Document:

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                                                                   EXHIBIT 10.16

                                                                   June 20, 2001

Mohan Gyani
c/o AT&T Wireless Services, Inc.
7277 164th Avenue NE
Redmond, WA  98052

Dear Mohan:

         It gives me great pleasure to confirm the terms and conditions of your
employment as President & Chief Executive Officer of AT&T Mobility Services for
AT&T Wireless Services, Inc. ("AT&T Wireless" or the "Company"). In addition,
this agreement will detail the terms and conditions of your employment and
outline the current major features of AT&T Wireless' compensation and benefit
plans and practices. This agreement will amend, restate and supersede your
letter agreement with AT&T Corp. dated January 15, 2000, as supplemented by the
addenda dated as of March 9, 2000 and as of May 1, 2001. The effective date of
this agreement is the date of the consummation of the split-off of the Company
from AT&T Corp. (the "Effective Date").

DUTIES

         As President & Chief Executive Officer of AT&T Mobility Services for
AT&T Wireless, you will report to, and only to, the Company's CEO (currently
John Zeglis). Your principal office location will be in San Francisco,
California, but you will have a second office in Redmond, Washington. The
Company will bear all reasonable expenses for your travel to and stay in
Redmond, Washington. You will travel to Redmond as requested by the Company's
CEO.

BASE SALARY

         Your initial base salary will be $700,000 per year. Currently, this
rate is reviewed annually for increase to reflect individual performance and
base salary structure changes applicable to comparable executives; provided,
however, that your base salary will in no event be reduced at any time.

SPECIAL PAYMENT

         The Company will provide you with a special incentive payment of
$600,000, less applicable withholding taxes, in acknowledgment of the scope and
responsibility associated with your position. Of this amount, $500,000 will be
paid on the Effective Date and $100,000 will be paid on January 15, 2002 or
earlier upon your death, "Long Term
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Disability," termination by the Company without "Cause," or termination by you
for "Good Reason" (as each of those terms is defined in this agreement).

ANNUAL BONUS

         The annual bonus for comparable executives is currently based on
measures of Company, unit, and individual performance and is paid in cash. The
2001 target (not actual) annual bonus for your position is 100% of your base
salary or $700,000.

LONG TERM INCENTIVES

         STOCK OPTIONS

         Promptly after the later of the Effective Date and the consummation of
the split-off of the Company from AT&T Corp. (the "Grant Date"), subject to
action by the Compensation Committee of the Company's Board of Directors, you
will be awarded an option under the Company's 2001 Long Term Incentive Plan (the
"2001 Plan"), which will be covered by a Form S-8 registration statement, to
purchase 360,000 shares of AT&T Wireless common stock at an option price equal
to the fair market value (defined as the average of the opening and closing
stock prices on the NYSE) on the Grant Date. The option will be subject to the
terms and conditions of the 2001 Plan and a stock option award agreement,
including but not limited to the following: assuming continued employment, the
option will vest 1/3 on October 28, 2001, 1/3 on February 14, 2002 and 1/3 on
February 14, 2003. In addition:

         (A) In the event that, prior to January 31, 2004, the closing stock
price of AT&T Corp. common stock is equal to or greater than $58 for ten
consecutive trading days (the "Collar Date"), the option will immediately vest
and, effective six months and one day from the Collar Date, the option will be
canceled.

         (B) Subject to (A) above, the option shall be subject to your rights
under the "Severance Benefit" section of this agreement with regard to
"Outstanding Stock Options."

         (C) The option shall not be subject to any clawback, forfeiture or
similar provision that is any more constraining of you than as applied to the
options granted to you at the time of your hire.

         As with the Annual Bonus, stock option grants are closely linked with
the Company's strategy to meet the challenges of an ever-changing marketplace.
Accordingly, the Company cannot guarantee continuation of stock option grants in
the current format, nor can it guarantee annual grant levels to individual
participants.

         RESTRICTED STOCK UNITS

         On the Grant Date, and subject to action by the Compensation Committee
of the Company's Board of Directors, you will be granted a restricted stock unit
award under the

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2001 Plan for 200,000 shares of AT&T Wireless common stock. Such award is
subject to the terms and conditions of the 2001 Plan and a restricted stock unit
agreement, including but not limited to the following: assuming continued
employment, the restricted stock unit award will vest 1/3 on October 28, 2001,
1/3 on February 14, 2002 and 1/3 on February 14, 2003 or earlier on a Change in
Control or your death, Long Term Disability, termination of employment by the
Company without Cause or termination of employment by you for Good Reason. The
restricted stock units will not be subject to any clawback, forfeiture or
similar provision that is any more constraining of you than as applied to the
options granted to you at the time of your hire. Subject to adoption and
approval of an AT&T Wireless Deferred Compensation Plan, the restricted stock
units will be eligible for deferral into such plan.

DEFERRED COMPENSATION ACCOUNTS

         The Company has assumed the obligations of AT&T Corp. for a Deferred
Compensation Account established in your name in connection with the January 15,
2000 agreement with a balance of $6,000,000 (the "DCA1") and on the Effective
Date will establish another Deferred Compensation Account in your name with a
balance of $3,500,000 (the "DCA2"). The Deferred Compensation Accounts (each a
"DCA") will be maintained and paid to you in accordance with the provisions set
forth below. Each DCA will be maintained as a bookkeeping account on the records
of the Company, and you will have no ownership interest in either DCA, nor in
any assets of the Company with respect thereto. Neither DCA may be assigned,
pledged or otherwise alienated by you, and any attempt to do so, or any
garnishment, execution or levy of any kind with respect to either DCA, will not
be recognized. You will not have any right to receive any payment with respect
to either DCA, except as expressly provided below. The DCA1 and the DCA 2 will
be credited with interest from January 16, 2000 and May 1, 2001, respectively,
as described below.

         Payments from the DCAs are in addition to and not in lieu (nor will
they or anything in this agreement postpone, reduce or negate impact) of
qualified or non-qualified pension, savings or other retirement plan, program or
arrangement covering you or any amounts due you under this agreement, including
but not limited to amounts and benefits due as a result of a future termination.
The DCA payments provided under this agreement are subject to payroll tax
withholding and reporting, and amounts credited to the DCAs are not included in
the base for calculating benefits (nor will such amounts offset any benefits)
under any employee or management benefit plan, program or practice.

           DCA1

         The interest credited on the amounts in the DCA1 will be compounded as
of the end of each calendar quarter for as long as any sums remain in the DCA1,
and the quarterly rate of interest applied at the end of any calendar quarter
will be equal to one-quarter of the sum of (1) the average 30-year Treasury Note
rate for the previous quarter plus (2) 2% percent.

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         The amounts credited to the DCA1, including interest, will be paid in
five approximately equal annual installments beginning in the quarter following
your retirement, provided your retirement is after age 55. Should you die prior
to the time that the entire sum in the DCA1 has been paid to you, the Company
will make the remaining payments described above in this paragraph to your
beneficiary designated on a Company form filed with Executive Human Resources,
or to your estate if no beneficiary has been designated. The Company, at your
request, will consider in good faith exchanging all or part of the DCA1 for an
enhanced estate program.

         In the event of your termination of employment prior to age 55 for any
reason, including, but not limited to, a voluntary termination, all amounts
credited to the DCA1 through the last day of the first calendar quarter of the
calendar year following the year in which such termination of employment occurs
will be paid to you (or your designated beneficiary or estate, as described
above, in the event of your death) within 30 business days after the end of such
quarter.

         DCA2

         The interest credited on the amounts in the DCA2 will be compounded as
of the end of each calendar quarter for as long as any sums remain in the DCA2,
and the quarterly rate of interest applied at the end of any calendar quarter
will be equal to one-quarter of the sum of (1) the average 10-year Treasury Note
rate for the previous quarter plus (2) 0.50% percent.

         The DCA2 will vest (1) $2,500,000 on August 1, 2001, and (2) $1,000,000
on February 14, 2002 (including interest thereon), contingent upon your
continued employment with the Company through the vesting dates, provided that
the DCA2 will fully vest on a Change in Control, your termination of employment
as a result of your death or Long Term Disability or, subject to the other
provisions of this agreement, a termination by the Company not for Cause or by
you for Good Reason. As of the vesting dates, you will be responsible for
applicable FICA and Medicare taxes on the amount vested on such date. The unpaid
balance in the DCA2 will continue to accrue interest at the rate of return set
forth above until it is paid out in its entirety as indicated below.

         The vested amounts credited to the DCA2, including interest, will be
paid in five approximately equal annual installments beginning in the quarter
following retirement, provided your retirement is at or after age 55. Should you
die prior to the time that the entire sum in the DCA2 has been paid to you, the
Company will make the remaining payments described above in this paragraph to
your beneficiary designated on a Company form filed with Executive Human
Resources, or to your estate if no beneficiary has been designated.

