Document:

exv10w1

 

Exhibit 10.1

LETTER OF CREDIT REIMBURSEMENT AGREEMENT

Dated as of November 30, 2007

     THIS LETTER OF CREDIT REIMBURSEMENT AGREEMENT (this “Agreement”) is between CONSUMERS ENERGY
COMPANY (the “Company”) and THE BANK OF NOVA SCOTIA (the “Bank”).

     The Company has requested, and the Bank has agreed to grant, a secured letter of credit
facility on the terms and subject to the conditions set forth in this Agreement. Accordingly,
the Company and the Bank agree as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION.

     1.1 Definitions. In addition to the terms defined in the preamble, as used
herein, (a) the terms set forth below shall have the following meanings (such definitions to be
applicable to both the singular and plural forms of such terms) and (b) other capitalized terms not
defined herein have the respective meanings set forth in the Credit Agreement referred to below:

     Bond Delivery Agreement means a bond delivery agreement whereby the Bank, among
other things, acknowledges delivery of the Bonds, substantially in the form of Exhibit
B.

     Bonds means a series of interest-bearing First Mortgage Bonds created under the
Supplemental Indenture issued in favor of, and in form and substance satisfactory to, the Bank.

     Business Day means any day on which the Bank’s main office in New York, New York is
open for the transaction of commercial banking business (including the issuance of, and receipt of
drawings under, letters of credit).

     Collateral Account means a special, interest-bearing account maintained (pursuant to
arrangements satisfactory to the Bank) at the Bank’s office at the address specified pursuant to
Section 11.2, which account shall be in the name of the Company but under the sole dominion
and control of the Bank.

     Commitment means the commitment of the Bank to issue Letters of Credit hereunder.

     Commitment Amount means $200,000,000, as reduced from time to time in accordance
with the terms hereof.

     Commitment Fee Rate — see Schedule 1.

     Credit Agreement means the Fourth Amended and Restated Credit Agreement dated as of
March 30, 2007 among the Company, various financial institutions and JPMorgan Chase Bank, N.A., as
administrative agent, as amended, modified or waived after the date hereof but without giving
effect to any termination thereof.

     Default means any event described in Section 10.1.

 

 

     Designated Covenant means each covenant of the Company set forth in Articles VI
through VIII of the Credit Agreement (excluding Sections 6.5, 6.6, 6.8 and 6.10 of the Credit
Agreement), together with all definitions related thereto.

     Expiration Date means the date that is 364 days after the date hereof, as such date
may be extended pursuant to Section 2.6.

     FMB Release Date means the date on which the Bonds are released pursuant to
Section 11.12.

     Letter of Credit — see Section 2.1.

     Letter of Credit Application — see Section 2.2.

     LC Commission Fee Rate — see Schedule 1.

     Liabilities means all obligations of the Company to the Bank and its successors and
assigns, howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing or due or to become due, arising out of or in connection with
the Letters of Credit, this Agreement or the other Transaction Documents.

     Prime Rate means a rate per annum equal to the prime rate of interest announced from
time to time by the Bank (which is not necessarily the lowest rate charged to any customer),
changing when and as such prime rate changes.

     Stated Amount means, with respect to any Letter of Credit, the sum of (i) the maximum
aggregate amount available for drawing under such Letter of Credit under any and all circumstances
and (ii) the unpaid principal amount of all reimbursement obligations in respect of drawings under
such Letter of Credit.

     Supplemental Indenture means a supplemental indenture substantially in the form
of Exhibit A.

     Termination Date means the earlier to occur of (a) the Expiration Date and (b) such
other date on which the Commitment Amount shall be reduced to zero pursuant to Section 4 or
the Commitment shall be terminated pursuant to Section 10.

     Transaction Documents means this Agreement, each Letter of Credit Application, the
Supplemental Indenture, the Bond Delivery Agreement, the Bonds and each other instrument or
document delivered in connection herewith.

     Unmatured Default means any event that if it continues uncured will, with lapse of
time or notice or lapse of time and notice, constitute a Default.

     1.2 Other Interpretive Provisions, (a) The term “including” is not limiting and
means “including without limitation.” (b) Unless otherwise provided herein, (i) references to
agreements and other contractual instruments shall be deemed to include all subsequent amendments
and other modifications thereto, but only to the extent such amendments and other

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modifications are not prohibited by the terms of any Transaction Document, and (ii) references
to any statute or regulation shall be construed to include all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting such statute or
regulation.

SECTION 2. COMMITMENT OF THE BANK; LETTER OF CREDIT PROCEDURES.

     2.1 Commitment. The Bank hereby agrees, on the terms and conditions set forth in this Agreement, to issue standby letters of credit denominated in U.S. dollars (each, a
“Letter of Credit”) and to renew, extend, increase, decrease or otherwise modify Letters of
Credit (“Modify,” and each such action a “Modification”), from time to time from and
including the date hereof and prior to the Termination Date upon the request of the Company;
provided that the aggregate Stated Amount of all Letters of Credit shall not at any time exceed the
Commitment Amount. No Letter of Credit shall (x) be issued later than 30 days prior to the
scheduled Termination Date, (y) have an expiry date later than the fifth Business Day prior to
the scheduled Termination Date (unless the Company agrees on writing on the date of issuance (or,
if applicable, the date of the Modification extending the expiry date thereof) of such Letter
of Credit to, and the Company does, on or prior to such fifth preceding Business Day, deliver
cash to the Bank for deposit in the Collateral Account in an amount equal to an amount equal to not
less than 105% of the outstanding Stated Amount of such Letter of Credit) or (z) provide for
time drafts.

     2.2 Notice. Subject to Section 2.1, the Company shall give the Bank notice prior to
12:00 noon (New York time) at least three Business Days (or such lesser number of days as the
Bank may agree in any particular instance) prior to the proposed date of issuance or
Modification
of a Letter of Credit, specifying the beneficiary, the proposed date of issuance (or
Modification)
and the expiry date of such Letter of Credit, and describing the proposed terms of such Letter
of
Credit and the nature of the transactions proposed to be supported thereby. The issuance or
Modification by the Bank of any Letter of Credit shall, in addition to the conditions
precedent set
forth in Section 9, be subject to the condition precedent that such Letter of Credit
shall be
satisfactory to the Bank and that the Company shall have executed and delivered an application
therefor on the Bank’s customary form for the type of Letter of Credit requested (each a
“Letter of Credit Application”). In the event of any conflict between the terms of this
Agreement and
the terms of any Letter of Credit Application, the terms of this Agreement shall control.

     2.3 Reimbursement. Upon receipt of a demand for payment from the beneficiary of a
Letter of Credit, the Bank shall promptly notify the Company as to the amount to be paid by
the
Bank as a result of such demand and the proposed payment date (the “LC Payment Date”). The
Bank’s sole responsibility to the Company upon any such demand shall be to determine that the
documents delivered under the applicable Letter of Credit in connection with such demand are
in
conformity in all material respects with the requirements of such Letter of Credit. The
Company
shall be irrevocably and unconditionally obligated to reimburse the Bank on the applicable LC
Payment Date for any amounts to be paid by the Bank upon any drawing under any Letter of
Credit, without presentment, demand, protest or other formalities of any kind;
provided that the
Company shall not be precluded from asserting any claim for direct (but not consequential)
damages suffered by the Company to the extent, but only to the extent, caused by (i) the gross
negligence or willful misconduct of the Bank in determining whether a demand presented under
any Letter of Credit complied with the terms of such Letter of Credit or (ii) the Bank’s
failure to

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pay under any Letter of Credit issued after the presentation to it of a request strictly complying
with the terms and conditions of such Letter of Credit. If the Company fails to reimburse the Bank
in full for any drawing under a Letter of Credit on the applicable LC Payment Date, the unpaid
principal amount of such reimbursement obligation shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to (x) the rate applicable to Floating Rate Advances under
the Credit Agreement plus, beginning on the third Business Day after the LC Payment Date, 1%.

     2.4 Obligations Absolute. The Company’s obligations under this Section 2 shall be
absolute and unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment that the Company may have or have had against the Bank or
any beneficiary of a Letter of Credit. The Company further agrees with the Bank that the Bank
shall not be responsible for, and the Company’s reimbursement obligation in respect of any
Letter of Credit shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even if such documents should in fact prove to be in
any or all respects invalid, fraudulent or forged, or any dispute between or among the
Company,
any of its affiliates, the beneficiary of any Letter of Credit or any financing institution or
other
party to whom any Letter of Credit may be transferred or any claims or defenses whatsoever of
the Company or of any of its affiliates against the beneficiary of any Letter of Credit or any
such
transferee. The Bank shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however transmitted, in
connection
with any Letter of Credit. The Company agrees that any action taken or omitted by the Bank
under or in connection with a Letter of Credit and the related drafts and documents, if done
without gross negligence and willful misconduct, shall be binding upon the Company and shall
not put the Bank under any liability to the Company. Nothing in this Section 2.4 is
intended to
limit the right of the Company to make a claim against the Bank for damages as contemplated by
the proviso to the second sentence of Section 2.3.

     2.5 Actions of the Bank. The Bank shall be entitled to rely, and shall be fully
protected in relying, upon any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement,
order or other document believed by it to be genuine and correct and to have been signed, sent
or
made by the proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Bank.

     2.6 Extension of Expiration Date. Not earlier than 120 days prior to, nor later than
60
days prior to, the initial Expiration Date (the “Initial Expiration Date”), the Company may
request that the Bank (in its sole discretion) extend the Initial Expiration Date for an
additional
364 days. If the Bank agrees to so extend the Initial Expiration Date (which agreement may be
conditioned upon the payment of an extension fee to be agreed to by the Company and the
Bank), the Expiration Date shall be extended for an additional 364 days effective as of the
Initial
Expiration Date.

     2.7 Indemnification. The Company hereby agrees to indemnify and hold harmless the
Bank and its directors, officers, agents and employees from and against any and all claims and
damages, losses, liabilities, reasonable costs or expenses that the Bank may incur (or that
may be
claimed against the Bank by any Person whatsoever) by reason of or in connection with the

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issuance, execution and delivery or transfer of or payment or failure to pay under any Letter of
Credit or any actual or proposed use of any Letter of Credit, including any claims, damages,
losses, liabilities, costs or expenses (“indemnified liabilities”) that the Bank may incur
by reason of or on account of the Bank issuing any Letter of Credit which specifies that the term
“Beneficiary” included therein includes any successor by operation of law of the named Beneficiary,
but which Letter of Credit does not require that any drawing by any such successor Beneficiary be
accompanied by a copy of a legal document, satisfactory to the Bank, evidencing the appointment of
such successor Beneficiary; provided that the Company shall not be required to indemnify
the Bank for indemnified liabilities to the extent it is determined in a final non-appealable
judgment by a court of competent jurisdiction that such indemnified liabilities arose out of an
event described in the proviso to the second sentence of Section 2.3.

     2.8 Evidence. The obligation of the Company to repay the Liabilities shall
be evidenced by one or more Bonds.

SECTION 3. FEES.

     3.1 Commitment and LC Commission Fees. The Company agrees to pay the Bank
(a) a commitment fee in an amount equal to the Commitment Fee Rate in effect from time to
time on the daily remainder of (i) the Commitment Amount and (ii) the Stated Amount of all
Letters of Credit and (b) a letter of credit commission fee in an amount equal to the LC
Commission Fee Rate in effect from time to time on the daily Stated Amount of each Letter of
Credit, in each case for the period from the date of issuance of such Letter of Credit to the
date
such Letter of Credit expires or otherwise terminates; provided that, at any time any
Default
exists, the Bank may, by written notice to the Company, increase the rate per annum for the
commitment fee and/or the letter of credit commission fee by 1.0% (which increased rate shall,
unless otherwise agreed by the Bank, remain effective until the first date on which no Default
exists). Such fees shall be computed for the actual number of days elapsed on the basis of a
360-day year and payable in arrears on the last day of each calendar quarter and on the
Termination
Date (and, if applicable, thereafter on demand), in each case for the period then ended for
which such fees have not previously been paid.

     3.2 Issuance Fees. The Company agrees to pay to the Bank (i) an issuance fee of
$100 for each Letter of Credit, payable not more than 30 days following delivery by the Bank
of
an invoice therefor, (ii) if at any time any other financial institution holds a risk
participation in
all or any portion of a Letter of Credit, a fronting fee of 12.5 basis points per annum of the
face
amount of such Letter of Credit, payable quarterly in arrears on the last day of each calendar
quarter and on the Termination Date (and thereafter, if applicable, on demand), and (iii)
documentary and processing charges in connection with the issuance or modification of and
draws under any Letter of Credit in accordance with the Bank’s standard schedule for such
charges as in effect from time to time.

SECTION 4. REDUCTIONS OF THE COMMITMENT AMOUNT. The Company may from time to time, upon not less
than five Business Days’ prior written notice to the Bank, permanently reduce the Commitment Amount
to an amount that is not less than the Stated Amount of all Letters of Credit. Upon any such
reduction in the Commitment Amount, the Bank shall, upon request of the Company, promptly surrender
to or upon the order of the Company one

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or more Bonds specified by the Company; provided that the Company remains in compliance
with Section 8.2.

SECTION 5. SECTION 6 MAKING OF PAYMENTS.

     5.1 Making of Payments. All amounts payable by the Company hereunder shall be
paid in U.S. dollars in immediately available funds to the Bank at its principal office in New
York, New York not later than 2:30 p.m., New York time, on the date due, and funds received
after such time shall be deemed to have been received by the Bank on the immediately following
Business Day. The Company hereby authorizes the Bank to charge any account of the Company
maintained with the Bank for (a) any reimbursement obligations that become due upon any
drawing under a Letter of Credit and (b) each payment of fees or other amounts that are due
and
payable hereunder (but the failure of the Bank to charge any such account shall not affect the
Company’s obligation to pay the Bank all amounts payable hereunder as such amounts become
due).

     5.2 Due Date Extension. If any amount required to be paid hereunder becomes due
on a date that is not a Business Day, then such amount shall be paid on the immediately
following Business Day.

SECTION 6. YIELD PROTECTION.

     6.1 Yield Protection. The Company agrees to reimburse the Bank for any increase in
the cost (including any increase in capital costs) to the Bank of, or any reduction in the
amount
of any sum receivable by the Bank in respect of, any Letter of Credit in accordance with the
terms of Section 4.1 of the Credit Agreement as if such Section were set forth in full herein
mutatis mutandis (it being understood that (a) any reference to the “Agent”, a “Bank”
or an “L/C
Issuer” shall be deemed to be a reference to the Bank, (b) any reference to a “Letter of
Credit”
shall be deemed to be a reference to a Letter of Credit and (c) any reference to “this
Agreement”
shall be deemed to be a reference to this Agreement).

     6.2 Bank Statements; Limitations on Demands; Survival. Each demand by the Bank
pursuant to this Section 6 shall be accompanied by a statement setting forth in
reasonable detail
the basis for such demand and a calculation of the amount being demanded. Determinations and
statements of the Bank pursuant to this Section 6 shall be conclusive absent
demonstrable error.
Notwithstanding the foregoing, the Bank shall not be entitled to demand compensation or be
compensated hereunder to the extent that such compensation relates to any period of time more
than 90 days prior to the date upon which the Bank first notified the Company of the
occurrence
of the event entitling the Bank to such compensation (unless, and to the extent that, any such
compensation so demanded relates to the retroactive application of any event so notified to
the
Company). The provisions of this Section 6 shall survive termination of this
Agreement.

SECTION 7. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into this Agreement and to
issue Letters of Credit hereunder, the Company represents and warrants that:

     7.1 Incorporation and Good Standing. The Company is duly incorporated, validly
existing and in good standing under the laws of the State of Michigan.

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     7.2 Corporate Power and Authority: No Conflicts. The execution, delivery and
performance by the Company of the Transaction Documents are within the Company’s corporate powers,
have been duly authorized by all necessary corporate action and do not (a) violate the Company’s
charter, bylaws or any applicable law, or (b) breach or result in an event of default under any
indenture or material agreement, and do not result in or require the creation of any Lien upon or
with respect to any of its properties (except the Lien of the Indenture securing the Bonds and any
Lien in favor of the Bank on the Collateral Account or any funds therein).

     7.3 Governmental Approvals. No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is required for the due
execution, delivery and performance by the Company of any Transaction Document, except for the
authorization to issue, sell or guarantee secured and/or unsecured short-term debt granted by the
Federal Energy Regulatory Commission, which authorization has been obtained and is in full force
and effect.

     7.4 Legally Enforceable Agreements. Each Transaction Document constitutes a legal,
valid and binding obligation of the Company, enforceable in accordance with its terms, subject to
(a) the effect of applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally and (b) the application of general
principles of equity (regardless of whether considered in a proceeding in equity or at law).

     7.5 Bonds. The issuance to the Bank of the Bonds to evidence the Liabilities (a) will
not violate any provision of the Indenture or any other agreement or instrument, or any law or
regulation, or judicial or regulatory order, judgment or decree, to which the Company or any of its
Subsidiaries is a party or by which any of the foregoing is bound and (b) will, prior to the FMB
Release Date, provide the Bank, as beneficial holder of the Bonds, the benefit of the Lien of the
Indenture equally and ratably with the holders of other First Mortgage Bonds.

     7.6 Credit Agreement Representations and Warranties. Each of the representations and
warranties of the Company set forth Sections 5.5 through 5.11, 5.13 and 5.14 of the Credit
Agreement is true and correct in all material respects, except to the extent that any such
representation or warranty expressly relates to an earlier date, in which case it was true and
correct as of such earlier date (it being understood that, for purposes hereof, all references in
such provisions of the Credit Agreement, and in any related definitions, to (a) the “Agent” or the
“Banks” shall be deemed to be references to the Bank and (b) a “Material Adverse Change”
shall mean any event, development or circumstance that has had or could reasonably be expected to
have a material adverse effect on (i) the financial condition or results of operations of the
Company and its Consolidated Subsidiaries, taken as a whole, (ii) the Company’s ability to perform
its obligations under any Transaction Document or (iii) the validity or enforceability of any
Transaction Document or the rights or remedies of the Bank thereunder.

SECTION 8. COVENANTS. The Company agrees that until the expiration or termination of the Commitment
and thereafter until all Liabilities are paid in full in cash and all outstanding Letters of Credit
are cancelled, have expired or are fully drawn, it will:

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     8.1 Compliance with Designated Covenants. Comply with each Designated Covenant as if
all such covenants were set forth in full herein, mutatis mutandis.

     8.2 Minimum Amount of Bonds. Beginning on the date hereof and continuing until the
earlier of (i) the FMB Release Date and (ii) the date on which the Commitment and Letters of Credit
have terminated and all Liabilities have been paid in full, cause the face amount of all Bonds to
at all times be equal to or greater than the greater of (x) the Commitment Amount and (y) the sum
of (A) the aggregate undrawn Stated Amount of all outstanding Letters of Credit plus (B) the
aggregate unpaid amount of all reimbursement obligations under all Letters of Credit.

     8.3 Maintenance of Books and Records; Inspections. Keep adequate records and books of
account, in which full and correct entries shall be made of all of its financial transactions and
its assets and business so as to permit the Company and its Consolidated Subsidiaries to present
financial statements in accordance with GAAP and, subject to any necessary approval from the
Nuclear Regulatory Commission, at any reasonable time and from time to time, permit the Bank or any
agent or representative thereof to examine and make copies of and abstracts from its records and
books of account, visit its properties and discuss its affairs, finances and accounts with any of
its officers.

     8.4 Notice of Default. As soon as practicable and in any event within five Business
Days after becoming aware of the occurrence of any Default or Unmatured Default, a statement of a
Designated Officer as to the nature thereof, and as soon as practicable and in any event within
five Business Days thereafter, a statement of a Designated Officer as to the action which the
Company has taken, is taking or proposes to take with respect thereto.

