleration of the maturity or upon redemption of the Series H Notes, and (2) the full and
prompt payment of any interest on the Series H Notes when and as the same shall become due and
payable in accordance with the terms and provisions of the Indenture and this Supplemental
Indenture and the Series H Notes. The Trustee shall enforce all of its rights under the First
Mortgage Indenture as a holder of the Series H Bonds transferred to it as provided in this Article
III for the benefit of the Holders of the Series H Notes and the proceeds of the enforcement of
such rights shall be applied by the Trustee to satisfy the Company’s obligations under the
Indenture, this Supplemental Indenture and the Series H Notes. The Series H Bonds are the “Related
Issue of Collateral Bonds” with respect to the Series H Notes within the meaning of the Indenture.

     The Company shall make payments of the principal of, and Make-Whole Amount or interest on, the
Series H Bonds to the Trustee, which payments shall be applied by the Trustee in satisfaction of
all obligations then due on the Series H Notes.

     The Series H Bonds shall not be sold or transferred by the Trustee until the earlier of the
Release Date or the prior retirement of the Series H Notes through redemption, repurchase or
otherwise. The “Release Date” shall be the date that all First Mortgage Bonds of the Company
issued and outstanding under the First Mortgage Indenture, other than the Collateral Bonds, have
been retired (at, before or after the maturity thereof) through payment, redemption or otherwise,
provided that no Default or Event of Default has occurred and, at such time, is continuing under
the Indenture.

Article IV

DELIVERY AND TRANSFER OF 2008 SERIES I COLLATERAL BONDS

     The Company hereby, delivers and transfers to the Trustee in connection with the issuance of
the Series I Notes, Fifty million Dollars ($50,000,000) aggregate principal amount of a related
issue of Collateral Bonds of the Company designated “2008 Series I Collateral Bonds” (the “Series I
Bonds” and, together with all other First Mortgage Bonds issued under the First Mortgage Indenture
as security for Securities issued under the Indenture, “Collateral Bonds”), which has been fully
registered in the name of the Trustee in such capacity, to be held in trust for the benefit of the
Holders from time to time of the Series I Notes as security for any and all obligations of the
Company in respect of the Series I Notes under the Indenture, this Supplemental Indenture and the
Series I Notes, including but not limited to (1) the full and prompt payment of the interest on,
principal of, and Make-Whole Amount, if any, on the Series I Notes when and as the same shall
become due and payable in accordance with the terms and provisions of the Indenture and this
Supplemental Indenture and the Series I Notes, either at the Stated Maturity, upon acceleration of
the maturity or upon redemption of the Series I Notes, and (2) the full and prompt payment of any
interest on

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the Series I Notes when and as the same shall become due and payable in accordance with the
terms and provisions of the Indenture and this Supplemental Indenture and the Series I Notes. The
Trustee shall enforce all of its rights under the First Mortgage Indenture as a holder of the
Series I Bonds transferred to it as provided in this Article IV for the benefit of the Holders of
the Series I Notes and the proceeds of the enforcement of such rights shall be applied by the
Trustee to satisfy the Company’s obligations under the Indenture, this Supplemental Indenture and
the Series I Notes. The Series I Bonds are the “Related Issue of Collateral Bonds” with respect
the Series I Notes within the meaning of the Indenture.

     The Company shall make payments of the principal of, and Make-Whole Amount or interest on, the
Series I Bonds to the Trustee, which payments shall be applied by the Trustee in satisfaction of
all obligations then due on the Series I Notes.

     The Series I Bonds shall not be sold or transferred by the Trustee until the earlier of the
Release Date or the prior retirement of the Series I Notes through redemption, repurchase or
otherwise. The “Release Date” shall be the date that all First Mortgage Bonds of the Company
issued and outstanding under the First Mortgage Indenture, other than the Collateral Bonds, have
been retired (at, before or after the maturity thereof) through payment, redemption or otherwise,
provided that no Default or Event of Default has occurred and, at such time, is continuing under
the Indenture.

Article V

COVENANTS

     Section 5.01. Limitation on Liens

     The covenant set forth in Section 11.10 of the Original Indenture shall apply to the Senior
Notes only from and after the Release Date (unless Substituted Collateral Bonds are issued to
secure the Senior Notes from and after the Release Date in which case such covenant shall not
apply); provided, that, in any case, the Company may issue, assume or guarantee Indebtedness
secured by a Lien not otherwise permitted under Section 11.10 so long as it effectively secures the
Senior Notes equally and ratably with such Indebtedness.

     Section 5.02. Limitation on Sale and Leaseback Transactions

     The covenant set forth in Section 11.11 of the Original Indenture shall apply to the Senior
Notes only from and after the Release Date (unless Substituted Collateral Bonds are issued to
secure the Senior Notes from and after the Release Date in which case such covenant shall not
apply).

     Section 5.03. Substituted Collateral Bonds

     The Company covenants and agrees that:

     (a) It shall notify the Trustee not less than 90 days prior to the anticipated Release Date
that on the Release Date the Company will cause Substituted Collateral

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Bonds and an associated supplemental indenture to be delivered to the Trustee in accordance
with Section 4.9 of the Original Indenture as security for the Securities issued under the
Indenture.

     (b) On or prior to the Release Date,

     (i) the Company shall have delivered to the Trustee as security for the Securities then
Outstanding under the Indenture, including the Senior Notes, Substituted Collateral Bonds
complying with the provisions of Section 4.9 of the Original Indenture, such Substituted
Collateral Bonds being issued

     (A) in an aggregate principal amount at least equal to the aggregate principal amount of
Securities then Outstanding under the Indenture, and

     (B) in series corresponding to the Series of Securities then Outstanding under the
Indenture, and each such series of Substituted Collateral Bonds shall be issued (1) in an
aggregate principal amount equal to the aggregate principal amount of the corresponding series
of Securities then Outstanding, (2) bearing interest at a rate equal to the interest rate borne
by the corresponding series of Securities, (3) having interest payment dates that are the same
as the Interest Payment Dates of the corresponding series of Securities, (4) with a stated
maturity that is the same as the Stated Maturity of the corresponding series of Securities, (5)
containing the same redemption or other make-whole payment provisions as the corresponding
series of Securities and provisions providing for the mandatory redemption thereof upon an
acceleration of the maturity of any Outstanding Securities of the corresponding series
following an Event of Default, and (6) meeting the other requirements of Section 4.9 of the
Original Indenture; it being expressly understood that each such series of Substituted
Collateral Bonds shall be held by the Trustee for the benefit of the Holders of the
corresponding series of Securities from time to time Outstanding subject to such terms and
conditions relating to surrender to the Company, transfer restrictions, voting, application of
payments of principal and interest and other matters as shall be set forth in an indenture
supplemental hereto specifically providing for the delivery to the Trustee of such Substituted
Collateral Bonds;

     (ii) such Substituted Collateral Bonds shall have been issued under and shall be secured by
a Substituted Mortgage Indenture

     (A) on which the Company shall be the obligor, and

     (B) which shall be qualified, or shall meet the requirements for qualification, under the
Trust Indenture Act;

     (iii) the Company shall have delivered to the Trustee:

     (A) an indenture supplemental hereto providing for the delivery to the Trustee of
Substituted Collateral Bonds in accordance with Section 4.9 of the Original Indenture and
Section 5.03(b)(i) above, together with such Substituted Collateral Bonds;

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     (B) an Officer’s Certificate (1) stating that, to the knowledge of the signer, (A) no
Event of Default has occurred and is continuing and (B) no event has occurred and is continuing
which entitles the secured party under the Substituted Mortgage Indenture to accelerate the
maturity of the indebtedness outstanding thereunder and (2) stating the aggregate principal
amount of indebtedness issuable, and then proposed to be issued, under and secured by the lien
of the Substituted Mortgage Indenture; and

     (C) an Opinion of Counsel to the effect that such Substituted Collateral Bonds have been
duly issued under such Substituted Mortgage Indenture and constitute valid obligations,
entitled to the benefit of the lien of the Substituted Mortgage Indenture equally and ratably
with all other indebtedness then outstanding secured by such lien; and

     (iv) the Company shall have been advised in writing, within not more than 30 days prior to
such substitution of the Substituted Collateral Bonds for the Collateral Bonds, by at least two
credit rating agencies qualifying as “nationally recognized statistical rating organizations” (as
defined by the Securities Exchange Act of 1934, as amended) then maintaining a securities rating
on the Senior Notes that the substitution of such Substituted Collateral Bonds for the Collateral
Bonds will not result in a reduction of the securities rating assigned to the Senior Notes by that
credit rating agency immediately prior to the substitution or the suspension or withdrawal of its
rating and the Company shall have provided the Trustee with written evidence of such advice;
provided that, in the event such Senior Notes are not rated by at least two such credit rating
agencies as described above immediately prior to any proposed substitution, the Company shall
cause the Senior Notes to be so rated prior to such substitution (and without giving effect to any
substitution) by at least two such credit rating agencies described above.

      (c) in the event that the Company cannot obtain assurance of at least two credit rating
agencies as described in Section 5.03(b)(iv) above, the Company will take such actions as are
necessary to cause the Release Date not to occur.

      (d) Notwithstanding any other provision of the Indenture, including Section 4.9(d) of the
Original Indenture, the requirements of this Section 5.03 shall constitute covenants, agreements
and obligations of the Company under the Indenture.

     Section 5.04. Additional Event of Default.

     Failure by the Company to deliver Substituted Mortgage Bonds in accordance with the provisions
of Section 5.03 of this Supplemental Indenture and Section 4.9 of the Original Indenture on or
prior to the Release Date shall be an “Event of Default” with respect to the Senior Notes as
contemplated by Section 6.1(9) of the Original Indenture.

Article VI

MISCELLANEOUS

     Section 6.01. Limitation of Trustee Liabilty

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     The Trustee has accepted the amendment of the Indenture effected by this Supplemental
Indenture and agrees to execute the trust created by the Indenture as hereby amended, but only upon
the terms and conditions set forth in the Indenture, including the terms and provisions defining
and limiting the liabilities and responsibilities of the Trustee, and without limiting the
generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or
with respect of any of the recitals or statements contained herein, all of which recitals or
statements are made solely by the Company, or for or with respect to (a) the validity or
sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (b) the proper
authorization hereof by the Company by corporate action or otherwise, and (c) the due execution
hereof by the Company.