         Notwithstanding the foregoing, in the event of your termination of
employment after February 14, 2002 but prior to age 55 for any reason,
including, but not limited to, a voluntary termination, all amounts credited to
the DCA2 through the last day of the first calendar quarter of the calendar year
following the year in which such termination of

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employment occurs will be paid to you (or your designated beneficiary, or
estate, as described above, in the event of your death) within 30 business days
after the end of such quarter.

         In the event that prior to February 14, 2002 and before a Change in
Control (i) you terminate your employment voluntarily for Good Reason or (ii)
the Company terminates your employment for other than Cause, which in either
case entitles you to the benefits under the Severance Benefit section (A) of
this agreement (which will be paid in either such case except as provided in
this paragraph), $1,000,000 will be forfeited from the DCA2 and your remaining
DCA2 balance (including interest thereon) will be paid to you (or to your
beneficiary or estate, in the event of your death) in a lump sum as soon as is
practical in the calendar quarter following the applicable termination. In the
event the Company determines that there is Cause for termination of employment,
the Company will provide you with written notice specifying the grounds upon
which its determination is based.

SEVERANCE BENEFIT

         (A) In the event of any Company-initiated termination, including
termination by you for Good Reason, other than for death, Long Term Disability
or Cause, you will be entitled to the following:

         1.       A "Severance Payment" equal to 200% of the sum of your annual
                  base salary and "target" annual bonus in effect on the date of
                  such termination, payable in the month following the month of
                  termination.

         2.       Annual Bonus: To the extent all or a portion of your annual
                  bonus for the current year and/or prior year has not been
                  paid, the Company will pay an amount equal to the target
                  annual bonus prorated for the total period of eligibility
                  based on a formula, the numerator of which is equal to the
                  number of days in the applicable calendar year for which the
                  annual bonus is being paid (up to and including the date of
                  termination), and the denominator of which is 365 and payable
                  to you within 20 business days after such termination;
                  provided that if the annual bonus for the prior year had been
                  declared before your termination and is higher than the target
                  bonus, it will be paid in lieu of the target bonus for the
                  prior year.

         3.       Annual Long Term Incentive Awards:

                  -        Outstanding performance shares and restricted stock
                           units, including those granted upon your hire, are
                           retained and distributed at the end of each
                           three-year cycle. Dividend equivalents continue to be
                           paid until all units are paid out.

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                  -        Outstanding stock options, including those granted
                           upon your hire (including the awards granted in
                           connection with the Company's initial public offering
                           and the awards granted as hiring incentives), are
                           retained and immediately fully vest, with the full
                           remaining term under the original terms and
                           conditions of the grants to exercise.

         4.       Deferred Compensation Accounts:

                  -        Any outstanding balance in either DCA will be paid
                           within 30 days from your termination date, except as
                           provided under "DCA2."

         5.       Medical Coverage:

                  -        You and your currently eligible dependents, for life,
                           will have access to AT&T Wireless medical benefits,
                           which to the extent not paid for by AT&T Wireless
                           under a program, will be made available to you on the
                           same basis as other similarly situated former
                           executives.

         6.       Special Payments:

                  -        Any outstanding payments will be paid within 30 days
                           from your termination date.

         7.       Other Amounts:

                  -        Any other amounts or benefits due under this
                           agreement or under any Company plan or program will
                           be as so provided.

         (B) In the event of your death or Long Term Disability, you will be
entitled to items under clauses (A)2, (A)3, (A)4 and (A)7 above.

         (C) The medical benefits under clause (A)5 above will also be made
available in the event of your voluntary resignation without Good Reason.

         (D) Upon termination of your employment for any reason or no reason
after the Effective Date (whether initiated by you or the Company), (1) all
stock options issued to you prior to the Effective Date will immediately and
fully vest and all such stock options (including those previously vested) will
remain exercisable until the expiration of their original stated term and (2)
outstanding performance shares and restricted stock units issued to you before
the Effective Date will be retained by you and distributed at the end of the
relevant three-year cycle with dividend equivalents to be paid until the units
are paid out.

         For purposes of this agreement:

         "Cause" means:

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         (1)      Your conviction (including a plea of guilty or nolo
                  contendere) of a felony involving theft or moral turpitude or
                  relating to the business of the Company, other than a felony
                  predicated on your vicarious liability. Vicarious liability
                  means, and only means, any liability which is based on acts of
                  the Company for which you are charged solely as a result of
                  your offices with the Company and in which either (i) you were
                  not directly involved or did not have prior knowledge of such
                  actions or inactions, or (ii) counsel had advised that the
                  action or inaction was permissible.

         (2)      You engage in conduct that constitutes willful gross neglect
                  or willful gross misconduct in carrying out your duties under
                  this agreement, resulting, in either case, in material
                  economic harm to the Company and its subsidiaries and
                  divisions.

         "Good Reason" means any termination of your Company employment,
         initiated by you, resulting from any of the following events, without
         your express written consent, which are not cured by the Company within
         20 days of your giving the Company written notice thereof:

         (1)      A reduction in your base salary and target annual incentive to
                  less than $1,400,000 or the failure of the Company to provide
                  you with stock options, restricted stock units, and/or other
                  equity incentive awards available to AT&T Wireless executives
                  at a level comparable with your position.

         (2)      The assignment to you of any duties inconsistent with, or, any
                  substantial alteration in, your status or responsibilities
                  (other than as a result of your mental or physical incapacity)
                  as in effect immediately prior thereto,

         (3)      A change in your work location of more than 50 miles from the
                  work location as of the Effective Date.

         (4)      A change in your reporting relationship that differs from the
                  reporting relationship described in the section under Duties
                  hereof, provided; however that subject to your written
                  consent, you may be reassigned to an operating position or
                  status comparable to this position as of the Effective Date
                  reporting to a comparable officer.

         (5)      A diminution in title or a material diminution in duties,
                  authority or responsibilities.

         (6)      A material breach of any provisions hereof by the Company.

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         (7)      Failure of the Compensation Committee of the Company's Board
                  of Directors to grant the stock option and restricted stock
                  units referred to above within 60 days after the Effective
                  Date.

                  You must notify the Company within 60 days following knowledge
         of an event you believe constitutes Good Reason, or such event will not
         constitute Good Reason hereunder. In the event the Good Reason event is
         clause (7) above, you will not be entitled to $500,000 of the amount
         described in the Special Payment section or to the DCA2.

                  All severance amounts will be paid without any obligations to
         mitigate or any offset for other amounts earned.

                  "Long Term Disability" means termination of your employment
         with the Company with eligibility to receive a disability
         benefit/allowance under any long term disability plan of the Company or
         any affiliate of the Company.

CHANGE IN CONTROL PROVISIONS

         (A) If within two years following a Change in Control (as defined in
         Attachment A), you become entitled to the benefits provided in Part (A)
         of the Severance Benefit section above, you will be entitled to 300%
         rather than 200% under clause (A)1.

         (B) Immediately following a Change in Control, all amounts and benefits
         to which you are entitled but not yet vested, whether under this
         agreement or otherwise, will become fully vested.

         (C) If, following a change in ownership within the meaning of Internal
         Revenue Code ("Code") Section 280G(b)(2)(A)(i)(I) or (II), the
         aggregate of all payments or benefits provided to you hereunder, and
         under any other plans or programs of the Company or any other payments
         in the nature of compensation within the meaning of Section 280G(b)(2)
         of the Code (the "Aggregate Payment") is determined to constitute a
         parachute payment within the meaning of Section 280G(b)(2) of the Code,
         the Company will pay you, prior to the time any excise tax imposed by
         Section 4999 of the Code ("Excise Tax") is payable with respect to such
         Aggregate Payment, an additional amount (the "Gross-Up Payment") which,
         after the imposition of all income, employment, excise and other taxes
         thereon, permits you to retain an amount equal to the Excise Tax on the
         Aggregate Payment. The determination of whether the Aggregate Payment
         constitutes a parachute payment and, if so, the amount to be paid to
         you and the time of payment pursuant to this Part (C) will be made by
         an independent auditor (the "Auditor") selected by the Company and
         reasonably acceptable to you and will be paid for by the Company. All
         fees and expenses of the Auditor will be borne solely by the Company.
         Any Gross-Up

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         Payment will be paid by the Company to you within fifteen days of
         receipt of the Auditor's determination. Any determination by the
         Auditor will be binding upon the Company and you, except to the extent
         the next paragraph hereof applies.