SECTION 9. CONDITIONS TO ISSUANCE OF LETTERS OF CREDIT. The obligation of the Bank to issue any
Letter of Credit is subject to the following conditions precedent:

     9.1 Initial Letter of Credit. The obligation of the Bank to issue the initial Letter
of Credit is, in addition to the conditions precedent specified in Section 9.2, subject to
the condition precedent that the Bank shall have received all of the following, each duly executed
and dated the date of issuance of such Letter of Credit (or such earlier date as shall be
satisfactory to the Bank), in form and substance satisfactory to the Bank:

     (a) a copy of the Restated Articles of Incorporation of the Company, together with all
amendments, certified by the Secretary or an Assistant Secretary of the Company, and a certificate
of good standing, certified by the appropriate governmental officer in its jurisdiction of
incorporation;

     (b) a copy, certified by the Secretary or an Assistant Secretary of the Company, of its bylaws
and of its Board of Directors’ resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for the Bank) authorizing the execution of the Transaction Documents;

     (c) an incumbency certificate, executed by the Secretary or an Assistant Secretary of the
Company, which shall identify by name and title and bear the original or facsimile signature of the
officers of the Company authorized to sign the Transaction Documents and the officers or

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other employees authorized to request Letters of Credit hereunder, upon which certificate the Bank
shall be entitled to rely until informed of any change in writing by the Company;

     (d) a certificate, signed by a Designated Officer of the Company, stating that on the date of
such issuance (i) no Default or Unmatured Default has occurred and is continuing and (ii) each
representation or warranty contained in Section 7 is true and correct;

     (e) the opinion letter of James E. Brunner, Esq., General Counsel of the Company, covering
substantially the same matters as the corresponding opinion letter issued in connection with the
Credit Agreement;

     (f) an executed Supplemental Indenture;

     (g) evidence satisfactory to the Bank of the issuance of the Bonds in the form set forth in
the Supplemental Indenture and in an aggregate principal amount of $200,000,000 pursuant to the
Bond Delivery Agreement; and

     (h) such other documents as the Bank may reasonably request.

     9.2 All Letters of Credit. The obligation of the Bank to issue each Letter of Credit
is subject to the following further conditions precedent that (and the submission of a Letter of
Credit Application pursuant to Section 2.2 shall constitute a representation and warranty
by the Company that such conditions will be satisfied on the date of the issuance of such Letter of
Credit):

     (a) no Default or Unmatured Default has occurred and is continuing or will result from the
issuance of such Letter of Credit; and

     (b) the
representations and warranties of the Company contained in Section 7 are true and
correct as of the date of the issuance of such Letter of Credit, with the same effect as though
made on such date.

SECTION 10. EVENTS OF DEFAULT AND THEIR EFFECT.

     10.1
Events of Default. Each of the following shall constitute a
“Default” under this
Agreement:

     10.1.1 Non-Payment of Liabilities, etc. The Company shall fail to pay (a) any
reimbursement obligation within one day after the same becomes due, or (b) any interest or any fee
or other Liability payable hereunder within five days after such interest, fee or other Liability
becomes due and payable.

          10.1.2 Bankruptcy, Insolvency, etc. The Company: (a) shall make an assignment for the
benefit of creditors, or petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (b) shall commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (c) shall have had any such petition or application filed or any such
proceeding shall have been

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commenced, against it, in which an adjudication or appointment is made or order for relief is
entered, or which petition, application or proceeding remains undismissed for a period of 30
consecutive days or more; or (d) by any act or omission shall indicate its consent to, approval of
or acquiescence in any such petition, application or proceeding or order for relief or the
appointment of a custodian, receiver or trustee for all or any substantial part of its property; or
(e) shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a
period of 30 days or more; or (f) shall take any corporate action to authorize any of the actions
set forth above in this Section 10.1.2.

          10.1.3 Non-Compliance with this Agreement. The Company fails to comply with or to
perform any provision of this Agreement or any other Transaction Document (and not constituting a
Default under any other provision of this Section 10) and continuance of such failure for 30
consecutive days after the earlier of (a) a Designated Officer obtaining knowledge of such breach
and (b) written notice thereof by means of facsimile, regular mail or written notice delivered in
person (or telephonic notice thereof confirmed in writing) having been given to the Company by the
Bank.

          10.1.4 Warranties. Any representation or warranty made by the Company (or any of its
officers) in this Agreement or any other Transaction Document or in any certificate, document,
report, financial or other written statement furnished at any time pursuant to any Transaction
Document shall prove to have been incorrect in any material respect on or as of the date made or
deemed made.

          10.1.5 Cross-Default. Any “Event of Default” under and as defined in the Credit
Agreement occurs.

     10.2 Effect of Default.

     (a) If any Default described in Section 10.1.2 shall occur, the Commitment (if it has
not theretofore terminated) shall immediately terminate and all Liabilities shall immediately
become due and payable upon demand (regardless of any provision hereof to the contrary); and in the
case of any other Default, the Bank may (i) without presentment, demand or any other notice
whatsoever, declare all Liabilities to be due and payable upon demand (regardless of any provision
hereof to the contrary) and/or (ii) by notice to the Company, declare the Commitment (if it has not
theretofore terminated) to be terminated, and the Company will be and become thereby
unconditionally obligated, without any further notice, act or demand, to pay to the Bank an amount
in immediately available funds, which funds shall be held in the Collateral Account, equal to the
difference between (x) 105% of the Stated Amount of all Letters of Credit at such time and (y) the
amount on deposit in the Collateral Account at such time which is free and clear of all rights and
claims of third parties and has not been applied against the Liabilities (such difference, the
“Collateral Shortfall Amount”).

     (b) If at any time while any Default is continuing, the Bank determines that the Collateral
Shortfall Amount at such time is greater than zero, the Bank may make demand on the Company to pay,
and the Company will, forthwith upon such demand and without any further notice or act, pay to the Bank the Collateral Shortfall Amount, which
funds shall be deposited in the Collateral Account.

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     (c) The Bank may, at any time or from time to time after funds are deposited in the Collateral
Account, apply such funds to the payment of the Liabilities and any other amounts as shall from
time to time have become due and payable by the Company to the Bank thereunder. The Company hereby
pledges, assigns and grants to the Bank a security interest in all of the Company’s right, title
and interest in and to all funds which may from time to time be on deposit in the Collateral
Account to secure the prompt and complete payment and performance of the Liabilities. The Bank will
invest any funds on deposit from time to time in the Collateral Account in certificates of deposit
of The Bank of Nova Scotia having a maturity not exceeding 30 days.

     (d) At any time while any Default is continuing, neither the Company nor any Person claiming
on behalf of or through the Company shall have any right to withdraw any of the funds held in the
Collateral Account. After all of the Liabilities have been indefeasibly paid in full, all Letters
of Credit have expired or been terminated and the Commitment has been terminated, any funds
remaining in the Collateral Account shall be returned by the Bank to the Company or paid to
whomever may be legally entitled thereto at such time.

     (e) The Bank shall promptly advise the Company in writing of any declaration pursuant to
clause (a)(i) above, but failure to do so shall not impair the effect of such declaration.

SECTION 11. GENERAL.

     11.1 Waiver; Amendments. No delay on the part of the Bank in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise
of any right, power or remedy preclude other or further exercise thereof, or the exercise of any
other right, power or remedy. No amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement shall be effective unless the same shall be in writing and signed
and delivered by the Bank, and then such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.

     11.2 Notices. All notices and other communications provided to any party hereto under
this Agreement shall be in writing (including by facsimile) and addressed or delivered to such
party at its address set forth below its signature hereto or at such other address as may be
designated by such party in a notice to the other party. Any notice, if mailed and properly
addressed with postage prepaid, shall be deemed given when received; any notice, if transmitted by
facsimile, shall be deemed given when transmitted and transmission is confirmed.

     11.3 Costs and Expenses; Indemnity; Taxes.

     (a) The Company shall reimburse the Bank for (a) any reasonable costs, internal charges and
out-of-pocket expenses (including reasonable attorneys’ fees and time charges of attorneys for the
Bank) paid or incurred by the Bank in connection with the preparation, review, execution, delivery, syndication, distribution (including via the
internet), amendment and modification of the Transaction Documents and (b) any reasonable costs,
internal charges and out-of-pocket expenses (including reasonable attorneys’ fees and time charges
of attorneys for the Bank) paid or incurred by the Bank in connection with the collection and
enforcement of the Transaction Documents. The Company further agrees to indemnify the Bank and its
Affiliates,

11

 

and the directors, officers, employees and agents of the foregoing (all of the foregoing, the
“Indemnified Persons”), against all losses, claims, damages, penalties, judgments,
liabilities and reasonable expenses (including all reasonable expenses of litigation or preparation
therefor whether or not an Indemnified Person is a party thereto) which any of them may pay or
incur arising out of or relating to this Agreement, the other Transaction Documents, the
transactions contemplated hereby, the direct or indirect application or proposed application of the
proceeds of any Letter of Credit, any actual or alleged presence or release of any Hazardous
Substance on or from any property owned or operated by the Company or any Subsidiary or any
Environmental Liability related in any way to the Company or any Subsidiary; provided that
the Company shall not be liable to any Indemnified Person for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of such Indemnified Person. Without
limiting the foregoing, the Company shall pay any civil penalty or fine assessed by the Office of
Foreign Assets Control against any Indemnified Person, and all reasonable costs and expenses
(including reasonable fees and expenses of counsel to such Indemnified Person) incurred in
connection with defense thereof, as a result of any breach or inaccuracy of the representation made
in Section 5.14 of the Credit Agreement. The obligations of the Company under this Section shall
survive the termination of this Agreement.

     11.4 Captions. Section captions used in this Agreement are for convenience only and
shall not affect the construction of this Agreement.

     11.5 Governing Law. This Agreement shall be a contract made under and governed by the
internal laws of the State of New York except, in the case of a Letter of Credit, to the extent
that such laws are inconsistent with the ISP (as defined below). Except as otherwise expressly
provided in the applicable Letter of Credit or Letter of Credit Application, each Letter of Credit
shall be subject to the International Standby Practices (the “ISP”) as most recently published by
the International Chamber of Commerce. All obligations of the Company and rights of the Bank
expressed herein shall be in addition to and not in limitation of those provided by applicable law.

     11.6 Severability. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

     11.7 Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto on separate counterparts, and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the same Agreement.

     11.8 Successors and Assigns. This Agreement shall be binding upon the Company and the
Bank and their respective successors and assigns, and shall inure to the benefit of the Company,
the Bank and the successors and assigns of the Bank.

     11.9 Waiver of Jury Trial. EACH OF THE COMPANY AND THE BANK HEREBY WAIVES ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT,
ANY OTHER

12

 

INSTRUMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.

     11.10 Submission to Jurisdiction. The Company hereby irrevocably and unconditionally
submits for itself and its property in any legal action or proceeding relating to this Agreement,
or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United States of America for
the Southern District of New York and appellate courts from any thereof, and agrees that any such
action or proceeding may be brought in such courts. The Company (a) waives any objection that it
may now or hereafter have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the
same, (b) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the Company at its address set forth on the signature page hereof or at such
other address of which the bank shall have been notified pursuant hereto, (c) agrees that nothing
herein shall affect the right of the bank to effect service of process in any other manner
permitted by law or shall limit the right to sue in any other jurisdiction and (d) waives, to the
maximum extent not prohibited by law, any right it may have to claim or recover in any legal action
or proceeding referred to in this Section any special, indirect, consequential or punitive damages.

     11.11 USA Patriot Act. The Bank hereby notifies the Company that pursuant to
requirements of the USA Patriot Act, the Bank is required to obtain, verify and record information
that identifies the Company, which information includes the name and address of the Company and
other information that will allow the Bank to identify the Company in accordance with the USA
Patriot Act.

     11.12
Release of Bonds. The Bank will release the Bonds and deliver, at the Company’s expense, such documents to the
Company or the trustee under the Indenture as the Company may reasonably require to evidence such release, upon written request by the Company accompanied by
a certificate of a Designated Officer certifying that (a) no Default or Unmatured Default exists
prior to or after giving effect to such release and (b) at least two of the three then current
ratings of the Company’s senior unsecured long-term debt (without third-party credit enhancement)
are as follows: (i) Baa2 or higher in the case of Moody’s, (ii) BBB or higher in the case of S&P
and (iii) BBB or higher in the case of Fitch.

13

 

     IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered
by their duly authorized representatives as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	CONSUMERS ENERGY COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Laura L. Mountcastle
 

	 	 
	 

	 	Name:
	 	Laura L. Mountcastle
 

	 	 
	 

	 	Title:
	 	Vice President and Treasurer
 

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

S-1

 

	 	 	 	 	 	 	 
	 	 	THE BANK OF NOVA SCOTIA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thane Rattew
 

	 	 
	 

	 	Name:
	 	Thane Rattew	 	 
	 

	 	Title:
	 	Managing Director	 	 

One Liberty Plaza

New York, NY 10006

Attention: Kevin Kober

Facsimile No: (212) 225 5480

Telephone No: (212) 225 5186

E-Mail Address: Kevin_kober@scotiacapital.com

S-2

 

EXHIBIT A

[FORM OF SUPPLEMENTAL INDENTURE]

ONE HUNDRED SIXTH SUPPLEMENTAL INDENTURE

Providing among other things for

FIRST MORTGAGE BONDS,

2007-2 Collateral Series (Interest Bearing)

 

Dated as of November 30, 2007

 

CONSUMERS ENERGY COMPANY

TO

THE BANK OF NEW YORK,

TRUSTEE

Counterpart ____ of 80

 

 

     THIS ONE HUNDRED SIXTH SUPPLEMENTAL INDENTURE, dated as of November 30, 2007 (herein sometimes
referred to as “this Supplemental Indenture”), made and entered into by and between CONSUMERS
ENERGY COMPANY, a corporation organized and existing under the laws of the State of Michigan, with
its principal executive office and place of business at One Energy Plaza, in Jackson, Jackson
County, Michigan 49201, formerly known as Consumers Power Company (hereinafter sometimes referred
to as the “Company”), and THE BANK OF NEW YORK, a New York banking corporation, with its corporate
trust offices at 101 Barclay St., New York, New York 10286 (hereinafter sometimes referred to as
the “Trustee”), as Trustee under the Indenture dated as of September 1, 1945 between Consumers
Power Company, a Maine corporation (hereinafter sometimes referred to as the “Maine corporation”),
and City Bank Farmers Trust Company (Citibank, N.A., successor, hereinafter sometimes referred to
as the “Predecessor Trustee”), securing bonds issued and to be issued as provided therein
(hereinafter sometimes referred to as the “Indenture”),

     WHEREAS at the close of business on January 30, 1959, City Bank Farmers Trust Company was
converted into a national banking association under the title “First National City Trust Company”;
and

     WHEREAS at the close of business on January 15, 1963, First National City Trust Company was
merged into First National City Bank; and

     WHEREAS at the close of business on October 31, 1968, First National City Bank was merged into
The City Bank of New York, National Association, the name of which was thereupon changed to First
National City Bank; and

     WHEREAS effective March 1, 1976, the name of First National City Bank was changed to Citibank,
N.A.; and

     WHEREAS effective July 16, 1984, Manufacturers Hanover Trust Company succeeded Citibank, N.A.
as Trustee under the Indenture; and

     WHEREAS effective June 19, 1992, Chemical Bank succeeded by merger to Manufacturers Hanover
Trust Company as Trustee under the Indenture; and

     WHEREAS effective July 15, 1996, The Chase Manhattan Bank (National Association), merged with
and into Chemical Bank which thereafter was renamed The Chase Manhattan Bank; and

     WHEREAS effective November 11, 2001, The Chase Manhattan Bank merged with Morgan Guaranty
Trust Company of New York and the surviving corporation was renamed JPMorgan Chase Bank; and

     WHEREAS, effective November 13, 2004, the name of JPMorgan Chase Bank was changed to JPMorgan
Chase Bank, N.A.; and

     WHEREAS, effective October 2, 2006, The Bank of New York assumed the rights and obligations of
JPMorgan Chase Bank, N.A. under the Indenture; and

 

 

     WHEREAS the Indenture was executed and delivered for the purpose of securing such bonds as may
from time to time be issued under and in accordance with the terms of the Indenture, the aggregate
principal amount of bonds to be secured thereby being limited to $5,000,000,000 at any one time
outstanding (except as provided in Section 2.01 of the Indenture), and the Indenture describes and
sets forth the property conveyed thereby and is filed in the Office of the Secretary of State of
the State of Michigan and is of record in the Office of the Register of Deeds of each county in the
State of Michigan in which this Supplemental Indenture is to be recorded; and

     WHEREAS the Indenture has been supplemented and amended by various indentures supplemental
thereto, each of which is filed in the Office of the Secretary of State of the State of Michigan
and is of record in the Office of the Register of Deeds of each county in the State of Michigan in
which this Supplemental Indenture is to be recorded; and

     WHEREAS the Company and the Maine corporation entered into an Agreement of Merger and
Consolidation, dated as of February 14, 1968, which provided for the Maine corporation to merge
into the Company; and

     WHEREAS the effective date of such Agreement of Merger and Consolidation was June 6, 1968,
upon which date the Maine corporation was merged into the Company and the name of the Company was
changed from “Consumers Power Company of Michigan” to “Consumers Power Company”; and

     WHEREAS the Company and the Predecessor Trustee entered into a Sixteenth Supplemental
Indenture, dated as of June 4, 1968, which provided, among other things, for the assumption of the
Indenture by the Company; and

     WHEREAS said Sixteenth Supplemental Indenture became effective on the effective date of such
Agreement of Merger and Consolidation; and

     WHEREAS the Company has succeeded to and has been substituted for the Maine corporation under
the Indenture with the same effect as if it had been named therein as the mortgagor corporation;
and

     WHEREAS effective March 11, 1997, the name of Consumers Power Company was changed to Consumers
Energy Company; and

     WHEREAS, the Company has entered into a Letter of Credit Reimbursement Agreement dated as of
November 30, 2007 (as amended or otherwise modified from time to time, the “Reimbursement
Agreement”) with The Bank of Nova Scotia (the “Lender”) providing for the making of certain
financial accommodations thereunder, and pursuant to such Reimbursement Agreement the Company has
agreed to issue to the Lender, as evidence of and security for the Liabilities (as such term is
defined in the Reimbursement Agreement), a new series of bonds under the Indenture; and

     WHEREAS, for such purposes the Company desires to issue a new series of bonds, to be
designated First Mortgage Bonds, 2007-2 Collateral Series (Interest Bearing), each of which

A-2

 

bonds shall also bear the descriptive title “First Mortgage Bond” (hereinafter provided for and
hereinafter sometimes referred to as the “2007-2 Collateral Bonds”), the bonds of which series are
to be issued as registered bonds without coupons and are to bear interest at the rate per annum
specified herein and are to mature on the Termination Date (as such term is defined in the
Reimbursement Agreement); and

     WHEREAS, each of the registered bonds without coupons of the 2007-2 Collateral Bonds and the
Trustee’s Authentication Certificate thereon are to be substantially in the following form, to wit:

A-3

 

[FORM OF REGISTERED BOND

OF THE 2007-2 COLLATERAL BONDS]

[FACE]

CONSUMERS ENERGY COMPANY

FIRST MORTGAGE BOND

2007-2 COLLATERAL SERIES (INTEREST BEARING)

			
	 	 	 
	      No. 1
	 	$200,000,000

     CONSUMERS ENERGY COMPANY, a Michigan corporation (hereinafter called the “Company”), for value
received, hereby promises to pay to The Bank of Nova Scotia, as the lender (in such capacity, the
“Lender”) under the Letter of Credit Reimbursement Agreement dated as of November 30, 2007 between
the Company and the Lender (as amended or otherwise modified from time to time, the “Reimbursement
Agreement”), or registered assigns, the principal sum of Two Hundred Million Dollars ($200,000,000)
or such lesser principal amount as shall be equal to the aggregate amount of obligations (the
“Reimbursement Obligations”) of the Company then outstanding under the Reimbursement Agreement to
reimburse the Lender for amounts paid by the Lender in respect of any one or more drawings under
Letters of Credit (as defined in the Reimbursement Agreement) included in the Liabilities (as
defined in the Reimbursement Agreement) outstanding on the Termination Date (as defined in the
Reimbursement Agreement) (the “Maturity Date”), but not in excess, however, of the principal amount
of this bond, and to pay interest thereon at the Interest Rate (as defined below) until the
principal hereof is paid or duly made available for payment on the Maturity Date, or, in the event
of redemption of this bond, until the redemption date, or, in the event of default in the payment
of the principal hereof, until the Company’s obligations with respect to the payment of such
principal shall be discharged as provided in the Indenture (as defined on the reverse hereof).
Interest on this bond shall be payable on each Interest Payment Date (as defined below), commencing
on the first Interest Payment Date next succeeding November 30, 2007. If the Maturity Date falls on
a day which is not a Business Day, as defined below, principal and any interest and/or fees payable
with respect to the Maturity Date will be paid on the immediately preceding Business Day. The
interest payable, and punctually paid or duly provided for, on any Interest Payment Date will,
subject to certain exceptions, be paid to the person in whose name this bond (or one or more
predecessor bonds) is registered at the close of business on the Record Date (as defined below);
provided, however, that interest payable on the Maturity Date will be payable to the person to whom
the principal hereof shall be payable. Should the Company default in the payment of interest
(“Defaulted Interest”), the Defaulted Interest shall be paid to the person in whose name this bond
(or one or more predecessor bonds) is registered on a subsequent record date fixed by the Company,
which subsequent record date shall be fifteen (15) days prior to the payment of such Defaulted
Interest. As used herein, (A)“Business Day” shall mean any day, other than a Saturday or Sunday, on which banks generally
are open in New

A-4

 

York, New York for the conduct of substantially all of their commercial lending activities and on
which interbank wire transfers can be made on the Fedwire system; (B) “Interest Payment Date” shall
mean each date on which Liabilities constituting interest and/or fees are due and payable from time
to time pursuant to the Reimbursement Agreement; (C) “Interest Rate” shall mean a rate of interest
per annum, adjusted as necessary, to result in an interest payment equal to the aggregate amount of
Liabilities constituting interest and fees due under the Reimbursement Agreement on the applicable
Interest Payment Date; and (D) “Record Date” with respect to any Interest Payment Date shall mean
the day (whether or not a Business Day) immediately next preceding such Interest Payment Date.

