Document:

<PAGE>

                                                                    EXHIBIT 4(g)

                                                               Execution Version
================================================================================

                               TERM LOAN AGREEMENT

                           Dated as of March 28, 2003

                                      among

                            CONSUMERS ENERGY COMPANY,
                                as the Borrower,

                    THE FINANCIAL INSTITUTIONS NAMED HEREIN,
                                  as the Banks,

                                       and

                          CITICORP NORTH AMERICA, INC.,
                                    as Agent

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

                            SALOMON SMITH BARNEY INC.

                      as Lead Arranger and Sole Book Runner

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

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            Page
                                                                                            ----
<S>                 <C>                                                                     <C>
ARTICLE I           DEFINITIONS........................................................       1
   1.1              Definitions........................................................       1
   1.2              Singular and Plural................................................      11
   1.3              Accounting Terms...................................................      11

ARTICLE II          THE TERM LOANS.....................................................      12
   2.1              The Term Loans.....................................................      12
   2.2              Making of Term Loans...............................................      12
   2.3              Repayment of Term Loans............................................      12
   2.4              Optional Principal Payments........................................      12
   2.5              Mandatory Prepayments..............................................      13
   2.6              Conversion or Continuation.........................................      13
   2.7              Interest Rates, Interest Payment Dates.............................      14
   2.8              Rate after Maturity................................................      14
   2.9              Method of Payment..................................................      14
   2.10             Evidence of Obligation; Telephonic Notices.........................      15
   2.11             Lending Installations..............................................      15
   2.12             Non-Receipt of Funds by the Agent..................................      16

ARTICLE III         RESERVED...........................................................      16

ARTICLE IV          CHANGE IN CIRCUMSTANCES............................................      16
   4.1              Yield Protection...................................................      16
   4.2              Replacement Bank...................................................      17
   4.3              Availability of Eurodollar Rate Loans..............................      17
   4.4              Funding Indemnification............................................      18
   4.5              Taxes..............................................................      18
   4.6              Bank Certificates; Survival of Indemnity...........................      20

ARTICLE V           REPRESENTATIONS AND WARRANTIES.....................................      20
   5.1              Incorporation and Good Standing....................................      20
   5.2              Corporate Power and Authority; No Conflicts........................      20
   5.3              Governmental Approvals.............................................      20
   5.4              Legally Enforceable Agreements.....................................      20
   5.5              Financial Statements...............................................      21
   5.6              Litigation.........................................................      21
   5.7              Margin Stock.......................................................      21
   5.8              ERISA..............................................................      21
   5.9              Insurance..........................................................      21
   5.10             Taxes..............................................................      21
   5.11             Investment Company Act.............................................      22
   5.12             Public Utility Holding Company Act.................................      22
   5.13             Bonds..............................................................      22
</TABLE>

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<TABLE>
<S>                  <C>                                                                     <C>
ARTICLE VI           AFFIRMATIVE COVENANTS.............................................      22
   6.1               Payment of Taxes, Etc.............................................      22
   6.2               Maintenance of Insurance..........................................      22
   6.3               Preservation of Corporate Existence, Etc..........................      22
   6.4               Compliance with Laws, Etc.........................................      22
   6.5               Visitation Rights.................................................      23
   6.6               Keeping of Books..................................................      23
   6.7               Reporting Requirements............................................      23
   6.8               Use of Proceeds...................................................      25
   6.9               Maintenance of Properties, Etc....................................      25
   6.10              Bonds.............................................................      25
   6.11              Recordation of Supplemental Indenture.............................      25

ARTICLE VII          NEGATIVE COVENANTS................................................      25
   7.1               Liens.............................................................      25
   7.2               Sale of Assets....................................................      27
   7.3               Mergers, Etc......................................................      27
   7.4               Compliance with ERISA.............................................      27
   7.5               Change in Nature of Business......................................      27
   7.6               Restricted Payments...............................................      27
   7.7               Off-Balance Sheet Liabilities.....................................      27

ARTICLE VIII         FINANCIAL COVENANTS...............................................      27
   8.1               Debt to Capital Ratio.............................................      27
   8.2               Interest Coverage Ratio...........................................      28

ARTICLE IX           EVENTS OF DEFAULT.................................................      28
   9.1               Events of Default.................................................      28
   9.2               Remedies..........................................................      29

ARTICLE X            WAIVERS, AMENDMENTS AND REMEDIES..................................      29
   10.1              Amendments........................................................      29
   10.2              Preservation of Rights............................................      30

ARTICLE XI           CONDITIONS PRECEDENT..............................................      30
   11.1              Delivery of Documents.............................................      31
   11.2              Payment of Fees...................................................      31
   11.3              No Default, Etc...................................................      31

ARTICLE XII          GENERAL PROVISIONS................................................      32
   12.1              Successors and Assigns............................................      32
   12.2              Survival of Representations.......................................      34
   12.3              Governmental Regulation...........................................      34
   12.4              Taxes.............................................................      34
   12.5              Choice of Law; Waiver of Jury Trial...............................      34
   12.6              Headings..........................................................      35
   12.7              Entire Agreement..................................................      35
</TABLE>

                                       ii

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<TABLE>
<S>                  <C>                                                                      <C>
   12.8              Expenses; Indemnification.........................................       35
   12.9              Severability of Provisions........................................       35
   12.10             Setoff............................................................       36
   12.11             Ratable Payments..................................................       36
   12.12             Nonliability of Banks.............................................       36
   12.13             Certain Disclosures...............................................       36
   12.14             Limitation of Liability: Communications...........................       37

ARTICLE XIII         THE AGENT.........................................................       37
   13.1              Appointment.......................................................       37
   13.2              Powers............................................................       37
   13.3              General Immunity..................................................       38
   13.4              No Responsibility for Loans, Recitals, Etc........................       38
   13.5              Action on Instructions of Banks...................................       38
   13.6              Employment of Agents and Counsel..................................       38
   13.7              Reliance on Documents; Counsel....................................       38
   13.8              Agent's Reimbursement and Indemnification.........................       38
   13.9              Rights as a Lender................................................       39
   13.10             Bank Credit Decision..............................................       39
   13.11             Successor Agent...................................................       39
   13.12             Agent and Arranger Fees...........................................       39

ARTICLE XIV          NOTICES...........................................................       39
   14.1              Giving Notice.....................................................       39
   14.2              Change of Address.................................................       40
   14.3              Platform and Primary Web Portal...................................       40

ARTICLE XV           COUNTERPARTS......................................................       42
</TABLE>

                                       iii

<PAGE>

SCHEDULES

Commitment Schedule

EXHIBITS

<TABLE>
<S>             <C>
Exhibit A       Form of Supplemental Indenture
Exhibit B-1     Required Opinions from Michael D. VanHemert, Esq.
Exhibit B-2     Required Opinions from Skadden, Arps, Slate, Meagher & Flom LLP
Exhibit B-3     Required Opinions from Miller, Canfield, Paddock and Stone, P.L.C.
Exhibit C       Form of Compliance Certificate
Exhibit D       Form of Assignment and Assumption Agreement
Exhibit E       Terms of Subordination (Junior Subordinated Debt)
Exhibit F       Terms of Subordination (Guaranty of Hybrid Preferred Securities)
Exhibit G       Form of Bond Delivery Agreement
</TABLE>

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<PAGE>

                               TERM LOAN AGREEMENT

         This Term Loan Agreement, dated as of March 28, 2003, is among
Consumers Energy Company, a Michigan corporation (the "Company"), the financial
institutions listed on the signature pages hereof (together with their
respective successors and assigns, the "Banks") and Citicorp North America,
Inc., a Delaware corporation, as Agent.

                                    ARTICLE I
                                   DEFINITIONS

         1.1      Definitions. As used in this Agreement:

         "Affiliate" means, as applied to any specified Person, any other Person
that, directly or indirectly, controls, is controlled by or is under common
control with, such specified Person and includes each officer or director or
general partner of such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with") as applied to any specified Person means the
possession, directly or indirectly, of the power to vote five percent (5.0%) or
more of the Voting Stock or otherwise to direct or cause the direction of, the
management and policies of such Person, whether through the ownership of Voting
Stock, by contract or otherwise. "Affiliated" has a correlative meaning to
Affiliate.

         "Agent" means Citicorp in its capacity as administrative agent for the
Banks pursuant to Article XIII, and not in its individual capacity as a Bank,
and any successor Agent appointed pursuant to Article XIII.

         "Agreement" means this Term Loan Agreement, as amended from time to
time.

         "Applicable Margin" means, with respect to Eurodollar Rate Loans at any
time, 4.50% per annum, and with respect to Floating Rate Loans at any time,
3.50% per annum.

         "Approved Fund" means, with respect to any Bank that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
is managed or advised by the same investment advisor as such Bank or by an
affiliate of such investment advisor.

         "Arranger" means Salomon Smith Barney Inc., a New York corporation, and
its successors, in its capacity as Lead Arranger and Sole Book Runner.

         "Article" means an article of this Agreement unless another document is
specifically referenced.

         "Assignment Agreement" - see Section 12.1(e).

         "Banks" - see the preamble.

         "Base Eurodollar Rate" means, with respect to any Interest Period
applicable to a Borrowing of Eurodollar Rate Loans, the per annum interest rate
determined by the offered rate

                                       1

<PAGE>

per annum at which deposits in Dollars appears on Telerate page 3750 (or any
successor page) as of 11:00 a.m. (London time), or in the event such offered
rate is not available from the Telerate page, the rate offered on deposits in
Dollars by Citibank's London Office to prime banks in the London interbank
market at 11:00 a.m. (London time), on the Eurodollar Interest Rate
Determination Date for such Interest Period and in an amount substantially equal
to the amount of the Eurodollar Rate Loan to be outstanding from Citicorp North
America, Inc. for such Interest Period.

         "Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the highest of:

                  (i)      the rate of interest announced publicly by Citibank
         in New York, New York from time to time, as Citibank's base rate; and

                  (ii)     the sum (adjusted to the nearest one-quarter of one
         percent (0.25%) or, if there is no nearest one-quarter of one percent
         (0.25%), to the next higher one-quarter of one percent (0.25%)) of (A)
         one- half of one percent (0.50%) per annum plus (B) the rate per annum
         obtained by dividing (I) the latest three-week moving average of
         secondary market morning offering rates in the United States for three-
         month certificates of deposit of major United States money market
         banks, such three-week moving average (adjusted to the basis of a year
         of 360 days) being determined weekly on each Monday (or, if any such
         day is not a Business Day, on the next succeeding Business Day) for the
         three-week period ending on the previous Friday (or, if such day is not
         a Business Day, on the next preceding Business Day) by Citibank on the
         basis of such rates reported by certificate of deposit dealers to, and
         published by, the Federal Reserve Bank of New York, or, if such
         publication shall be suspended or terminated, on the basis of
         quotations for such rates received by Citibank from three (3) New York
         certificate of deposit dealers of recognized standing selected by
         Citibank, by (II) a percentage equal to 100% minus the average of the
         daily percentages specified during such three-week period by the FRB
         for determining the maximum reserve requirement (including, but not
         limited to, any emergency, supplemental or other marginal reserve
         requirement) for Citibank in respect of liabilities consisting of or
         including (among other liabilities) three- month U.S. dollar
         nonpersonal time deposits in the United States plus (C) the average
         during such three-week period of the annual assessment rates estimated
         by Citibank for determining the then current annual assessment payable
         by Citibank to the Federal Deposit Insurance Corporation (or any
         successor) for insuring U.S. dollar deposits of Citibank in the United
         States; and

                  (iii)    the sum of (A) one- half of one percent (0.50%) per
         annum plus (B) the Federal Funds Rate in effect from time to time
         during such period.

         "Bond Delivery Agreement" means a bond delivery agreement substantially
in the form of Exhibit G whereby the Agent (x) acknowledges delivery of the
Bonds and (y) agrees to hold the Bonds for the benefit of the Banks and to
distribute all payments made by the Company on account thereof to the Banks.

                                       2

<PAGE>

         "Bonds" means a series of First Mortgage Bonds created under the
Supplemental Indenture issued in favor of, and in form and substance
satisfactory to, the Agent.

         "Borrowing" means a borrowing consisting of Term Loans of the same Type
made, continued or converted on the same day and, in the case of Eurodollar Rate
Loans, having the same Interest Period.

         "Building Lease" means the Master Lease and Lease Supplement, each
dated as of April 23, 2001, between Consumers Campus Holdings, LLC, a wholly
owned Subsidiary of the Company, as lessee, and Wilmington Trust Company, not in
its individual capacity but solely as owner Trustee of CEC Trust 2001-A, as
lessor, together with certain other related agreements, as the same may be
amended, restated or otherwise modified and any similar agreement entered into
in replacement thereof.

         "Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in New York, New York for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in New York, New York for the conduct of substantially all of their
commercial lending activities and interbank wire transfers can be made on the
Fedwire system.

         "Capital Lease" means any lease which has been or would be capitalized
on the books of the lessee in accordance with GAAP.

         "Citibank" means Citibank, N.A., a national banking association.

         "Citicorp" means Citicorp North America, Inc., a Delaware corporation,
in its individual capacity, and its successors and assigns.

         "Citigroup Parties" means Citibank, Citicorp, the Arranger and each of
their respective Affiliates, and each of their respective officers, directors,
employees, agents, advisors, and representatives.

         "CMS" means CMS Energy Corporation, a Michigan corporation.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Commitment Schedule" means the Schedule identifying each Bank's Term
Loan Commitment as of the date hereof attached hereto and identified as such.

         "Company" - see the preamble.

         "Communications" is defined in Section 14.3.

         "Consolidated EBIT" means for any period, Consolidated Net Income for
such period plus, (i) to the extent deducted from revenues in determining
Consolidated Net Income (without

                                       3

<PAGE>

duplication), (a) Consolidated Interest Expense, (b) expense for taxes paid or
accrued, and (c) any non-cash write-offs and write-downs contained in the
Company's Consolidated Net Income, including, without limitation, write-offs or
write-downs related to the sale of assets, impairment of assets and loss on
contracts, minus, (ii) to the extent included in Consolidated Net Income,
extraordinary gains realized other than in the ordinary course of business, all
calculated for the Company and its Subsidiaries on a consolidated basis in
accordance with GAAP.

         "Consolidated Interest Expense" means with respect to any period for
which the amount thereof is to be determined, an amount equal to interest
expense on Debt (excluding any Hybrid Preferred Securities), including payments
in the nature of interest under Capital Leases, all calculated for the Company
and its Subsidiaries on a consolidated basis in accordance with GAAP.

         "Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Company and its Subsidiaries calculated on a
consolidated basis for such period.

         "Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Company in accordance
with GAAP.

         "Conversion/Continuation Notice" - see Section 2.6(b).

         "Credit Agreement" means that certain Credit Agreement, dated as of
March 27, 2003, by and among the Company, the banks from time to time parties
thereto, and Bank One, NA, as agent thereunder, as amended, restated,
supplemented or otherwise modified from time to time.