     Section 6.02. Applicable Law

     This Supplemental Indenture and the Senior Notes shall be construed in connection with and as
a part of the Indenture and shall be governed by the laws (other than the choice of law provisions)
of the State of New York.

     Section 6.03. Survivability of Certain Provisions

     (a) If any provision of this Supplemental Indenture conflicts with another provision of the
Indenture required to be included in indentures qualified under the Trust Indenture Act of 1939, as
amended (as enacted prior to the date of this Supplemental Indenture), by any of the provisions of
Section 310 to 317, inclusive, of said act, such required provision shall control.

     (b) In case any one or more of the provisions contained in this Supplemental Indenture or in
the Senior Notes issued hereunder should be invalid, illegal, or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected, impaired, prejudiced or disturbed thereby.

     Section 6.04. Successors and Assigns

     Whenever in this Supplemental Indenture either of the parties hereto is named or referred to,
such name or reference shall be deemed to include the successors or assigns of such party, and all
the covenants and agreements contained in this Supplemental Indenture by or on behalf of the
Company or by or on behalf of the Trustee shall bind and inure to the benefit of the respective
successors and assigns of such parties, whether so expressed or not.

     Section 6.05. Counterpart Signatures and Descriptive Headings

     (a) This Supplemental Indenture may be simultaneously executed in several counterparts, and
all such counterparts executed and delivered, each as an original, shall constitute but one and the
same instrument.

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     (b) The descriptive headings of the several Articles of this Supplemental Indenture were
formulated, used and inserted in this Supplemental Indenture for convenience only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.

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     IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this Supplemental Indenture
to be executed by its duly authorized Officer and its corporate seal to be hereunto affixed, and
CITIBANK, N.A., as Trustee as aforesaid, has caused this Supplemental Indenture to be executed by
one of its authorized signatories, as of August 1, 2008.

	 	 	 	 	 
	 	MICHIGAN CONSOLIDATED GAS COMPANY

 	 
	[Corporate Seal]	By:  	/s/Paul A. Stadnikia 	 
	 	 	Paul A. Stadnikia 	 
	 	 	Assistant Treasurer 	 
	 
	 	CITIBANK, N.A., as Trustee

 	 
	 	By:  	/s/Wafaa M. Orfy
 	 
	 	 	Wafaa M. Orfy 	 
	 	 	Vice President 	 

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	PPN:                    
	 	APPENDIX I
	 

			
	No.R-___
	 	$                    

     THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. IN CONNECTION
WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES
AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.

MICHIGAN CONSOLIDATED GAS COMPANY

5.94% Senior Notes

2008 Series H due 2015

Principal Amount: $                    

Authorized Denomination: $1,000

Regular Record Date: close of business on the 15th calendar day (whether or not a
Business Day) prior to the relevant Interest Payment Date

Original Issue Date: August 20, 2008

Stated Maturity: September 1, 2015

Interest Payment Dates: March 1 and September 1 of each year, commencing March 1, 2009.

Interest Rate: 5.94% per annum

     MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and existing under the laws of
the State of Michigan (the “Company”, which term includes any successor corporation under the
Senior Indenture hereinafter referred to), for value received, hereby promises to pay to
                                                             or registered assigns, at the office or agency of the Company in
the City of New York, New York, the principal sum of                                                              MILLION DOLLARS
($ ) on September 1, 2015 (the “Stated Maturity”), in the coin or currency of the
United States, and to pay interest thereon from the Original Issue Date shown above, or from the
most recent Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears on each Interest Payment Date as specified above, commencing on March 1,
2009 and on the Stated Maturity at the rate per annum shown

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above (the “Interest Rate”) until the principal hereof is paid or made available for payment
and on any overdue principal and Make-Whole Amount and on any overdue installment of interest. The
interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will,
as provided in the Senior Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the Regular Record Date as
specified above next preceding such Interest Payment Date; provided that any interest payable at
Stated Maturity or on a Redemption Date will be paid to the Person to whom principal is payable.
Except as otherwise provided in the Senior Indenture, any such interest not so punctually paid or
duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Senior Note is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the
Senior Trustee, notice whereof shall be given to Holders of Securities of this series not less than
10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange, if any, on which the Securities of
this series shall be listed, and upon such notice as may be required by any such exchange, all as
more fully provided in the Senior Indenture.

     Payments of interest on this Senior Note will include interest accrued to but excluding the
respective Interest Payment Dates. Interest payments for this Senior Note shall be computed and
paid on the basis of a 360-day year consisting of twelve 30-day months. The Company shall pay
interest on overdue principal and Make-Whole Amount, if any, and, to the extent lawful, on overdue
installments of interest at the rate per annum borne by this Senior Note. In the event that any
Interest Payment Date, Redemption Date or Maturity Date is not a Business Day, then the required
payment of principal, Make-Whole Amount, if any, and interest will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect of any such
delay). “Business Day” means any day other than a day on which banking institutions in the State of
New York or the State of Michigan are authorized or obligated pursuant to law or executive order to
close.

     Payment of principal of, Make-Whole Amount, if any, and interest on the Securities of this
series shall be made in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. Payments of principal, Make-Whole
Amount, if any, and interest due at the Stated Maturity or earlier redemption of such Securities
shall be made at the office of the Paying Agent upon surrender of such Securities to the Paying
Agent, and (ii) payments of interest shall be made, at the option of the Company, subject to such
surrender where applicable, (A) by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register or (B) by wire transfer at such place and to
such account at a banking institution in the United States as may be designated in writing to the
Senior Trustee at least fourteen (14) days prior to the date for payment by the Person entitled
thereto. Notwithstanding the foregoing, so long as any Senior Note is held by an Institutional
Investor, payment of principal, Make-Whole Amount, if any, and interest on the Senior Notes held by
such Holder shall be made in the manner specified in the Purchase Agreement.

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     UNTIL THE RELEASE DATE (AS DEFINED ON THE REVERSE HEREOF), THIS SENIOR NOTE SHALL BE SECURED
BY FIRST MORTGAGE BONDS (THE “FIRST MORTGAGE BONDS”) ISSUED AND DELIVERED BY THE COMPANY TO THE
SENIOR TRUSTEE (AS DEFINED ON THE REVERSE HEREOF) UNDER THE COMPANY’S TWENTY-NINTH SUPPLEMENTAL
INDENTURE DATED AS OF JULY 15, 1989, PROVIDING FOR THE RESTATEMENT OF THE INDENTURE OF MORTGAGE AND
DEED OF TRUST DATED AS OF MARCH 1, 1944 BETWEEN THE COMPANY AND CITIBANK, N.A. (THE “MORTGAGE
TRUSTEE”) WHICH BECAME EFFECTIVE APRIL 1, 1994, AS PREVIOUSLY SUPPLEMENTED INCLUDING AS
SUPPLEMENTED BY THE FORTY-FIRST SUPPLEMENTAL INDENTURE (AS SO SUPPLEMENTED, THE “MORTGAGE
INDENTURE”). ON THE RELEASE DATE, THE SENIOR NOTES SHALL CEASE TO BE SECURED BY SUCH FIRST MORTGAGE
BONDS AND INSTEAD SHALL BE SECURED BY SUBSTITUTED COLLATERAL BONDS PURSUANT TO SECTION 5.03 OF THE
EIGHTH SUPPLEMENTAL INDENTURE DATED AS OF AUGUST 1, 2008 TO THE INDENTURE DESCRIBED ON THE REVERSE
HEREOF.

     Reference is made to the further provisions of this Senior Note set forth herein. Such further
provisions shall for all purposes have the same effect as though fully set forth at this place.

     This Senior Note shall not be valid or become obligatory for any purpose until the certificate
of authentication hereon shall have been manually signed by the Senior Trustee under the Senior
Indenture referred to on the reverse hereof.

     IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this instrument to be duly
executed under its corporate seal.

Dated: August 20, 2008

	 	 	 	 	 
	 	MICHIGAN CONSOLIDATED GAS COMPANY

 	 
	 	By:  	 	 
	 	 	N.A. Khouri 	 
	 	 	Vice President and Treasurer 	 
	 

	 	 	 	 	 
	 	Attest:

 	 
	 	By:  	 	 
	 	 	Sandra Kay Ennis 	 
	 	 	Corporate Secretary 	 

I-3

 

	 	 	 	 	 

CERTIFICATION OF AUTHENTICATION

Dated: August 20, 2008

     This is one of the Securities of the series designated therein referred to in the
within-mentioned Senior Indenture.

	 	 	 	 	 
	 	CITIBANK, N.A., as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 

I-4

 

	 	 	 	 	 

[REVERSE]

MICHIGAN CONSOLIDATED GAS COMPANY

5.94% Senior Notes

2008 Series H due 2015

          1. Senior Indenture. (a) This Senior Note is one of the duly authorized issue
of Securities of the Company (hereinafter called the “Securities”) of the series hereinafter
specified, all issued or to be issued under and pursuant to an Indenture, dated as of June 1, 1998,
as supplemented by the First Supplemental Indenture, dated as of June 18, 1998, the Second
Supplemental Indenture, dated as of June 9, 1999, the Third Supplemental Indenture, dated as of
August 15, 2001, the Fourth Supplemental Indenture dated as of February 15, 2003, the Fifth
Supplemental Indenture dated as of October 1, 2004, the Sixth Supplemental Indenture dated as of
April 1, 2008, the Seventh Supplemental Indenture dated as of June 1, 2008, and the Eighth
Supplemental Indenture dated as of August 1, 2008 between the Company and the Trustee (as so
supplemented, the “Senior Indenture”), duly executed and delivered by the Company to Citibank,
N.A., as Trustee (herein called the “Senior Trustee,” which term includes any successor trustee
under the Senior Indenture), to which Senior Indenture reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities thereunder of the Senior
Trustee, the Company and the Holders of the Securities. The Securities may be issued in one or more
series, which different series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject to different
redemption provisions (if any) and may be subject to different sinking, purchase or analogous funds
(if any) and may otherwise vary as provided in the Senior Indenture. This Security is one of the
series designated as the “5.94% Senior Notes, 2008 Series H due 2015 (the “Senior Notes”) of the
Company.

               (b) The Senior Indenture contains provisions for defeasance at any time of the entire
indebtedness of the Senior Notes or certain covenants with respect thereto upon compliance by the
Company with certain conditions set forth therein.

          2. Defined Terms. Capitalized terms used herein for which no definition is provided
herein shall have the meanings set forth in the Senior Indenture.