     Payment of the principal of and interest on this bond will be made in immediately available
funds at the office or agency of the Company maintained for that purpose in the City of Jackson,
Michigan, in such coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

     The provisions of this bond are continued on the reverse hereof and such continued provisions
shall for all purposes have the same effect as though fully set forth at this place.

     This bond shall not be valid or become obligatory for any purpose unless and until it shall
have been authenticated by the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.

A-5

 

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

	 	 	 	 	 	 	 
	 	 	CONSUMERS ENERGY COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	Dated:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	 

	 	 
	 

	 	Printed
	 	 

	 	 
	 

	 	Title
	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Attest:	 	 	 	 
	 

	 	 	 	 

	 	 

TRUSTEE’S AUTHENTICATION CERTIFICATE

     This is one of the bonds, of the series designated therein, described in the within-mentioned
Indenture.

	 	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK, Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 

Authorized Officer
	 	 

A-6

 

[REVERSE]

CONSUMERS ENERGY COMPANY

FIRST MORTGAGE BOND

2007-2 COLLATERAL SERIES (INTEREST BEARING)

     This bond is one of the bonds of a series designated as First Mortgage Bonds, 2007-2
Collateral Series (Interest Bearing) (sometimes herein referred to as the “2007-2 Collateral
Bonds”) issued under and in accordance with and secured by an Indenture dated as of September 1,
1945, given by the Company (or its predecessor, Consumers Power Company, a Maine corporation) to
City Bank Farmers Trust Company (The Bank of New York, successor) (hereinafter sometimes referred
to as the “Trustee”), together with indentures supplemental thereto, heretofore or hereafter
executed, to which indenture and indentures supplemental thereto (hereinafter referred to
collectively as the “Indenture”) reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and the rights, duties and immunities
thereunder of the Trustee and the rights of the holders of said bonds and of the Trustee and of the
Company in respect of such security, and the limitations on such rights. By the terms of the
Indenture, the bonds to be secured thereby are issuable in series which may vary as to date,
amount, date of maturity, rate of interest and in other respects as provided in the Indenture.

     The 2007-2 Collateral Bonds are to be issued and delivered to the Lender in order to evidence
and secure the obligation of the Company under the Reimbursement Agreement to make payments to the
Lender under the Reimbursement Agreement and to provide the Lender the benefit of the lien of the
Indenture with respect to the 2007-2 Collateral Bonds.

     The obligation of the Company to make payments with respect to the principal of 2007-2
Collateral Bonds shall be fully or partially, as the case may be, satisfied and discharged to the
extent that, at the time that any such payment shall be due, the then due Reimbursement Obligations
included in the Liabilities shall have been fully or partially paid. Satisfaction of any obligation
to the extent that payment is made with respect to the Reimbursement Obligations means that if any
payment is made on the Reimbursement Obligations, a corresponding payment obligation with respect
to the principal of the 2007-2 Collateral Bonds shall be deemed discharged in the same amount as
the payment with respect to the Reimbursement Obligations discharges the outstanding obligation
with respect to such Reimbursement Obligations. No such payment of principal shall reduce the
principal amount of the 2007-2 Collateral Bonds.

     The obligation of the Company to make payments with respect to the interest on 2007-2
Collateral Bonds shall be fully or partially, as the case may be, satisfied and discharged to the
extent that, at the time that any such payment shall be due, the then due interest and/or fees
under the Reimbursement Agreement shall have been fully or partially paid. Satisfaction of any
obligation to the extent that payment is made with respect to the interest and/or fees under the
Reimbursement Agreement means that if any payment is made on the interest and/or fees under the
Reimbursement Agreement, a corresponding payment obligation with respect to the interest on the
2007-2 Collateral Bonds shall be deemed discharged in the same amount as the payment

A-7

 

with respect to the Reimbursement Obligations discharges the outstanding obligation with respect to
such Reimbursement Obligations.

     The Trustee may at any time and all times conclusively assume that the obligation of the
Company to make payments with respect to the principal of and interest on this bond, so far as such
payments at the time have become due, has been fully satisfied and discharged unless and until the
Trustee shall have received a written notice from the Lender stating (i) that timely payment of
principal and interest on the 2007-2 Collateral Bonds has not been made, (ii) that the Company is
in arrears as to the payments required to be made by it to the Lender in connection with the
Liabilities pursuant to the Reimbursement Agreement, and (iii) the amount of the arrearage.

     If a Default (as defined in the Reimbursement Agreement) with respect to the payment of the
principal of the Reimbursement Obligations shall have occurred, it shall be deemed to be a default
for purposes of Section 11.01 of the Indenture in the payment of the principal of the 2007-2
Collateral Bonds equal to the amount of such unpaid Reimbursement Obligations (but in no event in
excess of the principal amount of the 2007-2 Collateral Bonds). If a Default (as defined in the
Reimbursement Agreement) with respect to the payment of interest on the Reimbursement Obligations
or any fees shall have occurred, it shall be deemed to be a default for purposes of Section 11.01
of the Indenture in the payment of the interest on the 2007-2 Collateral Bonds equal to the amount
of such unpaid interest or fees.

     This bond is not redeemable except upon written demand of the Lender following the occurrence
of a Default under the Reimbursement Agreement and the acceleration of the Liabilities, as provided
in Section 10.2 of the Reimbursement Agreement. This bond is not redeemable by the operation of the
improvement fund or the maintenance and replacement provisions of the Indenture or with the
proceeds of released property.

     In case of certain defaults as specified in the Indenture, the principal of this bond may be
declared or may become due and payable on the conditions, at the time, in the manner and with the
effect provided in the Indenture. The holders of certain specified percentages of the bonds at the
time outstanding, including in certain cases specified percentages of bonds of particular series,
may in certain cases, to the extent and as provided in the Indenture, waive certain defaults
thereunder and the consequences of such defaults.

     The Indenture contains provisions permitting the Company and the Trustee, with the consent of
the holders of not less than seventy-five per centum in principal amount of the bonds (exclusive of
bonds disqualified by reason of the Company’s interest therein) at the time outstanding, including,
if more than one series of bonds shall be at the time outstanding, not less than sixty per centum
in principal amount of each series affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of the rights and obligations of the
Company and the rights of the holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written approval or consent of the holder
hereof which will (a) extend the maturity of this bond or reduce the rate or extend the time of
payment of interest hereon or reduce the amount of the principal hereof, or (b) permit the creation
of any lien, not otherwise permitted, prior to or on a parity with the lien of

A-8

 

the Indenture, or (c) reduce the percentage of the principal amount of the bonds the holders of
which are required to approve any such supplemental indenture.

     The Company reserves the right, without any consent, vote or other action by holders of the
2007-2 Collateral Bonds or any other series created after the Sixty-eighth Supplemental Indenture,
to amend the Indenture to reduce the percentage of the principal amount of bonds the holders of
which are required to approve any supplemental indenture (other than any supplemental indenture
which is subject to the proviso contained in the immediately preceding sentence) (a) from not less
than seventy-five per centum (including sixty per centum of each series affected) to not less than
a majority in principal amount of the bonds at the time outstanding or (b) in case fewer than all
series are affected, not less than a majority in principal amount of the bonds of all affected
series, voting together.

     No recourse shall be had for the payment of the principal of or interest on this bond, or for
any claim based hereon, or otherwise in respect hereof or of the Indenture, to or against any
incorporator, stockholder, director or officer, past, present or future, as such, of the Company,
or of any predecessor or successor company, either directly or through the Company, or such
predecessor or successor company, or otherwise, under any constitution or statute or rule of law,
or by the enforcement of any assessment or penalty, or otherwise, all such liability of
incorporators, stockholders, directors and officers, as such, being waived and released by the
holder and owner hereof by the acceptance of this bond and being likewise waived and released by
the terms of the Indenture.

     This bond shall be exchangeable for other registered bonds of the same series, in the manner
and upon the conditions prescribed in the Indenture, upon the surrender of such bonds at the
Investor Services Department of the Company, as transfer agent. However, notwithstanding the
provisions of Section 2.05 of the Indenture, no charge shall be made upon any registration of
transfer or exchange of bonds of said series other than for any tax or taxes or other governmental
charge required to be paid by the Company.

     The Lender shall surrender this bond to the Trustee when all of the Reimbursement Obligations
and interest thereon arising under the Reimbursement Agreement, and all of the fees payable
pursuant to the Reimbursement Agreement with respect to the Liabilities shall have been duly paid,
and the Reimbursement Agreement shall have been terminated.

[END OF FORM OF REGISTERED BOND

OF THE 2007-2 COLLATERAL BONDS]

 

A-9

 

     AND WHEREAS all acts and things necessary to make the 2007-2 Collateral Bonds (the “Collateral
Bonds”), when duly executed by the Company and authenticated by the Trustee or its agent and issued
as prescribed in the Indenture, as heretofore supplemented and amended, and this Supplemental
Indenture provided, the valid, binding and legal obligations of the Company, and to constitute the
Indenture, as supplemented and amended as aforesaid, as well as by this Supplemental Indenture, a
valid, binding and legal instrument for the security thereof, have been done and performed, and the
creation, execution and delivery of this Supplemental Indenture and the creation, execution and
issuance of bonds subject to the terms hereof and of the Indenture, as so supplemented and amended,
have in all respects been duly authorized;

     NOW, THEREFORE, in consideration of the premises, of the acceptance and purchase by the
holders thereof of the bonds issued and to be issued under the Indenture, as supplemented and
amended as above set forth, and of the sum of One Dollar duly paid by the Trustee to the Company,
and of other good and valuable considerations, the receipt whereof is hereby acknowledged, and for
the purpose of securing the due and punctual payment of the principal of and premium, if any, and
interest on all bonds now outstanding under the Indenture and the $200,000,000 principal amount of
the Collateral Bonds and all other bonds which shall be issued under the Indenture, as supplemented
and amended from time to time, and for the purpose of securing the faithful performance and
observance of all covenants and conditions therein, and in any indenture supplemental thereto, set
forth, the Company has given, granted, bargained, sold, released, transferred, assigned,
hypothecated, pledged, mortgaged, confirmed, set over, warranted, alienated and conveyed and by
these presents does give, grant, bargain, sell, release, transfer, assign, hypothecate, pledge,
mortgage, confirm, set over, warrant, alien and convey unto The Bank of New York, as Trustee, as
provided in the Indenture, and its successor or successors in the trust thereby and hereby created
and to its or their assigns forever, all the right, title and interest of the Company in and to all
the property, described in Section 11 hereof, together (subject to the provisions of Article X of
the Indenture) with the tolls, rents, revenues, issues, earnings, income, products and profits
thereof, excepting, however, the property, interests and rights specifically excepted from the lien
of the Indenture as set forth in the Indenture.

     TOGETHER WITH all and singular the tenements, hereditaments and appurtenances belonging or in
any wise appertaining to the premises, property, franchises and rights, or any thereof, referred to
in the foregoing granting clause, with the reversion and reversions, remainder and remainders and
(subject to the provisions of Article X of the Indenture) the tolls, rents, revenues, issues,
earnings, income, products and profits thereof, and all the estate, right, title and interest and
claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire
in and to the aforesaid premises, property, franchises and rights and every part and parcel
thereof.

     SUBJECT, HOWEVER, with respect to such premises, property, franchises and rights, to excepted
encumbrances as said term is defined in Section 1.02 of the Indenture, and subject also to all
defects and limitations of title and to all encumbrances existing at the time of acquisition. TO
HAVE AND TO HOLD all said premises, property, franchises and rights hereby conveyed, assigned,
pledged or mortgaged, or intended so to be, unto the Trustee, its successor or successors in trust
and their assigns forever;

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     BUT IN TRUST, NEVERTHELESS, with power of sale for the equal and proportionate benefit and
security of the holders of all bonds now or hereafter authenticated and delivered under and secured
by the Indenture and interest coupons appurtenant thereto, pursuant to the provisions of the
Indenture and of any supplemental indenture, and for the enforcement of the payment of said bonds
and coupons when payable and the performance of and compliance with the covenants and conditions of
the Indenture and of any supplemental indenture, without any preference, distinction or priority as
to lien or otherwise of any bond or bonds over others by reason of the difference in time of the
actual authentication, delivery, issue, sale or negotiation thereof or for any other reason
whatsoever, except as otherwise expressly provided in the Indenture; and so that each and every
bond now or hereafter authenticated and delivered thereunder shall have the same lien, and so that
the principal of and premium, if any, and interest on every such bond shall, subject to the terms
thereof, be equally and proportionately secured, as if it had been made, executed, authenticated,
delivered, sold and negotiated simultaneously with the execution and delivery thereof.

     AND IT IS EXPRESSLY DECLARED by the Company that all bonds authenticated and delivered under
and secured by the Indenture, as supplemented and amended as above set forth, are to be issued,
authenticated and delivered, and all said premises, property, franchises and rights hereby and by
the Indenture and indentures supplemental thereto conveyed, assigned, pledged or mortgaged, or
intended so to be, are to be dealt with and disposed of under, upon and subject to the terms,
conditions, stipulations, covenants, agreements, trusts, uses and purposes expressed in the
Indenture, as supplemented and amended as above set forth, and the parties hereto mutually agree as
follows:

     SECTION 1. There is hereby created a series of bonds (the “2007-2 Collateral Bonds”)
designated as hereinabove provided, which shall also bear the descriptive title “First Mortgage
Bond”, and the forms thereof shall be substantially as hereinbefore set forth (collectively, the
“Sample Bond”). The 2007-2 Collateral Bonds shall be issued in the aggregate principal amount of
$200,000,000, shall mature on the Termination Date (as such term is defined in the Reimbursement
Agreement) and shall be issued only as registered bonds without coupons in denominations of $1,000
and any multiple thereof. The serial numbers of the Collateral Bonds shall be such as may be
approved by any officer of the Company, the execution thereof by any such officer either manually
or by facsimile signature to be conclusive evidence of such approval. The Collateral Bonds are to
be issued to and registered in the name of the Lender under the Reimbursement Agreement (as such
terms are defined in the Sample Bonds) to evidence and secure any and all Liabilities (as such term
is defined in the Reimbursement Agreement) of the Company under the Reimbursement Agreement.

     The 2007-2 Collateral Bonds shall bear interest as set forth in the Sample Bond. The principal
of and the interest on said bonds shall be payable as set forth in the Sample Bond.

     The obligation of the Company to make payments with respect to the principal of 2007-2
Collateral Bonds shall be fully or partially, as the case may be, satisfied and discharged to the
extent that, at the time that any such payment shall be due, the then due Reimbursement Obligations
included in the Liabilities shall have been fully or partially paid. Satisfaction of any obligation
to the extent that payment is made with respect to the Reimbursement Obligations

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means that if any payment is made on the Reimbursement Obligations, a corresponding payment
obligation with respect to the principal of the 2007-2 Collateral Bonds shall be deemed discharged
in the same amount as the payment with respect to the Reimbursement Obligations discharges the
outstanding obligation with respect to such Reimbursement Obligations. No such payment of principal
shall reduce the principal amount of the 2007-2 Collateral Bonds.

     The obligation of the Company to make payments with respect to interest on 2007-2 Collateral
Bonds shall be fully or partially, as the case may be, satisfied and discharged to the extent that,
at the time that any such payment shall be due, the then due interest and/or fees under the
Reimbursement Agreement shall have been fully or partially paid. Satisfaction of any obligation to
the extent that payment is made with respect to the interest and/or fees under the Reimbursement
Agreement means that if any payment is made on the interest and/or fees under the Reimbursement
Agreement, a corresponding payment obligation with respect to the interest on the 2007-2 Collateral
Bonds shall be deemed discharged in the same amount as the payment with respect to the interest
and/or fees discharges the outstanding obligation with respect to such interest and/or fees.

     The Trustee may at any time and all times conclusively assume that the obligation of the
Company to make payments with respect to the principal of and interest on the Collateral Bonds, so
far as such payments at the time have become due, has been fully satisfied and discharged unless
and until the Trustee shall have received a written notice from the Lender stating (i) that timely
payment of principal and interest on the 2007-2 Collateral Bonds has not been made, (ii) that the
Company is in arrears as to the payments required to be made by it to the Lender pursuant to the
Reimbursement Agreement, and (iii) the amount of the arrearage.

     The Collateral Bonds shall be exchangeable for other registered bonds of the same series, in
the manner and upon the conditions prescribed in the Indenture, upon the surrender of such bonds at
the Investor Services Department of the Company, as transfer agent. However, notwithstanding the
provisions of Section 2.05 of the Indenture, no charge shall be made upon any registration of
transfer or exchange of bonds of said series other than for any tax or taxes or other governmental
charge required to be paid by the Company.

     SECTION 2. The Collateral Bonds are not redeemable by the operation of the maintenance and
replacement provisions of this Indenture or with the proceeds of released property.

     SECTION 3. Upon the occurrence of a Default under the Reimbursement Agreement and the
acceleration of the Liabilities, the Collateral Bonds shall be redeemable in whole upon receipt by
the Trustee of a written demand from the Lender stating that there has occurred under the
Reimbursement Agreement both a Default and a declaration of acceleration of the Liabilities and
demanding redemption of the Collateral Bonds (including a description of the amount of
Reimbursement Obligations, interest and fees which comprise such Liabilities). The Company waives
any right it may have to prior notice of such redemption under the Indenture. Upon surrender of the
Collateral Bonds by the Lender to the Trustee, the Collateral Bonds shall be redeemed at a
redemption price equal to the aggregate amount of the Liabilities.