         "Debt" means, with respect to any Person, and without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all indebtedness of such
Person for the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business which are not
overdue), (c) all Unfunded Vested Liabilities of such Person (if such Person is
not the Company, determined in a manner analogous to that of determining
Unfunded Vested Liabilities of the Company), (d) all obligations of such Person
arising under acceptance facilities, (e) all obligations of such Person as
lessee under Capital Leases, (f) all obligations of such Person arising under
any interest rate swap, "cap", "collar" or other hedging agreements; provided,
however, for purposes of the calculation of Debt for this clause (f) only, the
actual amount of Debt of such Person shall be determined on a net basis to the
extent such agreements permit such amounts to be calculated on a net basis, and
(g) all guaranties, endorsements (other than for collection in the ordinary
course of business) and other contingent obligations of such Person to assure a
creditor against loss (whether by the purchase of goods or services, the
provision of funds for payment, the supply of funds to invest in any Person or
otherwise) in respect of indebtedness or obligations of any other Person of the
kinds referred to in clauses (a) through (f) above.

         "Default" means an event which but for the giving of notice or lapse of
time, or both, would constitute an Event of Default.

         "Designated Officer" means the Chief Financial Officer, the Treasurer,
an Assistant Treasurer, any Vice President in charge of financial or accounting
matters or the principal accounting officer of the Company.

                                       4

<PAGE>

         "Effective Date" means March 28, 2003.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company or is under common control (within
the meaning of Section 414(c) of the Code) with the Company.

         "Eurodollar Interest Rate Determination Date" means the second Business
Day prior to the first day of each Interest Period.

         "Eurodollar Rate" means, with respect to any Interest Period applicable
to a Eurodollar Rate Loan, an interest rate per annum equal to the sum of (i)
the quotient obtained by dividing (a) the Base Eurodollar Rate applicable to
that Interest Period by (b) one minus the Reserve Requirement (expressed as a
decimal) applicable to that Interest Period plus (ii) the Applicable Margin.

         "Eurodollar Rate Loan" means a Term Loan which bears interest by
reference to the Eurodollar Rate.

         "Event of Default" means an event described in Article IX.

         "Excluded Taxes" means, in the case of each Bank or applicable Lending
Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Bank or the Agent is incorporated or organized or (ii) the jurisdiction in
which the Agent's or such Bank's principal executive office or such Bank's
applicable Lending Installation is located.

         "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by the Agent.

         "Fee Letter" means the fee letter dated March [7], 2003 among the
Company, the Arranger and Citicorp.

         "First Mortgage Bonds" means bonds issued by the Company pursuant to
the Indenture.

         "Fitch" means Fitch, Inc. or any successor thereto.

         "Floating Rate" means a rate per annum equal to (i) the Base Rate plus
(ii) the Applicable Margin, changing when and as the Base Rate changes.

                                       5

<PAGE>

         "Floating Rate Loan" means a Term Loan which bears interest at the
Floating Rate.

         "FRB" means the Board of Governors of the Federal Reserve System or any
successor thereto.

         "GAAP" means generally accepted accounting principles in the United
States of America as in effect on the date hereof, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.5 (except, for purposes of the financial statements required to be
delivered pursuant to Sections 6.7(b) and (c), for changes concurred in by the
Company's independent public accountants).

         "Hybrid Preferred Securities" means any preferred securities issued by
a Hybrid Preferred Securities Subsidiary, where such preferred securities have
the following characteristics;

                  (i)      such Hybrid Preferred Securities Subsidiary lends
         substantially all of the proceeds from the issuance of such preferred
         securities to the Company or a wholly-owned direct or indirect
         Subsidiary of the Company in exchange for Junior Subordinated Debt
         issued by the Company or such wholly-owned direct or indirect
         Subsidiary, respectively;

                  (ii)     such preferred securities contain terms providing for
         the deferral of interest payments corresponding to provisions providing
         for the deferral of interest payments on the Junior Subordinated Debt;
         and

                  (iii)    the Company or a wholly-owned direct or indirect
         Subsidiary of the Company (as the case may be) makes periodic interest
         payments on the Junior Subordinated Debt, which interest payments are
         in turn used by the Hybrid Preferred Securities Subsidiary to make
         corresponding payments to the holders of the preferred securities.

         "Hybrid Preferred Securities Subsidiary" means any Delaware business
trust (or similar entity) (i) all of the common equity interest of which is
owned (either directly or indirectly through one or more wholly-owned
Subsidiaries of the Company) at all times by the Company or a wholly-owned
direct or indirect Subsidiary of the Company, (ii) that has been formed for the
purpose of issuing Hybrid Preferred Securities and (iii) substantially all of
the assets of which consist at all times solely of Junior Subordinated Debt
issued by the Company or a wholly-owned direct or indirect Subsidiary of the
Company (as the case may be) and payments made from time to time on such Junior
Subordinated Debt.

         "Indenture" means the Indenture, dated as of September 1, 1945, as
supplemented and amended from time to time, from the Company to JPMorgan Chase
Bank (formerly known as The Chase Manhattan Bank), as successor Trustee.

         "Interest Period" means, with respect to a Eurodollar Advance, a period
of one, two, three or six months, or such shorter or longer period agreed to by
the Company and the Banks, commencing on a Business Day selected by the Company
pursuant to this Agreement. Such Interest Period shall end on the day which
corresponds numerically to such date one, two, three

                                       6

<PAGE>

or six months thereafter (or such shorter or longer period agreed to by the
Company and the Banks), provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month (or such
shorter or longer period, as applicable), such Interest Period shall end on the
last Business Day of such next, second, third or sixth succeeding month (or such
shorter or longer period, as applicable). If an Interest Period would otherwise
end on a day which is not a Business Day, such Interest Period shall end on the
next succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day. The Company may not select any Interest
Period that ends after the Maturity Date.

         "Junior Subordinated Debt" means any unsecured Debt of the Company or a
Subsidiary of the Company (i) issued in exchange for the proceeds of Hybrid
Preferred Securities and (ii) subordinated to the rights of the Banks hereunder
and under the other Loan Documents pursuant to terms of subordination
substantially similar to those set forth in Exhibit E. or pursuant to other
terms and conditions satisfactory to the Majority Banks.

         "Lending Installation" means any office, branch, subsidiary or
affiliate of a Bank.

         "Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.

         "Loan" means a Floating Rate Loan or a Eurodollar Rate Loan.

         "Loan Documents" means this Agreement, the Supplemental Indenture and
the Bonds.

         "Majority Banks" means, as of any date of determination, Banks whose
Pro Rata Shares, in the aggregate, are 51% or greater as of such date.

         "Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a material adverse effect
on (a) the business, assets, property, financial condition, results of
operations or prospects of the Company and its Subsidiaries, considered as a
whole, (b) the Company's ability to perform its obligations under this Agreement
and the other Loan Documents or (c) the validity or enforceability of any Loan
Document or the rights or remedies of the Agent or the Banks thereunder.

         "Maturity Date" means March 28, 2006.

         "Moody's" means Moody's Investors Service, Inc. or any successor
thereto.

         "Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA.

         "Net Cash Proceeds of Sale" means proceeds received by the Company in
cash (including cash, equivalents readily convertible into cash, and such
proceeds of any notes received as consideration of any other non-cash
consideration) from the sale, assignment or other disposition of (but not the
lease or license of) any Property, other than sales of inventory in the ordinary
course of business and sales of accounts receivable pursuant to the Receivables
Sale

                                       7

<PAGE>

Agreement, net of (A) the costs of sale, assignment or other disposition, (B)
any income, franchise, transfer or other tax liability arising from such
transaction and (C) amounts applied to the repayment of Debt (other than the
Obligations) secured by a Lien permitted by Section 7.1 on the asset disposed
of, if such net proceeds arise from any individual sale, assignment or other
disposition or from any group of related sales, assignments or other
dispositions.

         "Net Proceeds" means, with respect to any sale or issuance of
securities or incurrence of Debt by any Person, the excess of (i) the gross cash
proceeds received by or on behalf of such Person in respect of such sale,
issuance or incurrence (as the case may be) over (ii) customary underwriting
commissions, auditing and legal fees, printing costs, rating agency fees and
other customary and reasonable fees and expenses incurred by such Person in
connection therewith.

         "Net Worth" means, with respect to any Person, the excess of such
Person's total assets over its total liabilities, total assets and total
liabilities each to be determined in accordance with GAAP consistently applied,
excluding, however, from the determination of total assets (i) goodwill,
organizational expenses, research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and rights in any
thereof, and other similar intangibles, (ii) cash held in a sinking or other
analogous fund established for the purpose of redemption, retirement or
prepayment of capital stock or Debt, and (iii) any items not included in clauses
(i) or (ii) above, that are treated as intangibles in conformity with GAAP.

         "Non-U.S. Bank" - see Section 4.5(d).

         "Obligations" means all unpaid principal of and accrued and unpaid
interest on the Term Loans and all other obligations of the Company to the Banks
or to any Bank or the Agent or Arranger arising under the Loan Documents.

         "Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any sale and leaseback
transaction which is not a Capital Lease, (iii) any liability under any
so-called "synthetic lease" transaction entered into by such Person, or (iv) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheets of such Person, but excluding from this clause
(iv) Operating Leases.

         "Operating Lease" of a Person means any lease of Property (other than a
Capital Lease) by such Person as lessee.

         "Other Taxes" - see Section 4.5(b).

         "Outstanding Term Loan" - see the Recitals.

         "Payment Date" means the second Business Day of each calendar quarter
occurring after the Effective Date.

         "PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

                                        8

<PAGE>

         "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

         "Plan" means any employee benefit plan (other than a Multiemployer
Plan) maintained for employees of the Company or any ERISA Affiliate and covered
by Title IV of ERISA.

         "Platform" is defined in Section 14.3.

         "Primary Web Portal" is defined in Section 14.3.

         "Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.

         "Pro Rata Share" means, with respect to any Bank, at any time, the
percentage obtained by dividing (i) the outstanding principal balance of such
Bank's Term Loan at such time by (ii) the outstanding principal balance of all
Term Loans.

         "Receivables Sale Agreement" means the Amended and Restated Receivables
Sale Agreement among the Company, Asset Securitization Cooperative Corporation
and Canadian Imperial Bank of Commerce, dated as of April 1, 2002, as the same
may be amended, restated or otherwise modified and any similar agreement entered
into in replacement thereof.

         "Regulation D" means Regulation D of the FRB from time to time in
effect and shall include any successor or other regulation or official
interpretation of said FRB relating to reserve requirements applicable to member
banks of the Federal Reserve System.

         "Regulation U" means Regulation U of the FRB from time to time in
effect and shall include any successor or other regulation or official
interpretation of said FRB relating to the extension of credit by banks,
non-banks and non-broker-dealers for the purpose of purchasing or carrying
margin stocks.

         "Reportable Event" has the meaning assigned to that term in Title IV of
ERISA.

         "Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.

         "S&P" means Standard and Poor's Rating Services, a division of The
McGraw Hill Companies, Inc. or any successor thereto.

         "SEC" means the Securities and Exchange Commission or any governmental
authority which may be substituted therefor.

         "Section" means a numbered section of this Agreement, unless another
document is specifically referenced.

                                       9

<PAGE>

         "Securitized Bonds" shall mean any nonrecourse bonds or similar
asset-backed securities issued by a special-purpose Subsidiary of the Company
which are payable solely from specialized charges authorized by the utility
commission of the relevant state in connection with the recovery of regulatory
assets, other stranded costs or other "Qualified Costs" (as defined in M.C.L.
460.10h(g)) authorized to be securitized by the Michigan Public Service
Commission.

         "Senior Debt" means the First Mortgage Bonds.

         "September 2002 Loan Agreement Obligations" means the "Obligations" as
defined in that certain Amended and Restated Term Loan Agreement dated as of
September 26, 2002 among Consumers Energy Company as borrower, Citicorp North
America, Inc. as agent and the financial institutions party thereto as banks (as
amended or modified from time to time).

         "Single Employer Plan" means a Plan maintained by the Company or any
ERISA Affiliate for employees of the Company or any ERISA Affiliate.

         "Subsidiary" means, as to any Person, any corporation or other entity
of which at least a majority of the securities or other ownership interests
having ordinary voting power (absolutely or contingently) for the election of
directors or other Persons performing similar functions are at the time owned
directly or indirectly by such Person.

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

         "Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

         "Termination Event" means (a) a Reportable Event described in Section
4043 of ERISA and the regulations issued thereunder (other than a Reportable
Event not subject to the provision for 30-day notice to the PBGC under such
regulations), or (b) the withdrawal of the Company or any of its ERISA
Affiliates from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001 (a) (2) of ERISA, or (c) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of proceedings
to terminate a Plan by the PBGC or to appoint a trustee to administer any Plan.

         "Term Loan Commitment" means, for each Bank, the obligation of such
Bank to make a term loan to the Company on the Effective Date in an amount not
exceeding the amount set forth on the Commitment Schedule as its Term Loan
Commitment.

         "Term Loans" - see Section 2.1.

         "Total Consolidated Capitalization" means, at any date of
determination, the sum of (a) Total Consolidated Debt, (b) equity of the common
stockholders of the Company, (c) equity of the preference stockholders of the
Company and (d) equity of the preferred stockholders of the Company, in each
case determined at such date.

                                       10

<PAGE>

         "Total Consolidated Debt" means, at any date of determination, the
aggregate Debt of the Company and its Consolidated Subsidiaries; provided, that
Total Consolidated Debt shall exclude (i) the principal amount of any
Securitized Bonds, (ii) any Junior Subordinated Debt owned by any Hybrid
Preferred Securities Subsidiary, (iii) any guaranty by the Company of payments
with respect to any Hybrid Preferred Securities, provided that such guaranty is
subordinated to the rights of the Banks hereunder and under the other Loan
Documents pursuant to terms of subordination substantially similar to those set
forth in Exhibit F, or pursuant to other terms and conditions satisfactory to
the Majority Banks, (iv) such percentage of the Net Proceeds from any issuance
of hybrid debt/equity securities (other than Junior Subordinated Debt and Hybrid
Preferred Securities) by the Company or any Consolidated Subsidiary as shall be
agreed to be deemed equity by the Agent and the Company prior to the issuance
thereof (which determination shall be based on, among other things, the
treatment (if any) given to such securities by the applicable rating agencies).

         "Type" means, with respect to any Loan, the character of such Loan as a
Eurodollar Rate Loan or a Floating Rate Loan.

         "Unfunded Vested Liabilities" means, (i) in the case of Single Employer
Plans, the amount (if any) by which the present value of all vested
nonforfeitable benefits under such Plan exceeds the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, and (ii) in the case of Multiemployer
Plans, the withdrawal liability of the Company and its ERISA Affiliates.

         "Voting Stock" means, with respect to any Person, shares, securities,
limited liability company interests, general or limited partnership interests or
other equivalents with respect to any class or classes of capital stock of such
Person entitling any holder thereof (whether at all times or only so long as no
senior class of capital stock has voting power by reason of any contingency) (a)
in the case of a corporation (or equivalent organization), to vote in the
election of members of the board of directors (or the equivalent thereof) of
such Person, (b) in the case of a limited liability company, to vote in the
election of managers of such Person or to bind or otherwise act as agent for
such Person, (c) in the case of a limited partnership, to vote on the admission
of the general partner of such Person or to bind or otherwise act as agent for
such Person or (iv) in the case of a general partnership, to bind or otherwise
act as agent for such Person.