          3. Transfer. No service charge will be made for any transfer or exchange of Senior
Notes, but payment will be required of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

     The Company shall not be required (a) to issue, transfer or exchange any Senior Notes during a
period beginning at the opening of business fifteen (15) days before the day of the mailing of a
notice pursuant to Section 12.4 of the Indenture identifying the serial numbers of the Senior Notes
to be called for redemption, and ending at the close of business on the day of the mailing, or (b)
to transfer or exchange any Senior Notes

I-5

 

theretofore selected for redemption in whole or in part, except the unredeemed portion of any
Senior Note redeemed in part.

          4. Redemption at the Company’s Option. The Senior Notes shall be subject to
redemption at the option of the Company, in whole at any time or in part from time to time (any
such date of optional redemption, a “Redemption Date” for purposes of the Indenture), at an
optional redemption price (which shall be a “Redemption Price” for purposes of the Indenture) equal
to 100% of the principal amount of the Senior Notes to be redeemed on the Redemption Date together
with the Make-Whole Amount (as defined below), if any, plus, in each case, accrued and unpaid
interest thereon to the Redemption Date.

     Notwithstanding the foregoing, installments of interest on the Series of Notes, that are due
and payable on Interest Payment Dates falling on or prior to a Redemption Date will be payable on
the Interest Payment Date to the registered Holders as of the close of business on the relevant
Record Date.

     “Make-Whole Amount” means, with respect to any Senior Note, an amount equal to the excess, if
any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Senior Note over the amount of such Called Principal, provided that the
Make-Whole Amount may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:

     “Called Principal” means, with respect to a Senior Note, the principal of the Senior Note that
is to be redeemed on an optional Redemption Date or has become or is declared to be immediately due
and payable pursuant to Section 6.2 of the Indenture, as the context requires.

     “Discounted Value” means, with respect to the Called Principal of a Senior Note, the amount
obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from
their respective scheduled due dates to the Settlement Date with respect to such Called Principal,
in accordance with accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Senior Note is payable) equal to the Reinvestment
Yield with respect to such Called Principal.

     “Reinvestment Yield” means, with respect to the Called Principal of a Senior Note, 0.50% plus
the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City time) on
the second Business Day preceding the Settlement Date with respect to such Called Principal, on the
display designated as “PX-1” on the Bloomberg Financial Market Screen (or such other display on the
Bloomberg Financial Market Service having the same information as “PX-1”, if “PX-1” is replaced by
the Bloomberg Financial Market Screen) for the most recently issued, actively traded on-the-run,
benchmark U.S. Treasury securities having a maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such
time or the yields reported as of such time are not ascertainable

I-6

 

(including by way of interpolation), the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting
U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly on a straight line basis between (1) the most recently
issued, actively traded on-the-run, benchmark U.S. Treasury security with the maturity closest to
and greater than the Remaining Average Life and (2) the most recently issued, actively traded
on-the-run, benchmark U.S. Treasury security with the maturity closest to and less than the
Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as
appears in the interest rate of the applicable Senior Note.

     “Remaining Average Life” means, with respect to any Called Principal, the number of years
(calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into
(ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such
Called Principal and the Stated Maturity of such Remaining Scheduled Payment.

     “Remaining Scheduled Payments” means, with respect to the Called Principal of a Senior Note,
all payments of such Called Principal and interest thereon that would be due after the Settlement
Date with respect to such Called Principal if no payment of such Called Principal were made prior
to its Stated Maturity, provided that if such Settlement Date is not a date on which interest
payments are due to be made under the terms of the Senior Note, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest accrued to such
Settlement Date and required to be paid on such Settlement Date.

     “Settlement Date” means, with respect to the Called Principal of a Senior Note, the optional
Redemption Date on which such Called Principal is to be redeemed or has become or is declared to be
immediately due and payable pursuant to Section 6.2 of the Indenture as the context requires.

     Unless the Company defaults in payment of the applicable Redemption Price, on and after the
applicable Redemption Date interest will cease to accrue on the principal amount of the Senior
Notes called for redemption.

     If money sufficient to pay the applicable Redemption Price with respect to the principal
amount of and accrued interest on the principal amount of the Senior Notes to be redeemed on the
applicable Redemption Date is deposited with the Senior Trustee or Paying Agent on or before the
related Redemption Date and certain other conditions

I-7

 

are satisfied, then on or after such date, interest will cease to accrue on the principal
amount of the Senior Notes called for redemption.

     If the Company elects to redeem all or a portion of the Senior Notes, the redemption will be
conditional upon receipt by the Paying Agent or the Senior Trustee of monies sufficient to pay the
Redemption Price. If the Senior Notes are only partially redeemed by the Company, the Senior
Trustee shall select which Senior Notes are to be redeemed pro rata among all of the Senior Notes
at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof and otherwise in accordance with the terms of the Indenture.

     In the event of redemption of the Senior Notes in part only, a new Senior Note or Senior Notes
for the unredeemed portion will be issued in the name or names of the Holders thereof upon the
surrender thereof.

     The Senior Notes will not have a sinking fund.

     Notice of redemption shall be given as provided in Section 12.4 of the Indenture. Each such
notice shall specify such optional Redemption Date, the aggregate principal amount of the Senior
Notes to be prepaid on such date, the principal amount of each Senior Note held by such Holder to
be redeemed, and the interest to be paid on the Redemption Date with respect to such principal
amount being prepaid, and shall be accompanied by a certificate of a senior financial officer of
the Company as to the estimated Make-Whole Amount due in connection with such redemption
(calculated as if the date of such notice were the date of the redemption), setting forth the
details of such computation. The Make-Whole Amount shall be determined by the Company two Business
Days prior to the applicable Redemption Date and the Company shall deliver to holder of the Senior
Notes and to the Trustee a certificate of a senior financial officer specifying the calculation of
such Make-Whole Amount as of the Redemption Date.

   Any redemption of less than all of the Senior Notes shall, with respect to the principal
thereof, be divisible by $1,000.

     5. Security; Release Date. Prior to the Release Date (as hereinafter defined), the
Senior Notes shall be secured by First Mortgage Bonds designated as 2008 Series H Collateral Bonds
(the “Collateral Bonds”), delivered by the Company to the Senior Trustee for the benefit of the
Holders of the Senior Notes. Prior to the Release Date, the Company shall make payments of the
principal of, and Make-Whole Amount, if any, and or interest on, the Collateral Bonds to the Senior
Trustee, which payments shall be applied by the Senior Trustee to satisfaction of all obligations
then due on the Senior Notes. Reference is made to the Mortgage Indenture and the Senior Indenture
for a description of the rights of the Senior Trustee as holder of the Collateral Bonds, the
property mortgaged and pledged under the Mortgage Indenture and the rights of the Company and of
the Mortgage Trustee in respect thereof, the duties and immunities of the Mortgage Trustee and the
terms and conditions upon which the Collateral Bonds are secured and the circumstances under which
additional First Mortgage Bonds or Substituted Collateral Bonds may be issued.

I-8

 

     FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN COLLATERAL BONDS) ISSUED
UNDER THE MORTGAGE INDENTURE HAVE BEEN RETIRED THROUGH PAYMENT, REDEMPTION OR OTHERWISE AT, BEFORE
OR AFTER THE MATURITY THEREOF (THE “RELEASE DATE”), THE COLLATERAL BONDS SHALL CEASE TO SECURE THE
SENIOR NOTES IN ANY MANNER PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND AT SUCH
TIME IS CONTINUING UNDER THE SENIOR INDENTURE. IN CERTAIN CIRCUMSTANCES PRIOR TO THE RELEASE DATE
AS PROVIDED IN THE SENIOR INDENTURE, THE COMPANY IS PERMITTED TO REDUCE THE AGGREGATE PRINCIPAL
AMOUNT OF A SERIES OF COLLATERAL BONDS HELD BY THE SENIOR TRUSTEE, BUT IN NO EVENT PRIOR TO THE
RELEASE DATE TO AN AMOUNT LESS THAN THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE SERIES OF
SENIOR NOTES INITIALLY ISSUED CONTEMPORANEOUSLY WITH SUCH COLLATERAL BONDS. ON THE RELEASE DATE,
THE SENIOR NOTES SHALL CEASE TO BE SECURED BY SUCH FIRST MORTGAGE BONDS AND INSTEAD SHALL BE
SECURED BY SUBSTITUTED COLLATERAL BONDS PURSUANT TO SECTION 5.03 OF THE EIGHTH SUPPLEMENTAL
INDENTURE DATED AS OF AUGUST 1, 2008 TO THE INDENTURE DESCRIBED ABOVE.

     6. Effect of Event of Default. In case an Event of Default with respect to the Senior
Notes shall occur and be continuing, the unpaid principal of the Senior Notes may be declared due
and payable, in the manner, with the effect and subject to the conditions provided in the Senior
Indenture. Upon any such declaration, the Company shall also pay to the Holders of the Senior
Notes the Make-Whole Amount on the Senior Notes, if any, determined as of the date the Senior Notes
shall have been declared due and payable.

     7. Amendments and Waivers. The Senior Indenture may be modified by the Company and
the Senior Trustee without consent of any Holder with respect to certain matters as described in
the Indenture. In addition, the Senior Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and obligations of the Company
and the rights of the Holders of the Securities of each series to be affected under the Senior
Indenture at any time by the Company and the Senior Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding of each series to be
affected. The Senior Indenture also contains provisions permitting the Holders of a majority in
principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders
of all Securities of such series, to waive compliance by the Company with certain provisions of the
Senior Indenture and certain past defaults under the Senior Indenture and their consequences. Any
such consent or waiver by the Holder of this Senior Note shall bind such Holder and all future
Holders of this Senior Note and of any note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon
this Senior Note.

I-9

 

     8. Obligations of Company. No reference herein to the Senior Indenture and no
provision of this Senior Note or of the Senior Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and any Make-Whole
Amount, if any, and interest on this Senior Note at the time, place, and rate and in the coin or
currency herein prescribed.

     9. Denominations, Transfer and Exchange.

          (a) The Senior Notes are issuable only in registered form without coupons in denominations
of $1,000 and any integral multiple thereof. As provided in the Senior Indenture and subject to
certain limitations therein set forth, Senior Notes of this series are exchangeable for a like
aggregate principal amount of Senior Notes of this series of a different authorized denomination,
as requested by the Holder surrendering the same.