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     SECTION 4. The Company reserves the right, without any consent, vote or other action by the
holder of the Collateral Bonds or of any subsequent series of bonds issued under the Indenture, to
make such amendments to the Indenture, as supplemented, as shall be necessary in order to amend
Section 17.02 to read as follows:

     SECTION 17.02. With the consent of the holders of not less than a majority in
principal amount of the bonds at the time outstanding or their attorneys-in-fact
duly authorized, or, if fewer than all series are affected, not less than a majority
in principal amount of the bonds at the time outstanding of each series the rights
of the holders of which are affected, voting together, the Company, when authorized
by a resolution, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this Indenture
or of any supplemental indenture or modifying the rights and obligations of the
Company and the rights of the holders of any of the bonds and coupons; provided,
however, that no such supplemental indenture shall (1) extend the maturity of any of
the bonds or reduce the rate or extend the time of payment of interest thereon, or
reduce the amount of the principal thereof, or reduce any premium payable on the
redemption thereof, without the consent of the holder of each bond so affected, or
(2) permit the creation of any lien, not otherwise permitted, prior to or on a
parity with the lien of this Indenture, without the consent of the holders of all
the bonds then outstanding, or (3) reduce the aforesaid percentage of the principal
amount of bonds the holders of which are required to approve any such supplemental
indenture, without the consent of the holders of all the bonds then outstanding. For
the purposes of this Section, bonds shall be deemed to be affected by a supplemental
indenture if such supplemental indenture adversely affects or diminishes the rights
of holders thereof against the Company or against its property. The Trustee may in
its discretion determine whether or not, in accordance with the foregoing, bonds of
any particular series would be affected by any supplemental indenture and any such
determination shall be conclusive upon the holders of bonds of such series and all
other series. Subject to the provisions of Sections 16.02 and 16.03 hereof, the
Trustee shall not be liable for any determination made in good faith in connection
herewith.

     Upon the written request of the Company, accompanied by a resolution
authorizing the execution of any such supplemental indenture, and upon the filing
with the Trustee of evidence of the consent of bondholders as aforesaid (the
instrument or instruments evidencing such consent to be dated within one year of
such request), the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee’s own
rights, duties or immunities under this Indenture or otherwise, in which case the
Trustee

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may in its discretion but shall not be obligated to enter into such supplemental indenture.

     It shall not be necessary for the consent of the bondholders under this Section to approve the
particular form of any proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.

     The Company and the Trustee, if they so elect, and either before or after such consent has
been obtained, may require the holder of any bond consenting to the execution of any such
supplemental indenture to submit his bond to the Trustee or to ask such bank, banker or trust
company as may be designated by the Trustee for the purpose, for the notation thereon of the fact
that the holder of such bond has consented to the execution of such supplemental indenture, and in
such case such notation, in form satisfactory to the Trustee, shall be made upon all bonds so
submitted, and such bonds bearing such notation shall forthwith be returned to the persons entitled
thereto.

     Prior to the execution by the Company and the Trustee of any supplemental indenture pursuant
to the provisions of this Section, the Company shall publish a notice, setting forth in general
terms the substance of such supplemental indenture, at least once in one daily newspaper of general
circulation in each city in which the principal of any of the bonds shall be payable, or, if all
bonds outstanding shall be registered bonds without coupons or coupon bonds registered as to
principal, such notice shall be sufficiently given if mailed, first class, postage prepaid, and
registered if the Company so elects, to each registered holder of bonds at the last address of such
holder appearing on the registry books, such publication or mailing, as the case may be, to be made
not less than thirty days prior to such execution. Any failure of the Company to give such notice,
or any defect therein, shall not, however, in any way impair or affect the validity of any such
supplemental indenture.

     SECTION 5. As supplemented and amended as above set forth, the Indenture is in all respects
ratified and confirmed, and the Indenture and all indentures supplemental thereto shall be read,
taken and construed as one and the same instrument.

     SECTION 6. Nothing contained in this Supplemental Indenture shall, or shall be construed to,
confer upon any person other than a holder of bonds issued under the Indenture, as supplemented and
amended as above set forth, the Company, the Trustee and the Lender, any right or interest to avail
himself of any benefit under any provision of the Indenture, as so supplemented and amended.

     SECTION 7. The Trustee assumes no responsibility for or in respect of the validity or
sufficiency of this Supplemental Indenture or of the Indenture as hereby supplemented or the due

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execution hereof by the Company or for or in respect of the recitals and statements contained
herein (other than those contained in the sixth, seventh and eighth recitals hereof), all of which
recitals and statements are made solely by the Company.

     SECTION 8. This Supplemental Indenture may be simultaneously executed in several counterparts
and all such counterparts executed and delivered, each as an original, shall constitute but one and
the same instrument.

     SECTION 9. In the event the date of any notice required or permitted hereunder shall not be a
Business Day, then (notwithstanding any other provision of the Indenture or of any supplemental
indenture thereto) such notice need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date fixed for such
notice. “Business Day” means, with respect to this Section 9, any day, other than a Saturday or
Sunday, on which banks generally are open in New York, New York for the conduct of substantially
all of their commercial lending activities and on which interbank wire transfers can be made on the
Fedwire system.

     SECTION 10. This Supplemental Indenture and the Collateral Bonds shall be governed by and
deemed to be a contract under, and construed in accordance with, the laws of the State of Michigan,
and for all purposes shall be construed in accordance with the laws of such state, except as may
otherwise be required by mandatory provisions of law.

     SECTION 11. Detailed Description of Property Mortgaged:

I.

ELECTRIC GENERATING PLANTS AND DAMS

     All the electric generating plants and stations of the Company, constructed or otherwise
acquired by it and not heretofore described in the Indenture or any supplement thereto and not
heretofore released from the lien of the Indenture, including all powerhouses, buildings,
reservoirs, dams, pipelines, flumes, structures and works and the land on which the same are
situated and all water rights and all other lands and easements, rights of way, permits,
privileges, towers, poles, wires, machinery, equipment, appliances, appurtenances and supplies and
all other property, real or personal, forming a part of or appertaining to or used, occupied or
enjoyed in connection with such plants and stations or any of them, or adjacent thereto.

II.

ELECTRIC TRANSMISSION LINES

     All the electric transmission lines of the Company, constructed or otherwise acquired by it
and not heretofore described in the Indenture or any supplement thereto and not heretofore released
from the lien of the Indenture, including towers, poles, pole lines, wires, switches, switch racks,
switchboards, insulators and other appliances and equipment, and all other property, real or
personal, forming a part of or appertaining to or used, occupied or enjoyed in connection with such
transmission lines or any of them or adjacent thereto; together with all real

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property, rights of way, easements, permits, privileges, franchises and rights for or relating to
the construction, maintenance or operation thereof, through, over, under or upon any private
property or any public streets or highways, within as well as without the corporate limits of any
municipal corporation. Also all the real property, rights of way, easements, permits, privileges
and rights for or relating to the construction, maintenance or operation of certain
transmission lines, the land and rights for which are owned by the Company, which are either not
built or now being constructed.

III.

ELECTRIC DISTRIBUTION SYSTEMS

     All the electric distribution systems of the Company, constructed or otherwise acquired by it
and not heretofore described in the Indenture or any supplement thereto and not heretofore released
from the lien of the Indenture, including substations, transformers, switchboards, towers, poles,
wires, insulators, subways, trenches, conduits, manholes, cables, meters and other appliances and
equipment, and all other property, real or personal, forming a part of or appertaining to or used,
occupied or enjoyed in connection with such distribution systems or any of them or adjacent
thereto; together with all real property, rights of way, easements, permits, privileges,
franchises, grants and rights, for or relating to the construction, maintenance or operation
thereof, through, over, under or upon any private property or any public streets or highways within
as well as without the corporate limits of any municipal corporation.

IV.

ELECTRIC SUBSTATIONS, SWITCHING STATIONS AND SITES

     All the substations, switching stations and sites of the Company, constructed or otherwise
acquired by it and not heretofore described in the Indenture or any supplement thereto and not
heretofore released from the lien of the Indenture, for transforming, regulating, converting or
distributing or otherwise controlling electric current at any of its plants and
elsewhere, together
with all buildings, transformers, wires, insulators and other appliances and equipment, and all
other property, real or personal, forming a part of or appertaining to or used, occupied or enjoyed
in connection with any of such substations and switching stations, or adjacent thereto, with sites
to be used for such purposes.

V.

GAS COMPRESSOR STATIONS, GAS PROCESSING PLANTS, DESULPHURIZATION

STATIONS, METERING STATIONS, ODORIZING STATIONS, REGULATORS AND

SITES

     All the compressor stations, processing plants, desulphurization stations, metering stations,
odorizing stations, regulators and sites of the Company, constructed or otherwise acquired by it
and not heretofore described in the Indenture or any supplement thereto and not heretofore released
from the lien of the Indenture, for compressing, processing, desulphurizing, metering, odorizing
and regulating manufactured or natural gas at any of its plants and

A-16

 

elsewhere, together with all buildings, meters and other appliances and equipment, and all other
property, real or personal, forming a part of or appertaining to or used, occupied or enjoyed in
connection with any of such purposes, with sites to be used for such purposes.

VI.

GAS STORAGE FIELDS

     The natural gas rights and interests of the Company, including wells and well lines (but not
including natural gas, oil and minerals), the gas gathering system, the underground gas storage
rights, the underground gas storage wells and injection and withdrawal system used in connection
therewith, constructed or otherwise acquired by it and not heretofore described in the Indenture or
any supplement thereto and not heretofore released from the lien of the Indenture: In the Overisel
Gas Storage Field, located in the Township of Overisel, Allegan County, and in the Township of
Zeeland, Ottawa County, Michigan; in the Northville Gas Storage Field located in the Township of
Salem, Washtenaw County, Township of Lyon, Oakland County, and the Townships of Northville and
Plymouth and City of Plymouth, Wayne County, Michigan; in the Salem Gas Storage Field, located in
the Township of Salem, Allegan County, and in the Township of Jamestown, Ottawa County, Michigan;
in the Ray Gas Storage Field, located in the Townships of Ray and Armada, Macomb County, Michigan;
in the Lenox Gas Storage Field, located in the Townships of Lenox and Chesterfield, Macomb County,
Michigan; in the Ira Gas Storage Field, located in the Township of Ira, St. Clair County, Michigan;
in the Puttygut Gas Storage Field, located in the Township of Casco, St. Clair County, Michigan; in
the Four Corners Gas Storage Field, located in the Townships of Casco, China, Cottrellville and
Ira, St. Clair County, Michigan; in the Swan Creek Gas Storage Field, located in the Township of
Casco and Ira, St. Clair County, Michigan; and in the Hessen Gas Storage Field, located in the
Townships of Casco and Columbus, St. Clair, Michigan.

VII.

GAS TRANSMISSION LINES

     All the gas transmission lines of the Company, constructed or otherwise acquired by it and not
heretofore described in the Indenture or any supplement thereto and not heretofore released from
the lien of the Indenture, including gas mains, pipes, pipelines, gates, valves, meters and other
appliances and equipment, and all other property, real or personal, forming a part of or
appertaining to or used, occupied or enjoyed in connection with such transmission lines or any of
them or adjacent thereto; together with all real property, right of way, easements, permits,
privileges, franchises and rights for or relating to the construction, maintenance or operation
thereof, through, over, under or upon any private property or any public streets or highways,
within as well as without the corporate limits of any municipal corporation.

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VIII.

GAS DISTRIBUTION SYSTEMS

     All the gas distribution systems of the Company, constructed or otherwise acquired by it and
not heretofore described in the Indenture or any supplement thereto and not heretofore released
from the lien of the Indenture, including tunnels, conduits, gas mains and pipes, service pipes,
fittings, gates, valves, connections, meters and other appliances and equipment, and all other
property, real or personal, forming a part of or appertaining to or used, occupied or enjoyed in
connection with such distribution systems or any of them or adjacent thereto; together with all
real property, rights of way, easements, permits, privileges,
franchises, grants and rights, for or relating to the construction, maintenance or operation
thereof, through, over, under or upon any private property or any public streets or highways within
as well as without the corporate limits of any municipal corporation.

IX.

OFFICE BUILDINGS, SERVICE BUILDINGS, GARAGES, ETC.

     All office, garage, service and other buildings of the Company, wherever located, in the State
of Michigan, constructed or otherwise acquired by it and not heretofore described in the Indenture
or any supplement thereto and not heretofore released from the lien of the Indenture, together with
the land on which the same are situated and all easements, rights of way and appurtenances to said
lands, together with all furniture and fixtures located in said buildings.

X.

TELEPHONE PROPERTIES AND

RADIO COMMUNICATION EQUIPMENT

     All telephone lines, switchboards, systems and equipment of the Company, constructed or
otherwise acquired by it and not heretofore described in the Indenture or any supplement thereto
and not heretofore released from the lien of the Indenture, used or available for use in the
operation of its properties, and all other property, real or personal, forming a part of or
appertaining to or used, occupied or enjoyed in connection with such telephone properties or any of
them or adjacent thereto; together with all real estate, rights of way, easements, permits,
privileges, franchises, property, devices or rights related to the dispatch, transmission,
reception or reproduction of messages, communications, intelligence, signals, light, vision or
sound by electricity, wire or otherwise, including all telephone equipment installed in buildings
used as general and regional offices, substations and generating stations and all telephone lines
erected on towers and poles; and all radio communication equipment of the Company, together with
all property, real or personal (except any in the Indenture expressly excepted), fixed stations,
towers, auxiliary radio buildings and equipment, and all appurtenances used in connection
therewith, wherever located, in the State of Michigan.

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XI.

OTHER REAL PROPERTY

     All other real property of the Company and all interests therein, of every nature and description
(except any in the Indenture expressly excepted) wherever located, in the State of Michigan,
acquired by it and not heretofore described in the Indenture or any supplement thereto and not
heretofore released from the lien of the Indenture. Such real property includes but is not limited
to the following described property, such property is subject to any interests that were excepted
or reserved in the conveyance to the Company:

ALCONA COUNTY

Certain land in Caledonia Township, Alcona County, Michigan described as:

     The East 330 feet of the South 660 feet of the SW 1/4 of the SW 1/4 of Section 8, T28N, R8E, except
the West 264 feet of the South 330 feet thereof; said land being more particularly described as
follows: To find the place of beginning of this description, commence at the Southwest corner of
said section, run thence East along the South line of said section 1243 feet to the place of
beginning of this description, thence continuing East along said South line of said section 66 feet
to the West 1/8 line of said section, thence N 02 degrees 09’ 30” E along the said West 1/8 line of
said section 660 feet, thence West 330 feet, thence S 02 degrees 09’ 30” W, 330 feet, thence East
264 feet, thence S 02 degrees 09’ 30” W, 330 feet to the place of beginning.

ALLEGAN COUNTY

Certain land in Lee Township, Allegan County, Michigan described as:

The NE 1/4 of the NW 1/4 of Section 16, T1N, R15W.

ALPENA COUNTY

Certain land in Wilson and Green Townships, Alpena County, Michigan described as:

     All that part of the S’ly 1/2 of the former Boyne City-Gaylord and Alpena Railroad right of
way, being the Southerly 50 feet of a 100 foot strip of land formerly occupied by said Railroad,
running from the East line of Section 31, T31N, R7E, Southwesterly across said Section 31 and
Sections 5 and 6 of T30N, R7E and Sections 10, 11 and the E 1/2 of Section 9, except the West 1646
feet thereof, all in T30N, R6E.

ANTRIM COUNTY

Certain land in Mancelona Township, Antrim County, Michigan described as:

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     The S 1/2 of the NE 1/4 of Section 33, T29N, R6W, excepting therefrom all mineral, coal, oil
and gas and such other rights as were reserved unto the State of Michigan in that certain deed
running from the State of Michigan to August W. Schack and Emma H. Schack, his wife, dated April
15, 1946 and recorded May 20, 1946 in Liber 97 of Deeds on page 682 of Antrim County Records.

ARENAC COUNTY

Certain land in Standish Township, Arenac County, Michigan described as:

     A parcel of land in the SW 1/4 of the NW 1/4 of Section 12, T18N, R4E, described as follows:
To find the place of beginning of said parcel of land, commence at the Northwest corner of Section
12, T18N, R4E; run thence South along the West line of said section, said West line of said section
being also the center line of East City Limits Road 2642.15 feet to the W 1/4 post of said section
and the place of beginning of said parcel of land; running thence N 88 degrees 26’ 00” E along the
East and West 1/4 line of said section, 660.0 feet;
thence North parallel with the West line of said section, 310.0 feet; thence S 88 degrees 26’
00” W, 330.0 feet; thence South parallel with the West line of said section, 260.0 feet; thence S
88 degrees 26’ 00” W, 330.0 feet to the West line of said section and the center line of East City
Limits Road; thence South along the said West line of said section, 50.0 feet to the place of
beginning.

BARRY COUNTY

Certain land in Johnstown Township, Barry County, Michigan described as:

     A strip of land 311 feet in width across the SW 1/4 of the NE 1/4 of Section 31, T1N, R8W,
described as follows: To find the place of beginning of this description, commence at the E 1/4 post
of said section; run thence N 00 degrees 55’ 00” E along the East line of said section, 555.84
feet; thence N 59 degrees 36’ 20” W, 1375.64 feet; thence N 88 degrees 30’ 00” W, 130 feet to a
point on the East 1/8 line of said section and the place of beginning of this description; thence
continuing N 88 degrees 30’ 00” W, 1327.46 feet to the North and South 1/4 line of said section;
thence S 00 degrees 39’35” W along said North and South 1/4 line of said section, 311.03 feet to a
point, which said point is 952.72 feet distant N’ly from the East and West 1/4 line of said section
as measured along said North and South 1/4 line of said section; thence S 88 degrees 30’ 00” E,
1326.76 feet to the East 1/8 line of said section; thence N 00 degrees 47’ 20” E along said East
1/8 line of said section, 311.02 feet to the place of beginning.

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BAY COUNTY

Certain land in Frankenlust Township, Bay County, Michigan described as:

     The South 250 feet of the N 1/2 of the W 1/2 of the W 1/2 of the SE 1/4 of Section 9, T13N,
R4E.

BENZIE COUNTY

Certain land in Benzonia Township, Benzie County, Michigan described as:

     A parcel of land in the Northeast 1/4 of Section 7, Township 26 North, Range 14 West,
described as beginning at a point on the East line of said Section 7, said point being 320 feet
North measured along the East line of said section from the East 1/4 post; running thence West 165
feet; thence North parallel with the East line of said section 165 feet; thence East 165 feet to
the East line of said section; thence South 165 feet to the place of beginning.

BRANCH COUNTY

Certain land in Girard Township, Branch County, Michigan described as:

     A parcel of land in the NE 1/4 of Section 23 T5S, R6W, described as beginning at a point on
the North and South quarter line of said section at a point 1278.27 feet distant South of the North
quarter post of said section, said distance being measured along the North and South quarter line
of said section, running thence S89 degrees21’E 250 feet, thence North
along a line parallel with the said North and South quarter line of said section 200 feet,
thence N89 degrees21’W 250 feet to the North and South quarter line of said section, thence South
along said North and South quarter line of said section 200 feet to the place of beginning.

CALHOUN COUNTY

Certain land in Convis Township, Calhoun County, Michigan described as:

     A parcel of land in the SE 1/4 of the SE 1/4 of Section 32, T1S, R6W, described as follows: To
find the place of beginning of this description, commence at the Southeast corner of said section;
run thence North along the East line of said section 1034.32 feet to the place of beginning of this
description; running thence N 89 degrees 39’ 52” W, 333.0 feet; thence North 290.0 feet to the
South 1/8 line of said section; thence S 89 degrees 39’ 52” E along said South 1/8 line of said
section 333.0 feet to the East line of said section; thence South along said East line of said
section 290.0 feet to the place of beginning. (Bearings are

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based on the East line of Section 32, T1S, R6W, from the Southeast corner of said
section to the Northeast corner of said section assumed as North.)

CASS COUNTY

     Certain easement rights located across land in Marcellus Township, Cass County, Michigan
described as:

The East 6 rods of the SW 1/4 of the SE 1/4 of Section 4, T5S, R13W.

CHARLEVOIX COUNTY

Certain land in South Arm Township, Charlevoix County, Michigan described as:

     A parcel of land in the SW 1/4 of Section 29, T32N, R7W, described as
follows: Beginning at the Southwest corner of said section and running thence
North along the West line of said section 788.25 feet to a point which is 528 feet
distant South of the South 1/8 line of said section as measured along the said
West line of said section; thence N 89 degrees 30’ 19” E, parallel with said South
1/8 line of said section 442.1 feet; thence South 788.15 feet to the South line of
said section; thence S 89 degrees 29’ 30” W, along said South line of said section
442.1 feet to the place of beginning.