         1.2      Singular and Plural. The foregoing definitions shall be
equally applicable to both the singular and plural forms of the defined terms.

         1.3      Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. If any changes in
generally accepted accounting principles are hereafter required or permitted and
are adopted by the Company or any of its Subsidiaries, or the Company or any of
its Subsidiaries shall change its application of generally accepted accounting
principles with respect to any Off-Balance Sheet Liabilities, in each case, with
the agreement of its independent certified public accountants and such changes
result in a change in the method of calculation of any of the financial
covenants, tests, restrictions or standards herein or in the related definitions
or terms used therein ("Accounting Changes"), the parties hereto agree, at the
Company's request, to enter into negotiations, in good faith, in order to amend
such

                                       11

<PAGE>

provisions in a credit neutral manner so as to reflect equitably such changes
with the desired result that the criteria for evaluating the Company's and its
Subsidiaries' financial condition shall be the same after such changes as if
such changes had not been made; provided, however, until such provisions are
amended in a manner reasonably satisfactory to the Agent, the Arranger and the
Majority Banks, no Accounting Change shall be given effect in such calculations.
In the event such amendment is entered into, all references in this Agreement to
GAAP shall mean generally accepted accounting principles as of the date of such
amendment.

                                   ARTICLE II
                                 THE TERM LOANS

         2.1      The Term Loans. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make a term loan to the Company on
the Effective Date in an amount equal to such Bank's Term Loan Commitment (each
individually, a "Term Loan" and, collectively, the "Term Loans "). The Term
Loans shall initially be Floating Rate Loans and thereafter may be continued as
Floating Rate Loans or converted into Eurodollar Rate Loans in the manner
provided in Section 2.6.

         2.2      Making of Term Loans. Not later than 1:00 p.m. (New York time)
on the Effective Date, each Bank shall make available its applicable Term Loan
in funds immediately available in New York to the Agent at its address specified
pursuant to Section 14. To the extent funds are received from the Banks, the
Agent will make such funds available to the Company at the Agent's aforesaid
address. No Bank's obligation to make any Term Loan shall be affected by any
other Bank's failure to make any Term Loan.

         2.3      Repayment of Term Loans. The Term Loans shall be paid in full
on the Maturity Date.

         2.4      Optional Principal Payments. The Company may, upon at least
three (3) Business Days' prior written notice to the Agent (which the Agent
shall promptly transmit to each Bank), at any time and from time to time,
without penalty or premium, prepay the Term Loans which are Floating Rate Loans,
in whole or in part. Term Loans which are Eurodollar Rate Loans may be prepaid
in whole or in part upon at least five (5) Business Days' prior written notice
to the Agent (which the Agent shall promptly transmit to each Bank), (A) on the
expiration date of the then applicable Interest Period therefor, and (B) on any
other date upon payment of the amounts required by Section 4.4, but otherwise
without penalty or premium. Any notice of prepayment given to the Agent under
this Section 2.4 shall specify the date (which shall be a Business Day) of
prepayment, the aggregate principal amount of the prepayment and any allocation
of such amount among Floating Rate Loans and Eurodollar Rate Loans. When notice
of prepayment is delivered as provided herein, the principal amount of the Term
Loans specified in the notice shall become due and payable on the prepayment
date specified in such notice. Unless the aggregate outstanding principal
balance of the Term Loans is to be prepaid in full, voluntary prepayments of the
Term Loans shall be in an aggregate minimum amount of $10,000,000 and integral
multiples of $1,000,000 in excess of that amount. Each voluntary prepayment of
the Term Loans shall be allocated first to Term Loans which are Floating Rate
Loans until paid in full and then to Term Loans which are Eurodollar Rate Loans.
Amounts prepaid hereunder may not be

                                       12

<PAGE>

reborrowed. Upon any prepayment of the Term Loans pursuant to the terms of this
Section 2.4, the Agent shall, upon request of the Company, promptly surrender to
or upon the order of the Company one or more Bonds specified by the Company;
provided that the Company remains in compliance with Section 6.10.

         2.5      Mandatory Prepayments. After repayment of the September 2002
Loan Agreement Obligations, the Company shall make mandatory prepayments of the
Term Loans as provided in this Section 2.5. Within three Business Days after the
Company's receipt of any Net Cash Proceeds of Sale, the Company shall make a
written offer to the Banks to prepay the Term Loans by an amount equal to 50% of
such Net Cash Proceeds of Sale; provided, however, that (i) the Company may
retain up to an aggregate of $100,000,000 of such Net Cash Proceeds of Sale
during the period beginning on September 26, 2002 and ending upon irrevocable
payment of the Obligations before it shall be required to make any such
mandatory offer, and (ii) the Company shall not be required to make any such
mandatory offer unless and until the aggregate amount of such mandatory offer
(on a cumulative basis) would be at least $1,000,000. Such offer shall be
transmitted by facsimile and by overnight courier to each Bank and shall be
deemed received on the Business Day following transmittal. Each Bank shall have
three Business Days following its receipt of such offer to submit a written
response to the Company's prepayment offer, and if any Bank shall not have
responded by the close of business on the third Business Day, it shall be deemed
to have accepted such offer. Payment shall be made to the Agent for the account
of all Banks that have accepted the prepayment offer on the fourth Business Day
following their receipt of the offer from the Company. If any Bank elects not to
accept its Pro Rata Share thereof, such prepayment shall be applied ratably to
the Term Loans of the Banks that have accepted such offer. Amounts prepaid
hereunder may not be reborrowed. Upon any prepayment of the Term Loans pursuant
to the terms of this Section 2.5, the Agent shall, upon request of the Company,
promptly surrender to or upon the order of the Company one or more Bonds
specified by the Company; provided that the Company remains in compliance with
Section 6.10.

         2.6      Conversion or Continuation. (a) The Company shall have the
option (A) to convert at any time all or any part of outstanding Floating Rate
Loans to Eurodollar Rate Loans; (B) to convert all or any part of outstanding
Eurodollar Rate Loans having Interest Periods which expire on the same date to
Floating Rate Loans on such expiration date; or (C) to continue all or any part
of outstanding Eurodollar Rate Loans having Interest Periods which expire on the
same date as Eurodollar Rate Loans, and the succeeding Interest Period of such
continued Loans shall commence on such expiration date; provided, however, no
such outstanding Loan may be continued as, or be converted into, a Eurodollar
Rate Loan (i) if the continuation of, or the conversion into, would violate any
of the provisions of this Agreement or (ii) if a Default or Event of Default
would occur or has occurred and is continuing. Any conversion into or
continuation of Eurodollar Rate Loans under this Section 2.6 shall be in a
minimum amount of $10,000,000 and in integral multiples of $1,000,000 in excess
of that amount.

         (b)      To convert or continue a Loan under Section 2.6(a), the
Company shall deliver an irrevocable notice (a "Conversion/Continuation Notice")
to the Agent no later than 11:00 a.m. (New York time) at least three (3)
Business Days in advance of the proposed conversion/continuation date. A
Conversion/Continuation Notice shall specify (A) the proposed
conversion/continuation date (which shall be a Business Day), (B) the principal
amount of the Loan to be converted/continued, (C) whether such Loan shall be
converted and/or continued, and

                                       13

<PAGE>

(D) in the case of a conversion to, or continuation of, a Eurodollar Rate Loan,
the requested Interest Period. Promptly after receipt of a
Conversion/Continuation Notice under this Section 2.6(b) (or telephonic notice
in lieu thereof), the Agent shall notify each Bank by telex or telecopy, or
other similar form of transmission, of the proposed conversion/continuation. Any
Conversion/Continuation Notice for conversion to, or continuation of, a Loan (or
telephonic notice in lieu thereof) shall be irrevocable, and the Company shall
be bound to convert or continue in accordance therewith.

         2.7      Interest Rates, Interest Payment Dates. (a) Subject to
Section 2.8, each Term Loan shall bear interest as follows:

                  (i)      if it is a Floating Rate Loan, at a rate per annum
         equal to the Floating Rate from time to time in effect; and

                  (ii)     if it is a Eurodollar Rate Loan, at a rate per annum
         equal to the Eurodollar Rate for each applicable Interest Period
         therein.

Changes in the rate of interest on that portion of any Term Loan maintained as a
Floating Rate Loan will take effect simultaneously with each change in the
Floating Rate.

         (b)      Interest accrued on each Floating Rate Loan shall be payable
on each Payment Date and at maturity. Interest accrued on each Eurodollar Rate
Loan shall be payable on the last day of its applicable Interest Period, on any
date on which such Eurodollar Rate Loan is prepaid and at maturity. Interest
accrued on each Eurodollar Rate Loan having an Interest Period longer than three
months shall also be payable on the last day of each three- month interval
during such Interest Period. Interest on all Term Loans shall be calculated for
actual days elapsed on the basis of a 360-day year. In computing interest on any
Term Loan, the date of the making of the Term Loan or the first day of an
Interest Period, as the case may be, shall be included and the date of payment
or the expiration date an Interest Period, as the case may be, shall be
excluded; provided, however, if a Term Loan is repaid on the same day on which
it is made, one (1) day's interest shall be paid on such Term Loan. If any
payment of principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment.

         2.8      Rate after Maturity. Any Term Loan not paid by the Company at
maturity, whether by acceleration or otherwise, shall bear interest until paid
in full at a rate per annum equal to the higher of the rate otherwise applicable
thereto plus 2% or the Floating Rate plus 2%. All other Obligations that are not
paid when due (including, without limitation, overdue interest beyond the
applicable grace period) shall bear interest until paid in full at a rate per
annum equal to the Floating Rate plus 2%. In addition, in the case of overdue
interest beyond the applicable grace period, until such overdue interest is paid
in full, the principal amount to which such interest relates shall also bear
interest at a rate per annum equal to the higher of the rate otherwise
applicable thereto plus 2% or the Floating Rate plus 2%.

         2.9      Method of Payment. All payments of principal, interest and
fees hereunder shall be made in immediately available funds to the Agent at its
address specified on its signature page to this Agreement (or at any other
Lending Installation of the Agent specified in writing by the

                                       14

<PAGE>

Agent to the Company) not later than 1:00 p.m. (New York time) on the date when
due and shall be applied ratably by the Agent among the Banks. Funds received
after such time shall be deemed received on the following Business Day unless
the Agent shall have received from, or on behalf of, the Company a Federal
Reserve reference number with respect to such payment before 1:00 p.m. (New York
time) on the date of such payment. Each payment delivered to the Agent for the
account of any Bank shall be delivered promptly by the Agent in the same type of
funds received by the Agent to such Bank at the address specified for such Bank
on its signature page to this Agreement or at any Lending Installation specified
in a notice received by the Agent from such Bank. The Agent is hereby authorized
to charge the account of the Company maintained with Citicorp, if any, for each
payment of principal, interest and fees as such payment becomes due hereunder.

         2.10     Evidence of Obligation; Telephonic Notices.

         (a)      The obligation of the Company to repay the Obligations shall
be evidenced by one or more Bonds.

         (b)      Each Bank shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Company to such Bank
resulting from each Term Loan made by such Bank from time to time, including the
amounts of principal and interest payable and paid to such Bank from time to
time hereunder.

         (c)      The Agent shall also maintain accounts in which it will record
(i) the amount of each Term Loan made hereunder, the Type thereof and the
Interest Period with respect thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Company to each
Bank hereunder, and (iii) the amount of any sum received by the Agent hereunder
from the Company and each Bank's share thereof.

         (d)      The entries maintained in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be prima facie evidence of the existence and
amounts of the Obligations therein recorded; provided, however, that the failure
of the Agent or any Bank to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Company to repay the Obligations
in accordance with their terms.

         (e)      The Company hereby authorizes the Banks and the Agent to make,
convert or continue Term Loans based on telephonic notices made by any person or
persons the Agent or any Bank in good faith believes to be acting on behalf of
the Company. The Company agrees to deliver promptly to the Agent a written
confirmation of each telephonic notice signed by a Designated Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Banks, the records of the Agent and the Banks shall govern
absent manifest error.

         2.11     Lending Installations. Subject to the provisions of Section
4.6, each Bank may book its Term Loans at any Lending Installation selected by
such Bank and may change its Lending Installation from time to time. All terms
of this Agreement shall apply to any such Lending Installation and the Term
Loans shall be deemed held by the applicable Bank for the benefit of such
Lending Installation. Each Bank may, by written or facsimile notice to the

                                       15

<PAGE>

Company, designate a Lending Installation through which Term Loans will be made
by it and for whose account payments on the Term Loans are to be made.

         2.12     Non-Receipt of Funds by the Agent. Unless a Bank or the
Company, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Bank, the
proceeds of a Term Loan or (ii) in the case of the Company, a payment of
principal, interest or fees to the Agent for the account of the Banks, that it
does not intend to make such payment, the Agent may assume that such payment has
been made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Bank or the Company, as the case may be, has not in fact made such payment
to the Agent, the recipient of such payment shall, on demand by the Agent, repay
to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to (i) in the case of payment by a Bank, the Federal Funds
Rate for such day or (ii) in the case of payment by the Company, the interest
rate applicable to the relevant Term Loan.

                                   ARTICLE III
                                    RESERVED

                                   ARTICLE IV
                             CHANGE IN CIRCUMSTANCES

         4.1      Yield Protection. (a) If any change in law or any governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any interpretation thereof by any agency or authority having
jurisdiction over any Bank,

                  (i)      subjects any Bank or any applicable Lending
         Installation to any increased tax, duty, charge or withholding on or
         from payments due from the Company (excluding taxation measured by or
         attributable to the overall net income of such Bank or applicable
         Lending Installation, whether overall or in any geographic area), or
         changes the rate of taxation of payments to any Bank in respect of its
         Term Loans or other amounts due it hereunder, or

                  (ii)     imposes or increases or deems applicable any reserve,
         assessment, insurance charge, special deposit or similar requirement
         against assets of, deposits with or for the account of, or credit
         extended by any Bank or any applicable Lending Installation (including,
         without limitation, any reserve costs under Regulation D with respect
         to Eurocurrency liabilities (as defined in Regulation D)), or

                  (iii)    imposes any other condition the result of which is to
         increase the cost to any Bank or any applicable Lending Installation of
         making, funding or maintaining Term Loans, or reduces any amount
         receivable by any Bank or any applicable Lending Installation in
         connection with Term Loans or requires any Bank or

                                       16

<PAGE>

         any applicable Lending Installation to make any payment calculated by
         reference to its Term Loans or interest received by it, by an amount
         deemed material by such Bank, or

                  (iv)     affects the amount of capital required or expected to
         be maintained by any Bank or Lending Installation or any corporation
         controlling any Bank and such Bank determines the amount of capital
         required is increased by or based upon the existence of this Agreement
         or its obligation to make Term Loans hereunder or of commitments of
         this type,

then, upon presentation by such Bank to the Company of a certificate (as
referred to in the immediately succeeding sentence of this Section 4.1) setting
forth the basis for such determination and the additional amounts reasonably
determined by such Bank for the period of up to 90 days prior to the date on
which such certificate is delivered to the Company and the Agent, to be
sufficient to compensate such Bank in light of such circumstances, the Company
shall within 30 days of such delivery of such certificate pay to the Agent for
the account of such Bank the specified amounts set forth on such certificate.
The affected Bank shall deliver to the Company and the Agent a certificate
setting forth the basis of the claim and specifying in reasonable detail the
calculation of such increased expense, which certificate shall be prima facie
evidence as to such increase and such amounts. An affected Bank may deliver more
than one certificate to the Company during the term of this Agreement. In making
the determinations contemplated by the above-referenced certificate, any Bank
may make such reasonable estimates, assumptions, allocations and the like that
such Bank in good faith determines to be appropriate, and such Bank's selection
thereof in accordance with this Section 4.1 shall be conclusive and binding on
the Company, absent manifest error.