          (b) As provided in the Senior Indenture and subject to certain limitations therein set forth,
the transfer of this Senior Note is registrable in the Security Register, upon surrender of this
Senior Note for registration of transfer at the office or agency of the Company in any place where
the principal of (and Make-Whole Amount, if any) and interest on this Senior Note are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Senior Notes of this series, and of like tenor, of
authorized denominations and for the same maturity and aggregate principal amount, shall be issued
to the designated transferee or transferees.

          (c) No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Prior to due presentment of this Senior Note for registration of
transfer, the Company, the Senior Trustee and any agent of the Company or the Senior Trustee may
treat the Person in whose name this Senior Note is registered as the owner hereof for all purposes,
whether or not this Senior Note be overdue, and neither the Company, the Senior Trustee nor any
such agent shall be affected by notice to the contrary.

     10. No Liability of Certain Persons. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the Company under this
Senior Note or the Senior Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder, by accepting a Senior Note, waives and releases all
such liability. The waiver and release are part of the consideration for the issuance of this
Senior Note.

     11. Governing Law. The Senior Indenture and this Senior Note shall for all purposes be
governed by, and construed in accordance with, the internal laws of the State of New York.

I-10

 

     THE FOLLOWING ABBREVIATIONS SHALL BE CONSTRUED AS THOUGH THE WORDS SET FORTH BELOW OPPOSITE
EACH ABBREVIATION WERE WRITTEN OUT IN FULL WHERE SUCH ABBREVIATION APPEARS:

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	TEN COM

	 	- as tenants in common
	 	(Name) CUST
	 	(Name) as Custodian for
	TEN ENT

	 	- as tenants by the entirety
	 	(Name) UNIF GIFT
	 	(name) under
the (State)
 
	JF TEN

	 	- as joint tenants with
right of survivorship and not as
tenants in common
	 	MIN ACT (state) —
	 	Uniform Gifts to Minors Act

ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.

To assign this Senior Note, fill in the form below: (I) or (we) assign and transfer this Senior
Note to:

 

(Print or type assignee’s name, address and zip code)

 

(Insert assignee’s social security or tax I.D. number)

and irrevocably appoint                                         agent to transfer this Senior Note on the books of the Company. The agent
may substitute another to act for him.

	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Your Signature:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(Sign exactly as your name appears on the
other side of this Senior Note)

Signature Guarantee:                                                                    
            

(Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of
the Transfer Agent, which requirements will include membership or participation in STAMP or such
other “signature guarantee program” as may be determined by the Transfer Agent in addition to, or
in substitution for, STAMP, all in accordance with the Exchange Act.)

Social Security Number or Taxpayer Identification Number:                                                            

I-11

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE

OR REGISTRATION OF TRANSFER OF SECURITIES

     This Certificate relates to $                     principal amount of Senior Notes held in definitive
form by                                          (the “Transferor”). The Transferor has requested the Trustee by
written order to exchange or register the transfer of a Security or Securities.

     In connection with any transfer of any of the Securities evidenced by this certificate
occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act
of 1933, the undersigned confirms that such Securities are being transferred in accordance with its
terms:

CHECK ONE BOX BELOW:

	 	 	 	 	 
	   (1)

	 	o
	 	to the Company; or
	 
	 	 	 	 
	   (2)

	 	o
	 	inside the United States to a “qualified institutional buyer” (as defined in Rule 144A
under the Securities Act of 1933) that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
	 
	 	 	 	 
	   (3)

	 	o
	 	pursuant to another available exemption from registration under the Securities Act of
1933.

     Prior to the expiration of the period referred to in Rule 144(k), unless one of the boxes is
checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in
the name of any Person other than the registered holder thereof; provided, however, that if box (3)
is checked, the Trustee may require, prior to registering any such transfer of the Securities, such
certifications and other information satisfactory to the Company and the Trustee to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933.

	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	[INSERT NAME OF TRANSFEROR] 	 
	 	 	 	 
	 
	 	 	 
	 	  	
 	 
	 	 	[SIGNATURE GUARANTEE] 	 
	 	 	 	 
	 

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Security Registrar, which requirements include membership or participation in the Security
Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be
determined by the Security Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

I-12

 

			
	PPN:                     
	 	APPENDIX II
	 	 	 
	No.R-___
	 	$                    

     THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. IN CONNECTION
WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES
AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.

MICHIGAN CONSOLIDATED GAS COMPANY

6.36% Senior Notes

2008 Series I due 2020

Principal Amount: $                    

Authorized Denomination: $1,000

Regular Record Date: close of business on the 15th calendar day (whether or not a
Business Day) prior to the relevant Interest Payment Date

Original Issue Date: August 20, 2008

Stated Maturity: September 1, 2020

Interest Payment Dates: March 1 and September 1 of each year, commencing March 1, 2009.

Interest Rate: 6.36% per annum

     MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and existing under the laws of
the State of Michigan (the “Company”, which term includes any successor corporation under the
Senior Indenture hereinafter referred to), for value received, hereby promises to pay to
                                                             or registered assigns, at the office or agency of the Company in
the City of New York, New York, the principal sum of                                                              MILLION DOLLARS
($ ) on September 1, 2020 (the “Stated Maturity”), in the coin or currency of the
United States, and to pay interest thereon from the Original Issue Date shown above, or from the
most recent Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears on each Interest Payment Date as specified above, commencing on March 1,
2009 and on the Stated Maturity at the rate per annum shown above (the “Interest Rate”) until the
principal hereof is paid or made available for

II-1

 

payment and on any overdue principal and Make-Whole Amount and on any overdue installment of
interest. The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Senior Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of business on the
Regular Record Date as specified above next preceding such Interest Payment Date; provided that any
interest payable at Stated Maturity or on a Redemption Date will be paid to the Person to whom
principal is payable. Except as otherwise provided in the Senior Indenture, any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this Senior Note is
registered at the close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Senior Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities exchange, if any,
on which the Securities of this series shall be listed, and upon such notice as may be required by
any such exchange, all as more fully provided in the Senior Indenture.

     Payments of interest on this Senior Note will include interest accrued to but excluding the
respective Interest Payment Dates. Interest payments for this Senior Note shall be computed and
paid on the basis of a 360-day year consisting of twelve 30-day months. The Company shall pay
interest on overdue principal and Make-Whole Amount, if any, and, to the extent lawful, on overdue
installments of interest at the rate per annum borne by this Senior Note. In the event that any
Interest Payment Date, Redemption Date or Maturity Date is not a Business Day, then the required
payment of principal, Make-Whole Amount, if any, and interest will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect of any such
delay). “Business Day” means any day other than a day on which banking institutions in the State of
New York or the State of Michigan are authorized or obligated pursuant to law or executive order to
close.

     Payment of principal of, Make-Whole Amount, if any, and interest on the Securities of this
series shall be made in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. Payments of principal, Make-Whole
Amount, if any, and interest due at the Stated Maturity or earlier redemption of such Securities
shall be made at the office of the Paying Agent upon surrender of such Securities to the Paying
Agent, and (ii) payments of interest shall be made, at the option of the Company, subject to such
surrender where applicable, (A) by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register or (B) by wire transfer at such place and to
such account at a banking institution in the United States as may be designated in writing to the
Senior Trustee at least fourteen (14) days prior to the date for payment by the Person entitled
thereto. Notwithstanding the foregoing, so long as any Senior Note is held by an Institutional
Investor, payment of principal, Make-Whole Amount, if any, and interest on the Senior Notes held by
such Holder shall be made in the manner specified in the Purchase Agreement.

II-2

 

     UNTIL THE RELEASE DATE (AS DEFINED ON THE REVERSE HEREOF), THIS SENIOR NOTE SHALL BE SECURED
BY FIRST MORTGAGE BONDS (THE “FIRST MORTGAGE BONDS”) ISSUED AND DELIVERED BY THE COMPANY TO THE
SENIOR TRUSTEE (AS DEFINED ON THE REVERSE HEREOF) UNDER THE COMPANY’S TWENTY-NINTH SUPPLEMENTAL
INDENTURE DATED AS OF JULY 15, 1989, PROVIDING FOR THE RESTATEMENT OF THE INDENTURE OF MORTGAGE AND
DEED OF TRUST DATED AS OF MARCH 1, 1944 BETWEEN THE COMPANY AND CITIBANK, N.A. (THE “MORTGAGE
TRUSTEE”) WHICH BECAME EFFECTIVE APRIL 1, 1994, AS PREVIOUSLY SUPPLEMENTED INCLUDING AS
SUPPLEMENTED BY THE FORTY-FIRST SUPPLEMENTAL INDENTURE (AS SO SUPPLEMENTED, THE “MORTGAGE
INDENTURE”). ON THE RELEASE DATE, THE SENIOR NOTES SHALL CEASE TO BE SECURED BY SUCH FIRST MORTGAGE
BONDS AND INSTEAD SHALL BE SECURED BY SUBSTITUTED COLLATERAL BONDS PURSUANT TO SECTION 5.03 OF THE
EIGHTH SUPPLEMENTAL INDENTURE DATED AS OF AUGUST 1, 2008 TO THE INDENTURE DESCRIBED ON THE REVERSE
HEREOF.

     Reference is made to the further provisions of this Senior Note set forth herein. Such further
provisions shall for all purposes have the same effect as though fully set forth at this place.

     This Senior Note shall not be valid or become obligatory for any purpose until the certificate
of authentication hereon shall have been manually signed by the Senior Trustee under the Senior
Indenture referred to on the reverse hereof.

     IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this instrument to be duly
executed under its corporate seal.

Dated: August 20, 2008

	 	 	 	 	 
	 	MICHIGAN CONSOLIDATED GAS COMPANY

 	 
	 	By:  	 	 
	 	 	N.A. Khouri 	 
	 	 	Vice President and Treasurer 	 
	 

	 	 	 	 	 
	 	Attest:

 	 
	 	By:  	 	 
	 	 	Sandra Kay Ennis 	 
	 	 	Corporate Secretary 	 

II-3

 

	 	 	 	 	 

CERTIFICATION OF AUTHENTICATION

Dated: August 20, 2008

     This is one of the Securities of the series designated therein referred to in the
within-mentioned Senior Indenture.