CHEBOYGAN COUNTY

Certain land in Inverness Township, Cheboygan County, Michigan described as:

     A parcel of land in the SW frl 1/4 of Section 31, T37N, R2W, described as
beginning at the Northwest corner of the SW frl 1/4, running thence East on the
East and West quarter line of said Section, 40 rods, thence South parallel to the
West line of said Section 40 rods, thence West 40 rods to the West line of said
Section, thence North 40 rods to the place of beginning.

CLARE COUNTY

Certain land in Frost Township, Clare County, Michigan described as:

     The East 150 feet of the North 225 feet of the NW 1/4 of the NW 1/4 of
Section 15, T20N, R4W.

CLINTON COUNTY

Certain land in Watertown Township, Clinton County, Michigan described as:

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     The NE 1/4 of the NE 1/4 of the SE 1/4 of Section 22, and the North 165 feet
of the NW 1/4 of the NE 1/4 of the SE 1/4 of Section 22, T5N, R3W.

CRAWFORD COUNTY

Certain land in Lovells Township, Crawford County, Michigan described as:

     A parcel of land in Section 1, T28N, R1W, described as: Commencing at NW
corner said section; thence South 89 degrees53’30” East along North section line
105.78 feet to point of beginning; thence South 89 degrees53’30” East along North
section line 649.64 feet; thence South 55 degrees 42’30” East 340.24 feet; thence
South 55 degrees 44’ 37” “East 5,061.81 feet to the East section line; thence
South 00 degrees 00’ 08” “West along East section line 441.59 feet; thence North
55 degrees 44’ 37” West 5,310.48 feet; thence North 55 degrees 42’30” West 877.76
feet to point of beginning.

EATON COUNTY

Certain land in Eaton Township, Eaton County, Michigan described as:

     A parcel of land in the SW 1/4 of Section 6, T2N, R4W, described as follows:
To find the place of beginning of this description commence at the Southwest
corner of said section; run thence N 89 degrees 51’ 30” E along the South line of
said section 400 feet to the place of beginning of this description; thence
continuing N 89 degrees 51’ 30” E, 500 feet; thence N 00 degrees 50’ 00” W, 600
feet; thence S 89 degrees 51’ 30” W parallel with the South line of said section
500 feet; thence S 00 degrees 50’ 00” E, 600 feet to the place of beginning.

EMMET COUNTY

Certain land in Wawatam Township, Emmet County, Michigan described as:

     The West 1/2 of the Northeast 1/4 of the Northeast 1/4 of Section 23, T39N,
R4W.

GENESEE COUNTY

Certain land in Argentine Township, Genesee County, Michigan described as:

     A parcel of land of part of the SW 1/4 of Section 8, T5N, R5E, being more
particularly described as follows:

     Beginning at a point of the West line of Duffield Road, 100 feet wide, (as
now established) distant 829.46 feet measured N01

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degrees42’56”W
and 50 feet measured S88 degrees14’04”W from the South quarter
corner, Section 8, T5N, R5E; thence S88 degrees14’04”W a distance of 550 feet;
thence N01 degrees42’56”W a distance of 500 feet to a point on the North line of
the South half of the Southwest quarter of said Section 8; thence N88
degrees14’04”E along the North line of South half of the Southwest quarter of said
Section 8 a distance 550 feet to a point on the West line of Duffield Road, 100
feet wide (as now established); thence S01 degrees42’56”E along the West line of
said Duffield Road a distance of 500 feet to the point of beginning.

GLADWIN COUNTY

Certain land in Secord Township, Gladwin County, Michigan described as:

     The East 400 feet of the South 450 feet of Section 2, T19N, R1E.

GRAND TRAVERSE COUNTY

Certain land in Mayfield Township, Grand Traverse County, Michigan described as:

     A parcel of land in the Northwest 1/4 of Section 3, T25N, R11W, described as
follows: Commencing at the Northwest corner of said section, running thence S 89
degrees19’15” E along the North line of said section and the center line of Clouss
Road 225 feet, thence South 400 feet, thence N 89 degrees19’15” W 225 feet to the
West line of said section and the center line of Hannah Road, thence North along
the West line of said section and the center line of Hannah Road 400 feet to the
place of beginning for this description.

GRATIOT COUNTY

Certain land in Fulton Township, Gratiot County, Michigan described as:

     A parcel of land in the NE 1/4 of Section 7, Township 9 North, Range 3 West,
described as beginning at a point on the North line of George Street in the
Village of Middleton, which is 542 feet East of the North and South one-quarter
(1/4) line of said Section 7; thence North 100 feet; thence East 100 feet; thence
South 100 feet to the North line of George Street; thence West along the North
line of George Street 100 feet to place of beginning.

HILLSDALE COUNTY

Certain land in Litchfield Village, Hillsdale County, Michigan described as:

     Lot 238 of Assessors Plat of the Village of Litchfield.

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HURON COUNTY

     Certain easement rights located across land in Sebewaing Township, Huron County, Michigan
described as:

     The North 1/2 of the Northwest 1/4 of Section 15, T15N, R9E.

INGHAM COUNTY

Certain land in Vevay Township, Ingham County, Michigan described as:

     A parcel of land 660 feet wide in the Southwest 1/4 of Section 7 lying South
of the centerline of Sitts Road as extended to the North-South 1/4 line of said
Section 7, T2N, R1W, more particularly described as follows: Commence at the
Southwest corner of said Section 7, thence North along the West line of said
Section 2502.71 feet to the centerline of Sitts Road; thence South 89
degrees54’45” East along said centerline 2282.38 feet to the place of beginning of
this description; thence continuing South 89 degrees54’45” East along said
centerline and said centerline extended 660.00 feet to the North-South 1/4 line of
said section; thence South 00 degrees07’20” West 1461.71 feet; thence North 89
degrees34’58” West 660.00 feet; thence North 00 degrees07’20” East 1457.91 feet to
the centerline of Sitts Road and the place of beginning.

IONIA COUNTY

Certain land in Sebewa Township, Ionia County, Michigan described as:

     A strip of land 280 feet wide across that part of the SW 1/4 of the NE 1/4 of
Section 15, T5N, R6W, described as follows:

     To find the place of beginning of this description commence at the E 1/4
corner of said section; run thence N 00 degrees 05’ 38” W along the East line of
said section, 1218.43 feet; thence S 67 degrees 18’ 24” W, 1424.45 feet to the
East 1/8 line of said section and the place of beginning of this description;
thence continuing S 67 degrees 18’ 24” W, 1426.28 feet to the North and South 1/4
line of said section at a point which said point is 105.82 feet distant N’ly of
the center of said section as measured along said North and South 1/4 line of said
section; thence N 00 degrees 04’ 47” E along said North and South 1/4 line of said
section, 303.67 feet; thence N 67 degrees 18’ 24” E, 1425.78 feet to the East 1/8
line of said section; thence S 00 degrees 00’ 26” E along said East 1/8 line of
said section, 303.48 feet to the place of beginning. (Bearings are based on the
East line of Section 15, T5N, R6W, from the E 1/4 corner of said section to the
Northeast corner of said section assumed as N 00 degrees 05’ 38” W.)

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IOSCO COUNTY

Certain land in Alabaster Township, Iosco County, Michigan described as:

     A parcel of land in the NW 1/4 of Section 34, T21N, R7E, described as
follows: To find the place of beginning of this description commence at the N 1/4
post of said section; run thence South along the North and South 1/4 line of said
section, 1354.40 feet to the place of beginning of this description; thence
continuing South along the said North and South 1/4 line of said section, 165.00
feet to a point on the said North and South 1/4 line of said section which said
point is 1089.00 feet distant North of the center of said section; thence West
440.00 feet; thence North 165.00 feet; thence East 440.00 feet to the said North
and South 1/4 line of said section and the place of beginning.

ISABELLA COUNTY

Certain land in Chippewa Township, Isabella County, Michigan described as:

     The North 8 rods of the NE 1/4 of the SE 1/4 of Section 29, T14N, R3W.

JACKSON COUNTY

Certain land in Waterloo Township, Jackson County, Michigan described as:

     A parcel of land in the North fractional part of the N fractional 1/2 of
Section 2, T1S, R2E, described as follows: To find the place of beginning of this
description commence at the E 1/4 post of said section; run thence N 01 degrees
03’ 40” E along the East line of said section 1335.45 feet to the North 1/8 line
of said section and the place of beginning of this description; thence N 89
degrees 32’ 00” W, 2677.7 feet to the North and South 1/4 line of said section;
thence S 00 degrees 59’ 25” W along the North and South 1/4 line of said section
22.38 feet to the North 1/8 line of said section; thence S 89 degrees 59’ 10” W
along the North 1/8 line of said section 2339.4 feet to the center line of State
Trunkline Highway M-52; thence N 53 degrees 46’ 00” W along the center line of
said State Trunkline Highway 414.22 feet to the West line of said section; thence
N 00 degrees 55’ 10” E along the West line of said section 74.35 feet; thence S 89
degrees 32’ 00” E, 5356.02 feet to the East line of said section; thence S 01
degrees 03’ 40” W along the East line of said section 250 feet to the place of
beginning.

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KALAMAZOO COUNTY

Certain land in Alamo Township, Kalamazoo County, Michigan described as:

     The South 350 feet of the NW 1/4 of the NW 1/4 of Section 16, T1S, R12W,
being more particularly described as follows: To find the place of beginning of
this description, commence at the Northwest corner of said section; run thence S
00 degrees 36’ 55” W along the West line of said section 971.02 feet to the place
of beginning of this description; thence continuing S 00 degrees 36’ 55” W along
said West line of said section 350.18 feet to the North 1/8 line of said section;
thence S 87 degrees 33’ 40” E along the said North 1/8 line of said section 1325.1
feet to the West 1/8 line of said section; thence N 00 degrees 38’ 25” E along the
said West 1/8 line of said section 350.17 feet; thence N 87 degrees 33’ 40” W,
1325.25 feet to the place of beginning.

KALKASKA COUNTY

Certain land in Kalkaska Township, Kalkaska County, Michigan described as:

     The NW 1/4 of the SW 1/4 of Section 4, T27N, R7W, excepting therefrom all
mineral, coal, oil and gas and such other rights as were reserved unto the State
of Michigan in that certain deed running from the Department of Conservation for
the State of Michigan to George Welker and Mary Welker, his wife, dated October 9,
1934 and recorded December 28, 1934 in Liber 39 on page 291 of Kalkaska County
Records, and subject to easement for pipeline purposes as granted to Michigan
Consolidated Gas Company by first party herein on April 4, 1963 and recorded June
21, 1963 in Liber 91 on page 631 of Kalkaska County Records.

KENT COUNTY

Certain land in Caledonia Township, Kent County, Michigan described as:

     A parcel of land in the Northwest fractional 1/4 of Section 15, T5N, R10W,
described as follows: To find the place of beginning of this description commence
at the North 1/4 corner of said section, run thence S 0 degrees 59’ 26” E along
the North and South 1/4 line of said section 2046.25 feet to the place of
beginning of this description, thence continuing S 0 degrees 59’ 26” E along said
North and South 1/4 line of said section 332.88 feet, thence S 88 degrees 58’ 30”
W 2510.90 feet to a point herein designated “Point A” on the East bank of the
Thornapple River, thence continuing S 88 degrees 53’ 30” W to the center thread of
the Thornapple River, thence NW’ly along the center thread of said
Thornapple River to a point which said point is S 88 degrees 58’ 30” W of a
point on the East bank of the Thornapple River herein designated “Point

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B”, said “Point B” being N 23 degrees 41’ 35” W 360.75 feet from said
above-described “Point A”, thence N 88 degrees 58’ 30” E to said “Point B”, thence
continuing N 88 degrees 58’ 30” E 2650.13 feet to the place of beginning.
(Bearings are based on the East line of Section 15, T5N, R10W between the East 1/4
corner of said section and the Northeast corner of said section assumed as N 0
degrees 59’ 55” W.)

LAKE COUNTY

Certain land in Pinora and Cherry Valley Townships, Lake County, Michigan described as:

     A strip of land 50 feet wide East and West along and adjoining the West line
of highway on the East side of the North 1/2 of Section 13 T18N, R12W. Also a
strip of land 100 feet wide East and West along and adjoining the East line of the
highway on the West side of following described land: The South 1/2 of NW 1/4, and
the South 1/2 of the NW 1/4 of the SW 1/4, all in Section 6, T18N, R11W.

LAPEER COUNTY

Certain land in Hadley Township, Lapeer County, Michigan described as:

     The South 825 feet of the W 1/2 of the SW 1/4 of Section 24, T6N, R9E, except
the West 1064 feet thereof.

LEELANAU COUNTY

Certain land in Cleveland Township, Leelanau County, Michigan described as:

     The North 200 feet of the West 180 feet of the SW 1/4 of the SE 1/4 of
Section 35, T29N, R13W.

LENAWEE COUNTY

Certain land in Madison Township, Lenawee County, Michigan described as:

     A strip of land 165 feet wide off the West side of the following described
premises: The E 1/2 of the SE 1/4 of Section 12. The E 1/2 of the NE 1/4 and the
NE 1/4 of the SE 1/4 of Section 13, being all in T7S, R3E, excepting therefrom a
parcel of land in the E 1/2 of the SE 1/4 of Section 12, T7S, R3E, beginning at
the Northwest corner of said E 1/2 of the SE 1/4 of Section 12, running thence
East 4 rods, thence South 6 rods, thence West 4 rods, thence North 6 rods to the
place of beginning.

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LIVINGSTON COUNTY

Certain land in Cohoctah Township, Livingston County, Michigan described as:

     Parcel 1

     The East 390 feet of the East 50 rods of the SW 1/4 of Section 30, T4N, R4E.

     Parcel 2

     A parcel of land in the NW 1/4 of Section 31, T4N, R4E, described as follows:
To find the place of beginning of this description commence at the N 1/4 post of
said section; run thence N 89 degrees 13’ 06” W along the North line of said
section, 330 feet to the place of beginning of this description; running thence S
00 degrees 52’ 49” W, 2167.87 feet; thence N 88 degrees 59’ 49” W, 60 feet; thence
N 00 degrees 52’ 49” E, 2167.66 feet to the North line of said section; thence S
89 degrees 13’ 06” E along said North line of said section, 60 feet to the place
of beginning.

MACOMB COUNTY

Certain land in Macomb Township, Macomb County, Michigan described as:

     A parcel of land commencing on the West line of the E 1/2 of the NW 1/4 of
fractional Section 6, 20 chains South of the NW corner of said E 1/2 of the NW 1/4
of Section 6; thence South on said West line and the East line of A. Henry
Kotner’s Hayes Road Subdivision #15, according to the recorded plat thereof, as
recorded in Liber 24 of Plats, on page 7, 24.36 chains to the East and West 1/4
line of said Section 6; thence East on said East and West 1/4 line 8.93 chains;
thence North parallel with the said West line of the E 1/2 of the NW 1/4 of
Section 6, 24.36 chains; thence West 8.93 chains to the place of beginning, all in
T3N, R13E.

MANISTEE COUNTY

Certain land in Manistee Township, Manistee County, Michigan described as:

     A parcel of land in the SW 1/4 of Section 20, T22N, R16W, described as
follows: To find the place of beginning of this description, commence at the
Southwest corner of said section; run thence East along the South line of said
section 832.2 feet to the place of beginning of this description; thence
continuing East along said South line of said section 132 feet; thence North 198
feet; thence West 132 feet; thence South 198 feet to the place of beginning,
excepting therefrom the South 2 rods thereof which was conveyed to Manistee
Township for highway purposes

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by a Quitclaim Deed dated June 13, 1919 and recorded July 11, 1919 in Liber 88 of Deeds on page 638
of Manistee County Records.

MASON COUNTY

Certain land in Riverton Township, Mason County, Michigan described as:

     Parcel 1

     The South 10 acres of the West 20 acres of the S 1/2 of the NE 1/4 of Section 22, T17N, R17W.

     Parcel 2

     A parcel of land containing 4 acres of the West side of highway, said parcel of land being
described as commencing 16 rods South of the Northwest corner of the NW 1/4 of the SW 1/4 of Section
22, T17N, R17W, running thence South 64 rods, thence NE’ly and N’ly and NW’ly along the W’ly line
of said highway to the place of beginning, together with any and all right, title, and interest of
Howard C. Wicklund and Katherine E. Wicklund in and to that portion of the hereinbefore mentioned
highway lying adjacent to the E’ly line of said above described land.

MECOSTA COUNTY

Certain land in Wheatland Township, Mecosta County, Michigan described as:

     A parcel of land in the SW 1/4 of the SW 1/4 of Section 16, T14N, R7W, described as beginning
at the Southwest corner of said section; thence East along the South line of Section 133 feet;
thence North parallel to the West section line 133 feet; thence West 133 feet to the West line of
said Section; thence South 133 feet to the place of beginning.

MIDLAND COUNTY

Certain land in Ingersoll Township, Midland County, Michigan described as:

     The West 200 feet of the W 1/2 of the NE 1/4 of Section 4, T13N, R2E.

MISSAUKEE COUNTY

Certain land in Norwich Township, Missaukee County, Michigan described as:

     A parcel of land in the NW 1/4 of the NW 1/4 of Section 16, T24N, R6W, described as follows:
Commencing at the Northwest corner of said section, running thence N 89 degrees 01’ 45” E along the
North

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line of said section 233.00 feet; thence South 233.00 feet; thence S 89 degrees
01’ 45” W, 233.00 feet to the West line of said section; thence North along said
West line of said section 233.00 feet to the place of beginning. (Bearings are
based on the West line of Section 16, T24N, R6W, between the Southwest and
Northwest corners of said section assumed as North.)

MONROE COUNTY

Certain land in Whiteford Township, Monroe County, Michigan described as:

     A parcel of land in the SW1/4 of Section 20, T8S, R6E, described as follows:
To find the place of beginning of this description commence at the S 1/4 post of
said section; run thence West along the South line of said section 1269.89 feet to
the place of beginning of this description; thence continuing West along said
South line of said section 100 feet; thence N 00 degrees 50’ 35” E, 250 feet;
thence East 100 feet; thence S 00 degrees 50’ 35” W parallel with and 16.5 feet
distant W’ly of as measured perpendicular to the West 1/8 line of said section, as
occupied, a distance of 250 feet to the place of beginning.

MONTCALM COUNTY

Certain land in Crystal Township, Montcalm County, Michigan described as:

     The N 1/2 of the S 1/2 of the SE 1/4 of Section 35, T10N, R5W.

MONTMORENCY COUNTY

Certain land in the Village of Hillman, Montmorency County, Michigan described as:

     Lot 14 of Hillman Industrial Park, being a subdivision in the South 1/2 of
the Northwest 1/4 of Section 24, T31N, R4E, according to the plat thereof recorded
in Liber 4 of Plats on Pages 32-34, Montmorency County Records.

MUSKEGON COUNTY

Certain land in Casnovia Township, Muskegon County, Michigan described as:

     The West 433 feet of the North 180 feet of the South 425 feet of the SW 1/4
of Section 3, T10N, R13W.

NEWAYGO COUNTY

Certain land in Ashland Township, Newaygo County, Michigan described as:

     The West 250 feet of the NE 1/4 of Section 23, T11N, R13W.

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OAKLAND COUNTY

Certain land in Wixcom City, Oakland County, Michigan described as:

     The E 75 feet of the N 160 feet of the N 330 feet of the W 526.84 feet of the NW 1/4 of the NW
1/4 of Section 8, T1N, R8E, more particularly described as follows: Commence at the NW corner of
said Section 8, thence N 87 degrees 14’ 29” E along the North line of said Section 8 a distance of
451.84 feet to the place of beginning for this description; thence continuing N 87 degrees 14’ 29”
E along said North section line a distance of 75.0 feet to the East line of the West 526.84 feet of
the NW 1/4 of the NW 1/4 of said Section 8; thence S 02 degrees 37’ 09” E along said East line a
distance of 160.0 feet; thence S 87 degrees 14’ 29” W a distance of 75.0 feet; thence N 02 degrees
37’ 09” W a distance of 160.0 feet to the place of beginning.