         (b)      No Bank shall be entitled to demand compensation or be
compensated hereunder to the extent that such compensation relates to any period
of time more than 90 days prior to the date upon which such Bank first notified
the Company of the occurrence of the event entitling such Bank to such
compensation (unless, and to the extent, that any such compensation so demanded
shall relate to the retroactive application of any event so notified to the
Company).

         4.2      Replacement Bank. If any Bank shall make a demand for payment
under Section 4.1, then within 30 days after such demand, the Company may, with
the approval of the Agent (which approval shall not be unreasonably withheld)
and provided that no Default or Event of Default shall then have occurred and be
continuing, demand that such Bank assign to one or more financial institutions
designated by the Company and approved by the Agent all (but not less than all)
of such Bank's outstanding Term Loans within the period ending on the later of
such 30th day and the last day of the longest of the then current Interest
Periods or maturity dates for such outstanding Term Loans. It is understood that
such assignment shall be consummated on terms satisfactory to the Company, the
Agent and the assigning Bank, provided that such assigning Bank's consent to
such an assignment shall not be unreasonably withheld.

         4.3      Availability of Eurodollar Rate Loans. If:

                  (i)      any Bank determines that maintenance of a Eurodollar
         Rate Loan at a suitable Lending Installation would violate any
         applicable law, rule, regulation or directive, whether or not having
         the force of law, or

                                       17

<PAGE>

                  (ii)     the Majority Banks determine that (A) deposits of a
         type and maturity appropriate to match fund Eurodollar Rate Loans are
         not available or (B) the Base Eurodollar Rate does not accurately
         reflect the cost of making or maintaining a Eurodollar Rate Loan,

then the Agent shall suspend the availability of Eurodollar Rate Loans and, in
the case of clause (i), require any Eurodollar Rate Loans to be converted to
Floating Rate Loans on such date as is required by the applicable law, rule,
regulation or directive.

         4.4      Funding Indemnification. If any payment of a Eurodollar Rate
Loan occurs on a date which is not the last day of an applicable Interest
Period, whether because of prepayment or otherwise, or a Eurodollar Rate Loan is
not made on the date specified by the Company for any reason other than default
by the Banks, the Company will indemnify each Bank for any loss or cost (but not
lost profits) incurred by it resulting therefrom, including, without limitation,
any loss or cost in liquidating or employing deposits acquired to fund or
maintain such Eurodollar Rate Loan; provided that the Company shall not be
liable for any of the foregoing to the extent they arise because of acceleration
by any Bank.

         4.5      Taxes.

         (a)      All payments by the Company to or for the account of any Bank
or the Agent hereunder or under any Bond shall be made free and clear of and
without deduction for any and all Taxes. If the Company shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder to any Bank
or the Agent, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 4.5) such Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions, (iii) the
Company shall pay the full amount deducted to the relevant authority in
accordance with applicable law and (iv) the Company shall furnish to the Agent
the original copy of a receipt evidencing payment thereof within 30 days after
such payment is made.

         (b)      In addition, the Company hereby agrees to pay any present or
future stamp or documentary taxes and any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or under
any Bond or from the execution or delivery of, or otherwise with respect to,
this Agreement or any Bond ("Other Taxes").

         (c)      The Company hereby agrees to indemnify the Agent and each Bank
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed on amounts payable under this Section 4.5) paid by
the Agent or such Bank and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Payments due under this
indemnification shall be made within 30 days of the date the Agent or such Bank
makes demand therefor pursuant to Section 4.6.

         (d)      Each Bank that is not incorporated under the laws of the
United States of America or a state thereof (each a "Non-U.S. Bank ") agrees
that it will, not more than ten Business Days after the date hereof, or, if
later, not more than ten Business Days after becoming a Bank hereunder, (i)
deliver to each of the Company and the Agent two (2) duly completed copies of

                                       18

<PAGE>

United States Internal Revenue Service Form W8BEN or W8ECI, certifying in either
case that such Bank is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, and (ii)
deliver to each of the Company and the Agent a United States Internal Revenue
Form W-8 or W-9, as the case may be, and certify that it is entitled to an
exemption from United States backup withholding tax. Each Non-U.S. Bank further
undertakes to deliver to each of the Company and the Agent (x) renewals or
additional copies of such form (or any successor form) on or before the date
that such form expires or becomes obsolete, and (y) after the occurrence of any
event requiring a change in the most recent forms so delivered by it, such
additional forms or amendments thereto as may be reasonably requested by the
Company or the Agent. All forms or amendments described in the preceding
sentence shall certify that such Bank is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form or
amendment with respect to it and such Bank advises the Company and the Agent
that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.

         (e)      For any period during which a Non-U.S. Bank has failed to
provide the Company with an appropriate form pursuant to clause (d), above
(unless such failure is due to a change in treaty, law or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, occurring subsequent to the date on which a form originally was
required to be provided), such Non-U.S. Bank shall not be entitled to
indemnification under this Section 4.5 with respect to Taxes imposed by the
United States; provided that, should a Non-U.S. Bank which is otherwise exempt
from or subject to a reduced rate of withholding tax become subject to Taxes
because of its failure to deliver a form required under clause (d) above, the
Company shall take such steps as such Non-U.S. Bank shall reasonably request to
assist such Non-U.S. Bank to recover such Taxes.

         (f)      Any Bank that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Bond
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
the Company (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate.

         (g)      If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political subdivision
thereof asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Bank (because the appropriate form was
not delivered or properly completed, because such Bank failed to notify the
Agent of a change in circumstances which rendered its exemption from withholding
ineffective, or for any other reason), such Bank shall indemnify the Agent fully
for all amounts paid, directly or indirectly, by the Agent as tax, withholding
therefor, or otherwise, including penalties and interest, and including taxes
imposed by any jurisdiction on amounts payable to the Agent under this
subsection, together with all costs and expenses related thereto (including
attorneys fees and time charges of attorneys for the Agent, which attorneys may
be

                                       19
<PAGE>

employees of the Agent). The obligations of the Banks under this Section 4.5(g)
shall survive the payment of the Obligations and termination of this Agreement.

         4.6      Bank Certificates; Survival of Indemnity. To the extent
reasonably possible, each Bank shall designate an alternate Lending Installation
with respect to Eurodollar Rate Loans to reduce any liability of the Company to
such Bank under Section 4.1 or to avoid the unavailability of Eurodollar Rate
Loan under Section 4.3, so long as such designation is not disadvantageous to
such Bank. A certificate of such Bank as to the amount due under Section 4.1,
4.4 or 4.5 shall be final, conclusive and binding on the Company in the absence
of manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Rate Loan shall be calculated as though each Bank
funded each Eurodollar Rate Loan through the purchase of a deposit of the type
and maturity corresponding to the deposit used as a reference in determining the
Base Eurodollar Rate applicable to such Eurodollar Rate Loan whether in fact
that is the case or not. Unless otherwise provided herein, the amount specified
in any certificate shall be payable on demand after receipt by the Company of
such certificate. The obligations of the Company under Sections 4.1, 4.4 and 4.5
shall survive payment of the Obligations and termination of this Agreement,
provided, that no Bank shall be entitled to compensation to the extent that such
compensation relates to any period of time more than 90 days after the
termination of this Agreement.

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

         The Company hereby represents and warrants that:

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

         5.2      Corporate Power and Authority; No Conflicts. The execution,
delivery and performance by the Company of the Loan Documents are within the
Company's corporate powers, have been duly authorized by all necessary corporate
action and do not (i) violate the Company's charter, bylaws or any applicable
law, or (ii) breach or result in an event of default under any indenture or
material agreement, and do not result in or require the creation of any Lien
upon or with respect to any of its properties (except the lien of the Indenture
securing the Bonds).

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

         5.4      Legally Enforceable Agreements. Each Loan 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

                                       20

<PAGE>

affecting the enforcement of creditors' rights generally and (b) the application
of general principles of equity (regardless of whether considered in a
proceeding in equity or at law).

         5.5      Financial Statements. The audited balance sheet of the Company
and its Consolidated Subsidiaries as at December 31, 2001, and the related
statements of income and cash flows of the Company and its Consolidated
Subsidiaries for the fiscal year then ended, as set forth in the Company's
Annual Report on Form 10-K/A (copies of which have been furnished to each Bank),
and the unaudited balance sheets of the Company and its Consolidated
Subsidiaries as at September 30, 2002, and the related statements of income and
cash flows of the Company and its Consolidated Subsidiaries for the nine-month
period then ended (copies of which have been furnished to each Bank), fairly
present the financial condition of the Company and its Consolidated Subsidiaries
as at such dates and the results of operations of the Company and its
Consolidated Subsidiaries for the periods ended on such dates, all in accordance
with GAAP, and since December 31, 2001, there has been no Material Adverse
Change (except to the extent described in the Company's Quarterly Report on Form
10-Q/A for the quarter ended September 30, 2002 as filed with the SEC, copies of
which have been furnished to each Bank).

         5.6      Litigation. Except (i) to the extent described in the
Company's Annual Report on Form 10-K/A for the year ended December 31, 2001 and
Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2002 as
filed with the SEC, copies of which have been furnished to each Bank, and (ii)
such other similar actions, suits and proceedings predicated on the occurrence
of the same events giving rise to any actions, suits and proceedings described
in the Reports filed with the SEC set forth in clause (i) hereof, there is no
pending or threatened action or proceeding against the Company or any of its
Consolidated Subsidiaries before any court, governmental agency or arbitrator,
which, if adversely determined, might reasonably be expected to materially
adversely affect the financial condition, results of operations, business,
Property or prospects of the Company and its Consolidated Subsidiaries, taken as
a whole, or that would materially adversely affect the Company's ability to
perform its obligations under any Loan Document. As of the Effective Date, there
is no litigation challenging the validity or the enforceability of any of the
Loan Documents.

         5.7      Margin Stock. The Company is not engaged in the business of
extending credit for the purpose of buying or carrying margin stock (within the
meaning of Regulation U), and no proceeds of any Term Loan will be used to buy
or carry any margin stock or to extend credit to others for the purpose of
buying or carrying any margin stock.

         5.8      ERISA. No Termination Event has occurred or is reasonably
expected to occur with respect to any Plan. Neither the Company nor any of its
ERISA Affiliates is an employer under a Multiemployer Plan.

         5.9      Insurance. All insurance required by Section 6.2 is in full
force and effect.

         5.10     Taxes. The Company and its Subsidiaries have filed all tax
returns (Federal, state and local) required to be filed and paid all taxes shown
thereon to be due, including interest and penalties, or, to the extent the
Company or any of its Subsidiaries is contesting in good faith an assertion of
liability based on such returns, has provided adequate reserves for payment
thereof in accordance with GAAP.

                                       21

<PAGE>

         5.11     Investment Company Act. The Company is not an investment
company (within the meaning of the Investment Company Act of 1940, as amended).

         5.12     Public Utility Holding Company Act. The Company is exempt from
the registration requirements of the Public Utility Holding Company Act of 1935,
as amended, 15 USC 79, et seq.

         5.13     Bonds. The issuance to the Agent of Bonds as evidence of the
Obligations (i) will not violate any provision of the Indenture or any other
agreement or instrument, or any law or regulation, or judicial or regulatory
order, judgment or decree, to which the Company or any of its Subsidiaries is a
party or by which any of the foregoing is bound and (ii) will provide the Banks,
as beneficial holders of the Bonds through the Agent, the benefit of the Lien of
the Indenture equally and ratably with the holders of other First Mortgage
Bonds.

                                   ARTICLE VI
                              AFFIRMATIVE COVENANTS

         So long as any Obligations shall remain unpaid, the Company shall:

         6.1      Payment of Taxes, Etc. Pay and discharge before the same shall
become delinquent, (a) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property, and (b) all lawful claims which, if
unpaid, might by law become a Lien upon its property, provided that the Company
shall not be required to pay or discharge any such tax, assessment, charge or
claim (i) which is being contested by it in good faith and by proper procedures
or (ii) the non-payment of which will not materially adversely affect the
financial condition or results of operations of the Company and its Consolidated
Subsidiaries, taken as a whole.

         6.2      Maintenance of Insurance. Maintain insurance in such amounts
and covering such risks with respect to its business and properties as is
usually carried by companies engaged in similar businesses and owning similar
properties, either with reputable insurance companies or, in whole or in part,
by establishing reserves or one or more insurance funds, either alone or with
other corporations or associations.

         6.3      Preservation of Corporate Existence, Etc. Preserve and
maintain its corporate existence, rights and franchises, and qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is necessary in view of its business and operations or the
ownership of its properties, provided that the Company shall not be required to
preserve any such right or franchise or to remain so qualified unless the
failure to do so would have a material adverse effect on the financial condition
or results of operations of the Company and its Consolidated Subsidiaries, taken
as a whole, or the ability of the Company to enter into, or to perform its
obligations under, any Loan Document.

         6.4      Compliance with Laws, Etc. Comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority,
the non-compliance with which would materially adversely affect the financial
condition or results of operations of the

                                       22

<PAGE>

Company and its Consolidated Subsidiaries, taken as a whole, or the ability of
the Company to perform its obligations under any Loan Document.

         6.5      Visitation Rights. Subject to any necessary approval from the
Nuclear Regulatory Commission, at any reasonable time and from time to time,
permit the Agent, any of the Banks or any agents or representatives thereof to
examine and make copies of and abstracts from its records and books of account,
visit its properties and discuss its affairs, finances and accounts with any of
its officers,

         6.6      Keeping of Books. Keep, and cause each Consolidated Subsidiary
to keep, adequate records and books of account, in which full and correct
entries shall be made of all of its financial transactions and its assets and
business so as to permit the Company and its Consolidated Subsidiaries to
present financial statements in accordance with GAAP.