	 	 	 	 	 
	 	CITIBANK, N.A., as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 

II-4

 

	 	 	 	 	 

[REVERSE]

MICHIGAN CONSOLIDATED GAS COMPANY

6.36% Senior Notes

2008 Series I due 2020

          1. Senior Indenture. (a) This Senior Note is one of the duly authorized issue
of Securities of the Company (hereinafter called the “Securities”) of the series hereinafter
specified, all issued or to be issued under and pursuant to an Indenture, dated as of June 1, 1998,
as supplemented by the First Supplemental Indenture, dated as of June 18, 1998, the Second
Supplemental Indenture, dated as of June 9, 1999, the Third Supplemental Indenture, dated as of
August 15, 2001, the Fourth Supplemental Indenture dated as of February 15, 2003, the Fifth
Supplemental Indenture dated as of October 1, 2004, the Sixth Supplemental Indenture dated as of
April 1, 2008, the Seventh Supplemental Indenture dated as of June 1, 2008, and the Eighth
Supplemental Indenture dated as of August 1, 2008 between the Company and the Trustee (as so
supplemented, the “Senior Indenture”), duly executed and delivered by the Company to Citibank,
N.A., as Trustee (herein called the “Senior Trustee,” which term includes any successor trustee
under the Senior Indenture), to which Senior Indenture reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities thereunder of the Senior
Trustee, the Company and the Holders of the Securities. The Securities may be issued in one or more
series, which different series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject to different
redemption provisions (if any) and may be subject to different sinking, purchase or analogous funds
(if any) and may otherwise vary as provided in the Senior Indenture. This Security is one of the
series designated as the “6.36% Senior Notes, 2008 Series I due 2020” (the “Senior Notes”) of the
Company.

               (b) The Senior Indenture contains provisions for defeasance at any time of the entire
indebtedness of the Senior Notes or certain covenants with respect thereto upon compliance by the
Company with certain conditions set forth therein.

          2. Defined Terms. Capitalized terms used herein for which no definition is provided
herein shall have the meanings set forth in the Senior Indenture.

          3. Transfer. No service charge will be made for any transfer or exchange of Senior
Notes, but payment will be required of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

     The Company shall not be required (a) to issue, transfer or exchange any Senior Notes during a
period beginning at the opening of business fifteen (15) days before the day of the mailing of a
notice pursuant to Section 12.4 of the Indenture identifying the serial numbers of the Senior Notes
to be called for redemption, and ending at the close of business on the day of the mailing, or (b)
to transfer or exchange any Senior Notes

II-5

 

theretofore selected for redemption in whole or in part, except the unredeemed portion of any
Senior Note redeemed in part.

          4. Redemption at the Company’s Option. The Senior Notes shall be subject to
redemption at the option of the Company, in whole at any time or in part from time to time (any
such date of optional redemption, a “Redemption Date” for purposes of the Indenture), at an
optional redemption price (which shall be a “Redemption Price” for purposes of the Indenture) equal
to 100% of the principal amount of the Senior Notes to be redeemed on the Redemption Date together
with the Make-Whole Amount (as defined below), if any, plus, in each case, accrued and unpaid
interest thereon to the Redemption Date.

     Notwithstanding the foregoing, installments of interest on the Series of Notes, that are due
and payable on Interest Payment Dates falling on or prior to a Redemption Date will be payable on
the Interest Payment Date to the registered Holders as of the close of business on the relevant
Record Date.

     “Make-Whole Amount” means, with respect to any Senior Note, an amount equal to the excess, if
any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Senior Note over the amount of such Called Principal, provided that the
Make-Whole Amount may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:

     “Called Principal” means, with respect to a Senior Note, the principal of the Senior Note that
is to be redeemed on an optional Redemption Date or has become or is declared to be immediately due
and payable pursuant to Section 6.2 of the Indenture, as the context requires.

     “Discounted Value” means, with respect to the Called Principal of a Senior Note, the amount
obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from
their respective scheduled due dates to the Settlement Date with respect to such Called Principal,
in accordance with accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Senior Note is payable) equal to the Reinvestment
Yield with respect to such Called Principal.

     “Reinvestment Yield” means, with respect to the Called Principal of a Senior Note, 0.50% plus
the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City time) on
the second Business Day preceding the Settlement Date with respect to such Called Principal, on the
display designated as “PX-1” on the Bloomberg Financial Market Screen (or such other display on the
Bloomberg Financial Market Service having the same information as “PX-1”, if “PX-1” is replaced by
the Bloomberg Financial Market Screen) for the most recently issued, actively traded on-the-run,
benchmark U.S. Treasury securities having a maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such
time or the yields reported as of such time are not ascertainable

II-6

 

(including by way of interpolation), the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting
U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly on a straight line basis between (1) the actively traded
on-the-run, benchmark U.S. Treasury security with the maturity closest to and greater than the
Remaining Average Life and (2) the most recently issued, actively traded on-the-run, benchmark
U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. The
Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate
of the applicable Senior Note.

     “Remaining Average Life” means, with respect to any Called Principal, the number of years
(calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into
(ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such
Called Principal and the Stated Maturity of such Remaining Scheduled Payment.

     “Remaining Scheduled Payments” means, with respect to the Called Principal of a Senior Note,
all payments of such Called Principal and interest thereon that would be due after the Settlement
Date with respect to such Called Principal if no payment of such Called Principal were made prior
to its Stated Maturity, provided that if such Settlement Date is not a date on which interest
payments are due to be made under the terms of the Senior Note, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest accrued to such
Settlement Date and required to be paid on such Settlement Date.

     “Settlement Date” means, with respect to the Called Principal of a Senior Note, the optional
Redemption Date on which such Called Principal is to be redeemed or has become or is declared to be
immediately due and payable pursuant to Section 6.2 of the Indenture as the context requires.

     Unless the Company defaults in payment of the applicable Redemption Price, on and after the
applicable Redemption Date interest will cease to accrue on the principal amount of the Senior
Notes called for redemption.

     If money sufficient to pay the applicable Redemption Price with respect to the principal
amount of and accrued interest on the principal amount of the Senior Notes to be redeemed on the
applicable Redemption Date is deposited with the Senior Trustee or Paying Agent on or before the
related Redemption Date and certain other conditions

II-7

 

are satisfied, then on or after such date, interest will cease to accrue on the principal
amount of the Senior Notes called for redemption.

     If the Company elects to redeem all or a portion of the Senior Notes, the redemption will be
conditional upon receipt by the Paying Agent or the Senior Trustee of monies sufficient to pay the
Redemption Price. If the Senior Notes are only partially redeemed by the Company, the Senior
Trustee shall select which Senior Notes are to be redeemed pro rata among all of the Senior Notes
at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof and otherwise in accordance with the terms of the Indenture.

     In the event of redemption of the Senior Notes in part only, a new Senior Note or Senior Notes
for the unredeemed portion will be issued in the name or names of the Holders thereof upon the
surrender thereof.

     The Senior Notes will not have a sinking fund.

     Notice of redemption shall be given as provided in Section 12.4 of the Indenture. Each such
notice shall specify such optional Redemption Date, the aggregate principal amount of the Senior
Notes to be prepaid on such date, the principal amount of each Senior Note held by such Holder to
be redeemed, and the interest to be paid on the Redemption Date with respect to such principal
amount being prepaid, and shall be accompanied by a certificate of a senior financial officer of
the Company as to the estimated Make-Whole Amount due in connection with such redemption
(calculated as if the date of such notice were the date of the redemption), setting forth the
details of such computation. The Make-Whole Amount shall be determined by the Company two Business
Days prior to the applicable Redemption Date and the Company shall deliver to holder of the Senior
Notes and to the Trustee a certificate of a senior financial officer specifying the calculation of
such Make-Whole Amount as of the Redemption Date.

   Any redemption of less than all of the Senior Notes shall, with respect to the principal
thereof, be divisible by $1,000.

     5. Security; Release Date. Prior to the Release Date (as hereinafter defined), the
Senior Notes shall be secured by First Mortgage Bonds designated as 2008 Series I Collateral Bonds
(the “Collateral Bonds”), delivered by the Company to the Senior Trustee for the benefit of the
Holders of the Senior Notes. Prior to the Release Date, the Company shall make payments of the
principal of, and Make-Whole Amount, if any, and or interest on, the Collateral Bonds to the Senior
Trustee, which payments shall be applied by the Senior Trustee to satisfaction of all obligations
then due on the Senior Notes. Reference is made to the Mortgage Indenture and the Senior Indenture
for a description of the rights of the Senior Trustee as holder of the Collateral Bonds, the
property mortgaged and pledged under the Mortgage Indenture and the rights of the Company and of
the Mortgage Trustee in respect thereof, the duties and immunities of the Mortgage Trustee and the
terms and conditions upon which the Collateral Bonds are secured and the circumstances under which
additional First Mortgage Bonds or Substituted Collateral Bonds may be issued.

II-8

 

     FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN COLLATERAL BONDS) ISSUED
UNDER THE MORTGAGE INDENTURE HAVE BEEN RETIRED THROUGH PAYMENT, REDEMPTION OR OTHERWISE AT, BEFORE
OR AFTER THE MATURITY THEREOF (THE “RELEASE DATE”), THE COLLATERAL BONDS SHALL CEASE TO SECURE THE
SENIOR NOTES IN ANY MANNER PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND AT SUCH
TIME IS CONTINUING UNDER THE SENIOR INDENTURE. IN CERTAIN CIRCUMSTANCES PRIOR TO THE RELEASE DATE
AS PROVIDED IN THE SENIOR INDENTURE, THE COMPANY IS PERMITTED TO REDUCE THE AGGREGATE PRINCIPAL
AMOUNT OF A SERIES OF COLLATERAL BONDS HELD BY THE SENIOR TRUSTEE, BUT IN NO EVENT PRIOR TO THE
RELEASE DATE TO AN AMOUNT LESS THAN THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE SERIES OF
SENIOR NOTES INITIALLY ISSUED CONTEMPORANEOUSLY WITH SUCH COLLATERAL BONDS. ON THE RELEASE DATE,
THE SENIOR NOTES SHALL CEASE TO BE SECURED BY SUCH FIRST MORTGAGE BONDS AND INSTEAD SHALL BE
SECURED BY SUBSTITUTED COLLATERAL BONDS PURSUANT TO SECTION 5.03 OF THE EIGHTH SUPPLEMENTAL
INDENTURE DATED AS OF AUGUST 1, 2008 TO THE INDENTURE DESCRIBED ABOVE.