OCEANA COUNTY

Certain land in Crystal Township, Oceana County, Michigan described as:

     The East 290 feet of the SE 1/4 of the NW 1/4 and the East 290 feet of the NE 1/4 of the SW
1/4, all in Section 20, T16N, R16W.

OGEMAW COUNTY

Certain land in West Branch Township, Ogemaw County, Michigan described as:

     The South 660 feet of the East 660 feet of the NE 1/4 of the NE 1/4 of Section 33, T22N, R2E.

OSCEOLA COUNTY

Certain land in Hersey Township, Osceola County, Michigan described as:

     A parcel of land in the North 1/2 of the Northeast 1/4 of Section 13, T17N, R9W, described as
commencing at the Northeast corner of said Section; thence West along the North Section line 999
feet to the point of beginning of this description; thence S 01 degrees 54’ 20” E 1327.12 feet to
the North 1/8 line; thence S 89 degrees 17’ 05” W along the North 1/8 line 330.89 feet; thence N 01
degrees 54’ 20” W 1331.26 feet to the North Section line; thence East along the North Section line
331 feet to the point of beginning.

OSCODA COUNTY

Certain land in Comins Township, Oscoda County, Michigan described as:

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     The East 400 feet of the South 580 feet of the W 1/2 of the SW 1/4 of Section 15,
T27N, R3E.

OTSEGO COUNTY

Certain land in Corwith Township, Otsego County, Michigan described as:

     Part of the NW 1/4 of the NE 1/4 of Section 28, T32N, R3W, described as: Beginning at
the N 1/4 corner of said section; running thence S 89 degrees 04’ 06” E along the North
line of said section, 330.00 feet; thence S 00 degrees 28’ 43” E, 400.00 feet; thence N 89
degrees 04’ 06” W, 330.00 feet to the North and South 1/4 line of said section; thence N
00 degrees 28’ 43” W along the said North and South 1/4 line of said section, 400.00 feet
to the point of beginning; subject to the use of the N’ly 33.00 feet thereof for highway
purposes.

OTTAWA COUNTY

Certain land in Robinson Township, Ottawa County, Michigan described as:

     The North 660 feet of the West 660 feet of the NE 1/4 of the NW 1/4 of Section 26,
T7N, R15W.

PRESQUE ISLE COUNTY

     Certain land in Belknap and Pulawski Townships, Presque Isle County, Michigan described as:

     Part of the South half of the Northeast quarter, Section 24, T34N, R5E, and part of
the Northwest quarter, Section 19, T34N, R6E, more fully described as: Commencing at the
East 1/4 corner of said Section 24; thence N 00 degrees15’47” E, 507.42 feet, along the East
line of said Section 24 to the point of beginning; thence S 88 degrees15’36” W, 400.00
feet, parallel with the North 1/8 line of said Section 24; thence N 00 degrees15’47” E,
800.00 feet, parallel with said East line of Section 24; thence N 88 degrees15’36”E,
800.00 feet, along said North 1/8 line of Section 24 and said line extended; thence S 00
degrees15’47” W, 800.00 feet, parallel with said East line of Section 24; thence S 88
degrees15’36” W, 400.00 feet, parallel with said North 1/8 line of Section 24 to the point
of beginning.

     Together with a 33 foot easement along the West 33 feet of the Northwest quarter
lying North of the North 1/8 line of Section 24, Belknap Township, extended, in Section
19, T34N, R6E.

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ROSCOMMON COUNTY

Certain land in Gerrish Township, Roscommon County, Michigan described as:

     A parcel of land in the NW 1/4 of Section 19, T24N, R3W, described as follows: To
find the place of beginning of this description commence at the Northwest corner of said
section, run thence East along the North line of said section 1,163.2 feet to the place of
beginning of this description (said point also being the place of intersection of the West
1/8 line of said section with the North line of said section), thence S 01 degrees 01’ E
along said West 1/8 line 132 feet, thence West parallel with the North line of said
section 132 feet, thence N 01 degrees 01’ W parallel with said West 1/8 line of said
section 132 feet to the North line of said section, thence East along the North line of
said section 132 feet to the place of beginning.

SAGINAW COUNTY

Certain land in Chapin Township, Saginaw County, Michigan described as:

     A parcel of land in the SW 1/4 of Section 13, T9N, R1E, described as follows: To find
the place of beginning of this description commence at the Southwest corner of said
section; run thence North along the West line of said section 1581.4 feet to the place of
beginning of this description; thence continuing North along said West line of said
section 230 feet to the center line of a creek; thence S 70 degrees 07’ 00” E along said
center line of said creek 196.78 feet; thence South 163.13 feet; thence West 185 feet to
the West line of said section and the place of beginning.

SANILAC COUNTY

     Certain easement rights located across land in Minden Township, Sanilac County, Michigan
described as:

     The Southeast 1/4 of the Southeast 1/4 of Section 1, T14N, R14E, excepting therefrom
the South 83 feet of the East 83 feet thereof.

SHIAWASSEE COUNTY

Certain land in Burns Township, Shiawassee County, Michigan described as:

     The South 330 feet of the E 1/2 of the NE 1/4 of Section 36, T5N, R4E.

ST. CLAIR COUNTY

Certain land in Ira Township, St. Clair County, Michigan described as:

A-34

 

     The N 1/2 of the NW 1/4 of the NE 1/4 of Section 6, T3N, R15E.

ST. JOSEPH COUNTY

Certain land in Mendon Township, St. Joseph County, Michigan described as:

     The North 660 feet of the West 660 feet of the NW 1/4 of SW 1/4, Section 35,
T5S, R10W.

TUSCOLA COUNTY

Certain land in Millington Township, Tuscola County, Michigan described as:

     A strip of land 280 feet wide across the East 96 rods of the South 20 rods of
the N 1/2 of the SE 1/4 of Section 34, T10N, R8E, more particularly described as
commencing at the Northeast corner of Section 3, T9N, R8E, thence S 89 degrees 55’
35” W along the South line of said Section 34 a distance of 329.65 feet, thence N
18 degrees 11’ 50” W a distance of 1398.67 feet to the South 1/8 line of said
Section 34 and the place of beginning for this description; thence continuing N 18
degrees 11’ 50” W a distance of 349.91 feet; thence N 89 degrees 57’ 01” W a
distance of 294.80 feet; thence S 18 degrees 11’ 50” E a distance of 350.04 feet
to the South 1/8 line of said Section 34; thence S 89 degrees 58’ 29” E along the
South 1/8 line of said section a distance of 294.76 feet to the place of
beginning.

VAN BUREN COUNTY

Certain land in Covert Township, Van Buren County, Michigan described as:

     All that part of the West 20 acres of the N 1/2 of the NE fractional 1/4 of
Section 1, T2S, R17W, except the West 17 rods of the North 80 rods, being more
particularly described as follows: To find the place of beginning of this
description commence at the N 1/4 post of said section; run thence N 89 degrees
29’ 20” E along the North line of said section 280.5 feet to the place of
beginning of this description; thence continuing N 89 degrees 29’ 20” E along said
North line of said section 288.29 feet; thence S 00 degrees 44’ 00” E, 1531.92
feet; thence S 89 degrees 33’ 30” W, 568.79 feet to the North and South 1/4 line
of said section; thence N 00 degrees 44’ 00” W along said North and South 1/4 line
of said section 211.4 feet; thence N 89 degrees 29’ 20” E, 280.5 feet; thence N 00
degrees 44’ 00” W, 1320 feet to the North line of said section and the place of
beginning.

WASHTENAW COUNTY

Certain land in Manchester Township, Washtenaw County, Michigan described as:

A-35

 

     A parcel of land in the NE 1/4 of the NW 1/4 of Section 1, T4S, R3E, described as
follows: To find the place of beginning of this description commence at the Northwest
corner of said section; run thence East along the North line of said section 1355.07 feet
to the West 1/8 line of said section; thence S 00 degrees 22’ 20” E along said West 1/8
line of said section 927.66 feet to the place of beginning of this description; thence
continuing S 00 degrees 22’ 20” E along said West 1/8 line of said section 660 feet to the
North 1/8 line of said section; thence N 86 degrees 36’ 57” E along said North 1/8 line of
said section 660.91 feet; thence N 00 degrees22’ 20” W, 660 feet; thence S 86 degrees 36’
57” W, 660.91 feet to the place of beginning.

WAYNE COUNTY

     Certain land in Livonia City, Wayne County, Michigan described as:

     Commencing at the Southeast corner of Section 6, T1S, R9E; thence North along the
East line of Section 6 a distance of 253 feet to the point of beginning; thence continuing
North along the East line of Section 6 a distance of 50 feet; thence Westerly parallel to
the South line of Section 6, a distance of 215 feet; thence Southerly parallel to the East
line of Section 6 a distance of 50 feet; thence easterly parallel with the South line of
Section 6 a distance of 215 feet to the point of beginning.

WEXFORD COUNTY

     Certain land in Selma Township, Wexford County, Michigan described as:

     A parcel of land in the NW 1/4 of Section 7, T22N, R10W, described as beginning on
the North line of said section at a point 200 feet East of the West line of said section,
running thence East along said North section line 450 feet, thence South parallel with
said West section line 350 feet, thence West parallel with said North section line 450
feet, thence North parallel with said West section line 350 feet to the place of
beginning.

     SECTION 12. The Company is a transmitting utility under Section 9501(2) of the Michigan
Uniform Commercial Code (M.C.L. 440.9501(2)) as defined in M.C.L. 440.9102(1)(aaaa).

     IN WITNESS WHEREOF, said Consumers Energy Company has caused this Supplemental Indenture to be
executed in its corporate name by its Chairman of the Board, President, a Vice President or its
Treasurer and its corporate seal to be hereunto affixed and to be attested by its Secretary or an
Assistant Secretary, and The Bank of New York, as Trustee as aforesaid, to evidence its acceptance
hereof, has caused this Supplemental Indenture to be executed in its corporate name by a Vice
President and its corporate seal to be hereunto affixed

A-36

 

and to be attested by an Assistant Treasurer, in several counterparts, all as of the day and year
first above written.

A-37

 

	 	 	 	 	 	 	 
	 	 	CONSUMERS ENERGY COMPANY	 	 
	 
	 	 	 	 	 	 
	(SEAL)

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name	 	 	 	 
	 

	 	 	 	 	 	 
	Attest:

	 	Title	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Joyce H. Norkey
	 	 	 	 	 	 
	Assistant Secretary
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Signed, sealed and delivered
	 	 	 	 	 	 
	by CONSUMERS ENERGY COMPANY
	 	 	 	 	 	 
	in the presence of
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Kimberly C. Wilson
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Sammie B. Dalton
	 	 	 	 	 	 

	 	 	 	 	 
	STATE OF MICHIGAN

	 	)
	 	 
	 

	 	ss.	 	 
	COUNTY OF JACKSON

	 	)	 	 

     The foregoing instrument was acknowledged before me this ___day of                     , 2007,
by                                         ,                                          of CONSUMERS ENERGY COMPANY, a
Michigan corporation, on behalf of the corporation.

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Margaret Hillman, Notary Public
	 	 
	[SEAL]

	 	Jackson County, Michigan	 	 
	 

	 	My Commission Expires:                            
             	 	 

S-1

 

	 	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK, AS TRUSTEE
	 
	 	 	 	 	 	 
	(SEAL)

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	L. O’Brien	 	 
	Attest:

	 	 	 	Vice President	 	 

	 	 	 
	 

Assistant Treasurer

	 	 
	 
	 	 
	Signed, sealed and delivered
	 	 
	by THE BANK OF NEW YORK
	 	 
	in the presence of
	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

	 	 	 
	STATE OF NEW YORK

	 	) 
	 

	 	  ss.
	COUNTY OF NEW YORK

	 	) 

          The foregoing instrument was acknowledged before me this       day of                     , 2007, by L.
O’Brien, a Vice President of THE BANK OF NEW YORK, a New York banking corporation, on behalf of
the bank, as trustee.

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Notary Public   
	 	 
	 
	 	 	 	 
	[Seal]

	 	New York County, New York	 	 
	 

	 	My Commission Expires:	 	 
	 
	 	 	 	 
	Prepared by:

	 	When recorded, return to:	 	 
	Kimberly C. Wilson

	 	Consumers Energy Company	 	 
	One Energy Plaza

	 	Business Services Real Estate Dept.	 	 
	Jackson, MI 49201

	 	Attn: Nancy Fisher EP7-439	 	 
	 

	 	One Energy Plaza	 	 
	 

	 	Jackson, MI 4920	 	 

S-2

 

SCHEDULE 1

FEES

     The Commitment Fee Rate and the LC Commission Fee Rate shall be determined pursuant to the
table below.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Commitment Fee Rate	 	LC Commission Fee Rate
	 	 	Specified Rating	 	(per annum)	 	(per annum)
	 
	Level 1
	 	A-/A-/A3	 	6.0 bps	 	25.0 bps
	Level 2
	 	BBB+/BBB+Baa1	 	7.0 bps	 	30.0 bps
	Level 3
	 	BBB/BBB/Baa2	 	9.0 bps	 	37.5 bps
	Level 4
	 	BBB-/BBB-/Baa3	 	12.5 bps  	 	55.0 bps
	Level 5
	 	BB+/BB+/Ba1	 	17.5 bps  	 	82.5 bps
	Level 6
	 	£BB/BB/Ba2	 	22.5 bps  	 	122.5 bps  

     The “Rating” from S&P, Fitch or Moody’s shall mean (a) at any time prior to the FMB Release
Date, the rating issued by such rating agency and then in effect with respect to the Senior Debt,
and (b) at any time thereafter, the rating issued by such rating agency and then in effect with
respect to the Company’s senior unsecured long-term debt (without credit enhancement).

     (a) If each of S&P, Fitch and Moody’s shall issue a Rating, the Specified Rating shall be (i)
if two of such Ratings are the same, such Ratings; and (ii) if all such Ratings are different, the
middle of such Ratings.

     (b) If only two of S&P, Fitch and Moody’s shall issue a Rating, the Specified Rating shall be
the higher of such Ratings; provided that if a split of greater than one ratings category occurs
between such Ratings, the Specified Rating shall be the ratings category that is one category below
the higher of such Ratings.

     (c) If only one of S&P, Fitch and Moody’s shall issue a Rating, the Specified Rating shall be
such Rating.

     (d) If none of S&P, Fitch and Moody’s shall issue a Rating, the Specified Rating shall be
BB/BB/Ba2.

 

 

EXHIBIT A

FORM OF SUPPLEMENTAL INDENTURE

 

 

EXHIBIT B

FORM OF BOND DELIVERY AGREEMENT

BOND DELIVERY AGREEMENT

CONSUMERS ENERGY COMPANY

to

THE BANK OF NOVA SCOTIA

Dated as of November 30, 2007

 

Relating to

First Mortgage Bonds,

2007-2 Collateral Series (Interest Bearing)

 

 

 

     THIS BOND DELIVERY AGREEMENT (this “Agreement”), dated as of November 30, 2007, is entered
into between Consumers Energy Company (the “Company”) and The Bank of Nova Scotia (the “Bank”)
pursuant to the Letter of Credit Reimbursement Agreement (as amended, supplemented or otherwise
modified from time to time, the “Reimbursement Agreement”) dated as of November 30, 2007 between
the Company and the Bank. Capitalized terms used but not otherwise defined herein have the
respective meanings assigned to such terms in the Reimbursement Agreement.

     Whereas, the Company has entered into the Reimbursement Agreement and may from time to time
make borrowings thereunder in accordance with the provisions thereof;

     Whereas, the Company has established its First Mortgage Bonds, 2007-2 Collateral Series
(Interest Bearing) in the aggregate principal amount of $200,000,000 (the “Bonds”), to be issued
under and in accordance with the One Hundred Sixth Supplemental Indenture dated as of November 30,
2007 (the “Supplemental Indenture”) to the Indenture of the Company to The Bank of New York dated
as of September 1, 1945 (as amended and supplemented, the “Indenture”); and

     Whereas, the Company proposes to issue and deliver to the Bank the Bonds in order to provide
the Bonds as evidence of (and the benefit of the lien of the Indenture with respect to the Bonds
for) the Liabilities of the Company arising under the Reimbursement Agreement.

     Now, therefore, in consideration of the premises and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the Company and the Bank hereby
agree as follows:

ARTICLE I

The Bonds

Section 1.1 Delivery of Bonds.

     In order to provide the Bonds as evidence of (and through the Bonds the benefit of the Lien of
the Indenture for) the Liabilities of the Company under the Reimbursement Agreement as aforesaid,
the Company hereby delivers to the Bank the Bonds in the aggregate principal amount of
$200,000,000, maturing on the earlier of (a) November 28, 2008 or such later date as may be fixed
as the “Termination Date” under and as defined in the Reimbursement Agreement and (b) the “FMB
Release Date” (as defined by reference to the Reimbursement Agreement) and bearing interest as
provided in the Supplemental Indenture. The obligation of the Company to pay the principal of and
interest on the Bonds shall be deemed to have been satisfied and discharged in full or in part, as
the case may be, to the extent of payment by the Company of the Liabilities, all as set forth in
the Bonds and in Section 1 of the Supplemental Indenture.

     The Bonds are registered in the name of the Bank and shall be owned and held by the Bank, and
the Company shall have no interest therein. The Bank shall be entitled to exercise all rights of
bondholders under the Indenture with respect to the Bonds.

     The Bank hereby acknowledges receipt of the Bonds.

Section 1.2 Payments on the Bonds.

2

 

     Any payments received by the Bank on account of the principal of or interest on the Bonds
shall be deemed to be and treated in all respects as payments of the Liabilities.

ARTICLE II

No Transfer of Bonds; Surrender of Bonds

Section 2.1 No Transfer of the Bonds.

     The Bank shall not sell, assign or otherwise transfer any Bonds delivered to it under this
Agreement except to a successor letter of credit issuer under the Reimbursement Agreement. The
Company may take such actions as it shall deem necessary, desirable or appropriate to effect
compliance with such restrictions on transfer, including the issuance of stop-transfer instructions
to the trustee under the Indenture or any other transfer agent thereunder.

Section 2.2 Surrender of Bonds.

     (a) The Bank shall forthwith surrender to or upon the order of the Company all Bonds held by
it at the first time at which the Commitment shall have been terminated, all Letters of Credit have
been terminated or expired and all Liabilities shall have been paid in full.

     (b) Upon any permanent reduction in the Commitment pursuant to the terms of the Reimbursement
Agreement, the Bank shall forthwith surrender to or upon the order of the Company Bonds in an
aggregate principal amount equal to the excess of the aggregate principal amount of Bonds held by
the Bank over the Commitment.

ARTICLE III

Governing Law

     This Agreement shall construed in accordance with and governed by the internal laws (without
regard to the conflict of laws provisions) of the State of New York, but giving effect to Federal
laws applicable to national banks.

[SIGNATURE PAGE FOLLOWS]

3

 

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

	 	 	 
	CONSUMERS ENERGY COMPANY
	 	 
	 
	 	 
	 

Name:

	 	 
	Title:
	 	 
	 
	 	 
	THE BANK OF NOVA SCOTIA
	 	 
	 

	 

Name:

	 	 
	Title:
	 	 

4exv10w1

 

Exhibit 10.1

FIRST AMENDMENT TO 

AMENDED AND RESTATED CREDIT AGREEMENT AND WAIVER

     THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND WAIVER, dated as of November
30, 2007 (this “Amendment”), is entered into by and among LCC International, Inc., a
Delaware corporation (the “Borrower”), the Guarantors identified on the signature pages
hereto (the “Guarantors” and, collectively with the Borrower, the “Loan Parties”),
the Lenders identified on the signature pages hereto (the “Lenders”) and Bank of America,
N.A., as administrative agent (the “Administrative Agent”). Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed thereto in the Credit Agreement (as
defined below) as amended hereby.