         6.7      Reporting Requirements. Furnish to the Agent, with sufficient
copies for each of the Banks:

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

         (b)      as soon as available and in any event within 60 days after the
end of each of the first three quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries as
at the end of such quarter, and the related consolidated statements of income,
cash flows and common stockholder's equity of the Company and its Consolidated
Subsidiaries as at the end of and for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
date or period of the preceding fiscal year, or statements providing
substantially similar information (which requirement shall be deemed satisfied
by the delivery of the Company's quarterly report on Form 10-Q for such
quarter), all in reasonable detail and duly certified (subject to the absence of
footnotes and to year-end audit adjustments) by a Designated Officer as having
been prepared in accordance with GAAP, together with (i) a certificate of a
Designated Officer (which certificate shall also accompany the financial
statements delivered pursuant to clause (c) below) stating that such officer has
no knowledge (having made due inquiry with respect thereto) that a Default or
Event of Default has occurred and is continuing, or, if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the actions which the Company has taken, is taking or proposes to take with
respect thereto, and (ii) a certificate of a Designated Officer, in
substantially the form of Exhibit C hereto, setting forth the Company's
computation of the financial ratios specified in Sections 8.1 and 8.2 as of the
end of the immediately preceding fiscal quarter or year, as the case may be, of
the Company;

         (c)      as soon as available and in any event within 120 days after
the end of each fiscal year of the Company, a copy of the Annual Report on Form
10-K (or any successor form) for the Company for such year, including therein
the consolidated balance sheet of the Company and its

                                       23

<PAGE>

Consolidated Subsidiaries as at the end of such year and the consolidated
statements of income, cash flows and common stockholder's equity of the Company
and its Consolidated Subsidiaries as at the end of and for such year, or
statements providing substantially similar information, in each case certified
by independent public accountants of recognized national standing selected by
the Company (and not objected to by the Majority Banks), together with a
certificate of such accounting firm addressed to the Banks stating that, in the
course of its examination of the consolidated financial statements of the
Company and its Consolidated Subsidiaries, which examination was conducted by
such accounting firm in accordance with GAAP, (1) such accounting firm has
obtained no knowledge that an Event of Default, insofar as such Event of Default
related to accounting or financial matters, has occurred and is continuing, or
if, in the opinion of such accounting firm, such an Event of Default has
occurred and is continuing, a statement as to the nature thereof, and (2) such
accounting firm has examined a certificate prepared by the Company setting forth
the computations made by the Company in determining, as of the end of such
fiscal year, the ratios specified in Sections 8.1 and 8.2 which certificate
shall be attached to the certificate of such accounting firm, and such
accounting firm confirms that such computations accurately reflect such ratio;

         (d)      promptly after the sending or filing thereof, copies of all
proxy statements which the Company sends to its stockholders, copies of all
regular, periodic and special reports (other than those which relate solely to
employee benefit plans) which the Company files with the SEC and notice of the
sending or filing of (and, upon the request of the Agent or any Bank, a copy of)
any final prospectus filed with the SEC;

         (e)      as soon as possible and in any event (i) within 30 days after
the Company or any of its ERISA Affiliates knows or has reason to know that any
Termination Event described in clause (a) of the definition of Termination Event
with respect to any Plan has occurred and (ii) within ten days after the Company
or any of its ERISA Affiliates knows or has reason to know that any other
Termination Event with respect to any Plan has occurred, a statement of the
Chief Financial Officer of the Company describing such Termination Event and the
action, if any, which the Company or such ERISA Affiliate, as the case may be,
proposes to take with respect thereto;

         (f)      promptly upon becoming aware thereof, notice of any upgrading
or downgrading of the rating of the Senior Debt by Fitch, Moody's or S&P;

         (g)      as soon as possible and in any event within five (5) days
after the occurrence of any material default under any material agreement to
which the Company or any of its Subsidiaries is a party, which default would
materially adversely affect the financial condition, business, results of
operations, Property or prospects of the Company and its Subsidiaries,
considered as a whole, any of which is continuing on the date of such
certificate, a certificate of the president or chief financial officer of the
Company setting forth the details of such material default and the action which
the Company or any such Subsidiary proposes to take with respect thereto; and

         (h)      such other information respecting the business, properties or
financial condition of the Company as the Agent or any Bank through the Agent
may from time to time reasonably request.

                                       24

<PAGE>

         6.8      Use of Proceeds. The Company will use the proceeds of the Term
Loans for working capital and other general corporate purposes. The Company will
not, nor will it permit any Subsidiary to, use any of the proceeds of the Term
Loans to purchase or carry any "margin stock" (as defined in Regulation U).

         6.9      Maintenance of Properties, Etc. The Company shall, and shall
cause each of its Subsidiaries to, maintain in all material respects all of its
respective owned and leased Property in good and safe condition and repair to
the same degree as other companies engaged in similar businesses and owning
similar properties, and not permit, commit or suffer any waste or abandonment of
any such Property, and from time to time shall make or cause to be made all
material repairs, renewals and replacements thereof, including, without
limitation, any capital improvements which may be required; provided, however,
that such Property may be altered or renovated in the ordinary course of
Company's or its Subsidiaries' business; and provided, further, that the
foregoing shall not restrict the sale of any asset of the Company or any
Subsidiary to the extent not prohibited by Section 7.2.

         6.10     Bonds. Beginning on the Effective Date and continuing until
all Obligations have been paid in full, cause the aggregate amount of the Bonds
outstanding to at all times be equal to or greater than the aggregate
outstanding Term Loans.

         6.11     Recordation of Supplemental Indenture. The Company shall (i)
within ten days after the Effective Date, deliver the Supplemental Indenture in
recordable form to the appropriate recording office in all applicable
jurisdictions for recording in the real estate records and deliver to the office
of the Secretary of State of Michigan a UCC-1 financing statement with the
Supplemental Indenture as an attachment thereto for filing in such office and
(ii) within 25 days after the Effective Date, deliver to the Agent a certificate
signed by a Designated Officer certifying that the actions required by the
foregoing clause (i) have been taken.

                                   ARTICLE VII
                               NEGATIVE COVENANTS

         So long as any Obligations shall remain unpaid, the Company shall not:

         7.1      Liens. Create, incur, assume or suffer to exist any Lien upon
or with respect to any of its properties, now owned or hereafter acquired,
except:

         (a)      Liens created pursuant to the Indenture securing the First
Mortgage Bonds;

         (b)      Liens securing pollution control bonds, or bonds issued to
refund or refinance pollution control bonds (including Liens securing
obligations (contingent or otherwise) of the Company under letter of credit
agreements or other reimbursement or similar credit enhancement agreements with
respect to pollution control bonds), provided that the aggregate face amount of
any such bonds so issued shall not exceed the aggregate face amount of such
pollution control bonds, as the case may be, so refunded or refinanced;

         (c)      Liens in (and only in) assets acquired to secure Debt incurred
to finance the acquisition of such assets;

                                       25

<PAGE>

         (d)      Statutory and common law banker's Liens on bank deposits;

         (e)      Liens in respect of accounts receivable sold, transferred or
assigned by the Company;

         (f)      Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;

         (g)      Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue or
being contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books;

         (h)      Liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;

         (i)      Judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the payment of
which is covered (subject to a customary deductible) by insurance;

         (j)      Zoning restrictions, easements, licenses, covenants,
reservations, utility company rights, restrictions on the use of real property
or minor irregularities of title incident thereto which do not in the aggregate
materially detract from the value of the property or assets of the Company or
materially impair the operation of its business;

         (k)      Liens arising in connection with the financing of the
Company's fuel resources, including, but not limited to, nuclear fuel;

         (l)      Liens arising pursuant to MCL 324.20138; provided that the
aggregate amount of all obligations secured by such Liens (excluding any such
Liens of which the Company has no knowledge or which are permitted by subsection
(f) above) shall not exceed $20,000,000;

         (m)      Liens arising in connection with the Securitized Bonds;

         (n)      Liens on the Facility LC Collateral Account (as defined in the
Credit Agreement) or any funds therein in favor of the agent under the Credit
Agreement;

         (o)      Liens on natural gas, oil and minerals, or on stock in trade,
materials or supplies manufactured or acquired for the purpose of sale and/or
resale in the usual course of business or consumable in the operation of any of
the properties of the Company; provided that (i) such liens secure obligations
not exceeding $500,000,000 in aggregate principal amount and (ii) such liens
shall also be permitted under the terms of the Credit Agreement; and

                                       26

<PAGE>

         (p)      Other Liens securing obligations in an aggregate amount not in
excess of $150,000,000.

         7.2      Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of 15% or more of its assets, calculated with reference to total assets
as reflected on the Company's consolidated balance sheet as at September 30,
2002.

         7.3      Mergers, Etc. Merge with or into or consolidate with or into
any other Person, except that the Company may merge with any other Person,
provided that, in each case, immediately after giving effect thereto, (a) no
event shall occur and be continuing which constitutes a Default or Event of
Default, (b) the Company is the surviving corporation, (c) the Company shall not
be liable with respect to any Debt or allow its property to be subject to any
Lien which it could not become liable with respect to or allow its property to
become subject to under this Agreement on the date of such transaction and (d)
the Company's Net Worth shall be equal to or greater than its Net Worth
immediately prior to such merger.

         7.4      Compliance with ERISA. Permit to exist any occurrence of any
Reportable Event, or any other event or condition which presents a material (in
the reasonable opinion of the Majority Banks) risk of a termination by the PBGC
of any Plan of the Company or any ERISA Affiliate, which termination will
result in any material (in the reasonable opinion of the Majority Banks)
liability of the Company or such ERISA Affiliate to the PBGC.

         7.5      Change in Nature of Business. Make any material change in the
nature of its business as carried on as of the date hereof.

         7.6      Restricted Payments. The Company: (a) will not declare or pay
any dividends or make any other distributions on its capital stock (other than
dividends payable solely in such capital stock) or redeem any such capital
stock; and (b) will not, and will not permit any Subsidiary to, purchase or
otherwise acquire or retire any of the Company's capital stock or make any loans
or advances to CMS or any Subsidiary thereof (other than the Company or any
Subsidiary thereof); provided that, so long as no Default or Event of Default
exists, the Company may pay dividends in an aggregate amount not to exceed
$300,000,000 during any calendar year.

         7.7      Off-Balance Sheet Liabilities. Create, incur, assume or suffer
to exist, or permit any Subsidiary to create, incur, assume or suffer to exist,
Off-Balance Sheet Liabilities (exclusive of obligations pursuant to the
Receivables Sale Agreement and the Building Lease) in the aggregate in excess of
$250,000,000 at any time.

                                  ARTICLE VIII
                              FINANCIAL COVENANTS

         So long as any Obligations shall remain unpaid, the Company shall:

         8.1      Debt to Capital Ratio. At all times, maintain a ratio of Total
Consolidated Debt to Total Consolidated Capitalization of not greater than 0.65
to 1.0.

                                       27

<PAGE>

         8.2      Interest Coverage Ratio. Not permit the ratio, determined as
of the end of each of its fiscal quarters for the then most-recently ended four
fiscal quarters, of (i) Consolidated EBIT to (ii) Consolidated Interest Expense
to be less than 2.0 to 1.0.

                                   ARTICLE IX
                               EVENTS OF DEFAULT

         9.1      Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default":

         (a)      The Company shall fail to pay (i) any principal of any Term
Loan when due and payable, or (ii) any interest on any Term Loan or any fee or
other Obligation payable hereunder within five (5) days after such interest or
fee or other Obligation becomes due and payable;

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

         (c)      The Company shall fail to perform or observe any term,
covenant or agreement contained in Section 6.10, Section 6.11(i), Article VII or
Article VIII: or the Company shall fail to perform or observe any other term,
covenant or agreement on its part to be performed or observed in this Agreement
or in any other Loan Document and such failure shall continue for 30 consecutive
days after notice thereof by means of facsimile, regular mail or written notice
delivered in person (or telephonic notice thereof confirmed in writing) shall
have been given to the Company by the Agent or the Majority Banks;

         (d)      The Company shall: (i) fail to pay any Debt (other than the
payment obligations described in subsection (a) above) in excess of $25,000,000,
or any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the instrument
or agreement relating to such Debt; or (ii) fail to perform or observe any term,
covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such Debt, when required to be performed
or observed, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, the maturity of such Debt, unless
the obligee under or holder of such Debt shall have waived in writing such
circumstance, or such circumstance has been cured, so that such circumstance is
no longer continuing; or (iii) any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), in each case in accordance with the terms of such agreement or
instrument, prior to the stated maturity thereof; or (iv) generally not, or
shall admit in writing its inability to, pay its debts as such debts become due;

         (e)      The Company: (i) shall make an assignment for the benefit of
creditors, or petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its assets, or
(ii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, or (iii) shall have had
any such petition or

                                       28

<PAGE>

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

         (f)      One or more judgments, decrees or orders for the payment of
money in excess of $25,000,000 in the aggregate shall be rendered against the
Company and either (i) enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order or (ii) there shall be any period of
more than 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect;

         (g)      Any Termination Event with respect to a Plan shall have
occurred, and 30 days after notice thereof shall have been given to the Company
by the Agent, (i) such Termination Event (if correctable) shall not have been
corrected and (ii) the then present value of such Plan's vested benefits exceeds
the then current value of the assets accumulated in such Plan by more than the
amount of $25,000,000 (or in the case of a Termination Event involving the
withdrawal of a "substantial employer" (as defined in Section 4001(A)(2) of
ERISA), the withdrawing employer's proportionate share of such excess shall
exceed such amount); or

         (h)      Any Bond shall cease to be in full force and effect (except
for Bonds surrendered by the Agent pursuant to Section 2.4 or 2.5); or the
Company shall deny that it has any liability or obligation under any Bond or
purport to revoke, terminate, rescind or redeem any Bond (other than in
accordance with the terms of the Bonds and the Indenture).

         9.2      Remedies.

If any Event of Default shall occur and be continuing, the Agent shall upon the
request, or may with the consent, of the Majority Banks, by notice to the
Company, declare the Obligations to be forthwith due and payable, whereupon the
Obligations shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Company, provided that in the case of an Event of Default referred
to in Section 9.1(e) above, the Obligations shall automatically become due and
payable without notice, presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Company.

                                    ARTICLE X
                        WAIVERS, AMENDMENTS AND REMEDIES

         10.1     Amendments. Subject to the provisions of this Article X, the
Majority Banks (or the Agent with the consent in writing of the Majority Banks)
and the Company may enter into written agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Banks or the Company hereunder or waiving any
Event of Default hereunder, provided that (except as provided in the

                                       29

<PAGE>

proviso immediately below) no such supplemental agreement shall without the
consent of all of the Banks:

                  (1) extend the maturity of any Term Loan or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest or fees thereon;

                  (2) modify the percentage specified in the definition of
Majority Banks;

                  (3) permit the Company to assign its rights under this
Agreement; or

                  (4) amend Section 6.10, Section 12.12 or this Section 10.1.

Provided, notwithstanding anything in this Section 10.1 or this Agreement to the
contrary (except the ultimate proviso of this paragraph), the Majority Banks may
consent to amend this Agreement to provide for the making of additional term
loans hereunder which additional term loans may have such terms and conditions
as are agreed by the Majority Banks, the Agent and the Company; without limiting
the foregoing, financial institutions which are not Banks as of the date hereof
may be added as Banks hereunder in connection with any such additional term
loans; provided, however, no such amendment or any supplemental agreement to
this Agreement shall increase the amount of the respective Term Loan Commitment
of any Bank hereunder without the consent of such affected Bank and no such
additional term loan shall be made unless the Company issues additional First
Mortgage Bonds in favor of the Agent in an amount at least equal to the
aggregate amount of such additional term loans.

The Agent, as holder of the Bonds, shall not consent to or vote in favor of a
release of all or substantially all of the property subject to the lien of the
Indenture without the consent of all of the Banks. No amendment of any provision
of this Agreement relating to the Agent shall be effective without the written
consent of the Agent.