         As a result of the uncertainty in the application of Sections 280G and
         4999 of the Code at the time of the initial determination by the
         Auditor hereunder, it is possible that the Gross-Up Payment made will
         have been an amount more than the Company should have paid pursuant to
         this Part C (the "Overpayment") or that the Gross-Up Payment made will
         have been an amount less than the Company should have paid pursuant to
         this Part C (the "Underpayment"). In the event that there is a final
         determination by the Internal Revenue Service, or a final determination
         by a court of competent jurisdiction, that an Overpayment has been
         made, any such Overpayment will be treated for all purposes as a loan
         to you which you will repay to the Company together with interest at
         the applicable federal rate provided for in Section 7872(f)(2) of the
         Code. In the event that there is a final determination by the Internal
         Revenue Service, or a final determination by a court of competent
         jurisdiction, that an Underpayment arises under this agreement, any
         such Underpayment will be promptly paid by the Company to or for the
         benefit of you, together with interest at the applicable federal rate
         provided for in Section 7872(f)(2) of the Code.

         You will notify the Company in writing of any claim by the IRS that, if
         successful, would result in an Underpayment and would require the
         payment by the Company of an additional Gross-Up Payment. Such
         notification will be given as soon as practicable but no later than ten
         business days after you are informed in writing of such claim and will
         apprise the Company of the nature of such claim and the date on which
         such claim is requested to be paid. You will not pay such claim prior
         to the expiration of the 30-day calendar period following the date on
         which you give such notice to the Company (or shorter period ending on
         the date that any payment of taxes with respect to such claim is due).
         If the Company notifies you in writing prior to the expiration of such
         period that it desires to contest such claim, you will:

                  (i)      give the Company any information reasonably requested
                           by the Company relating to such claim,

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

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

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                  (iv)     permit the Company to participate in any proceeding
                           relating to such claim; provided, however, that the
                           Company will bear and pay directly all costs and
                           expenses (including additional interest and
                           penalties) incurred in connection with such contest
                           and will indemnify and hold you harmless, on an
                           after-tax basis, for any Excise Tax or income or
                           employment tax (including interest and penalties with
                           respect thereto) imposed as a result of such
                           proceeding and payment of costs and expenses. Without
                           limitation on the foregoing provisions of this Part
                           (C), the Company will control all proceedings taken
                           in connection with such contest, provided that the
                           Company's control of the contest will be limited to
                           issues with respect to which a Gross-Up Payment would
                           be payable hereunder, and you will be entitled to
                           settle or contest, as the case may be, any other
                           issue raised by the Internal Revenue Service or any
                           other taxing authority.

                  In the event that the Company does not so timely notify you,
         fails to file necessary documents contesting the claim or it is
         necessary to pay such amounts while contesting such claims, the Company
         will promptly pay you the Gross-Up Payment.

BENEFITS: You will, of course, be eligible for the benefit programs currently
available to all AT&T Wireless executives at your level, and you will be
eligible for future compensation and benefit plans established for executives at
your level based on the then current eligibility requirements established for
participation in such future benefits. In addition, you will be entitled to five
weeks annual vacation.

OTHER PROVISIONS: It is agreed and understood that you will not disclose the
specific terms of this agreement or any fact concerning its negotiation or
implementation, except in compliance with process, prior to the information
being made public by the Company. You may, however, discuss the contents of this
agreement with your spouse, legal and/or financial counselor and the forfeiture
provisions to any potential future employer.

         (a) Competition. As indicated in the AT&T Non-Competition Guideline
         that was included as Attachment B to the January 15, 2000 agreement
         between you and AT&T Corp., a number of AT&T Corp. incentive
         arrangements and/or non-qualified benefits were subject to
         non-competition constraints that result in the forfeiture of future
         amounts, benefits or rights if such guidelines are violated. AT&T
         Wireless is considering adopting noncompetition guidelines that will
         apply to its equity grants and benefit plans (if adopted, the
         "Guidelines"). In no event will the Guidelines or any incentive
         arrangements or non-qualified benefits as they apply to you require you
         to agree to a prohibition as to certain activities as a condition of
         receiving (as opposed to the forfeiture if you violate the Guidelines),
         permit recapture of any amounts or benefits previously paid or provided
         to you or be broader than as currently set forth in the AT&T
         Non-Competition Guidelines as modified herein. Furthermore, the

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         limitation in the Guidelines will in no event apply to the items
         referred to as Hiring Incentives in the January 15, 2000 agreement.
         This provision will override any provision in any plan, program or
         grant. You will also have the benefit of Section 5.7 of the Employee
         Benefits Agreement dated as of June 7, 2001 between AT&T Corp. and AT&T
         Wireless.

         The AT&T Non-Competition Guidelines, and hence the Guidelines, (and any
         "non-competition clause") will be modified as follows:

         (1)      Section 4 Subpart 2(c)(i) will be deemed violated only if the
                  violation is willful, with intent to damage, in a public forum
                  (i.e., lectures, to the media, in published materials, to
                  analysts or in comparable forums) and is of a material nature.

         (2)      Section 4 Subpart 2(c)(2) will only be violated if you,
                  directly or indirectly, (i) recruit, solicit, induce or
                  attempt to induce, or encourage others to recruit, solicit or
                  induce, any employee of AT&T Wireless or an affiliate of AT&T
                  Wireless to terminate their employment with AT&T Wireless or
                  any affiliate, to join an entity with which you are affiliated
                  or (ii) offer employment to any employee of AT&T Wireless;
                  provided that the foregoing will not be violated by the
                  general advertising for employees or the hiring of employees
                  by entities with which you are affiliated so long as you are
                  not involved, either directly or indirectly, in recruiting,
                  soliciting, inducing or attempting to induce, or in
                  encouraging others in the recruiting, soliciting or inducing
                  of, any employee to leave AT&T Wireless and join any entity
                  with which you are affiliated.

         (3)      Section 4 Subpart 2(a) will be modified by deleting "but will
                  not be limited to" and it will not be violated by your owning
                  less than 3% of the debt or equity of a publicly traded entity
                  or your investing in private equity funds, investment pools or
                  other similar vehicles so long as you own less than 5% of the
                  equity in the vehicle.

         (4)      The Guidelines will not be violated by any activity or action
                  more than two years after any termination of employment (one
                  year in the case of "establishing a relationship with"
                  limitation) or by establishment of a relationship with an
                  entity that becomes a "competitor of the Company" after you
                  established the relationship unless you were hired to assist
                  the entity in becoming a Competitor.

         (5)      Section 4 Subpart 2(b) will be modified so that it only
                  applies to significant and direct competitors (such as
                  currently MCI Worldcom, Sprint and any of the regional Bell
                  operating companies and major wireless companies such as
                  currently Bell Atlantic, Sprint PCS, SBC, Nextel, and Vodafone
                  Airtouch PLC).

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         (6)      Notwithstanding anything in the Guidelines to the contrary, no
                  forfeiture or cancellation will take place unless AT&T
                  Wireless will have first given you written notice of its
                  intent to so forfeit, or cancel or pay out and you have not,
                  within 30 calendar days of giving of such notice to you,
                  ceased such unpermitted competitive activity, provided that
                  the foregoing prior notice procedure will not be required with
                  respect to a competitive activity which you instituted after
                  AT&T Wireless informed you in writing that it believed such
                  activity violated the Guidelines.

         (b)      Confidentiality.

                  You agree that you will not, at any time during your
         employment pursuant to this agreement or thereafter, disclose or use
         any trade secret, proprietary or confidential information of the
         Company or any subsidiary or affiliate of the Company, except as
         required in the course of such employment or with the written
         permission of the Company or, as applicable, any subsidiary or
         affiliate of the Company or as may be required by law; provided that,
         if you receive legal process with regard to disclosure of such
         information, you will promptly notify the Company and cooperate with
         the Company in seeking a protective order.

                  You agree that at the time of the termination of your
         employment with the Company, whether at the insistence of you or the
         Company, and regardless of the reasons therefor, you will deliver to
         the Company, and not keep or deliver to anyone else, any and all notes,
         files, memoranda, papers and, in general, any and all physical matter
         containing information, including any and all documents significant to
         the conduct of the business of the Company or any subsidiary or
         affiliate of the Company which are in your possession, except for any
         documents for which the Company or any subsidiary or affiliate of the
         Company has given written consent to removal at the time of the
         termination of your employment and your personal rolodex, phone book
         and similar items.

                  You agree that the Company's remedies at law would be
         inadequate in the event of a breach or threatened breach of this
         paragraph (b); accordingly, the Company will be entitled, in addition
         to its rights at law, to an injunction and other equitable relief
         without the need to post a bond.

INDEMNIFICATION

         The Company will indemnify and hold you harmless to the fullest extent
permitted by applicable law with regard to any action or inaction by you as an
officer or director of the Company or any affiliate or as a fiduciary of any
benefit plan of the Company or any affiliate both during and after your term of
employment. The Company will cover you under director and officer liability
insurance to the same extent it covers other officers and directors both during
and after the term of employment.