RECITALS

     A. The Loan Parties, the Lenders and the Administrative Agent have entered into that certain
Amended and Restated Credit Agreement dated as of May 29, 2007 (as amended and otherwise modified
from time to time, the “Credit Agreement”).

     B. Certain Events of Default have occurred as a result of the Borrower’s failure to comply
with (a) Section 7.01(a) of the Credit Agreement with respect to the fiscal year ended December 31,
2006 within the time period required by such section (the “10K Default”), (b) Section
7.01(b) of the Credit Agreement with respect to the fiscal quarters ended March 31, 2007, June 30,
2007 and September 30, 2007 within the time periods required by such Section (the “10Q
Defaults”), (c) Section 8.11(a) of the Credit Agreement with respect to the applicable periods
ended June 30, 2007 and September 30, 2007 (the “Financial Covenant Defaults”), (d) Section
7.15 of the Credit Agreement (the “Account Maintenance Default”), (e) Sections 7.08 and
7.09(b) of the Credit Agreement as a result of the 10K Default and 10Q Defaults and (the
“Compliance Defaults”) and (f) certain representations and warranties made or deemed made
pursuant to the Credit Agreement with respect to existence of a Default or Event of Default to the
extent relating to the foregoing defaults (together with the 10K Default, the 10Q Defaults, the
Financial Covenant Defaults, the Account Maintenance Default and the Compliance Defaults, the
“Acknowledged Events of Default”).

     C. The Loan Parties have requested that the Administrative Agent and the Lenders (i) waive the
Acknowledged Events of Default, (ii) convert a portion of the outstanding Revolving Loans to a Term
Loan and (iii) modify certain provisions of the Credit Agreement.

     D. The Administrative Agent and the Lenders have agreed to do so, but only pursuant to the
terms set forth herein.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     1. Estoppel, Acknowledgement and Reaffirmation. Immediately prior to giving effect to
this Amendment, the aggregate outstanding principal amount of the Revolving Loans was $28,451,000,
which amount constitutes a valid and subsisting obligation of the Loan Parties to the Lenders that
is not subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind.
After giving

 

 

effect to this Amendment, the aggregate outstanding principal amount of (i) the Revolving Loans
shall be $21,951,000 and (ii) the Term Loan shall be $6,500,000. The Loan Parties hereby
acknowledge their obligations under the respective Loan Documents to which they are party, reaffirm
that each of the liens and security interests created and granted in or pursuant to the Collateral
Documents is valid and subsisting and agree that this Amendment shall in no manner impair or
otherwise adversely effect such obligations, liens or security interests, except as explicitly set
forth herein.

     2. Waiver. The Lenders and the Administrative Agent hereby waive the Acknowledged
Events of Default, provided that the foregoing waiver shall not be deemed to modify or
affect the obligations of the Loan Parties to comply with each and every other obligation under the
Credit Agreement and the other Loan Documents from and after the date hereof. This waiver is a
one-time waiver and shall not be construed to be a waiver of any other Default or Event of Default
that may currently exist or occur hereafter.

     3. Financial Statement Deliveries. In addition to any and all reporting requirements
under the Credit Agreement, the Loan Parties hereby agree to deliver to the Administrative Agent
(a) on or before November 30, 2007, the financial statements described in Section 7.01(a) of the
Credit Agreement with respect to the fiscal year ended December 31, 2006 and (b) on or before
January 14, 2008, the financial statements described in Section 7.01(b) of the Credit Agreement
with respect to the fiscal quarters ended March 31, 2007, June 30, 2007 and September 30, 2007, in
each case, along with any additional deliveries required under the Credit Agreement in connection
therewith. The failure to timely deliver the financial statements as required herein shall
constitute an immediate Event of Default under the Loan Documents irrespective of any otherwise
applicable grace or cure period.

     4. Amendments to Credit Agreement.

     (a) The definition of “Applicable Rate” in Section 1.01 of the Credit Agreement is
hereby amended by replacing the pricing grid contained therein with the following pricing
grid:

	 	 	 	 	 	 	 	 	 
	Pricing	 	Consolidated	 	Commitment	 	Eurodollar Rate	 	Base Rate
	Tier	 	Leverage Ratio	 	Fee	 	Based Loans	 	Loans
	1
	 	£ 2.5 to 1.0	 	0.250%	 	3.50%	 	2.50%
	2
	 	> 2.5 to 1.0	 	0.250%	 	4.00%	 	3.00%

     (b) The following definitions in Section 1.01 of the Credit Agreement are hereby
amended and restated in their entirety to read as follows:

     “Aggregate Revolving Commitments” means the Revolving Commitments of
all the Lenders. The amount of the Aggregate Revolving Commitments in effect as of
November 30, 2007 is TWENTY ONE MILLION NINE HUNDRED FIFTY ONE THOUSAND DOLLARS
($21,951,000).

     “Applicable Percentage” means with respect to any Lender at any time,
the percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Commitment at such time; provided that if the
commitment of each Lender to make Loans has been terminated pursuant to Section
9.02 or if the Aggregate Commitments have expired, then the Applicable
Percentage of each Lender shall be determined based on the Applicable Percentage of
such Lender most recently in effect, giving effect to any subsequent assignments.
The initial Applicable Percentage of each Lender is set forth opposite the name of
such Lender on Schedule 2.01 or in the

2

 

Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.

     “Borrowing Base” means, at the relevant time of reference thereto, an
amount equal to the sum of, without duplication: (i) 80% of Eligible Domestic
Accounts Receivable plus (ii) 75% of Eligible Foreign Accounts Receivable
plus (iii) 25% of Eligible S&A Accounts Receivable plus (iv) 50% of
Eligible Unbilled Receivables plus (v) 25% of Eligible Unbilled S&A
Receivables, in each case as set forth in the most recent Borrowing Base Certificate
delivered to the Administrative Agent in accordance with the terms of Section
7.02(c) minus (vi) the principal amount of the Term Loan outstanding at
such time.

     “Commitment” means, as to each Lender, the Revolving Commitment or the
Term Loan Commitment, as applicable, of such Lender.

     “Consolidated Scheduled Funded Debt Payments” means for any period for
the Borrower and its Subsidiaries on a consolidated basis, the sum of all scheduled
payments of principal (including, for the avoidance of doubt all Scheduled Principal
Payments) on Consolidated Funded Indebtedness. For purposes of this definition,
“scheduled payments of principal” (a) shall be determined without giving effect to
any reduction of such scheduled payments resulting from the application of any
voluntary or mandatory prepayments made during the applicable period, (b) shall be
deemed to include the Attributable Indebtedness and (c) shall not include any
voluntary prepayments or mandatory prepayments required pursuant to Section
2.03.

     “Interest Payment Date” means (a) as to any Eurodollar Rate Loan, the
last day of each Interest Period applicable to such Loan and the Maturity Date;
provided, however, that if any Interest Period for a Eurodollar Rate
Loan exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates; and (b)
as to any Base Rate Loan and any Eurodollar Daily Floating Rate Loan, the last
Business Day of each calendar month and the Maturity Date.

     “Loan” means an extension of credit by a Lender to the Borrower under
Article II in the form of a Revolving Loan or a Term Loan.

     “Note” means the Revolving Notes and the Term Loan Notes, individually
or collectively, as appropriate.

     (c) The following definitions are hereby added to Section 1.01 of the Credit Agreement
in the appropriate alphabetical order:

     “Aggregate Commitments” means the Aggregate Revolving Commitments and
the Aggregate Term Loan Commitments.

     “Aggregate Term Loan Commitments” means the Term Loan Commitments of
all the Lenders. The initial amount of the Aggregate Term Loan Commitments in
effect as of November 30, 2007 is SIX MILLION FIVE HUNDRED THOUSAND DOLLARS
($6,500,000).

     “Calculation Date” has the meaning specified in Section 7.16.

3

 

     “First Amendment” means that certain First Amendment to Amended and
Restated Credit Agreement and Waiver, dated as of November 30, 2007, by and among
the Administrative Agent, the Lenders and the Loan Parties.

     “Foreign Cash” has the meaning specified in Section 7.16.

     “Lock Boxes” has the meaning specified in Section 7.17.

     “Lock Box Accounts” has the meaning specified in Section 7.17.

     “Master Account” means that certain deposit account #VA 435003566323 of
the Borrower maintained with Bank of America, and any successor account opened with
the approval of the Administrative Agent.

     “Nokia Disposition” means the Disposition of certain assets to Nokia
Inc. in exchange for which the Borrower received an account receivable, such
transaction having been consummated on June 30, 2008.

     “Restricted Cash” has the meaning specified in Section 7.16.

     “Revolving Note” has the meaning specified in Section 2.09.

     “Scheduled Principal Payment” has the meaning specified in Section
2.05.

     “Term Loan” has the meaning specified in Section 2.01(b).

     “Term Loan Commitment” means, as to each Lender, its obligation to make
Term Loans to the Borrower pursuant to Section 2.01 (which obligation shall
be deemed satisfied by the conversion of Revolving Loans in an amount equal to the
Aggregate Term Loan Commitments to a Term Loan pursuant to the First Amendment), in
an aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment
and Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this Agreement.

     “Term Loan Note” has the meaning specified in Section 2.09.

     (d) Section 2.01 of the Credit Agreement is hereby amended by deleting the word
“Revolving” in the section heading thereof.

     (e) Section 2.01(b) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

   
  (b) Term Loan. As of November  30, 2007 in connection with the First
Amendment, the Lenders shall be deemed to have made a term loan to the Borrower (the
“Term Loan”) in the amount of $6,500,000 in respect of the aggregate amount
of Revolving Loans that have been converted to a Term Loan as of such date pursuant
to the First Amendment. Amounts repaid on the Term Loan may not be reborrowed. The
Term Loan may be Base Rate Loans, Eurodollar Rate Loans or Eurodollar Daily Floating
Rate Loans, as further provided herein.

4

 

     (f) Section 2.03(a) of the Credit Agreement is hereby amended by (i) deleting the word
“Revolving” in the first sentence thereof and (ii) inserting the words “(except in
connection with any automatic sweep provisions contemplated under Section 7.17)” at
the end of the first sentence thereof.

     (g) Section 2.03(b)(ii) of the Credit Agreement is hereby amended (i) by deleting the
word “Revolving” in the first sentence thereof and (ii) by adding the following sentence
thereto:

     In the case of any Net Cash Proceeds received by Borrower in respect of the
Nokia Disposition, only 75% of such Net Cash Proceeds shall constitute Net Cash
Proceeds of a Disposition subject to this Section 2.03(b)(ii).

     (h) Sections 2.03(b)(iii) and (iv) of the Credit Agreement are hereby amended by
deleting the word “Revolving” therein.

     (i) A new Section 2.03(b)(v) is hereby added to the Credit Agreement to read as
follows:

     (v) Application of Mandatory Prepayments. All amounts required to be
paid pursuant to this Section 2.03(b) shall be applied as follows:

     (A) with respect to all amounts prepaid pursuant to Section
2.03(b)(i), to Revolving Loans;

     (B) with respect to all amounts prepaid pursuant to Sections
2.03(b)(ii), (iii) and (iv), first to the Term Loan (to
the remaining principal amortization payments of the Term Loan in reverse
order thereof (other than with respect to any prepayment made with Net Cash
Proceeds of the Nokia Disposition, which shall be applied (I) first, to the
Term Loan in the direct order of maturity in accordance with the
amortization schedule set forth in Section 2.05 and (II) thereafter,
to the payment of any accrued and unpaid interest on the Loans)), then
(after the Term Loan has been paid in full) to the Revolving Loans (with a
corresponding permanent reduction in the Aggregate Revolving Commitments).

     (j) Section 2.04(b) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

     (b) Mandatory. The Aggregate Revolving Commitments shall be
permanently reduced in an amount equal to the amount of Net Cash Proceeds that is
available to be applied to the prepayment of Revolving Loans pursuant to Section
2.03(b)(v), irrespective of the Total Revolving Outstandings at such time.

     (k) Section 2.05 of the Credit Agreement is hereby amended and restated in its entirety
to read as follows:

     2.05 Repayment of Loans

     (a) The Borrower shall repay the principal balance of the Term Loan by
making a payment on each date set forth below in the respective amount set
forth in the table below (each such payment, a “Scheduled Principal
Payment”):

5

 

	 	 	 	 	 
	            Date	 	Payment Amount	 
	June 1, 2008
	 	$	3,500,000	 
	September 1, 2008
	 	$	1,000,000	 
	December 1, 2008
	 	$	1,000,000	 
	March 1, 2009
	 	$	1,000,000	 
	Maturity Date
	 	Remaining balance (if any	)

     (b) The Borrower shall repay the aggregate principal amount of all
outstanding Loans on the Maturity Date.

     (l) Section 2.09 of the Credit Agreement is hereby amended by deleting the
second-to-last sentence thereof and replacing it with the following two sentences:

Upon the request of any Lender made through the Administrative Agent, the Borrower
shall execute and deliver to such Lender (through the Administrative Agent) a
promissory note, which shall evidence such Lender’s Loans in addition to such
accounts or records. Each such promissory note shall (i) in the case of Revolving
Loans, be in the form of Exhibit 2.09(a) (a “Revolving Note”) and
(ii) in the case of the Term Loan, be in the form of Exhibit 2.09(b) (a
“Term Loan Note”).

     (m) Section 7.01(b) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

     (b) as soon as available, but in any event within forty-five days after the end
of each month, a consolidated balance sheet of the Borrower and its Subsidiaries as
at the end of such month, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such month and for the portion
of the Borrower’s fiscal year then ended, setting forth in each case in comparative
form the figures for the corresponding month of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail and
certified by the chief executive officer, chief financial officer, treasurer or
controller of the Borrower as fairly presenting the financial condition, results of
operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries
in accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes; and

     (n) A new Section 7.01(c) is hereby added to the Credit Agreement to read as follows:

     (c) on the third Business Day of each week, a rolling thirteen (13) week
forecast of cash flows for the Borrower and its Subsidiaries in form and detail
reasonably acceptable to the Administrative Agent (the “Forecast”) together
with (except for the initial report) a reconciliation between actual cash flows for
the prior week and projected cash flows for such week as set forth in the most
recent previous Forecast.

     (o) Section 7.02(c) of the Credit Agreement is hereby amended by replacing the words
“within 30 days following the end of each fiscal month of the Borrower, a certificate as of
the end of such fiscal month” with the words “on the third Business Day of each week, a
certificate as of the end of the immediately preceding week”.

6

 

     (p) A new Section 7.14(c) is hereby added to the Credit Agreement to read as follows:

     (c) Inter-company Receivables. To the extent that any loans, advances,
accounts receivable or other Indebtedness that is or may be from time to time owed
to a Loan Party by any other Loan Party or any of its Subsidiaries are at any time
evidenced by a promissory note or other instrument, cause such note or instrument to
be delivered to the Administrative Agent promptly upon its execution thereof.

     (q) A new Section 7.16 is hereby added to the Credit Agreement to read as follows:

     7.16 Excess Subsidiary Cash.

     (a) To the extent that the aggregate balance of cash or Cash
Equivalents held by the Foreign Subsidiaries (“Foreign Cash”)
exceeds $6,000,000 as of the date which is five Business Days (using the
Business Day convention applicable to Eurodollar Rate Based Loans) after the
end of each fiscal quarter of the Borrower (such date, the “Calculation
Date”), the Borrower shall cause the Foreign Subsidiaries to transfer an
aggregate amount of cash or Cash Equivalents equal to the amount by which
Foreign Cash exceeds $6,000,000 as of such Calculation Date to the Master
Account within 20 days of such Calculation Date. To the extent that any
cash or Cash Equivalents held by the Foreign Subsidiaries are not available
to be repatriated to the United States within such 20-day period due to
currency controls or similar regulatory impediments (“Restricted
Cash”), such Restricted Cash shall not constitute Foreign Cash for
purposes of this subsection (a); provided that the Borrower shall
inform the Administrative Agent as to the aggregate balance of Restricted
Cash as of each Calculation Date.

     (b) As soon as any Restricted Cash excluded from the immediately
preceding clause (a) as of any such Calculation Date becomes
available to be repatriated to the United States prior to the next following
Calculation Date, the Borrower shall as promptly as possible cause the
Foreign Subsidiaries to transfer such newly available cash or Cash
Equivalent amounts to the Master Account until the aggregate amount of such
transfers equals the sum of (i) the amount by which the aggregate balance of
cash or Cash Equivalents held by Foreign Subsidiaries exceeds $6,000,000 as
of most recent Calculation Date minus (ii) the aggregate principal
amount of cash or Cash Equivalents transferred to the Master Account
pursuant to clause (a) with respect to such Calculation Date.

     (r) A new Section 7.17 is hereby added to the Credit Agreement to read as follows:

     7.17 Cash Management System.

  
   (a) On or before January 4, 2008, the Loan Parties shall establish
one or more bank accounts (“Lock Box Accounts”) under the exclusive
control of the Administrative Agent, into which there shall be deposited
from time to time the cash proceeds of all account debts received by the
Loan Parties. All right, title and interest in and to the cash amounts on
deposit from time to time in the Lock Box Accounts shall vest in the
Administrative Agent, shall constitute part of the Collateral under the Loan
Documents and shall not constitute repayment of the Loans until applied
thereto as hereinafter provided.

7

 

     (b) Each Loan Party shall promptly instruct all account debtors and
other Persons obligated to the Loan Parties in respect of account debts to
make all payments in respect thereof, and shall use its commercially
reasonable efforts to cause such account debtors and other Persons to remit
all such payments directly, to the Lock Box Accounts (if paid by wire
transfer) or, if required by the Administrative Agent, to one or more post
office boxes (“Lock Boxes”) that are subject to a lock box
agreement, in form and substance satisfactory to the Administrative Agent,
for deposit into the Lock Box Accounts. In addition, each Loan Party agrees
that if the proceeds of any Collateral (including the payments made in
respect of account debts) shall be received by it, such Loan Party shall, as
promptly as possible, deposit such proceeds into the Lock Box Accounts.
Until so deposited, all such proceeds shall be held in trust by the Loan
Parties for the Administrative Agent and shall not be commingled with any
other funds or property of the Loan Parties. All receipts held in the Lock
Boxes shall be remitted daily to a Lock Box Account. Commencing on January
7, 2008, all collected funds deposited into the Master Account on any
Business Day shall be applied by the Administrative Agent on the following
Business Day to reduce the then outstanding balance of the Revolving Loans
and to pay any other outstanding Obligations which are then due and payable
under the Loan Documents; provided that for the purpose of
determining the availability of Revolving Loans hereunder, such funds
deposited into the Master Account shall be deemed to have reduced the
outstanding Revolving Loans on the Business Day during which such funds were
deposited into such account. In furtherance of the objectives of this
Section 7.17, the Loan Parties hereby agree and consent that the
Administrative Agent, or its representatives, may communicate directly with
account debtors on the account debts.

     (s) Section 8.11(a) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

     (a) Consolidated EBITDA. Permit Consolidated EBITDA for any period set
forth below to be less than the amount set forth below for such period:

     (i) for the month ending October 31, 2007, $175,000;

     (ii) for the two month period ending November 30, 2007, $600,000;

     (iii) for the three month period ending December 31, 2007, $850,000;

     (iv) for the four month period ending January 31, 2008, $850,000;

     (v) for the five month period ending February 29, 2008, $1,100,000;

     (vi) for the six month period ending March 31, 2008, $1,850,000;

     (vii) for the seven month period ending April 30, 2008, $2,500,000;

     (viii) for the eight month period ending May 31, 2008, $3,200,000;

     (ix) for the nine month period ending June 30, 2008, $3,900,000;

8

 

     (x) for the four fiscal quarter period ending on September 30, 2008,
$6,600,000;

     (xi) for the four fiscal quarter period ending on December 31, 2008,
$8,000,000;

     (xii) for the four fiscal quarter period ending on March 31, 2009,
$9,000,000; and

     (xiii) for each four fiscal quarter period ending on or after June 30,
2009, $10,000,000; provided, however, that if the
Consolidated Leverage Ratio as of the last day of any such four fiscal
quarter period is less than or equal to 2.5 to 1.0, compliance with this
clause (ix) shall not be required for such fiscal quarter period.