     6. Effect of Event of Default. In case an Event of Default with respect to the Senior
Notes shall occur and be continuing, the unpaid principal of the Senior Notes may be declared due
and payable, in the manner, with the effect and subject to the conditions provided in the Senior
Indenture. Upon any such declaration, the Company shall also pay to the Holders of the Senior
Notes the Make-Whole Amount on the Senior Notes, if any, determined as of the date the Senior Notes
shall have been declared due and payable.

     7. Amendments and Waivers. The Senior Indenture may be modified by the Company and
the Senior Trustee without consent of any Holder with respect to certain matters as described in
the Indenture. In addition, the Senior Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and obligations of the Company
and the rights of the Holders of the Securities of each series to be affected under the Senior
Indenture at any time by the Company and the Senior Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding of each series to be
affected. The Senior Indenture also contains provisions permitting the Holders of a majority in
principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders
of all Securities of such series, to waive compliance by the Company with certain provisions of the
Senior Indenture and certain past defaults under the Senior Indenture and their consequences. Any
such consent or waiver by the Holder of this Senior Note shall bind such Holder and all future
Holders of this Senior Note and of any note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon
this Senior Note.

II-9

 

     8. Obligations of Company. No reference herein to the Senior Indenture and no
provision of this Senior Note or of the Senior Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and any Make-Whole
Amount, if any, and interest on this Senior Note at the time, place, and rate and in the coin or
currency herein prescribed.

     9. Denominations, Transfer and Exchange.

          (a) The Senior Notes are issuable only in registered form without coupons in denominations
of $1,000 and any integral multiple thereof. As provided in the Senior Indenture and subject to
certain limitations therein set forth, Senior Notes of this series are exchangeable for a like
aggregate principal amount of Senior Notes of this series of a different authorized denomination,
as requested by the Holder surrendering the same.

          (b) As provided in the Senior Indenture and subject to certain limitations therein set forth,
the transfer of this Senior Note is registrable in the Security Register, upon surrender of this
Senior Note for registration of transfer at the office or agency of the Company in any place where
the principal of (and Make-Whole Amount, if any) and interest on this Senior Note are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Senior Notes of this series, and of like tenor, of
authorized denominations and for the same maturity and aggregate principal amount, shall be issued
to the designated transferee or transferees.

          (c) No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Prior to due presentment of this Senior Note for registration of
transfer, the Company, the Senior Trustee and any agent of the Company or the Senior Trustee may
treat the Person in whose name this Senior Note is registered as the owner hereof for all purposes,
whether or not this Senior Note be overdue, and neither the Company, the Senior Trustee nor any
such agent shall be affected by notice to the contrary.

     10. No Liability of Certain Persons. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the Company under this
Senior Note or the Senior Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder, by accepting a Senior Note, waives and releases all
such liability. The waiver and release are part of the consideration for the issuance of this
Senior Note.

     11. Governing Law. The Senior Indenture and this Senior Note shall for all purposes be
governed by, and construed in accordance with, the internal laws of the State of New York.

II-10

 

     THE FOLLOWING ABBREVIATIONS SHALL BE CONSTRUED AS THOUGH THE WORDS SET FORTH BELOW OPPOSITE
EACH ABBREVIATION WERE WRITTEN OUT IN FULL WHERE SUCH ABBREVIATION APPEARS:

	 	 	 	 	 	 	 
	TEN COM

	 	- as tenants in common
	 	(Name) CUST
	 	(Name) as Custodian for
	TEN ENT

	 	- as tenants by the entirety
	 	(Name) UNIF GIFT
	 	(name) under the (State)
	JF TEN

	 	- as joint tenants with
right of survivorship and not as
tenants in common
	 	MIN ACT (state) —
	 	Uniform Gifts to Minors
Act

ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.

To assign this Senior Note, fill in the form below: (I) or (we) assign and transfer this Senior
Note to:

 

(Print or type assignee’s name, address and zip code)

 

(Insert assignee’s social security or tax I.D. number)

and irrevocably appoint                                          agent to transfer this Senior Note on the books of the Company. The agent
may substitute another to act for him.

	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Your Signature:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(Sign exactly as your name appears on the
other side of this Senior Note)

Signature Guarantee:                                                                    
            

(Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of
the Transfer Agent, which requirements will include membership or participation in STAMP or such
other “signature guarantee program” as may be determined by the Transfer Agent in addition to, or
in substitution for, STAMP, all in accordance with the Exchange Act.)

Social Security Number or Taxpayer Identification Number:                                                              
                  

II-11

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE

OR REGISTRATION OF TRANSFER OF SECURITIES

     This Certificate relates to $                     principal amount of Senior Notes held in definitive
form by                                          (the “Transferor”). The Transferor has requested the Trustee by
written order to exchange or register the transfer of a Security or Securities.

     In connection with any transfer of any of the Securities evidenced by this certificate
occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act
of 1933, the undersigned confirms that such Securities are being transferred in accordance with its
terms:

CHECK ONE BOX BELOW:

	 	 	 	 	 
	   (1)

	 	o
	 	to the Company; or
	 
	 	 	 	 
	   (2)

	 	o
	 	inside the United States to a “qualified institutional buyer” (as defined in Rule 144A
under the Securities Act of 1933) that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
	 
	 	 	 	 
	   (3)

	 	o
	 	pursuant to another available exemption from registration under the Securities Act of
1933.

     Prior to the expiration of the period referred to in Rule 144(k), unless one of the boxes is
checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in
the name of any Person other than the registered holder thereof; provided, however, that if box (3)
is checked, the Trustee may require, prior to registering any such transfer of the Securities, such
certifications and other information satisfactory to the Company and the Trustee to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933.

	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	[INSERT NAME OF TRANSFEROR] 	 
	 	 	 	 
	 
	 	 	 
	 	  	
 	 
	 	 	[SIGNATURE GUARANTEE] 	 
	 	 	 	 
	 

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of
the Security Registrar, which requirements include membership or participation in the Security
Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be
determined by the Security Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

II-12EX-10.1

Exhibit 10.1

November 2, 2008

Akorn, Inc.

1925 West Field Court

Suite 300

Lake Forest, IL 60045

Attn: Arthur S. Przybyl, CEO

and Jeffrey A. Whitnell, CFO

Gentlemen:

General Electric Capital Corporation (“GE Capital” or the “Agent”), an affiliate of GE Healthcare
Financial Services, Inc., is pleased to provide its commitment to provide a $25,000,000 senior
secured revolving credit facility (the “Credit Facility”) to Akorn, Inc. (the “Company”), to
refinance existing indebtedness and to provide financing for ongoing working capital, capital
expenditure needs and expenses relating to the Credit Facility, on the terms and conditions set
forth herein and in the attached Summary of Indicative Terms and
Conditions dated November 2, 2008
(the “Term Sheet”) and the Fee Letter (as defined in the Term Sheet).

The Term Sheet, together with this letter, hereinafter are referred to as the “Commitment Letter.”
This commitment is based upon our understanding of the transactions described in the Term Sheet and
upon the information that you have provided to us.

Company agrees to pay all reasonable costs and out-of-pocket expenses incurred in connection with
the diligence, syndication, preparation, negotiation, execution, and enforcement of this Commitment
Letter and the documentation for the Credit Facility (the “Credit Facility Documentation”),
regardless of whether such Credit Facility Documentation is executed, including without limitation,
the legal fees of counsel to Agent and GE Capital Markets, Inc. (the “Lead Arranger”).

Company further agrees to indemnify and hold harmless the Agent, all other agents under the Credit
Facility, the Lead Arranger, their affiliates, and their officers, directors, employees, agents and
attorneys (each an “Indemnified Party”) against any and all losses, claims, damages, costs,
expenses (including reasonable fees, time charges and expenses of attorneys) or liabilities of
every kind whatsoever (collectively, the “Indemnified Obligations”) to which any of the Indemnified
Parties may become subject in connection with this commitment letter, except that Company shall not
be liable for any Indemnified Obligations of any Indemnified Party to the extent any of the
foregoing is determined by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of any Indemnified Party. This Indemnity Obligation will continue
notwithstanding any termination of this commitment.

Company agrees that in any action arising in connection with this Commitment Letter or any
transaction contemplated hereby the only damages that may be sought from Agent, all other agents
and lenders under the Credit Facility, Lead Arranger or any of their affiliates or any Indemnified
Party are those which are direct and reasonably foreseeable as the probable result of any breach
hereof. The Agent, all other agents and lenders under the Credit Facility, the Lead

 

 

Arranger and
their affiliates shall not be liable under this Commitment Letter or any Credit Facility
Documentation or in respect of any act, omission or event relating to the transaction contemplated
hereby or thereby, on any theory of liability, for any special, indirect, exemplary, consequential
or punitive damages.

This Commitment Letter and Fee Letter are for Company’s confidential use only and may not be
disclosed by the Company to any person other than to the Company’s subsidiaries and to its and
their respective employees, attorneys and financial advisors (but not commercial lenders) and then
only in connection with the proposed transaction and on a confidential basis, except where in the
Company’s reasonable judgment, disclosure is required by law or by regulations of any exchange on
which the Company’s securities are traded or where the Agent’s consent to the proposed disclosure
is provided. Subject to the preceding sentence, Agent reserves the right to review and approve, in
advance, all materials, press releases, advertisements, and other disclosures with respect to the
financing transaction contemplated hereby, that you or your affiliates prepare that contain Agent’s
or any affiliate’s name or describe Agent’s financing commitment.

The Term Sheet is intended to be indicative of the principal terms of the Credit Facility and does
not purport to specify all of the terms, conditions, representations and warranties, covenants and
other provisions that will be contained in the final Credit Facility Documentation.

If this Commitment Letter, the Fee Letter or any act, omission or event hereunder or thereunder
becomes the subject of a dispute, each of the undersigned hereby waive trial by jury. Each of the
undersigned hereby consent and agree that the state or federal courts located in New York County,
State of New York shall have exclusive jurisdiction to hear and determine any claims pertaining to
this Commitment Letter, the Fee Letter or any transaction relating hereto, any other financing
related thereto, and any investigation, litigation or proceeding related to or arising out of any
such matters, provided that the parties acknowledge that any appeals from those courts may have to
be by a court located outside of such jurisdiction. Each of the undersigned hereby expressly
submit and consent in advance to such jurisdiction in any action or suit commenced in any such
court, and hereby waive any objection which any of them may have based on lack of personal
jurisdiction, improper venue or inconvenient forum. This Commitment Letter and the Fee Letter
shall be governed by and shall be construed in accordance with the laws of the State of New York
applicable to contracts made and performed in that state.