         10.2     Preservation of Rights. No delay or omission of the Banks or
the Agent to exercise any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Default or Event of Default or an
acquiescence therein, and the making of a Term Loan notwithstanding the
existence of a Default or Event of Default or the inability of the Company to
satisfy the conditions precedent to such Term Loan shall not constitute any
waiver or acquiescence. Any single or partial exercise of any such right shall
not preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Banks required pursuant to Section 10.1, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Banks until the Obligations have been paid in
full.

                                       30

<PAGE>
                                   ARTICLE XI
                              CONDITIONS PRECEDENT

         11.1     Delivery of Documents. This Agreement shall not become
effective and the Banks shall not be required to make the Term Loans hereunder
on the Effective Date unless the Company has furnished to the Agent with
sufficient copies for the Banks:

         (a)      A certificate, signed by a Designated Officer of the Company,
stating that on the Effective Date no Default or Event of Default has occurred
and is continuing.

         (b)      Evidence satisfactory to the Agent of the issuance of the
Bonds in the form set forth in the Supplemental Indenture and in an aggregate
principal amount of $150,000,000 pursuant to the Bond Delivery Agreement.

         (c)      Favorable opinions of:

                  (i)               Michael D. VanHemert, Esq., Deputy General
         Counsel of CMS, as to the matters set forth in Exhibit B-1 and as to
         such other matters as the Agent may reasonably request;

                  (ii)              Skadden, Arps, Slate, Meagher & Flom LLP,
         special counsel to the Company, as to the matters set forth in Exhibit
         B-2 and as to such other matters as the Agent may reasonably request;
         and

                  (iii)             Miller, Canfield, Paddock and Stone, P.L.C.,
         special counsel to the Company, as to the matters set forth in Exhibit
         B-3 and as to such other matters as the Agent may reasonably request.

Such opinions shall be addressed to the Agent and the Banks and shall be
satisfactory in form and substance to the Agent.

         (d)      Evidence, in form and substance satisfactory to the Agent,
that the Company has obtained all governmental approvals, if any, necessary for
it to enter into the Loan Documents.

         (e)      Evidence, in form and substance satisfactory to the Agent,
that the scheduled termination and maturity date of the Credit Agreement is a
date occurring on or after the Maturity Date, including extensions thereunder.

         (f)      Such other documents as the Agent or any Bank may reasonably
request.

         11.2     Payment of Fees. It shall be a further condition precedent to
the making of the Term Loans on the Effective Date that the Company shall have
paid to the Agent for the account of the Banks the fees required to be paid on
the Effective Date pursuant to the Fee Letter.

         11.3     No Default, Etc. No Bank shall be required to make any Term
Loan on the Effective Date unless (i) no Default or Event of Default then
exists, (ii) the representations and warranties contained in Article V are true
and correct as of the Effective Date and (iii) all legal matters incident to the
making of such Term Loan are satisfactory to such Bank and its counsel. The
Company represents and warrants that the conditions contained in subsections
(i) and (ii) above will be satisfied on the Effective Date.

                                       31

<PAGE>

                                   ARTICLE XII
                               GENERAL PROVISIONS

         12.1     Successors and Assigns. (a) The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of the Company and
the Banks and their respective successors and assigns, except that the Company
shall not have the right to assign its rights under the Loan Documents. Any Bank
may sell participations in all or a portion of its rights and obligations under
this Agreement pursuant to subsection (b) below and any Bank may assign all or
any part of its rights and obligations under this Agreement pursuant to
subsection (c) below.

         (b)      Any Bank may sell participations to one or more banks or other
entities (each a "Participant") in all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Term Loan Commitment and its outstanding Term Loan), provided
that (i) such Bank's obligations under this Agreement (including, without
limitation, its Term Loan Commitment to the Company hereunder) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Bank shall remain the
holder of the Term Loans of such Bank for all purposes of this Agreement and
(iv) the Company shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement. Each
Bank shall retain the sole right to approve, without the consent of any
Participant, any amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with respect to any
Term Loan or Term Loan Commitment in which such Participant has an interest
which would require consent of all of the Banks pursuant to the terms of Section
10.1 or of any other Loan Document. The Company agrees that each Participant
shall be deemed to have the right of setoff provided in Section 12.11 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Bank under the Loan Documents, provided that each Bank shall retain
the right of setoff provided in Section 12.11 with respect to the amount of
participating interests sold to each Participant. The Banks agree to share with
each Participant, and each Participant, by exercising the right of setoff
provided in Section 12.11, agrees to share with each Bank, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 12.11 as if each Participant were a Bank. The Company
further agrees that each Participant shall be entitled to the benefits of
Sections 4.1, 4.3, 4.4 and 4.5 to the same extent as if it were a Bank and had
acquired its interest by assignment pursuant to Section 12.1(c); provided that
(i) a Participant shall not be entitled to receive any greater payment under
Section.4.1, 4.3, 4.4 or 4.5 than the Bank who sold the participating interest
to such Participant would have received had it retained such interest for its
own account, unless the sale of such interest to such Participant is made with
the prior written consent of the Company, and (ii) any Participant not
incorporated under the laws of the United States of America or any State thereof
agrees to comply with the provisions of Section 4.5 to the same extent as if it
were a Bank.

         (c)      Any Bank may, in the ordinary course of its business and in
accordance with applicable law, at any time assign to one or more financial
institutions all or any part of its rights and obligations under this Agreement,
provided that the minimum principal amount of any such assignment (other than
assignments to a Federal Reserve Bank, or to any other Bank or affiliate or
Approved Fund of a Bank, or to any direct or indirect contractual counterparties
in swap

                                       32

<PAGE>

agreements relating to the Term Loans to the extent required in connection with
the physical settlement of any Bank's obligations pursuant thereto) shall be
$1,000,000 (or such lesser amount consented to by the Agent); provided that,
unless such Bank is assigning all of its rights and obligations hereunder, after
giving effect to such assignment the assigning Bank shall have Term Loans in the
aggregate of not less than $1,000,000 (unless otherwise consented to by the
Agent).

         (d)      Any Bank may, in connection with any sale or participation or
proposed sale or participation pursuant to this Section 12.1 disclose to the
purchaser or participant or proposed purchaser or participant any information
relating to the Company furnished to such Bank by or on behalf of the Company,
provided that prior to any such disclosure of non-public information, the
purchaser or participant or proposed purchaser or participant (which purchaser
or participant is not an affiliate of a Bank) shall agree to preserve the
confidentiality of any confidential information (except any such disclosure as
may be required by law or regulatory process) relating to the Company received
by it from such Bank.

         (e)      Assignments under this Section 12.1 shall be made pursuant to
an agreement (an "Assignment Agreement") substantially in the form of Exhibit D
hereto or in such other form as may be agreed to by the parties thereto and
shall not be effective until a $3,500 fee has been paid to the Agent by the
assignee, which fee shall cover the cost of processing such assignment,
provided, that such fee shall not be incurred in the event of an assignment by
any Bank of all or a portion of its rights under this Agreement to (i) a Federal
Reserve Bank or (ii) a Bank or an affiliate or Approved Fund of the assigning
Bank or (iii) to any direct or indirect contractual counterparties in swap
agreements relating to the Term Loans to the extent required in connection with
the physical settlement of any Bank's obligations pursuant thereto.

         (f)      Notwithstanding anything to the contrary contained herein, any
Bank (a "Granting Bank") may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing from time to time by the Granting Bank to
the Agent and the Company, the option to provide to the Company all or any part
of any Term Loan that such Granting Bank is obligated to make to the Company
pursuant to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Term Loan, (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Term
Loan, the Granting Bank shall remain obligated to make such Term Loan pursuant
to the terms hereof, (iii) the Company shall not be required to pay any amount
under Section 4.5 that is greater than the amount which it would have been
required to pay had there been no grant to an SPC and (iv) any SPC (or assignee
of an SPC) will comply, if applicable, with the provisions contained in Section
4.5. No grant by any Granting Bank to an SPC agreeing to provide a Term Loan or
the making of such Term Loan by such SPC shall operate to relieve such Granting
Bank of its liabilities and obligations hereunder, except to the extent of the
making of such Term Loan by such SPC. The making of a Term Loan by an SPC
hereunder shall utilize the Term Loan Commitment of the Granting Bank to the
same extent, and as if, such Term Loan were made by such Granting Bank. Each
party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Bank). In addition, each party hereto hereby agrees
(which agreement shall survive the termination of this Agreement) that any SPC
may (i) with notice to, but without the prior written consent of, the Company
and the Agent and without paying any processing fee therefor, assign all or a
portion

                                       33

<PAGE>

of its interests in any Term Loans to the Granting Bank or to any financial
institutions (consented to by the Agent in its sole discretion) providing
liquidity and/or credit support to or for the account of such SPC to support the
funding or maintenance of Term Loans and (ii) disclose on a confidential basis
any non-public information relating to its Term Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This Section 12.1(f) may not be amended
without the written consent of any SPC that holds an option to provide Term
Loans. No recourse under any obligation, covenant, or agreement of the SPC
contained in this Agreement shall be had against any shareholder, officer, agent
or director of the SPC as such, by the enforcement of any assessment or by any
proceeding, by virtue of any statute or otherwise; it being expressly agreed and
understood that this Agreement is a corporate obligation of the SPC and no
personal liability shall attach to or be incurred by any officer, agent or
member of the SPC as such, or any of them under or by reason of any of the
obligations, covenants or agreements of the SPC contained in this Agreement, or
implied therefrom, and that any and all personal liability for breaches by the
SPC of any such obligations, covenants or agreements, either at law or by
statute or constitution, of every such shareholder, officer, agent or director
is hereby expressly waived by all parties to this Agreement as a condition of
and consideration for the SPC entering into this Agreement; provided, however,
that the foregoing shall not relieve any such person or entity of any liability
they might otherwise have as a result of fraudulent actions or omissions taken
by them. All parties to this Agreement acknowledge and agree that the SPC shall
only be liable for any claims that each of them may have against the SPC only to
the extent of the SPC's assets. The provisions of this clause shall survive the
termination of this Agreement.

         (g)      Any Bank may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Bank, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for such Bank as a party hereto.

         12.2     Survival of Representations. All representations and
warranties of the Company contained in this Agreement shall survive the making
of the Term Loans herein contemplated.

         12.3     Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Bank shall be obligated to extend credit to
the Company in violation of any limitation or prohibition provided by any
applicable statute or regulation.

         12.4     Taxes. Any taxes (excluding income taxes) payable or ruled
payable by any Federal or State authority in respect of the execution of the
Loan Documents shall be paid by the Company, together with interest and
penalties, if any.

         12.5     Choice of Law; Waiver of Jury Trial. THE LOAN DOCUMENTS SHALL
BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT
LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF NEW YORK, BUT
OTHERWISE WITHOUT REGARD TO THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY

                                       34

<PAGE>

UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT AND THE
COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY HEREBY
WAIVES ANY RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING HEREUNDER OR UNDER ANY LOAN DOCUMENT.

         12.6     Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.

         12.7     Entire Agreement. The Loan Documents embody the entire
agreement and understanding between the Company, the Agent and the Banks and
supersede all prior agreements and understandings between the Company, the Agent
and the Banks relating to the subject matter thereof (other than those contained
in the fee letter described in Section 13.12 which shall survive and remain in
full force and effect during the term of this Agreement).

         12.8     Expenses; Indemnification. The Company shall (a) reimburse the
Agent and the Arranger for any reasonable costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent) paid or incurred by the Agent or the Arranger in
connection with the preparation, review, execution, delivery, syndication,
distribution (including, without limitation, via the internet), amendment and
modification of the Loan Documents and (b) reimburse the Agent, the Arranger and
each Bank for any reasonable costs, internal charges and out-of-pocket expenses
(including reasonable attorneys' fees and time charges of attorneys for the
Agent or for such Bank) paid or incurred by the Agent, the Arranger or such Bank
in connection with the collection and enforcement of the Loan Documents. The
Company further agrees to indemnify the Agent, the Arranger, each Citigroup
Party and each Bank and their respective directors, officers, employees,
trustees, agents and advisors (collectively, the "Indemnitees") against all
losses, claims, damages, penalties, judgments, liabilities and reasonable
expenses (including, without limitation, all material expenses of litigation or
preparation therefor whether or not the Agent, the Arranger, any Citigroup Party
or any Bank is a party thereto) which any of them may pay or incur arising out
of or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Term Loan hereunder, provided that the
Company shall not be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the respective Indemnitee.
The obligations of the Company under this Section shall survive the termination
of this Agreement.

         12.9     Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.

                                       35

<PAGE>

         12.10    Setoff. In addition to, and without limitation of, any rights
of the Banks under applicable law, if the Company becomes insolvent, however
evidenced, or any Default or Event of Default occurs, any indebtedness from any
Bank to the Company (including all account balances, whether provisional or
final and whether or not collected or available) may be offset and applied
toward the payment of the Obligations owing to such Bank, whether or not the
Obligations, or any part hereof, shall then be due. The Company agrees that any
purchaser or participant under Section 12.1 may, to the fullest extent permitted
by law, exercise all its rights of payment with respect to such purchase or
participation as if it were the direct creditor of the Company in the amount of
such purchase or participation.

         12.11    Ratable Payments. If any Bank, whether by setoff or otherwise,
has payment made to it upon its outstanding Term Loans in a greater proportion
than that received by any other Bank, such Bank agrees, promptly upon demand, to
purchase a portion of the aggregate outstanding Term Loans held by the other
Banks so that after such purchase each Bank will hold its Pro Rata Share of the
aggregate outstanding Term Loans. If any Bank, whether in connection with setoff
or amounts which might be subject to setoff or otherwise, receives collateral or
other protection for its Obligations or such amounts which may be subject to
setoff, such Bank agrees, promptly upon demand, to take such action necessary
such that all Banks share in the benefits of such collateral ratably in
proportion to their respective Pro Rata Share of the aggregate outstanding Term
Loans. In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.

         12.12    Nonliability of Banks. The relationship between the Company,
on the one hand, and the Banks and the Agent, on the other hand, shall be solely
that of borrower and lender Neither the Agent, the Arranger nor any Bank shall
have any fiduciary responsibilities to the Company. Neither the Agent, the
Arranger nor any Bank undertakes any responsibility to the Company to review or
inform the Company of any matter in connection with any phase of the Company's
business or operations. The Company shall rely entirely upon its own judgment
with respect to its business, and any review, inspection, supervision or
information supplied to the Company by the Banks is for the protection of the
Banks and neither the Company nor any third party is entitled to rely thereon.
The Company agrees that neither the Agent, the Arranger nor any Bank shall have
liability to the Company (whether sounding in tort, contract or otherwise) for
losses suffered by the Company in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established by
the Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a court
of competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the
Agent, the Arranger nor any Bank shall have any liability with respect to, and
the Company hereby waives, releases and agrees not to sue for, any special,
indirect, consequential or punitive damages suffered by the Company in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.