     (t) Section 8.11(b) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

     (b) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio as of the end of each fiscal quarter of the Borrower set forth below to be
greater than the ratio corresponding to such fiscal quarter:

	 	 	 	 	 	 	 	 	 
	Calendar	 	 	 	 	 	 	 	 
	Year	 	March 31	 	June 30	 	September 30	 	December 31
	2008

	 	13.5 to 1.0
	 	10.0 to 1.0
	 	9.0 to 1.0
	 	7.0 to 1.0
	2009

	 	6.0 to 1.0
	 	6.0 to 1.0
	 	6.0 to 1.0
	 	N/A

provided, that (i) for purposes of calculating the Consolidated Leverage
Ratio for the applicable period ended March 31, 2008, Consolidated EBITDA during
such period shall be determined by multiplying Consolidated EBITDA during the period
from October 1, 2007 through March 31, 2008 by two (2), and (ii) for purposes of
calculating Consolidated Leverage Ratio for the applicable period ended June 30,
2008, Consolidated EBITDA during such period shall be determined by multiplying the
average quarterly Consolidated EBITDA of the preceding three fiscal quarters by four
(4).

     (u) Section 8.11(c) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

     (c) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated
Fixed Charge Coverage Ratio as of the end of each fiscal quarter of the Borrower set
forth below to be less than the ratio corresponding to such fiscal quarter:

	 	 	 	 	 	 	 	 	 
	Calendar	 	 	 	 	 	 	 	 
	Year	 	March 31	 	June 30	 	September 30	 	December 31
	2008

	 	N/A
	 	N/A
	 	0.70 to 1.0
	 	0.70 to 1.0
	2009

	 	0.70 to 1.0
	 	0.75 to 1.0
	 	0.75 to 1.0
	 	N/A

     (v) Section 8.16 of the Credit Agreement is hereby amended and restated in its entirety
to read as follows:

9

 

     8.16 Consolidated Capital Expenditures.

     Permit Consolidated Capital Expenditures, in the aggregate, during any
fiscal quarter of the Borrower set forth below to exceed the amount set
forth below for such period:

     (a) for the fiscal quarter ending December 31, 2007, $400,000;

     (b) for the fiscal quarter ending March 31, 2008, $400,000;

     (c) for the fiscal quarter ending June 30, 2008, $600,000; and

     (d) for each fiscal quarter ending on or after September 30, 2008,
$750,000.

     (w) Section 11.01(a)(iv) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

     (iv) change Section 2.11 or Section 9.03 in a manner that would
alter the pro rata sharing of payments required thereby without the written consent
of each Lender directly affected thereby or Section 2.03(b)(v) in a manner
that would the alter the application of prepayments among the Loans without the
written consent of each Lender;

     (x) Section 11.01(a) of the Credit Agreement is hereby amended (i) by deleting the word
“and” at the end of clause (vii) thereof and (ii) by adding a new clause (viii) to read as
follows:

     (viii) without the consent of Lenders (other than Defaulting Lenders) holding
in the aggregate at least a majority of the Aggregate Revolving Commitments (or if
the Aggregate Revolving Commitments have been terminated, the outstanding Revolving
Loans, (A) waive any Default or Event of Default for purposes of Section
5.03 for purposes of any Revolving Loan borrowing, (ii) amend, change, waive,
discharge or terminate Section 2.01(a), 2.02, 2.03(b)(i) or
2.04 or any term, covenant or agreement contained in Article VIII or
Article IX or (iii) amend or change any provision of this Section
11.01(a)(viii); and

     (y) Schedule 2.01 to the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

Schedule 2.01

Commitments and Applicable Percentages

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Revolving	 	Term Loan	 	 
	Lender	 	Commitment	 	Commitment	 	Pro Rata Shares
	Bank of America, N.A.
	 	$	21,951,000	 	 	$	6,500,000	 	 	 	100.000000000	%
	TOTAL
	 	$	21,951,000	 	 	$	6,500,000	 	 	 	100.000000000	%

10

 

     (z) Schedule 6.17 to the Credit Agreement is hereby amended by removing the following
patent from such schedule:

REPLACEABLE OUTER COVER FOR PERSONAL COMMUNICATION DEVICE

Patent No. 5,923,752

     (aa) Exhibit 2.09(a) to the Credit Agreement is hereby amended and replaced by new
Schedule 2.09(a) in the form of Schedule 2.09(a) attached hereto.

     (bb) A new Exhibit 2.09(b) is hereby added to the Credit Agreement in the form of
Exhibit 2.09(b) attached hereto.

     5. Amendment Fee. In consideration of the Lenders’ willingness to enter into this
Amendment, the Loan Parties shall be obligated to pay to the Administrative Agent (for the ratable
benefit of the Lenders) an amendment fee of $550,000 (the “Amendment Fee”) which fee shall
be fully earned and non-refundable as of the date hereof. Of the Amendment Fee, $200,000 shall be
due and payable as a condition precedent to the effectiveness of this Amendment, and the remaining
$350,000 (the “Amendment Fee Balance”) shall be due and payable as follows (if not sooner
as a result of the acceleration of the Obligations or payment in full of all other Obligations):
(i) $150,000 of the Amendment Fee Balance on April 15, 2008; provided that $75,000 of such
Amendment Fee Balance shall be waived by the Lenders in the event that Consolidated EBITDA for the
six month period ending March 31, 2008 exceeds $4,000,000 and an additional $25,000 of such
Amendment Fee Balance shall be waived by the Lenders in the event that Consolidated EBITA for the
six month period ending March 31, 2008 exceeds $5,000,000, (ii) $125,000 of the Amendment Fee
Balance on July 15, 2008; provided that $75,000 of such Amendment Fee Balance shall be
waived by the Lenders in the event that Consolidated EBITDA for the nine month period ending June
30, 2008 exceeds $5,000,000 and an additional $25,000 of such Amendment Fee Balance shall be waived
by the Lenders in the event that Consolidated EBITDA for the nine month period ending June 30, 2008
exceeds $6,000,000 and (iii) $75,000 of the Amendment Fee Balance on October 15, 2008;
provided that $50,000 of such Amendment Fee Balance shall be waived by the Lenders in the
event that Consolidated EBITDA for the twelve month period ending September 30, 2008 exceeds
$8,000,000 and the remaining $25,000 of such Amendment Fee Balance shall be waived by the Lenders
in the event that Consolidated EBITDA for the twelve month period ending September 30, 2008 exceeds
$8,500,000. For the avoidance of doubt, the entire amount of the Amendment Fee shall constitute
Obligations under the Credit Agreement and shall become due and payable in connection with any
acceleration pursuant to Section 9.02(b) of the Credit Agreement, and, following such acceleration,
any subsequent reductions that would otherwise be available pursuant to this Section 5
shall no longer be applicable.

     6. Cooperation With Consultants. The Loan Parties shall (i) cooperate fully with any
consultants retained by the Administrative Agent (the “Consultants”), which cooperation
shall include, but shall not be limited to, allowing the Consultants (a) full access to observe the
Loan Parties’ respective operations, (b) the opportunity to inspect the Loan Parties’ respective
financial records and projections, and (c) the opportunity to inspect and review the Lenders’
Collateral by performing customary field audits and (ii) upon demand, reimburse the Administrative
Agent for the reasonable fees and expenses of the Consultants.

     7. Effectiveness; Conditions Precedent. This Amendment shall be effective as of the
date hereof upon satisfaction of the following conditions in form and substance satisfactory to the
Administrative Agent:

11

 

     (a) The Administrative Agent shall have received counterparts of this Amendment duly
executed by each of the Loan Parties, the Administrative Agent and each of the Lenders.

     (b) The Loan Parties shall have provided to the Administrative Agent copies of all
management letters and similar communications issued by the Loan Parties’ auditors, KPMG
LLP, to the Loan Parties, with respect to the Loan Parties’ financial statements for 2005
and 2006, and the Administrative Agent shall have conducted a satisfactory review of such
materials.

     (c) The Administrative Agent shall have been reimbursed by the Loan Parties for all
fees and expenses (including, without limitation, reasonable attorneys fees) owed by the
Loan Parties to the Administrative Agent and billed as of the date hereof.

     (d) The Administrative Agent shall have received a Revolving Note and a Term Loan Note,
each made in favor of Bank of America, N.A., as a Lender and duly executed by the Borrower.

     (e) The Administrative Agent shall have received executed copies of the resolutions
duly adopted by the board of directors or other governing body of each Loan Party, as
applicable, authorizing the transactions contemplated hereby and the execution, delivery and
performance of this Amendment.

     (f) The Administrative Agent shall have received $200,000 in respect of the Amendment
Fee.

     8. Representations of the Loan Parties. Each of the Loan Parties represents and
warrants to the Administrative Agent and the Lenders as follows:

     (a) After giving effect to this Amendment, it is in compliance with the covenant set
forth in Section 7.15 of the Credit Agreement as of the date hereof.

     (b) Schedule A attached hereto sets forth a complete and accurate list, as of
the date hereof, of all loans, advances, accounts receivable or other Indebtedness that is
owed to a Loan Party by any other Loan Party or any of its Subsidiaries. None of the loans,
advances, accounts receivable or other Indebtedness that is owed to a Loan Party by any
other Loan Party or any of its Subsidiaries is evidenced by a promissory note or other
instrument.

     (c) It has taken all necessary action to authorize the execution, delivery and
performance of this Amendment and any other documents delivered by it in connection
herewith.

     (d) This Amendment and each other document delivered by it in connection herewith has
been duly executed and delivered by such Person and constitutes such Person’s legal, valid
and binding obligation, enforceable in accordance with its terms, except as such
enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is considered
in a proceeding at law or in equity).

     (e) No consent, approval, authorization or order of, or filing, registration or
qualification with, any court or governmental authority or third party is required in
connection with the execution, delivery or performance by such Person of this Amendment.

12

 

     (f) The execution and delivery of this Amendment or any other document delivered by it
in connection herewith does not (i) violate, contravene or conflict with any provision of
its Organization Documents or (ii) materially violate, contravene or conflict with any Laws
applicable to it or any of its Subsidiaries.

     (g) After giving effect to this Amendment, (i) the representations and warranties of
the Loan Parties set forth in Article VI of the Credit Agreement are true, accurate
and complete in all material respects on and as of the date hereof to the same extent as
though made on and as of such date except to the extent such representations and warranties
specifically relate to an earlier date and (ii) no event has occurred and is continuing
which constitutes a Default or an Event of Default (other than the Acknowledged Events of
Default).

     9. Release. In consideration of the Administrative Agent’s and the Lenders’
willingness to enter into this Amendment, the Loan Parties hereby release the Administrative Agent,
the Lenders and each of their respective officers, employees, representatives, agents, counsel and
directors from any and all actions, causes of action, claims, demands, damages and liabilities of
whatever kind or nature, in law or in equity, now known or unknown, suspected or unsuspected to the
extent that any of the foregoing arises from any action or failure to act solely in connection with
the Loan Documents on or prior to the date hereof.

     10. Reaffirmation of Guaranty. Each Guarantor (a) acknowledges and consents to all of
the terms and conditions of this Agreement, (b) affirms all of its obligations under the Loan
Documents and (c) agrees that this Agreement and all documents executed in connection herewith do
not operate to reduce or discharge such Guarantor’s obligations under the Loan Documents.

     11. Expenses. Upon demand therefor, the Loan Parties shall pay all reasonable
out-of-pocket expenses incurred by the Administrative Agent and the Lenders (including without
limitation the reasonable fees and out-of-pocket expenses of counsel) in connection with or related
to the negotiation, drafting, and execution of this Amendment and the transactions contemplated
hereby.

     12. Reference to and Effect on Credit Agreement. Except as specifically modified
herein, the Loan Documents shall remain in full force and effect. The execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the
Administrative Agent and the Lenders under any of the Loan Documents, or constitute a waiver or
amendment of any provision of any of the Loan Documents, except as expressly set forth herein. The
breach of any provision or representation under this Amendment shall constitute an immediate Event
of Default under the Credit Agreement, and this Amendment shall constitute a Loan Document.

     13. Further Assurances. The Administrative Agent, the Lenders and the Loan Parties
each agree to execute and deliver, or to cause to be executed and delivered, all such instruments
as may reasonably be requested to effectuate the intent and purposes, and to carry out the terms,
of this Amendment.

     14. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

     15. Miscellaneous.

     (a) This Amendment shall be binding on and shall inure to the benefit of the Loan
Parties, the Administrative Agent, the Lenders and their respective successors and permitted
assigns. The terms and provisions of this Amendment are for the purpose of defining the
relative

13

 

rights and obligations of the Loan Parties, the Administrative Agent and the Lenders
with respect to the transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Amendment.

     (b) Section headings in this Amendment are included herein for convenience of reference
only and shall not constitute a part of this Amendment for any other purpose.

     (c) Wherever possible, each provision of this Amendment shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision of this
Amendment shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Amendment.

     (d) Except as otherwise provided in this Amendment, if any provision contained in this
Amendment is in conflict with, or inconsistent with, any provision in the Loan Documents,
the provision contained in this Amendment shall govern and control.

     (e) This Amendment may be executed in any number of separate counterparts, each of
which shall collectively and separately constitute one agreement. Delivery of an executed
counterpart of this Amendment by telecopy shall be effective as an original.

     16. Entirety. This Amendment and the other Loan Documents embody the entire agreement
between the parties and supersede all prior agreements and understandings, if any, relating to the
subject matter hereof. This Amendment and the other Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements of the parties.

[remainder of page intentionally left blank]

14

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Amended and
Restated Credit Agreement and Waiver to be duly executed as of the date first above written.

	 	 	 	 	 	 	 
	LOAN PARTIES:	 	LCC INTERNATIONAL, INC.,	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	LCC WIRELESS SERVICES, INC.,	 	 
	 	 	a Delaware corporation,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	LCC DESIGN SERVICES, L.L.C.,	 	 
	 	 	a Delaware limited liability company,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	LCC WIRELESS DESIGN SERVICES, L.L.C.,	 	 
	 	 	a Delaware limited liability company,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

First Amendment to Amended and Restated Credit Agreement and Waiver

 

 

	 	 	 	 	 	 	 
	ADMINISTRATIVE AGENT:	 	BANK OF AMERICA, N.A.,	 	 
	 	 	as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	LENDER:	 	BANK OF AMERICA, N.A.,	 	 
	 	 	as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

First Amendment to Amended and Restated Credit Agreement and Waiver

 

 

Schedule A

Attached

 

 

Exhibit 2.09(a)

FORM OF REVOLVING NOTE

__________, 20________                

     FOR VALUE RECEIVED, LCC INTERNATIONAL, INC., a Delaware corporation (the “Borrower”),
hereby promises to pay to [                                        ] or registered assigns (the “Lender”), in
accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal
amount of each Revolving Loan from time to time made by the Lender to the Borrower under that
certain Amended and Restated Credit Agreement (as amended by that certain First Amendment to
Amended and Restated Credit Agreement and Waiver dated as of November 30, 2007 and as further
amended, modified, supplemented, increased and extended from time to time, the “Credit
Agreement”) dated as of May 29, 2007 among the Borrower, the Guarantors identified therein, the
Lender, the other lenders identified therein and Bank of America, N.A., as Administrative Agent.
Capitalized terms used herein but not otherwise defined herein shall have the meanings provided in
the Credit Agreement.

     The Borrower promises to pay interest on the unpaid principal amount of each Revolving Loan
from the date of such Revolving Loan until such principal amount is paid in full, at such interest
rates and at such times as provided in the Credit Agreement. All payments of principal and
interest shall be made to the Administrative Agent for the account of the Lender in Dollars in
immediately available funds at the Administrative Agent’s Office. If any amount is not paid in
full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the
due date thereof until the date of actual payment (and before as well as after judgment) computed
at the per annum rate set forth in the Credit Agreement.

     This Revolving Note is one of the Revolving Notes referred to in the Credit Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on this Revolving Note
shall become, or may be declared to be, immediately due and payable all as provided in the Credit
Agreement. Revolving Loans made by the Lender shall be evidenced by one or more loan accounts or
records maintained by the Lender in the ordinary course of business. The Lender may also attach
schedules to this Revolving Note and endorse thereon the date, amount and maturity of its Revolving
Loans and payments with respect thereto.

     The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, demand, dishonor and non-payment of this Revolving Note.

     THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

[SIGNATURE PAGE FOLLOWS]

 

 

     IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be duly executed by its
duly authorized officer as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	LCC INTERNATIONAL, INC.,
	 	 	a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

 

 

Exhibit 2.09(b)

FORM OF TERM LOAN NOTE

          , 2007

     FOR VALUE RECEIVED, LCC INTERNATIONAL, INC., a Delaware corporation (the “Borrower”),
hereby promises to pay to [                                        ] or registered assigns (the “Lender”), in
accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal
amount of each Term Loan from time to time made by the Lender to the Borrower under that certain
Amended and Restated Credit Agreement (as amended by that certain First Amendment to Amended and
Restated Credit Agreement and Waiver dated as of November 30, 2007 and as further amended,
modified, supplemented, increased and extended from time to time, the “Credit Agreement”)
dated as of May 29, 2007 among the Borrower, the Guarantors identified therein, the Lender, the
other lenders identified therein and Bank of America, N.A., as Administrative Agent. Capitalized
terms used herein but not otherwise defined herein shall have the meanings provided in the Credit
Agreement.

     The Borrower promises to pay interest on the unpaid principal amount of each Term Loan from
the date of such Term Loan until such principal amount is paid in full, at such interest rates and
at such times as provided in the Credit Agreement. All payments of principal and interest shall be
made to the Administrative Agent for the account of the Lender in Dollars in immediately available
funds at the Administrative Agent’s Office. If any amount is not paid in full when due hereunder,
such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the
date of actual payment (and before as well as after judgment) computed at the per annum rate set
forth in the Credit Agreement.

     This Term Loan Note is one of the Term Loan Notes referred to in the Credit Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on this Term Loan Note
shall become, or may be declared to be, immediately due and payable all as provided in the Credit
Agreement. The Lender may also attach schedules to this Term Loan Note and endorse thereon the
date, amount and maturity of its Term Loans and payments with respect thereto.

     The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, demand, dishonor and non-payment of this Term Loan Note.

     THIS TERM LOAN NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

[SIGNATURE PAGE FOLLOWS]

 

 

     IN WITNESS WHEREOF, the Borrower has caused this Term Loan Note to be duly executed by its
duly authorized officer as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	LCC INTERNATIONAL, INC.,
	 	 	a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

 

 

Bank of America, N.A.

December 6, 2007

LCC International, Inc.

7925 Jones Branch Drive

McLean, VA 22102

Attention: Mr. Louis Salamone, Chief Financial Officer

     Re:    Extension of time for delivery of delivery of certain financial statements

Ladies and Gentlemen:

     Reference is hereby made to that certain First Amendment to Amended and
Restated Credit Agreement and Waiver, dated as of November 30, 2007 (the
“Amendment and Waiver”), by and among LCC International, Inc., a Delaware
corporation (the “Borrower”), the Guarantors party thereto (collectively with
the Borrower, the “Loan Parties”), the Lenders party thereto (the “Lenders”)
and Bank of America, N.A., as administrative agent (the “Administrative
Agent”). Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms (or incorporated by reference) in the Amendment
and Waiver.

     Notwithstanding anything to the contrary set forth in the Amendment and
Waiver (including, without limitation, the provisions of Section 3 thereof),
the Lenders and the Administrative Agent hereby agree to extend, from December
7, 2007 to December 14, 2007, the date by which the Loan Parties shall deliver
the financial statements described in Section 7.01(a) of the Credit Agreement
with respect to the fiscal year ended December 31, 2006 to the Administrative
Agent.

	 	 
	 	Sincerely,
	 
	 	BANK OF AMERICA, N.A.,

as Administrative Agent
	 
	 	By:

Name: John P. McDuffie

Title:  Senior Vice President
	 
	 	BANK OF AMERICA, N.A.,

as Lender
	 
	 	By:

Name:       John P. McDuffie

Title:      Senior Vice President

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