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<PAGE>   13
DISPUTE RESOLUTION

         At your option or the Company's, any dispute, controversy, or question
arising under, out of or relating to this agreement or the breach thereof, other
than that for injunctive relief under the above paragraph (b), will be referred
for decision by arbitration in the State of Washington by a neutral arbitrator
selected by the parties hereto. The proceeding will be governed by the Rules of
the American Arbitration Association then in effect or such rules last in effect
(in the event such Association is no longer in existence). If the parties are
unable to agree upon such a neutral arbitrator within 30 days after either party
has given the other written notice of the desire to submit the dispute,
controversy or question for decision as aforesaid, then either party may apply
to the American Arbitration Association for an appointment of a neutral
arbitrator, or if such Association is not then in existence or does not act in
the matter within 30 days of application, either party may apply to the
Presiding Judge of the Superior Court of any county in Washington for an
appointment of a neutral arbitrator to hear the parties and settle the dispute,
controversy or question, and such Judge is hereby authorized to make such
appointment. In the event that either party exercises the right to submit a
dispute arising hereunder to arbitration, the decision of the neutral arbitrator
will be final, conclusive and binding on all interested persons and no action at
law or equity will be instituted or, if instituted, further prosecuted by either
party other than to enforce the award of the neutral arbitrator. The award of
the neutral arbitrator may be entered in any court that has jurisdiction. In the
event that you are successful in pursuing any material claims or disputes
arising out of this agreement, the Company will pay all of your attorneys' fees
and costs reasonably incurred, including the compensation and expenses of any
arbitrator. In any other case, you and the Company will each bear all their own
costs and attorneys fees, except the Company will in all events pay the costs of
any arbitrator appointed hereunder.

CHOICE OF LAW

         The construction, interpretation and performance of this agreement will
be governed by the laws of the State of Delaware, without regard to its conflict
of laws rule.

ASSIGNMENT

         This agreement will inure to the benefit of and be binding upon the
Company and its successors and assigns, provided that the Company may not assign
this agreement except in connection with an assignment or disposition of all or
substantially all of the assets or stock of the Company, or by law as a result
of a merger or consolidation. In the event of such assignment, a failure by the
successor to specifically assume in writing, delivered to you, the obligations
and liabilities of the Company hereunder will be deemed a material breach of
this agreement.

         This agreement reflects the entire agreement regarding the terms and
conditions of your employment. Accordingly, it supersedes and completely
replaces any prior oral or written communication on this subject. This agreement
is not an employment contract and

                                      -13-
<PAGE>   14
should not be construed or interpreted as containing any guarantee of continued
employment. The employment relationship at AT&T Wireless or any of its
affiliates is by mutual consent ("Employment-At-Will"). This means that
employees have the right to terminate their employment at any time and for any
reason. Likewise, the Company reserves the right to discontinue your employment
with or without cause at any time and for any reason.

         The incentive plans as well as the employee benefit plans, programs and
practices as briefly outlined in this letter or attachments, reflect their
current provisions. Payments and benefits under these plans, programs, and
practices, as well as other payments referred to in this agreement, are subject
to IRS rules and regulations with respect to withholding, reporting, and
taxation, and will not be grossed-up unless specifically stated. Moreover, the
summaries contained herein are subject to the terms of such plans, programs and
practices.

         For purposes of the employee benefit plans, the definition of
compensation is as stated in the plans. All other compensation and payments
reflected in this offer are not included in the calculation of any employee
benefits.

         By acceptance of this agreement, you agree that (1) no trade secret or
proprietary information belonging to your employer prior to AT&T Corp. will be
intentionally disclosed or used by you at AT&T Wireless, and that no such
information, whether in the form of documents, memoranda, software or drawings,
etc., will be retained by you or brought with you to AT&T Wireless, and (2) you
have brought to AT&T Wireless's attention and provided it with a copy of any
agreement which may impact your future employment at AT&T Wireless, including
non-disclosure, non-competition, invention assignment agreements or agreements
containing future work restrictions. AT&T Wireless will not require or request
you to do anything that would intentionally violate clause (1) above.

         If you agree with the foregoing, and affirm that, to the best of your
knowledge, there are no agreements or other impediments that would prevent you
from providing exclusive service to the Company, please sign this agreement in
the space provided below and return the original executed copy to me.

                                              Sincerely,

                                              /s/ Harold W. Burlingame

                                              Harold W. Burlingame

/s/ Mohan Gyani                               June 20, 2001
----------------------------------------      ----------------------------------
Mohan Gyani                                   Date

Attachment

                                      -14-
<PAGE>   15
                                  ATTACHMENT A

Change in Control means:

(1)      an acquisition by any individual, entity or group (within the meaning
         of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934)
         (the "Exchange Act") (an "Entity") of beneficial ownership (within the
         meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
         more of either (A) the then outstanding shares of stock of the Company
         (the "Outstanding Company Stock") or (B) the combined voting power of
         the then outstanding voting securities of the Company entitled to vote
         generally in the election of directors; excluding, however, certain
         acquisitions by or from the Company or by Company employee benefit
         plans or certain shareholder approved mergers or sale transactions
         involving the Company,

(2)      A change in the composition of our board of directors such that the
         individuals who, as of the effective date of the plan, constitute our
         board of directors, cease for any reason to constitute at least a
         majority of our board of directors, unless such change is approved by
         certain members of the current board,

(3)      With certain exceptions, the approval by the shareholders of the
         Company of a merger, reorganization or consolidation, or sale or other
         disposition of all or substantially all of the assets of AT&T Wireless
         or, if consummation of such corporate transaction is subject, at the
         time of such approval by shareholders, to the consent of any government
         or governmental agency, the obtaining of such consent, or

(4)      The approval by the shareholders of the Company of a complete
         liquidation or dissolution of the Company.

                                      -15-<PAGE>   1

                                                                    EXHIBIT 4(a)

                          THIRD SUPPLEMENTAL INDENTURE

                            Dated as of June 15, 2001

                                     between

                               SEMCO ENERGY, INC.,

                                    AS ISSUER

                                       and

                  BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION,

                                   AS TRUSTEE

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                        <C>
ARTICLE I DEFINITIONS.......................................................................................1

         Section 1.1         Definition of Terms............................................................1

ARTICLE II ISSUE, EXECUTION, FORM AND REGISTRATION OF
SECURITIES..................................................................................................2

         Section 2.1         Authentication and Delivery of Securities......................................2
         Section 2.2         Execution of Securities........................................................2
         Section 2.3         Certificate of Authentication..................................................2
         Section 2.4         Form, Denomination and Date of Securities......................................2
         Section 2.5         Global Securities..............................................................5

ARTICLE III TERMS OF THE SECURITIES.........................................................................6

         Section 3.1         Terms of the Securities........................................................6
         Section 3.2         Form of the Securities........................................................10

ARTICLE IV MISCELLANEOUS...................................................................................10

         Section 4.1         Ratification of Indenture.....................................................10
         Section 4.2         Trustee Not Responsible for Recitals..........................................10
         Section 4.3         Governing Law.................................................................10
         Section 4.4         Separability..................................................................10
         Section 4.5         Counterparts..................................................................10
</TABLE>

<PAGE>   3

         THIRD SUPPLEMENTAL INDENTURE, dated as of June 15, 2001 (the "Third
Supplemental Indenture"), between SEMCO Energy, Inc., a corporation duly
organized and existing under the laws of the State of Michigan, (the "Company"),
and Bank One Trust Company, National Association, a national banking
association, as trustee (the "Trustee")

         WHEREAS, the Company executed and delivered the indenture, dated as of
October 23, 1998 (the "Base Indenture"), to the Trustee to provide for the
future issuance of the Company's debentures, notes, bonds or other evidences of
indebtedness (the "Securities"), to be issued from time to time in one or more
series as may be determined by the Company under the Base Indenture; and

         WHEREAS, the Company entered into a First Supplemental Indenture dated
as of June 16, 2000 and a Second Supplemental Indenture dated as of June 29,
2000 to the Base Indenture; and

         WHEREAS, pursuant to the terms of the Base Indenture, the Company
desires to provide for the establishment of a new series of its Securities to be
known as its 8% Senior Notes Due 2016 (the "8% Senior Notes Due 2016" or the
"Securities"), the form and substance of the Securities and the terms,
provisions and conditions thereof to be set forth as provided in the Base
Indenture as heretofore supplemented and as further supplemented by this Third
Supplemental Indenture (together, the "Indenture"); and

         WHEREAS, the Company has requested that the Trustee execute and deliver
this Third Supplemental Indenture and all requirements necessary to make this
Third Supplemental Indenture a valid instrument in accordance with its terms,
and to make the Securities, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company and all acts and
things necessary have been done and performed to make this Third Supplemental
Indenture enforceable in accordance with its terms, and the execution and
delivery of this Third Supplemental Indenture has been duly authorized in all
respects.