         12.13    Certain Disclosures. Notwithstanding any other provision of
this Agreement, each party (and each Participant pursuant to Section 12.1) (and
each employee, representative or other agent of such party (or Participant)) may
disclose to any and all persons, without limitation of any kind, the U.S. tax
treatment and U.S. tax structure of the transactions contemplated by the Loan
Documents and all materials of any kind (including opinions or other tax
analyses) that are

                                       36

<PAGE>

provided to such party relating to such U.S. tax treatment and U.S. tax
structure, other than any information for which nondisclosure is reasonably
necessary in order to comply with applicable securities laws.

         12.14    Limitation of Liability: Communications. WITH RESPECT TO
COMMUNICATIONS DELIVERED PURSUANT TO SECTION 14.3 OF THIS AGREEMENT, SUCH
COMMUNICATIONS AND THE PLATFORM ARE PROVIDED "AS IS" AND "AS AVAILABLE". THE
CITIGROUP PARTIES DO NOT WARRANT THE ACCURACY, ADEQUACY OR COMPLETENESS OF THE
COMMUNICATIONS OR THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR
OMISSIONS IN THE COMMUNICATIONS OR THE PLATFORM. NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE
CITIGROUP PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. THE
COMPANY HEREBY ACKNOWLEDGES THAT ALTHOUGH THE PRIMARY WEB PORTAL IS SECURED WITH
A DUAL FIREWALL AND A USER IDENTIFICATION/PASSWORD AUTHORIZATION SYSTEM AND THE
PLATFORM IS SECURED THROUGH A SINGLE USER PER DEAL AUTHORIZATION METHOD WHEREBY
EACH USER MAY ACCESS THE PLATFORM ONLY ON A DEAL-BY-DEAL BASIS, THE DISTRIBUTION
OF MATERIAL THROUGH AN ELECTRONIC MEDIUM IS NOT NECESSARILY SECURE AND THAT
THERE ARE CONFIDENTIALITY AND OTHER RISKS ASSOCIATED WITH SUCH DISTRIBUTION. THE
PROVISIONS OF THIS SECTION 12.13 SHALL SURVIVE THE MAKING OF ANY TERM LOAN, THE
REPAYMENT THEREOF AND THE TERMINATION OF THIS AGREEMENT AND ANY LOAN DOCUMENT.

                                  ARTICLE XIII
                                   THE AGENT

         13.1     Appointment. Citicorp North America, Inc. is hereby appointed
Agent hereunder, and each of the Banks irrevocably authorizes the Agent to act
as the contractual representative on behalf of such Bank. The Agent agrees to
act as such upon the express conditions contained in this Article XIII. The
Agent shall not have a fiduciary relationship in respect of any Bank by reason
of this Agreement. The Agent hereby acknowledges and agrees that it shall hold
the Bonds for the ratable benefit of the Banks.

         13.2     Powers. The Agent shall have and may exercise such powers
hereunder as are specifically delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. The Agent shall
not have any implied duties to the Banks or any obligation to the Banks to take
any action hereunder except any action specifically provided by this Agreement
to be taken by the Agent.

                                       37

<PAGE>

         13.3     General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Banks or any Bank for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith except for its or their own gross negligence or willful misconduct.

         13.4     No Responsibility for Loans, Recitals, Etc. The Agent shall
not be responsible to the Banks for any recitals, reports, statements,
warranties or representations herein or in any Loan Document or be bound to
ascertain or inquire as to the performance or observance of any of the terms of
this Agreement.

         13.5     Action on Instructions of Banks. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Majority Banks (or all of the Banks if required by Section 10.1), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks. The Banks hereby acknowledge that the Agent shall
be under no duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Loan Document unless
it shall be requested in writing to do so by the Majority Banks. The Agent shall
be fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Banks pro rata against any and all liability, cost and expense that it
may incur by reason of taking or continuing to take any such action.

         13.6     Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder by or through employees, agents and attorneys-in-
fact and shall not be answerable to the Banks, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder.

         13.7     Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.

         13.8     Agent's Reimbursement and Indemnification. The Banks agree to
reimburse and indemnify the Agent ratably in proportion to their respective Pro
Rata Shares (i) for any amounts not reimbursed by the Company for which the
Agent is entitled to reimbursement by the Company under the Loan Documents and
(ii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement or any other document
delivered in connection with this Agreement or the transactions contemplated
hereby or the enforcement of any of the terms hereof or of any such other
documents, provided that no Bank shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct of the Agent.

                                       38

<PAGE>

         13.9     Rights as a Lender. With respect to its Term Loan Commitment,
if any, and any Term Loan made by it, Citicorp shall have the same rights and
powers hereunder as any Bank and may exercise the same as though it were not the
Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include Citicorp in its individual capacity. Citicorp may accept
deposits from, lend money to, and generally engage in any kind of banking or
trust business with the Company or any Subsidiary as if it were not the Agent.

         13.10    Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements prepared by the Company and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.

         13.11    Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Banks and the Company, and the Agent may be
removed at any time with or without cause by written notice received by the
Agent from the Majority Banks. Upon any such resignation or removal, the
Majority Banks shall have the right to appoint, on behalf of the Banks, a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Banks and shall have accepted such appointment within thirty days after
the retiring Agent's giving notice of resignation, then the retiring Agent may
appoint, on behalf of the Banks, a successor Agent. Such successor Agent shall
be a commercial bank having capital and retained earnings of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article XIII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent hereunder.

         13.12    Agent and Arranger Fees. The Company agrees to pay to the
Agent and the Arranger, for their respective accounts, the fees agreed to by the
Company, the Agent and the Arranger pursuant to that certain letter agreement
dated March [7], 2003, or as otherwise agreed from time to time.

                                  ARTICLE XIV
                                    NOTICES

         14.1     Giving Notice. Except as otherwise permitted by Section 2.6
with respect to Conversion/Continuation Notices, all notices, requests and
other communications to any party hereunder shall be in writing (including
electronic transmission, facsimile transmission or similar writing) and shall be
given to such party; (x) in the case of the Company or the Agent, at its address
or facsimile number set forth on the signature pages hereof, except that
Conversion/Continuation Notices shall be sent to the Agent at 2 Penn's Way,
Suite 200, New Castle, DE 19720, Attention: Jason Trala, telephone 302-894-6086,
fax 302-894-6120, or (y) in

                                       39

<PAGE>

the case of any Bank, at its address or facsimile number set forth in its
Administrative Details Form provided to the Agent. Each such notice, request or
other communication shall be effective (i) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iii) if given by any other means, when delivered
(or, in the case of electronic transmission, received) at the address specified
in this Section; provided that notices to the Agent under Article II shall not
be effective until received.

         14.2     Change of Address. The Company and the Agent may each change
the address for service of notice upon it by a notice in writing to the other
parties hereto in accordance with Section 14.1. Any Bank may change the address
for service of notice upon it by a notice in writing to the Company and the
Agent in accordance with Section 14.1.

         14.3     Platform and Primary Web Portal. (a) The Borrower shall
provide to the Agent all information, documents and other materials that it is
obligated to furnish to the Agent pursuant to this Agreement and the other Loan
Documents, including, without limitation, all notices, requests, financial
statements, financial and other reports, certificates and other information
materials, but excluding any such communication that (i) relates to a notice of
borrowing or other extension of credit or a conversion of an existing interest
rate on any Term Loan or borrowing (including, without limitation, any
Conversion/Continuation Notice), (ii) relates to the payment of any principal
or other amount due hereunder prior to the scheduled date therefor, (iii)
provides notice of any Default or Event of Default hereunder or (iv) is required
to be delivered to satisfy any condition precedent to the effectiveness of this
Agreement and/or any extension of credit hereunder (all such non-excluded
communications being referred to herein collectively as "Communications"), by
transmitting the Communications in an electronic/soft medium in a format
acceptable to the Agent to [oploanswebadmin@citigroup.com]. In addition, the
Company shall continue to provide the Communications to the Agent in the manner
specified in this Agreement but only to the extent requested by the Agent. Each
Bank and the Borrower further agree that the Agent may make the Communications
available to the Banks by posting the Communications on "e-Disclosure" (the
"Platform"), the Agent's internet delivery system that is part of SSB Direct,
Global Fixed Income's primary web portal (the "Primary Web Portal").

                  (b) The Agent agrees that the receipt of the Communications by
the Agent at its e-mail address set forth in clause (a) above shall constitute
effective delivery of the Communications to the Agent for purposes of this
Agreement and under the Loan Documents. Each Bank agrees that notice to it at
its e-mail address provided in clause (a) above specifying that Communications
have been posted to the Platform shall constitute effective delivery of the
Communications to such Bank under this Agreement and under the Loan Documents.

                  (c) Nothing in this Agreement or any other Loan Document shall
prejudice the right of the Agent or any Bank to give any notice or other
communication pursuant hereto or to any other Loan Document in any other manner
specified herein or therein.

                  (e) The provisions of Section 14.3(a) and (b) shall terminate
on the date that neither Citicorp North America, Inc. nor any of the Citigroup
Parties is the Agent.

                                       40

<PAGE>

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       41

<PAGE>

                                   ARTICLE XV
                                  COUNTERPARTS

         This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Company, the Agent
and the Banks and each party has notified the Agent by facsimile or telephone
that it has taken such action.

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

                                      CONSUMERS ENERGY COMPANY

                                      By:/s/ Laura L. Mountcastle
                                         ---------------------------
                                         Name: Laura L. Mountcastle
                                         Title: Vice President

                                      212 West Michigan Avenue
                                      Jackson, MI 49201
                                      Attention: Kimberly C. Wilson
                                      Facsimile No.: (517)788-0768
                                      Confirmation Telephone No: (517)788-2194
                                      E-Mail Address: KCWilson@cmsenergy.com

<PAGE>

                                      CITICORP NORTH AMERICA, INC., as
                                      Agent and as a Bank

                                      By:/s/ J. Nicholas McKee
                                         ----------------------------
                                         Name: J. Nicholas McKee
                                         Title: Managing Director

                                      388 Greenwich Street
                                      New York, NY 10023
                                      Attention:  Nick McKee
                                      Facsimile No.: (212) 816-8098
                                      Confirmation No: (212) 816-8592

                                       43

<PAGE>
                                   Exhibit A

                       EIGHTY-NINTH SUPPLEMENTAL INDENTURE

                        PROVIDING AMONG OTHER THINGS FOR

                              FIRST MORTGAGE BONDS,

                           COLLATERAL SERIES DUE 2006

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

                           DATED AS OF MARCH 28, 2003

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

                            CONSUMERS ENERGY COMPANY

                                       TO

                              JPMORGAN CHASE BANK,

                                     TRUSTEE

                                                         Counterpart _____ of 80

<PAGE>

         THIS EIGHTY-NINTH SUPPLEMENTAL INDENTURE, dated as of March 28, 2003
(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 212 West Michigan Avenue, in Jackson,
Jackson County, Michigan 49201, formerly known as Consumers Power Company
(hereinafter sometimes referred to as the "Company"), and JPMORGAN CHASE BANK, a
corporation organized and existing under the laws of the State of New York, with
its corporate trust offices at 4 New York Plaza, New York, New York 10004
(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 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

                                      -1-

<PAGE>

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 Term Loan Agreement dated as of
March 28, 2003 (the "Term Loan Agreement") with various financial institutions
and Citicorp North America, Inc., as administrative agent (in such capacity, the
"Agent") for the Banks (as such term is defined in the Term Loan Agreement)
providing for the making of certain financial accommodations thereunder, and
pursuant to such Term Loan Agreement the Company has agreed to issue to the
Agent, as evidence of and security for the Obligations (as such term is defined
in the Term Loan 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, Collateral Series due 2006, each
of which bonds shall also bear the descriptive title "First Mortgage Bond"
(hereinafter provided for and hereinafter sometimes referred to as the "2006
Collateral Series 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 March 28, 2006; and

         WHEREAS, each of the registered bonds without coupons of the 2006
Collateral Series Bonds and the Trustee's Authentication Certificate thereon are
to be substantially in the following form, to wit:

                                      -2-

<PAGE>

         [FORM OF REGISTERED BOND OF THE 2006 COLLATERAL SERIES BONDS]

                                     [FACE]

                            CONSUMERS ENERGY COMPANY
                               FIRST MORTGAGE BOND
                           COLLATERAL SERIES DUE 2006

         No. 1                                                  $150,000,000

         CONSUMERS ENERGY COMPANY, a Michigan corporation (hereinafter called
the "Company"), for value received, hereby promises to pay to Citicorp North
America, Inc., as agent (in such capacity, the "Agent") for the Banks under and
as defined in the Amended and Restated Term Loan Agreement dated as of March 28,
2003 among the Company, the Banks and the Agent (the "Term Loan Agreement"), or
registered assigns, the principal sum of One Hundred Fifty Million Dollars
($150,000,000) or such lesser principal amount as shall be equal to the
aggregate principal amount of the Term Loans (as defined in the Term Loan
Agreement) included in the Obligations (as defined in the Term Loan Agreement)
outstanding on March 28, 2006 (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 March 28, 2003. If the Maturity Date falls on a day
which is not a Business Day, as defined below, principal and any interest and/or
fees payable with respect to the Maturity Date will be paid on the immediately
preceding Business Day. The interest payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions,
be paid to the person in whose name this bond (or one or more predecessor bonds)
is registered at the close of business on the Record Date (as defined below);
provided, however, that interest payable on the Maturity Date will be payable to
the person to whom the principal hereof shall be payable. Should the Company
default in the payment of interest ("Defaulted Interest"), the Defaulted
Interest shall be paid to the person in whose name this bond (or one or more
predecessor bonds) is registered on a subsequent record date fixed by the
Company, which subsequent record date shall be fifteen (15) days prior to the
payment of such Defaulted Interest. As used herein, (A) "Business Day" shall
mean any day, other than a Saturday or Sunday, on which banks generally are open
in New York, New York 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
interest and/or fees under the Term Loan Agreement are due and payable from time
to time pursuant to the Term Loan 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 interest and fees due under the Term
Loan 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.

                                     - 3 -

<PAGE>

         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.

         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.

                                            JPMORGAN CHASE BANK, Trustee

                                            By__________________________________
                                                          Authorized Officer

                                     - 4 -

<PAGE>

                                    [REVERSE]

                            CONSUMERS ENERGY COMPANY

                               FIRST MORTGAGE BOND
                           COLLATERAL SERIES DUE 2006

         This bond is one of the bonds of a series designated as First Mortgage
Bonds, Collateral Series due 2006 (sometimes herein referred to as the "2006
Collateral Series 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 (JPMorgan Chase Bank, 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 2006 Collateral Series Bonds are to be issued and delivered to the
Agent in order evidence and secure the obligation of the Company under the Term
Loan Agreement to make payments to the Banks under the Term Loan Agreement and
to provide the Banks the benefit of the lien of the Indenture with respect to
the 2006 Collateral Series Bonds.

         The obligation of the Company to make payments with respect to the
principal of 2006 Collateral Series Bonds shall be fully or partially, as the
case may be, satisfied and discharged to the extent that, at the time that any
such payment shall be due, the then due principal of the Term Loans included in
the Obligations shall have been fully or partially paid. Satisfaction of any
obligation to the extent that payment is made with respect to the Term Loans
means that if any payment is made on the principal of the Term Loans, a
corresponding payment obligation with respect to the principal of the 2006
Collateral Series Bonds shall be deemed discharged in the same amount as the
payment with respect to the Term Loans discharges the outstanding obligation
with respect to such Term Loans.