This Commitment Letter and the Fee Letter supersede all prior discussions, writings, indications of
interest and proposals with respect to the Credit Facility previously delivered to you or your
affiliates by Agent or any of its affiliates. Please indicate your acceptance of this commitment
and return a signed copy of this Commitment Letter and the Fee Letter to Agent. This commitment
will expire at 5:00 p.m., Chicago time, on November 4, 2008 unless on or prior to such time Agent
shall have received a copy of this Commitment Letter and the Fee Letter executed by you and payment
of the Existing Expenses (as defined in the Fee Letter). Notwithstanding acceptance of this
Commitment Letter, the commitment herein will automatically terminate unless definitive Credit
Facility Documentation is executed on or before January 28, 2009. Upon expiration or termination
of the commitment contained herein, Agent, Lead Arranger and their affiliates shall have no
liability or obligation hereunder. Termination of this commitment shall not affect your
obligations hereunder, including to pay any fees, costs or expenses provided for herein or in any
other agreements entered into between you and Agent. Notwithstanding any of the foregoing, the
Credit Facility Documentation shall not be executed until on or after January 2, 2009.

 

 

We look forward to working with you and the rest of the management team of Akorn, Inc. on this
transaction.

Sincerely,

GENERAL ELECTRIC CAPITAL CORPORATION,

An Affiliate of GE Healthcare Financial Services, Inc.

By: /s/ Dennis Cloud                                        

Title: Duly Authorized Signatory

ACCEPTED AND AGREED

AKORN, INC.

	 	 	 	 	 
	By:

	 	/s/ Arthur S. Przybyl
 

Arthur S. Przybyl
	 	 
	Its:

	 	Pres & CEO	 	 
	Date:

	 	11/3/08	 	 

 

 

Summary of Indicative Terms and Conditions (“Term Sheet”)

Akorn, Inc.

$25,000,000 Senior Secured Credit Facility

November 2, 2008

	 	 	 
	BORROWER:

	 	Akorn, Inc. ( “Company”)
	 
	 	 
	ADMINISTRATIVE
AGENT:

	 	General Electric Capital Corporation (“GE Capital” or “Agent”)
	 
	 	 
	SOLE LEAD ARRANGER 

AND  BOOKRUNNER:

	 	GE Capital Markets, Inc. (“GECM”)
	 
	 	 
	LENDERS:

	 	A syndicate of financial institutions (including GE Capital) arranged by GECM.
	 
	 	 
	SENIOR SECURED 

CREDIT
FACILITY:

	 	
A $25,000,000 senior secured revolving credit facility (the “Credit Facility”), which will include a
letter of credit subfacility for up to $5,000,000 (the “LC Subfacility”).
	 
	 	 
	REVOLVING CREDIT 

AVAILABILITY:

	 	

Availability under the Credit Facility would be limited to a borrowing base which, based upon GE
Capital’s due diligence to date, is expected to be up to the lesser of (i) the sum of (a) 85% of net
amount of eligible accounts receivable, plus (b) the lesser of (x) 50% of the Company’s eligible finished
goods inventory valued at the lower of cost (using an average cost method) or market value and (y) 85% of
the net orderly liquidation value of the Company’s eligible finished goods inventory as determined by an
appraisal firm acceptable to Agent; provided that the maximum amount of such eligible finished goods
inventory which may be included as part of the borrowing base may not exceed an amount equal to 75% of
the aggregate borrowing base, plus (c) 85% of Company’s net orderly liquidation value of the eligible
equipment, plus (d) 50% of Company’s distressed value of the eligible real estate or (ii) $25,000,000
Agent will retain the right from time to time to establish or modify reserves against availability,
advance rates, and standards of eligibility. The value of inventory shall be subject to quarterly
appraisals, and the value of equipment and real estate shall be subject to annual appraisals.
	 
	 	 
	 

	 	The LC Subfacility would provide for the issuance of letters of
credit for the account of Company. Outstanding letters of credit
will be reserved from availability under the Credit Facility.

1

 

	 	 	 
	INCREMENTAL
FACILITY:

	 	
The Company shall have the right to increase the size of
the Credit Facility, at Agent’s and Company’s mutual
agreement, in an aggregate amount of up to $10,000,000
(the “Incremental Facility”) at any time on or before the
date which is two years after the closing date, from
existing Lenders and/or new Lenders mutually acceptable
to Agent and Company; provided that (i) no default or
event of default shall have occurred and be continuing,
(ii) no commitment of any Lender shall be increased
without the consent of such Lender and (iii) Company
would be in pro forma compliance with all financial
covenants. The Incremental Facility shall become part of
the Credit Facility.
	 
	 	 
	USE OF
PROCEEDS:

	 	To refinance existing indebtedness, to provide for
working capital and for general corporate purposes, and
to fund certain fees and expenses associated with the
closing of the Credit Facility.
	 
	 	 
	TERM:

	 	4 years.
	 
	 	 
	INTEREST
RATES:

	 	The outstanding principal balance under the Credit
Facility shall bear interest, at Company’s option, at a
fluctuating rate equal to (a) the Base Rate plus a margin
to be determined, or (b) LIBOR plus a margin to be
determined. The interest rate margins applicable to Base
Rate and LIBOR shall be determined by the Agent in its
sole discretion at the time of closing, such
determination to be made in good faith.
	 
	 	 
	 

	 	The Base Rate will be a floating rate defined as the greater of (a)
the rate publicly quoted from time to time by The Wall Street
Journal (or another national publication selected by the Agent)
as the “base rate on corporate loans posted by at least 75% of the
nation’s largest banks” and (b) the LIBOR Rate for a one-month
LIBOR period plus 100 basis points and (c) the Federal funds rate
plus 50 basis points. Notwithstanding the foregoing, in no event
shall the Base Rate be less than a floor to be determined by the
Agent in its sole discretion at the time of closing, such
determination to be made in good faith.
	 
	 	 
	 

	 	LIBOR will be defined as the offered rate per annum for deposits of
Dollars for the applicable Interest Period (as defined below) that
appears on Reuters Screen LIBOR01 Page as of 11:00 A.M. (London,
England time) two (2) Business Days prior to the first day in each
Interest Period. If no such offered rate exists, such rate will be
the rate of interest per annum, as determined by the Agent (rounded
upwards, if necessary, to the nearest 1/100 of 1%) at which
deposits of Dollars in immediately available funds are offered at
11:00 A.M. (London, England time) two (2) Business Days prior to
the first day in the applicable Interest Period by major financial
institutions reasonably satisfactory to the Agent in the London
interbank market for the applicable Interest Period and for an
amount

2

 

	 	 	 
	 

	 	equal or comparable to the principal amount of the Loans to be
borrowed, converted or continued as LIBOR Rate loans on such date
of determination. Notwithstanding the foregoing, in no event shall
LIBOR be less than a floor to be determined by the Agent in its
sole discretion at the time of closing, such determination to be
made in good faith.
	 
	 	 
	 

	 	Interest Period means, with respect to any LIBOR Rate loan, the
period commencing on the Business Day the Loan is disbursed,
converted or continued as a LIBOR Rate loan and ending on the date
one, two, three or six months thereafter, as selected by the
Company in its notice of borrowing, conversion or continuation. No
more than seven (7) Interest Periods shall be in effect at any
time.
	 
	 	 
	 

	 	No loan may be converted into, or continued as, a LIBOR Rate loan
at any time when a default shall have occurred and be continuing.
	 
	 	 
	 

	 	Interest on Base Rate loans will be payable monthly in arrears on
the first day of each month. Interest on LIBOR Rate loans will be
payable at the end of each Interest Period and, in addition, at the
end of three months in the case of a six month Interest Period.
All interest will be calculated using a 360 day year and actual
days elapsed.
	 
	 	 
	 

	 	In any event, if the Agent or Requisite Lenders determine that
LIBOR for any Interest Period will not adequately reflect the cost
to the Lenders of making or maintaining LIBOR Rate Loans for such
Interest Period, or that the Base Rate will not adequately reflect
the cost to the Lenders of making or maintaining Base Rate Loans,
LIBOR for such Interest Period and/or the Base Rate shall be
adjusted to such rate as the Agent or Requisite Lenders may, from
time to time, designate to Borrower (and in the case of Requisite
Lenders, to Agent and Borrower) in writing as the rate necessary to
adequately reflect such cost to the Lenders.
	 
	 	 
	 

	 	At the election of the Agent or Requisite Lenders, upon the
occurrence and during the continuance of a default, the obligations
shall bear interest at a default rate of interest equal to an
additional two percent (2%) per annum over the rate otherwise
applicable and such interest will be payable on demand. For
purposes of calculating interest, collections to the Credit
Facility will be credited one (1) business day following Agent’s
receipt of good funds.
	 
	 	 
	SECURITY:

	 	The Agent, for the benefit of itself and the Lenders, shall receive a first
priority perfected security interest in substantially all existing and after-acquired real and
personal property of the Company, its subsidiaries (“Subsidiaries”) and any holding company
(“Holdings”) formed to own the capital stock or equity securities of Company (the
“Collateral”), including, but not limited to, all inventory, accounts,

3

 

	 	 	 
	 

	 	equipment, fixtures, chattel paper, patents, trademarks,
copyrights, all other intellectual property, documents,
instruments, deposit accounts, cash and cash equivalents,
investment property, general intangibles supporting obligations,
letter of credit rights, commercial tort claims, insurance
policies, and other personal property of Holdings, Company and its
Subsidiaries and first mortgage liens on all of the owned real
property of Company and its Subsidiaries, and all substitutions,
accessions, products and proceeds of such property. The Collateral
will be free and clear of other liens, claims, and encumbrances,
except permitted liens and encumbrances acceptable to the Agent (to
be set forth in the Credit Facility Documentation).
	 
	 	 
	 

	 	The Agent, for the benefit of itself and the Lenders, shall also
receive a first priority perfected pledge of all of the outstanding
capital stock or other equity securities of each of the Company’s
Subsidiaries.
	 
	 	 
	 

	 	Agent’s liens and security interests shall be evidenced by
documentation reasonably satisfactory to Agent, including search
results, collateral releases from prior lenders, landlord,
mortgagee and bailee waivers, and in the case of real estate
collateral, title insurance policies (supported by surveys) in
amount, form and from an issuer reasonably satisfactory to Agent.
All obligations under the Credit Facility shall be
cross-collateralized with each other and with collateral provided
by any subsidiary of Company or any other guarantor.
	 