         NOW THEREFORE, in consideration of the purchase and acceptance of the
Securities by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Securities and the
terms, provisions and conditions thereof, the Company covenants and agrees with
the Trustee as follows:

                                   ARTICLE I.
                                   DEFINITIONS

SECTION 1.1. Definition of Terms.

         Unless the context otherwise requires a term defined in the Indenture
has the same meaning when used in this Third Supplemental Indenture.

                                       1
<PAGE>   4

                                   ARTICLE II
              ISSUE, EXECUTION, FORM AND REGISTRATION OF SECURITIES

SECTION 2.1 AUTHENTICATION AND DELIVERY OF SECURITIES.

         Upon the execution and delivery of this Third Supplemental Indenture,
or from time to time thereafter, Securities in an aggregate principal amount not
in excess of $60,000,000 (or such higher amount as may be authorized by a
resolution of the Board of Directors of the Company or a committee thereof) may
be executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Securities to or upon
the written order of the Company, signed by both (a) its Chairman of the Board
of Directors, or its President or any Vice President and (b) by its Chief
Financial Officer, or its Secretary or any Assistant Secretary, or its Treasurer
or any Assistant Treasurer without any further action by the Company. The
Securities shall be direct, unconditional obligations of the Company and shall
rank pari passu without preference among themselves and equally in priority of
payment with all other present and future, unsecured senior indebtedness of the
Company.

SECTION 2.2 EXECUTION OF SECURITIES.

         The Securities shall be signed on behalf of the Company by both (a) its
Chairman of the Board of Directors or its President or any Vice President and
(b) attested by its Secretary or its Assistant Secretary under its corporate
seal. Such signatures may be the manual or facsimile signatures of the present
or any future such officers. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Securities. Typographical and other minor errors or defects in
any such reproduction of the seal or any such signature shall not affect the
validity or enforceability of any Security that has been duly authenticated and
delivered by the Trustee.

SECTION 2.3 CERTIFICATE OF AUTHENTICATION.

         Only such Securities as shall bear thereon a certificate of
authentication substantially in the form recited in the form of Security
attached as Exhibit A hereto, executed by the Trustee by manual signature of one
of its authorized signatories, shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Trustee upon any Security executed by the Company shall be conclusive evidence
that the Security so authenticated has been duly authenticated and delivered
hereunder and that the Holder is entitled to the benefits of this Indenture.

SECTION 2.4 FORM, DENOMINATION AND DATE OF SECURITIES.

         (a) The Securities and the Trustee's certificate of authentication
shall be substantially in the form set forth in the form of Security attached as
Exhibit A hereto. The Securities shall be numbered, lettered, or otherwise
distinguished in such manner or in accordance with such plans as the officers of
the Company executing the same may determine with the approval of the Trustee.

                                       2
<PAGE>   5

         Any of the Securities may be issued with appropriate insertions,
omissions, substitutions and variations and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Securities are admitted to trading, or to conform to general usage.

         (b) (i) This Section 2.4(b)(i) shall apply only to Securities in global
form ("Global Securities") deposited with The Depository Trust Company (the
"U.S. Depositary").

         The Company shall execute and the Trustee shall, in accordance with
this Section 2.4(b)(i), authenticate and deliver initially Global Securities
that (a) shall be registered in the name of the U.S. Depositary for such Global
Securities or the nominee of such U.S. Depositary, (b) shall be deposited on
behalf of Agent Members (as defined herein) with the Trustee as custodian for
the U.S. Depositary and (c) shall bear legends substantially to the following
effect:

         "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
         OF [INSERT NAME AND ADDRESS OF U.S. DEPOSITARY] TO THE COMPANY OR ITS
         AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
         CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE OR ANY PORTION
         HEREOF IS REGISTERED IN THE NAME OF [INSERT NAME OF U.S. NOMINEE OF
         DEPOSITARY], OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
         REPRESENTATIVE OF [INSERT NAME OF U.S. DEPOSITARY], OR SUCH OTHER NAME
         AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF [INSERT NAME OF U.S.
         DEPOSITARY] (AND ANY PAYMENT HEREON IS MADE TO [INSERT NAME OF NOMINEE
         OF U.S. DEPOSITARY]), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
         VALUE OR OTHERWISE BY OR TO ANY PERSON OTHER THAN (INSERT NAME OF U.S.
         DEPOSITARY OR A NOMINEE THEREOF] IS WRONGFUL INASMUCH AS THE REGISTERED
         OWNER HEREOF, [INSERT NAME OF NOMINEE OF U.S. DEPOSITARY] HAS AN
         INTEREST HEREIN".

         "TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
         WHOLE, BUT NOT IN PART, TO NOMINEES OF [INSERT NAME OF U.S. DEPOSITARY]
         OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
         PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
         ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 305 OF THE
         INDENTURE REFERRED TO ON THE REVERSE HEREOF".

         Members of, or participants in, a U.S. Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the U.S. Depositary or under any Global Security, and
the U.S. Depositary may be treated by the Company, the Trustee, and any agent of
the Company or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving

                                       3
<PAGE>   6

effect to any written certification, proxy or other authorization furnished by
the U.S. Depositary or impair, as between the U.S. Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any security.

         (ii) This Section 2.4(b)(ii) shall apply only to the Global Security
deposited on behalf of the purchasers of the Securities represented thereby with
the Trustee as custodian for the U.S. Depositary for credit to their respective
accounts (or to such other accounts as they may direct) at Euroclear System
("Euroclear") or Cedel, S.A. ("Cedel") insofar as interests in the Global
Security are held by the Agent Members for Euroclear or Cedel.

         The provisions of the "Operating Procedures of the Euroclear System"
and the "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations" and "Instructions to Participants" of Cedel, respectively, shall be
applicable to such Global Security insofar as interests therein are held by the
Agent Members for Euroclear and Cedel. Account holders or participants in
Euroclear and Cedel shall have no rights under this Indenture with respect to
the Global Security, and the nominee of the U.S. Depositary may be treated by
the Company and the Trustee and any agent of the Company or the Trustee as the
owner of the Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the U.S. Depositary or impair, as
between the U.S. Depositary and its Agent Members, the operation of customary
practices governing the exercise of the rights of a holder of any security.

         (c) Each Security shall be dated the date of its authentication and
shall bear interest from the applicable date, and shall be payable on the dates
specified on the face of the form of Security attached as Exhibit A hereto.

         (d) The Person in whose name any Security is registered at the close of
business on the record date specified in the Securities with respect to any
Interest Payment Date shall be entitled to receive the interest, if any, payable
on such Interest Payment Date notwithstanding any transfer or exchange of such
security subsequent to the record date and prior to such Interest Payment Date,
except if and to the extent the Company shall default in the payment of the
interest due on such Interest Payment Date, in which case such defaulted
interest shall be paid to the Persons in whose names Outstanding Securities are
registered at the close of business on a subsequent special record date, to be
established (together with the related payment date) by the Trustee. Such
special record date shall not be more than 15 nor less than 10 days prior to the
payment date. Not less than 10 days prior to the special record date, the
Company (or the Trustee, in the name of and the expense of the Company) shall
mail to Holders a notice that states the special record date, the related
payment date and the amount of interest to be paid. Notice of the proposed
payment of such defaulted interest and the special record date therefor having
been mailed as aforesaid, such defaulted interest shall be paid to the Persons
in whose names the Securities are registered on such special record date.

         (e) The Securities shall be issuable in the denominations specified in
the form of Security attached as Exhibit A hereto.

                                       4
<PAGE>   7

SECTION 2.5 GLOBAL SECURITIES.

         (a) Portions of a Global Security deposited with the U.S. Depositary
pursuant to Section 2.4 shall be transferred in certificated form to the
beneficial owners thereof only if such transfer complies with Section 305 of the
Base Indenture and (i) the U.S. Depositary notifies the Company that it is
unwilling or unable to continue as U.S. Depositary for such Global Security or
if at any time such U.S. Depositary ceases to be a "clearing agency" registered
under the Exchange Act and a successor depositary is not appointed by the
Company within 90 days of such notice, (ii) the Company determines not to have
the Securities represented by a Global Security, or (iii) an Event of Default
has occurred and is continuing with respect to the Securities and the beneficial
owners of a majority in interest of Securities have advised the U.S. Depositary
to cease acting as depository for the Securities.

         (b) Portions of any Global Security that are transferable to the
beneficial owners thereof pursuant to this Section 2.5 shall be surrendered by
the U.S. Depositary to the Trustee at its New York office for registration of
transfer, in whole or from time to time in part, without charge and the Trustee
shall authenticate and deliver, upon such registration of transfer of each
portion of such Global Security, an equal aggregate principal amount of
Securities of authorized denominations. Any portion of a Global Security whose
registration is transferred pursuant to this Section 2.5 shall be executed,
authenticated and delivered only in the denominations specified in the form of
Security attached as Exhibit A hereto and registered in such names as the U.S.
Depositary shall direct.

         (c) Subject to the provisions of Section 2.4(b) above, the registered
Holder of any Global Security may grant proxies and otherwise authorize any
person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.

         (d) In the event of the occurrence of any of the events specified in
paragraph (a) of this Section 2.5, the Company shall promptly make available to
the Trustee a reasonable supply of certificated Securities in definitive fully,
registered form without interest coupons.

                                       5
<PAGE>   8

                                   ARTICLE III

                                      TERMS

SECTION 3.1 TERMS OF THE SECURITIES.

The Securities contain the following terms and conditions:

TITLE OF SECURITIES:

         8% Senior Notes Due 2016

AGGREGATE PRINCIPAL AMOUNT:

         $60,000,000

MATURITY:

         June 30, 2016

INTEREST RATE:

         8% per annum

DATE FROM WHICH INTEREST ACCRUES:

         June 21, 2001, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for.

INTEREST PAYMENT DATES:

         Quarterly on each March 31, June 30, September 30 and December 31
commencing September 30, 2001 and at maturity. In the event that any date on
which interest is payable is not a Business Day (as defined in the Indenture),
then payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day.

REGULAR RECORD DATE:

         Payments of interest and principal shall be made to the person in whose
name a Series 8% Senior Note is registered at the close of business on the
fifteenth calendar day, whether or not a Business Day, prior to the payment
date.

                                       6
<PAGE>   9

PLACE OF PAYMENT

         Any designated office of the Trustee, including such office located in
the Borough of Manhattan.

REDEMPTION - COMPANY OPTION:

         Redeemable, in whole or in part, at any time on and after June 30, 2006
at a redemption price equal to 100% of the principal amount redeemed plus any
accrued and unpaid interest to the date of redemption.

REDEMPTION - LIMITED HOLDER OPTION

         For purposes of this provision, a "Beneficial Owner" means the person
who has the right to sell, transfer or otherwise dispose of an interest in a
Series 8% Senior Note and the right to receive the proceeds therefrom, as well
as the interest and principal payable to the holder thereof. In general, a
determination of beneficial ownership in the Series 8% Senior Notes will be
subject to the rules, regulations and procedures governing the depositary and
institutions that have accounts with the depositary or a nominee thereof
("Participants").

         Unless the Series 8% Senior Notes have been declared due and payable
prior to their maturity by reason of an event of default under the Indenture,
the Representative (defined below) of a deceased Beneficial Owner has the right
to request redemption of all or part of such Beneficial Owner's interest in the
Series 8% Senior Notes. The request must be expressed in multiples of $1,000.
The Company will redeem such Beneficial Owner's Series 8% Senior Notes subject
to the following limitations. The Company will not be obligated to redeem during
the period from the initial issuance of the Series 8% Senior Notes through and
including June 30, 2002 (the "Initial Period"), and during any twelve-month
period which ends on and includes each June 30 thereafter (each such
twelve-month period being hereinafter referred to as a "Subsequent Period") (i)
on behalf of any deceased Beneficial Owner, any interest in the Series 8% Senior
Notes which exceeds a principal amount of $60,000 and (ii) interests in the
Series 8% Senior Notes in an aggregate principal amount exceeding $1,200,000. A
request for redemption may be presented to the Trustee under the Indenture by
the Representative of a deceased Beneficial Owner at any time and in any
principal amount in integral multiples of $1,000, subject to the limitations set
forth above. Representatives of deceased Beneficial Owners must make
arrangements with the Participant in the depositary through whom such interest
is owned in order that timely presentation of redemption requests can be made by
the Participant and, in turn, by the depositary, to the Trustee. If the Company,
although not obligated to do so, chooses to redeem interests in the Series 8%
Senior Notes of a deceased Beneficial Owner during the Initial Period or in any
Subsequent Period in excess of the $60,000 limitation, such redemption, to the
extent that it exceeds the $60,000 limitation for any deceased Beneficial Owner,
shall not be included in the computation of the $1,200,000 aggregate limitation
for such Initial Period or such Subsequent Period, as the case may be.

         Subject to the $60,000 and the $1,200,000 limitations, the Company
will, upon the death of a Beneficial Owner, redeem the interest of such
Beneficial Owner in the Series 8% Senior

                                       7
<PAGE>   10

Notes within 60 days following receipt by the Trustee of a Redemption Request
(defined below), including all supporting documentation, from such Beneficial
Owner's representative, or surviving joint tenant(s), tenant(s) by the entirety
or tenant(s) in common, or other persons entitled to effect a Redemption Request
(each of which is a "Representative"). If, during the Initial Period or any
Subsequent Period, Redemption Requests exceed the aggregate principal amount of
Series 8% Senior Notes required to be redeemed, then such excess Redemption
Requests (subject in the case of the $60,000 limitation to the provisions of the
last sentence of the preceding paragraph) will be applied to successive
Subsequent Periods in order of receipt, regardless of the number of Subsequent
Periods required to redeem such interests unless sooner withdrawn as described
below.

         A request for redemption of an interest in the Series 8% Senior Notes
may be made by delivering a request to the Participant in the depositary through
whom the deceased Beneficial Owner owned such Series 8% Senior Notes, in form
satisfactory to the Participant, together with evidence of the death of the
Beneficial Owner and the authority of the Representative satisfactory to the
Participant and the Trustee. A Representative of a deceased Beneficial Owner may
make the request for redemption and shall submit such other evidence of the
right to such redemption as the Participant or the Trustee shall require. The
request shall specify the principal amount of Series 8% Senior Notes to be
redeemed. A request for redemption in form satisfactory to the Participant and
accompanied by the documents relevant to the request as above provided, together
with a certification by the Participant that it holds the interest on behalf of
the deceased Beneficial Owner with respect to whom the request for redemption is
being made (a "Redemption Request"), must be provided to the depositary by a
Participant, and the depositary will forward the request to the Trustee.
Redemption Requests, including all supporting documentation, must be in the form
satisfactory to the Trustee, and no request for redemption will be considered
validly made until the Redemption Request and all supporting documentation, in
form satisfactory to the Trustee, have been received by the Trustee.

         The price to be paid by the Company for an interest in the Series 8%
Senior Notes to be redeemed pursuant to the request of a Representative of a
deceased Beneficial Owner is 100% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of payment. Subject to arrangements
with the depositary, payment for interests in the Series 8% Senior Notes which
are to be redeemed will be made to the depositary within 60 days following
receipt by the Trustee of the Redemption Request, including all supporting
documentation, and the Series 8% Senior Notes in the aggregate principal amount
specified in the Redemption Requests submitted to the Trustee by the depositary
which are to be fulfilled in connection with such payment. Any acquisition of
Series 8% Senior Notes by the Company or its subsidiaries other than by
redemption at the option of a Representative of a deceased Beneficial Owner
shall not be included in the computation of either the $60,000 or the $1,200,000
limitation for the Initial Period or for any Subsequent Period.

         Interests in the Series 8% Senior Notes held in tenancy by the
entirety, joint tenancy or by tenants in common will be deemed to be held by a
single Beneficial Owner, and the death of a tenant in common, tenant by the
entirety or joint tenant will be deemed the death of a Beneficial Owner. The
death of a person who, during such person's lifetime, was entitled to
substantially all of the rights of a Beneficial Owner of the Series 8% Senior
Notes will be deemed the death of

                                       8
<PAGE>   11

the Beneficial Owner, regardless of the recordation of such interest on the
records of the Participant in the depositary, if such rights can be established
to the satisfaction of the participant and the Trustee. Such interest shall be
deemed to exist in typical cases of nominee ownership, ownership under the
Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, community
property or other similar joint ownership arrangements, including individual
retirement accounts or Keogh [H.R. 10] plans maintained solely by or for the
decedent or by or for the decedent and any spouse, and trust and certain other
arrangements where one person has substantially all of the rights of a holder
during such person's lifetime.

         In the case of a Redemption Request which is presented on behalf of a
deceased Beneficial Owner and which has not been fulfilled at the time the
Company gives notice of its election to redeem the Series 8% Senior Notes, the
Series 8% Senior Notes which are the subject of such Redemption Request shall
not be eligible for redemption pursuant to the Company's option to redeem but
shall remain subject to redemption pursuant to such Redemption Request. Subject
to the provisions of the immediately preceding sentence, any Redemption Request
may be withdrawn upon delivery of a written request for such withdrawal given to
the Trustee by the depositary prior to payment for redemption of interests in
the Series 8% Senior Notes by reason of the death of a Beneficial Owner.