	 	 
	 

	 	Notwithstanding the foregoing, the terms “subsidiary” and
“subsidiaries” as used herein shall exclude any product development
ventures or other joint ventures of the Company; provided
that Agent may require such product development ventures and/or
other joint ventures to be deemed “subsidiaries” in certain
instances, including without limitation, requiring the pledge to
Agent of certain assets, if Agent reasonably determines that it (i)
is necessary after conducting its due diligence and (ii) is cost
effective and time efficient to do so.
	 
	 	 
	GUARANTEES:

	 	Obligations under the Credit Facility will be guaranteed
by all Subsidiaries of Company.
	 
	 	 
	CASH
MANAGEMENT:

	 	Company’s customers would be directed to continue to make
all payments to the Company’s current lockbox/depository
account (or to such other lockbox/depositary account at
a bank acceptable to Agent, if the current lockbox
account arrangement is not acceptable to Agent or is not
able to be continued), which shall be under the control
of Agent and all deposit accounts of Company and its
Subsidiaries would be subject to control agreements in
favor of Agent having daily sweep mechanisms.

4

 

	 	 	 
	VOLUNTARY 

PREPAYMENTS:

	 	

The Company may voluntarily prepay any loans outstanding
under
the Credit Facility, in each case, subject to concurrent payments
of any applicable LIBOR breakage costs. Prepayment of such loans
shall be applied in the manner set forth under Mandatory
Prepayments below.
	 
	 	 
	MANDATORY 

PREPAYMENTS:

	 	

In addition to regularly scheduled payments of principal,
Company will be required to make prepayments as follows: (a)
promptly upon receipt thereof in the amount of 100% of the
net proceeds of (i) any sale or other disposition of any
assets of Company or its subsidiaries (net of amounts
reinvested in replacement assets within 180 days or required
to pay taxes or other costs applicable to the disposition),
other than certain dispositions of other assets to be agreed;
(ii) any sales or issuances of debt securities of Company or
any of its subsidiaries and/or any other indebtedness for
borrowed money incurred by Company or any of its subsidiaries
after the closing date (other than permitted amounts and
types of indebtedness, each to be agreed upon); and (iii)
insurance proceeds and condemnation awards to the extent not
reinvested in the business; and (b) fifty percent (50%) of
any sales or issuances of equity (subject to mutually
agreeable customary exceptions) of Borrower or any of its
subsidiaries. Such prepayments shall be applied to reduce
the outstanding principal balance of the Credit Facility.
	 
	 	 
	FEES:

	 	The fees payable to Agent as specified in the fee letter between Company and Agent
dated on or about the date hereof (the “Fee Letter”).
	 
	 	 
	 

	 	An Unused Commitment Fee in a percentage to be determined on the
average unused daily balance of the Credit Facility (less any
outstanding letters of credit) such fee to be paid monthly on the
first day of each calendar month. The unused commitment fee
percentage shall be determined by the Agent in its sole discretion
at the time of closing, such determination to be made in good
faith, and remains subject to credit approval.
	 
	 

	 	Letter of credit fees for all letters of credit under the Credit
Facility in an amount equal to the LIBOR margin on the Credit
Facility on the outstanding face amount of all letters of credit
such fee to be paid monthly on the first day of each calendar
month.
	 
	 	 
	 

	 	All fees (other than the Agent’s Fee) will be calculated using a
360-day year and actual days elapsed.
	 
	 	 
	 

	 	The Company will pay all reasonable costs and expenses associated
with due diligence, the preparation, negotiation and execution of
all documentation executed in connection with the Credit Facility,
and the administration and syndication, if any, of the Credit
Facility, including without limitation, the legal fees of counsel
to the Lead

5

 

	 	 	 
	 

	 	Arranger and Agent regardless of whether or not the Credit Facility
is closed, and all enforcement costs and expenses of Agent and
Lenders, and the out-of-pocket cost (including fees and expenses)
paid to third party auditors, or a such reasonable per diem
allowance as the Agent may from time to time establish for
in-house auditors plus out-of-pocket expenses.

	 	 	 
	LIBOR
BREAKAGE:

	 	Any payment (or conversion) of a LIBOR loan other
than at the end of its Interest Period, will be
subject to customary breakage provisions.
	 
	 	 
	DOCUMENTATION:

	 	The loan documents will contain conditions precedent,
affirmative, negative, financial reporting and
financial covenants, indemnities, events of default
and remedies, and other provisions, and Company will
make representations and warranties, all as required
by Agent and Lenders and acceptable to the Company.
Transactions between Company and its officers,
directors, employees and affiliates shall be
restricted in a manner acceptable to Agent, except
commercially reasonable transactions between Borrower
and its employees conducted in the ordinary course of
business.
	 
	 	 
	FINANCIAL
COVENANTS:

	 	

Financial covenants at close may include, but shall
not be limited to:
	 

	 	•     minimum liquidity

	 

	 	•     minimum tangible net worth

	 

	 	•     minimum fixed charge coverage ratio

	 

	 	•     minimum EBITDA

	 
	 	 
	FINANCIAL
STATEMENTS

& OTHER REPORTS:

	 	

Borrower shall deliver such financial statements and
other reports as required by Agent, including,
without limitation, the following:
	 
	 	 
	 

	 	•     Monthly: a borrowing base certificate; inventory
summaries; accounts receivable agings; inventory, accounts
receivable, and accounts payable reconciliations; and
monthly financials

	 
	 	 
	 

	 	•     Quarterly: field audits, inventory appraisals and
quarterly financials.

	 
	 	 
	 

	 	•     Annual: annual financials, real property and fixed
asset appraisals (subject to certain provisions)

	 
	 	 
	OTHER TERMS AND 

CONDITIONS:

	 	

Other terms and conditions include, but are not limited
to, the following:
	 
	 	 
	 

	 	•     The preparation, execution and delivery of a credit
agreement and other documents executed in connection therewith

6

 

	 	 	 
	 

	 	(collectively, with the credit agreement, the “Credit Facility
Documentation”) mutually acceptable to the Company and Agent,
incorporating substantially the terms and conditions as
outlined in the Commitment Letter and this Term Sheet.

	 
	 	 
	 

	 	•     Up to a to-be-determined amount may be drawn at close under
the Credit Facility (including issued letters of credit). In
any event, after giving effect to the funding at close, or
creation of a reserve for, and payment of all costs and
expenses related to the closing, Company is required to have
minimum availability of a to-be-determined amount under the
Credit Facility.

	 
	 	 
	 

	 	•     Satisfactory completion of Agent’s business, tax and legal
due diligence (including a review of existing and potential
contracts with Serum for trials related to ANDA for Hepatitis
B, a review of background checks on significant related
parties, insurance review, customer and supplier calls,
satisfactory regulatory review and satisfactory review of all
material pending or threatened litigation or proceedings in
court or any administrative forum).

	 
	 	 
	 

	 	•     The ownership, capital, corporate, tax, organizational and
legal structure of Borrower and its subsidiaries upon closing
shall be satisfactory to Agent. Any subordinated indebtedness
shall be on terms and conditions, including subordination
provisions, acceptable to Agent.

	 
	 	 
	 

	 	•     Receipt and satisfactory review by Agent of the Company’s
available unaudited statements for each monthly period from
January 2008 through November 2008 and each monthly period
thereafter ending 45 days or more prior to the closing date.
Agent shall have also received a pro forma closing balance
sheet, adjusted to give effect to the transaction contemplated
hereby, that is satisfactory to Agent.

	 
	 	 
	 

	 	•     The determination by Agent that there shall not have
occurred any change, development, or event that has or would
reasonably be expected to have a material adverse effect on
(i) the operations, business, properties, prospects or
condition (financial or otherwise) of the Borrower, or the
Borrower and its subsidiaries taken as a whole, or (ii) the
industry in which the Borrower or its subsidiaries operate.

	 
	 

	 	•     The determination by Agent of the absence of any material
disruption of, or material adverse change in, loan
syndication, financial, banking or capital markets conditions
generally.

	 
	 	 
	 

	 	•     Both before and after giving effect to the closing, the
absence of any default or event of default under the Credit  Facility

7

 

	 	 	 
	 

	 	Documentation or under any material contract or agreement of
the Company or its subsidiaries; and accuracy of
representations and warranties in all material respects.

	 
	 	 
	 

	 	•     There being no order or injunction or pending litigation in
which there is a reasonable possibility of a decision which
would have a material adverse affect on the Company or any of
its subsidiaries and no pending litigation seeking to enjoin
or prevent the transactions contemplated hereby.

	 
	 	 
	 

	 	•     All material third-party, government and regulatory
approvals and consents necessary to consummate the proposed
transactions shall have been obtained and shall be final and
non-appealable. Agent shall have received such resolutions,
consents, certificates, legal opinions and other documents as
it shall have reasonably requested with respect to the
execution and delivery of the Credit Facility Documentation,
the related transactions and performance of the obligations
created thereunder.

	 
	 	 
	 

	 	•     Other conditions precedent specific to the transaction and
typical of facilities of this type, including Agent’s receipt
of satisfactory corporate approval of the financing as well as
opinions of counsel satisfactory to Agent as to, among other
matters, valid corporate existence and authority, legality,
validity and binding effect of all loan, guaranty and security
documents, perfection of security interests, the absence of
any violation of law or regulation or conflict with any
existing contracts. All governmental, regulatory and other
third-party approvals and consents required by Agent with
respect to the proposed transactions shall have been obtained
and shall be final and non-appealable.

	 
	 	 
	 

	 	•     The equity structure of all joint venture arrangements of
Borrower shall be acceptable to Agent.

	 
	 	 
	 

	 	•     Legal review satisfactory to Agent of the October 2008
Parexel audit of the Company as to FDA compliance status, and
confirmation satisfactory to Agent that the Company shall have
had no additional FDA issues since the audited period.

	 
	 	 
	ASSIGNMENTS AND 

PARTICIPATIONS:
	 	

Lenders would have the right at any time to sell and assign
interests and sell participations under the Credit Facility in
accordance with customary terms.
	 

	 

8

 

	 	 	 
	REQUISITE
LENDERS:

	 	Lenders holding greater than 50% of the loan exposure (including unfunded commitments under the Credit Facility) under the Credit Facility.
	 
	 	 
	 

	 	Certain amendments and waivers may require class votes or the consent of all Lenders, as
appropriate.
	 
	 	 
	GOVERNING LAW:

	 	New York.

9

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