         The Company is legally obligated to redeem Series 8% Senior Notes
properly presented for redemption pursuant to a Redemption Request in accordance
with and subject to the terms, conditions and limitations in the Indenture, as
summarized above. The Company's redemption obligation is not cumulative. Nothing
in the Indenture prohibits the Company from redeeming, in fulfillment of the
Redemption Requests made pursuant to the Indenture, Series 8% Senior Notes in
excess of the principal amount that the Company is obligated to redeem, nor does
anything in the Indenture prohibit the Company from purchasing any Series 8%
Senior Notes in the open market. However, the Company may not use any Series 8%
Senior Notes redeemed or purchased as described in the immediately preceding
sentence as a credit against the Company's redemption obligation.

         Because of the limitations of the Company's requirement to redeem, no
Beneficial Owner can have any assurance that his or her Series 8% Senior Notes
will be paid prior to maturity.

SINKING FUND PROVISIONS:

         None

FORM:

         One or more permanent global notes in definitive, fully registered,
book-entry form, without coupons.

DEPOSITARY:

         The Depository Trust Company.

                                       9
<PAGE>   12

DEFEASANCE:

         The provisions of Sections 1402 and 1403 of the Indenture shall be
applicable to the Series 8% Senior Notes.

SECTION 3.2 FORM OF THE SECURITIES.

         The form of the Series 8% Senior Notes shall be the form set forth in
Exhibit A attached hereto.

                                   ARTICLE IV
                                  MISCELLANEOUS

SECTION 4.1. Ratification of Indenture.

         The Indenture as supplemented by this Third Supplemental Indenture, is
in all respects ratified and confirmed, and this Third Supplemental Indenture
shall be deemed part of the Indenture in the manner and to the extent herein and
therein provided.

SECTION 4.2. Trustee Not Responsible for Recitals.

         The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
Third Supplemental Indenture.

SECTION 4.3. Governing Law.

         This Third Supplemental Indenture and each Security shall be deemed to
be a contract made under the internal laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State, without
regard to conflicts of laws principles.

SECTION 4.4. Separability.

         In case any one or more of the provisions contained in this Third
Supplemental Indenture or in the Securities shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Third
Supplemental Indenture or of the Securities, but this Third Supplemental
Indenture and the Securities shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.

SECTION 4.5. Counterparts.

         This Third Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.

                                       10
<PAGE>   13

         IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed by their respective officers
thereunto duly authorized, on the date or dates indicated in the acknowledgments
and as of the day and year first above written.

                               SEMCO ENERGY, INC.
                               as Issuer

                               By:
                                  ----------------------------------------------
                                  Name:    Marcus Jackson
                                  Title:   President and Chief Executive Officer

                               BANK ONE TRUST COMPANY, NATIONAL
                               ASSOCIATION, as Trustee

                               By:
                                  ----------------------------------------------
                                  Name:
                                  Title:

                                       11
<PAGE>   14

                                                                       Exhibit A

Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Corporation or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

                                                           CUSIP NO. 78412D AE 9

No.                             SEMCO ENERGY, INC.
   --
                             SERIES 8% SENIOR NOTES
                                    DUE 2016

<TABLE>
<S>                                 <C>
Principal Amount:                   $60,000,000

Regular Record Date:                The fifteenth calendar day, whether or not a Business Day,
                                    prior to the Interest Payment Date

Original Issue Date:                June 21, 2001

Maturity:                           June 30, 2016

Interest Payment Dates:             Quarterly on each March 31, June 30, September 30 and
                                    December 31 commencing on September 30, 2001

Interest Rate:                      8% per annum

Authorized Denomination:            $1,000 or any integral multiples thereof

Place of Payment:                   Any designated office of the Trustee, including such office
                                    located in the Borough of Manhattan.
</TABLE>

         SEMCO Energy, Inc., a Michigan corporation (the "Corporation", which
term includes any successor corporation under the Indenture referred to on the
reverse hereto), for value received, hereby promises to pay to CEDE & CO. or its
registered assigns, the principal sum of SIXTY MILLION DOLLARS ($60,000,000) on
the Maturity shown above, unless redeemed prior thereto as hereinafter provided,
and to pay interest thereon from the Original Issue Date

                                        1
<PAGE>   15

shown above, or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, in arrears on each Interest Payment Date as
specified above in each year, commencing on September 30, 2001, at the rate per
annum shown above (the "Interest Rate") until the principal hereof (and premium,
if any) is paid or made available for payment and on any overdue principal (and
premium, if any) 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 such Indenture, be paid to the Person in whose name this
Series 8% Senior Note (this "Security") is registered at the close of business
on the Regular Record Date as specified above next preceding such Interest
Payment Date. Except as otherwise provided in the 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 Security is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be mailed 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 said Indenture.

         Interest payments for this Security shall be computed and paid on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which principal (and premium, if any) or interest is payable on this Security is
not a Business Day, then payment of the principal (and premium, if any) or
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or payment in respect of any such delay)
with the same force and effect as if made on the date the payment was originally
payable.

         Payment of the principal (and premium, if any) of this Security, when
due and payable, shall be made upon surrender of this Security, at any Place of
Payment, 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. At the
option of the Corporation, all payments of principal may be made by check to the
registered holder of the Security or such other person entitled thereto against
surrender of such Security. Payment of interest will be made, at the option of
the Corporation, (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer to an account maintained by the Person entitled thereto located inside
the United States.

         REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

         Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.

                                        2
<PAGE>   16

         IN WITNESS WHEREOF, the Corporation has caused this instrument to be
duly executed under its corporate seal.

Dated:  June 21, 2001

                                       SEMCO ENERGY, INC.

                                       By:
                                          --------------------------------------
                                          Marcus Jackson
                                          President and Chief Executive Officer

Attest:

--------------------------------------
Sherry L. Abbott, Secretary

                          CERTIFICATE OF AUTHENTICATION

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

                                       BANK ONE TRUST COMPANY, NATIONAL
                                       ASSOCIATION, as Trustee

                                       By:
                                          --------------------------------------

                                       3

<PAGE>   17

                           (Reverse Side of Security)

         This Security is one of a duly authorized issue of Securities of the
Corporation (the "Securities"), issued and issuable in one or more series under
an Indenture, dated as of October 23, 1998 as supplemented by a First, Second
and Third Supplemental Indenture (the "Indenture"), between the Corporation and
Bank One Trust Company, National Association, successor to NBD Bank, as Trustee
(the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture reference is hereby made for a statement of the respective
rights, limitation of rights, duties and immunities thereunder of the
Corporation, the Trustee and the Holders of the Securities issued thereunder and
of the terms upon which said Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof as
Series 8% Senior Notes Due 2016 (the "Series 8% Senior Notes" or "Securities of
this series") in the aggregate principal amount of up to $60,000,000.
Capitalized terms used herein for which no definition is provided herein shall
have the meanings set forth in the Indenture.

         The Securities of this series are redeemable, in whole or in part, at
any time on or after June 30, 2006 at a redemption price equal to 100% of the
principal amount redeemed plus any accrued and unpaid interest to the date of
redemption.

         For purposes of this provision, a "Beneficial Owner" means the person
who has the right to sell, transfer or otherwise dispose of an interest in a
Series 8% Senior Note and the right to receive the proceeds therefrom, as well
as the interest and principal payable to the holder thereof. In general, a
determination of beneficial ownership in the Series 8% Senior Notes will be
subject to the rules, regulations and procedures governing the depositary and
institutions that have accounts with the depositary or a nominee thereof
("Participants").

         Unless the Series 8% Senior Notes have been declared due and payable
prior to their maturity by reason of an event of default under the Indenture,
the Representative (defined below) of a deceased Beneficial Owner has the right
to request redemption of all or part of such Beneficial Owner's interest in the
Series 8% Senior Notes. The request must be expressed in multiples of $1,000.
The Corporation will redeem such Beneficial Owner's Series 8% Senior Notes
subject to the following limitations. The Corporation will not be obligated to
redeem during the period from the initial issuance of the Series 8% Senior Notes
through and including June 30, 2002 (the "Initial Period"), and during any
twelve-month period which ends on and includes each June 30 thereafter (each
such twelve-month period being hereinafter referred to as a "Subsequent Period")
(i) on behalf of any deceased Beneficial Owner, any interest in the Series 8%
Senior Notes which exceeds a principal amount of $60,000 and (ii) interests in
the Series 8% Senior Notes in an aggregate principal amount exceeding
$1,200,000. A request for redemption may be presented to the Trustee under the
Indenture by the Representative of a deceased Beneficial Owner at any time and
in any principal amount in integral multiples of $1,000, subject to the
limitations set forth above. Representatives of deceased Beneficial Owners must
make arrangements with the Participant in the depositary through whom such
interest is owned in order that timely presentation of redemption requests can
be made by the Participant and, in turn, by the depositary, to the Trustee. If
the Corporation, although not obligated to do so, chooses to

                                       1
<PAGE>   18

redeem interests in the Series 8% Senior Notes of a deceased Beneficial Owner
during the Initial Period or in any Subsequent Period in excess of the $60,000
limitation, such redemption, to the extent that it exceeds the $60,000
limitation for any deceased Beneficial Owner, shall not be included in the
computation of the $1,200,000 aggregate limitation for such Initial Period or
such Subsequent Period, as the case may be.

         Subject to the $60,000 and the $1,200,000 limitations, the Corporation
will, upon the death of a Beneficial Owner, redeem the interest of such
Beneficial Owner in the Series 8% Senior Notes within 60 days following receipt
by the Trustee of a Redemption Request (defined below), including all supporting
documentation, from such Beneficial Owner's representative, or surviving joint
tenant(s), tenant(s) by the entirety or tenant(s) in common, or other persons
entitled to effect a Redemption Request (each of which is a "Representative").
If, during the Initial Period or any Subsequent Period, Redemption Requests
exceed the aggregate principal amount of Series 8% Senior Notes required to be
redeemed, then such excess Redemption Requests (subject in the case of the
$60,000 limitation to the provisions of the last sentence of the preceding
paragraph) will be applied to successive Subsequent Periods in order of receipt,
regardless of the number of Subsequent Periods required to redeem such interests
unless sooner withdrawn as described below.

         A request for redemption of an interest in the Series 8% Senior Notes
may be made by delivering a request to the Participant in the depositary through
whom the deceased Beneficial Owner owned such Series 8% Senior Notes, in form
satisfactory to the Participant, together with evidence of the death of the
Beneficial Owner and the authority of the Representative satisfactory to the
Participant and the Trustee. A Representative of a deceased Beneficial Owner may
make the request for redemption and shall submit such other evidence of the
right to such redemption as the Participant or the Trustee shall require. The
request shall specify the principal amount of Series 8% Senior Notes to be
redeemed. A request for redemption in form satisfactory to the Participant and
accompanied by the documents relevant to the request as above provided, together
with a certification by the Participant that it holds the interest on behalf of
the deceased Beneficial Owner with respect to whom the request for redemption is
being made (a "Redemption Request"), must be provided to the depositary by a
Participant, and the depositary will forward the request to the Trustee.
Redemption Requests, including all supporting documentation, must be in the form
satisfactory to the Trustee, and no request for redemption will be considered
validly made until the Redemption Request and all supporting documentation, in
form satisfactory to the Trustee, have been received by the Trustee.

         The price to be paid by the Corporation for an interest in the Series
8% Senior Notes to be redeemed pursuant to the request of a Representative of a
deceased Beneficial Owner is 100% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of redemption. Subject to arrangements
with the depositary, payment for interests in the Series 8% Senior Notes which
are to be redeemed will be made to the depositary within 60 days following
receipt by the Trustee of the Redemption Request, including all supporting
documentation, and the Series 8% Senior Notes in the aggregate principal amount
specified in the Redemption Requests submitted to the Trustee by the depositary
which are to be fulfilled in connection with such payment. Any acquisition of
Series 8% Senior Notes by the Corporation or its subsidiaries other than by
redemption at the option of a Representative of a deceased Beneficial Owner
shall

                                       2
<PAGE>   19

not be included in the computation of either the $60,000 or the $1,200,000
limitation for the Initial Period or for any Subsequent Period.

         Interests in the Series 8% Senior Notes held in tenancy by the
entirety, joint tenancy or by tenants in common will be deemed to be held by a
single Beneficial Owner, and the death of a tenant in common, tenant by the
entirety or joint tenant will be deemed the death of a Beneficial Owner. The
death of a person who, during such person's lifetime, was entitled to
substantially all of the rights of a Beneficial Owner of the Series 8% Senior
Notes will be deemed the death of the Beneficial Owner, regardless of the
recordation of such interest on the records of the Participant in the
depositary, if such rights can be established to the satisfaction of the
Participant and the Trustee. Such interest shall be deemed to exist in typical
cases of nominee ownership, ownership under the Uniform Gifts to Minors Act or
the Uniform Transfers to Minors Act, community property or other similar joint
ownership arrangements, including individual retirement accounts or Keogh [H.R.
10] plans maintained solely by or for the decedent or by or for the decedent and
any spouse, and trust and certain other arrangements where one person has
substantially all of the rights of a holder during such person's lifetime.

         In the case of a Redemption Request which is presented on behalf of a
deceased Beneficial Owner and which has not been fulfilled at the time the
Corporation gives notice of its election to redeem the Series 8% Senior Notes,
the Series 8% Senior Notes which are the subject of such Redemption Request
shall not be eligible for redemption pursuant to the Corporation's option to
redeem but shall remain subject to redemption pursuant to such Redemption
Request. Subject to the provisions of the immediately preceding sentence, any
Redemption Request may be withdrawn upon delivery of a written request for such
withdrawal given to the Trustee by the depositary prior to payment for
redemption of interests in the Series 8% Senior Notes by reason of the death of
a Beneficial Owner.

           The Corporation is legally obligated to redeem Series 8% Senior Notes
properly presented for redemption pursuant to a Redemption Request in accordance
with and subject to the terms, conditions and limitations in the Indenture, as
summarized above. The Corporation's redemption obligation is not cumulative.
Nothing in the Indenture prohibits the Corporation from redeeming, in
fulfillment of the Redemption Requests made pursuant to the Indenture, Series 8%
Senior Notes in excess of the principal amount that the Corporation is obligated
to redeem, nor does anything in the Indenture prohibit the Corporation from
purchasing any Series 8% Senior Notes in the open market. However, the
Corporation may not use any Series 8% Senior Notes redeemed or purchased as
described in the immediately preceding sentence as a credit against the
Corporation's redemption obligation.

         Because of the limitations of the Corporation's requirement to redeem,
no Beneficial Owner can have any assurance that his or her Series 8% Senior
Notes will be paid prior to maturity.

         If an Event of Default with respect to the Securities of this series
shall occur and be continuing, the principal of the Securities of this series
may be declared due and payable in the manner, with the effect and subject to
the conditions provided in the Indenture.

                                       3
<PAGE>   20

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights of the Holders of the
Securities of all series affected under the Indenture at any time by the
Corporation and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities of all series
affected thereby (voting as one class). The Indenture contains provisions
permitting the Holders of not less than a majority in principal amount of the
Outstanding Securities of any series with respect to which a default under the
Indenture shall have occurred and be continuing (voting as one class), on behalf
of the Holders of the Securities of such series, to waive, with certain
exceptions, such default under the Indenture and its consequences. The Indenture
also permits the Holders of not less than 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 Corporation with
certain provisions of the Indenture affecting such series. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security 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
Security.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Corporation for such purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Corporation and the Security Registrar and duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Securities of this series, of authorized denominations and of like tenor and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

         As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall have failed to institute any such proceeding for 60 days after receipt of
such notice, request and offer of indemnity and shall not have received during
such 60-day period from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request. The foregoing shall not apply to any suit instituted by the Holder
of this Security for the enforcement of any payment of principal hereof or any
interest hereon on or after the respective due dates expressed herein.

         The Indenture contains provisions for defeasance at any time of all or
a portion of the indebtedness of the Securities of this series and for covenant
defeasance at any time of certain covenants in the Indenture upon compliance
with certain conditions set forth in the Indenture.

                                       4
<PAGE>   21

         The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to the limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of any authorized denomination, as requested by the
Holder surrendering the same upon surrender of the Security or Securities to be
exchanged at any Place of Payment.

         Prior to the due presentment of a Security of this series for
registration of transfer, the Corporation, the Trustee and any agent of the
Corporation or Trustee may treat the registered Holder thereof as the owner of
such Security for the purpose of receiving payment of principal of (and premium,
if any) and (subject to certain Indenture provisions) interest on, such Security
and for all other purposes whatsoever, whether or not such Security be overdue,
and neither the Corporation, the Trustee nor any agent of the Corporation or the
Trustee shall be affected by notice to the contrary.

         This Security shall be governed by, and construed in accordance with,
the internal laws of the State of New York.

                                       5
<PAGE>   22

                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common

TEN ENT - as tenants by the entireties

JT TEN - as joint tenants with rights
         of survivorship and not as
         tenants in common

UNIF GIFT MIN ACT - ..................... Custodian ............................
                          (Cust)                               (Minor)

Under Uniform Gifts to Minors Act...............................................
                                                  (State)

  Additional abbreviations may also be used though not on the above list.

--------------------------------------------------------------------------------

         FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfers) unto
                (please insert Social Security or other identifying number of
assignee).

--------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing agent to transfer said Security on the books of the Corporation,
with full power of substitution in the premises.

Dated:
      -------------------------     --------------------------------------------

                  NOTICE: The signature to this assignment must correspond with
                  the name as written upon the face of the within instrument in
                  every particular without alteration or enlargement, or any
                  change whatever.

Signature(s) must be guaranteed by an eligible guarantor institution
participating in a Securities Transfer Association's recognized signature
guarantee program.

                                       6

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