         The obligation of the Company to make payments with respect to the
interest on 2006 Collateral Series 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 on the Term Loans
included in the Obligations shall have been fully or partially paid.
Satisfaction of any obligation to the extent that payment is made with respect
to the Term Loans means that if any payment is made on the interest and/or fees
on the Term Loans, a corresponding payment obligation with respect to the
interest on the 2006 Collateral Series

                                     - 5 -

<PAGE>

Bonds shall be deemed discharged in the same amount as the payment with respect
to the Term Loans discharges the outstanding obligation with respect to such
Term Loans.

         The Trustee may at any time and all times conclusively assume that the
obligation of the Company to make payments with respect to the principal of and
interest on this bond, so far as such payments at the time have become due, has
been fully satisfied and discharged unless and until the Trustee shall have
received a written notice from the Agent stating (i) that timely payment of
principal and interest on the 2006 Collateral Series Bonds has not been made,
(ii) that the Company is in arrears as to the payments required to be made by it
to the Agent pursuant to the Term Loan Agreement, and (iii) the amount of the
arrearage.

         If an Event of Default (as defined in the Term Loan Agreement) with
respect to the payment of the principal of any Term Loans 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 2006 Collateral Series Bonds
equal to the amount of such unpaid principal (but in no event in excess of the
principal amount of the 2006 Collateral Series Bonds). If an Event of Default
(as defined in the Term Loan Agreement) with respect to the payment of interest
on any Term Loans or 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 2006 Collateral Series Bonds equal to the amount of such unpaid
interest or fees.

         This bond is not redeemable except upon written demand of the Agent
following the occurrence of an Event of Default under the Term Loan Agreement
and the acceleration of the Obligations, as provided in Section 9.2 of the Term
Loan 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 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.

                                     - 6 -

<PAGE>

         The Company reserves the right, without any consent, vote or other
action by holders of the 2006 Collateral Series Bonds or any other series
created after the Sixty-eighth Supplemental Indenture to amend the Indenture to
reduce the percentage of the principal amount of bonds the holders of which are
required to approve any supplemental indenture (other than any supplemental
indenture which is subject to the proviso contained in the immediately preceding
sentence) (a) from not less than seventy-five per centum (including sixty per
centum of each series affected) to not less than a majority in principal amount
of the bonds at the time outstanding or (b) in case fewer than all series are
affected, not less than a majority in principal amount of the bonds of all
affected series, voting together.

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

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

         The Agent shall surrender this bond to the Trustee when all of the
principal of and interest on the Term Loans arising under the Term Loan
Agreement, and all of the fees payable pursuant to the Term Loan Agreement,
shall have been duly paid, and the Term Loan Agreement shall have been
terminated.

[END OF FORM OF REGISTERED BOND OF THE 2006 COLLATERAL SERIES BONDS]

                                     - 7 -

<PAGE>

         AND WHEREAS all acts and things necessary to make the 2006 Collateral
Series Bonds, when duly executed by the Company and authenticated by the Trustee
or its agent and issued as prescribed in the Indenture, as heretofore
supplemented and amended, and this Supplemental Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute the Indenture,
as supplemented and amended as aforesaid, as well as by this Supplemental
Indenture, a valid, binding and legal instrument for the security thereof, have
been done and performed, and the creation, execution and delivery of this
Supplemental Indenture and the creation, execution and issuance of bonds subject
to the terms hereof and of the Indenture, as so supplemented and amended, have
in all respects been duly authorized;

         NOW, THEREFORE, in consideration of the premises, of the acceptance and
purchase by the holders thereof of the bonds issued and to be issued under the
Indenture, as supplemented and amended as above set forth, and of the sum of One
Dollar duly paid by the Trustee to the Company, and of other good and valuable
considerations, the receipt whereof is hereby acknowledged, and for the purpose
of securing the due and punctual payment of the principal of and premium, if
any, and interest on all bonds now outstanding under the Indenture and the
$150,000,000 principal amount of the 2006 Collateral Series Bonds proposed to be
issued initially 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
JPMorgan Chase Bank, 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;

                                     - 8 -

<PAGE>

         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 one series of bonds (the "2006
Collateral Series Bonds") designated as hereinabove provided, which shall also
bear the descriptive title "First Mortgage Bond", and the form thereof shall be
substantially as hereinbefore set forth (the "Sample Bond"). The 2006 Collateral
Series Bonds shall be issued in the aggregate principal amount of $150,000,000,
shall mature on March 28, 2006 and shall be issued only as registered bonds
without coupons in denominations of $1,000 and any multiple thereof. The serial
numbers of the 2006 Collateral Series 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 2006 Collateral Series Bonds are to be issued to and registered in the name
of the Agent under the Term Loan Agreement (as such terms are defined in the
Sample Bond) to evidence and secure any and all Obligations (as such term is
defined in the Term Loan Agreement) of the Company under the Term Loan
Agreement.

         The 2006 Collateral Series 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 2006 Collateral Series Bonds shall be fully or partially, as the
case may be, satisfied and discharged to the extent that, at the time that any
such payment shall be due, the then due principal of the Term Loans included in
the Obligations shall have been fully or partially paid. Satisfaction of any
obligation to the extent that payment is made with respect to the Term Loans
means that if any payment is made on the principal of the Term Loans, a
corresponding payment obligation with respect to the principal of the 2006
Collateral Series Bonds shall be deemed discharged in the

                                     - 9 -

<PAGE>

same amount as the payment with respect to the Term Loans discharges the
outstanding obligation with respect to such Term Loans.

         The obligation of the Company to make payments with respect to the
interest on 2006 Collateral Series 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 on the Term Loans
included in the Obligations shall have been fully or partially paid.
Satisfaction of any obligation to the extent that payment is made with respect
to the Term Loans means that if any payment is made on the interest and/or fees
on the Term Loans, a corresponding payment obligation with respect to the
interest on the 2006 Collateral Series Bonds shall be deemed discharged in the
same amount as the payment with respect to the Term Loans discharges the
outstanding obligation with respect to such Term Loans.

         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 2006 Collateral Series Bonds, so far as such payments at the
time have become due, has been fully satisfied and discharged unless and until
the Trustee shall have received a written notice from the Agent stating (i) that
timely payment of principal and interest on the 2006 Collateral Series Bonds has
not been made, (ii) that the Company is in arrears as to the payments required
to be made by it to the Agent pursuant to the Term Loan Agreement, and (iii) the
amount of the arrearage.

         The 2006 Collateral Series 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 2006 Collateral Series Bonds are not redeemable by the
operation of the maintenance and replacement provisions of this Indenture or
with the proceeds of released property.

         SECTION 3. Upon the occurrence of an Event of Default under the Term
Loan Agreement and the acceleration of the Obligations, the 2006 Collateral
Series Bonds shall be redeemable in whole upon receipt by the Trustee of a
written demand from the Agent stating that there has occurred under the Term
Loan Agreement both an Event of Default and a declaration of acceleration of the
Obligations and demanding redemption of the 2006 Collateral Series Bonds
(including a description of the amount of principal, interest and fees which
comprise such Obligations). The Company waives any right it may have to prior
notice of such redemption under the Indenture. Upon surrender of the 2006
Collateral Series Bonds by the Agent to the Trustee, the 2006 Collateral Series
Bonds shall be redeemed at a redemption price equal to the aggregate amount of
the Obligations.

         SECTION 4. The Company reserves the right, without any consent, vote or
other action by the holder of the 2006 Collateral Series 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:

                                     - 10 -

<PAGE>

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

         Upon the written request of the Company, accompanied by a resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of bondholders as aforesaid
(the instrument or instruments evidencing such consent to be dated within one
year of such request), the Trustee shall join with the Company in the execution
of such supplemental indenture unless such supplemental indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion but shall not be obligated to enter
into such supplemental indenture.

         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

                                     - 11 -

<PAGE>

         for the purpose, for the notation thereon of the fact that the holder
         of such bond has consented to the execution of such supplemental
         indenture, and in such case such notation, in form satisfactory to the
         Trustee, shall be made upon all bonds so submitted, and such bonds
         bearing such notation shall forthwith be returned to the persons
         entitled thereto.

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

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

         SECTION 6. Nothing contained in this Supplemental Indenture shall, or
shall be construed to, confer upon any person other than a holder of bonds
issued under the Indenture, as supplemented and amended as above set forth, the
Company, the Trustee and the Agent, for the benefit of the Banks (as such term
is defined in the Term Loan Agreement), any right or interest to avail himself
of any benefit under any provision of the Indenture, as so supplemented and
amended.

         SECTION 7. The Trustee assumes no responsibility for or in respect of
the validity or sufficiency of this Supplemental Indenture or of the Indenture
as hereby supplemented or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein (other than those
contained in the sixth, seventh and eighth recitals hereof), all of which
recitals and statements are made solely by the Company.

         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

                                     - 12 -

<PAGE>

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 2006 Collateral Series
Bonds shall be governed by and deemed to be a contract under, and construed in
accordance with, the laws of the State of Michigan, and for all purposes shall
be construed in accordance with the laws of such state, except as may otherwise
be required by mandatory provisions of law.

         SECTION 11. Detailed Description of Property Mortgaged:

                                       I.

                       ELECTRIC GENERATING PLANTS AND DAMS

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

                                       II.

                           ELECTRIC TRANSMISSION LINES

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

                                     - 13 -

<PAGE>

towers, poles, wires, insulators, subways, trenches, conduits, manholes, cables,
meters and other appliances and equipment, and all other property, real or
personal, forming a part of or appertaining to or used, occupied or enjoyed in
connection with such distribution systems or any of them or adjacent thereto;
together with all real property, rights of way, easements, permits, privileges,
franchises, grants and rights, for or relating to the construction, maintenance
or operation thereof, through, over, under or upon any private property or any
public streets or highways within as well as without the corporate limits of any
municipal corporation.

                                       IV.

               ELECTRIC SUBSTATIONS, SWITCHING STATIONS AND SITES

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

                                       V.

   GAS COMPRESSOR STATIONS, GAS PROCESSING PLANTS, DESULPHURIZATION STATIONS,
          METERING STATIONS, ODORIZING STATIONS, REGULATORS AND SITES

         All the compressor stations, processing plants, desulphurization
stations, metering stations, odorizing stations, regulators and sites of the
Company, constructed or otherwise acquired by it and not heretofore described in
the Indenture or any supplement thereto and not heretofore released from the
lien of the Indenture, for compressing, processing, desulphurizing, metering,
odorizing and regulating manufactured or natural gas at any of its plants and
elsewhere, together with all buildings, meters and other appliances and
equipment, and all other property, real or personal, forming a part of or
appertaining to or used, occupied or enjoyed in connection with any of such
purposes, with sites to be used for such purposes.

                                       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

                                     - 14 -

<PAGE>

in the Township of Salem, Washtenaw County, Township of Lyon, Oakland County,
and the Townships of Northville and Plymouth and City of Plymouth, Wayne County,
Michigan; in the Salem Gas Storage Field, located in the Township of Salem,
Allegan County, and in the Township of Jamestown, Ottawa County, Michigan; in
the Ray Gas Storage Field, located in the Townships of Ray and Armada, Macomb
County, Michigan; in the Lenox Gas Storage Field, located in the Townships of
Lenox and Chesterfield, Macomb County, Michigan; in the Ira Gas Storage Field,
located in the Township of Ira, St. Clair County, Michigan; in the Puttygut Gas
Storage Field, located in the Township of Casco, St. Clair County, Michigan; in
the Four Corners Gas Storage Field, located in the Townships of Casco, China,
Cottrellville and Ira, St. Clair County, Michigan; in the Swan Creek Gas Storage
Field, located in the Township of Casco and Ira, St. Clair County, Michigan; and
in the Hessen Gas Storage Field, located in the Townships of Casco and Columbus,
St. Clair, Michigan.

                                      VII.

                             GAS TRANSMISSION LINES

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

                                      VIII.

                            GAS DISTRIBUTION SYSTEMS

         All the gas distribution systems of the Company, constructed or
otherwise acquired by it and not heretofore described in the Indenture or any
supplement thereto and not heretofore released from the lien of the Indenture,
including tunnels, conduits, gas mains and pipes, service pipes, fittings,
gates, valves, connections, meters and other appliances and equipment, and all
other property, real or personal, forming a part of or appertaining to or used,
occupied or enjoyed 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.

                                     - 15 -

<PAGE>

                                       IX.

               OFFICE BUILDINGS, SERVICE BUILDINGS, GARAGES, ETC.

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

                                       X.

                            TELEPHONE PROPERTIES AND
                         RADIO COMMUNICATION EQUIPMENT

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

                                       XI.

                               OTHER REAL PROPERTY

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

                                  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

                                     - 16 -

<PAGE>

         beginning of this description, commence at the Southwest corner of said
         section, run thence East along the South line of said section 1243 feet
         to the place of beginning of this description, thence continuing East
         along said South line of said section 66 feet to the West 1/8 line of
         said section, thence N 02 degrees 09' 30" E along the said West 1/8
         line of said section 660 feet, thence West 330 feet, thence S 02
         degrees 09' 30" W, 330 feet, thence East 264 feet, thence S 02 degrees
         09' 30" W, 330 feet to the place of beginning.

                                 ALLEGAN COUNTY

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

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

                                  ALPENA COUNTY

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

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

                                  ANTRIM COUNTY

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

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

                                  ARENAC COUNTY

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

                  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"

                                     - 17 -

<PAGE>

         W, 330.0 feet; thence South parallel with the West line of said
         section, 260.0 feet; thence S 88 degrees 26' 00" W, 330.0 feet to the
         West line of said section and the center line of East City Limits Road;
         thence South along the said West line of said section, 50.0 feet to the
         place of beginning.

                                  BARRY COUNTY

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

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

                                   BAY COUNTY

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

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

                                  BENZIE COUNTY

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

                  A parcel of land in the Northeast 1/4 of Section 7, Township
         26 North, Range 14 West, described as beginning at a point on the East
         line of said Section 7, said point being 320 feet North measured along
         the East 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

                                     - 18 -

<PAGE>

         1278.27 feet distant South of the North quarter post of said section,
         said distance being measured along the North and South quarter line of
         said section, running thence S89 degrees21'E 250 feet, thence North
         along a line parallel with the said North and South quarter line of
         said section 200 feet, thence N89 degrees21'W 250 feet to the North and
         South quarter line of said section, thence South along said North and
         South quarter line of said section 200 feet to the place of beginning.

                                 CALHOUN COUNTY

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

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

                                   CASS COUNTY

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

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

                               CHARLEVOIX COUNTY

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

                  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.

                                     - 19 -

<PAGE>

                                CHEBOYGAN COUNTY

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

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

                                  CLARE COUNTY

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

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

                                 CLINTON COUNTY

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

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

                                 CRAWFORD COUNTY

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

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

                                     - 20 -

<PAGE>

         section 500 feet; thence S 00 degrees 50' 00" E, 600 feet to the place
         of beginning.

                                  EMMET COUNTY

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

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

                                 GENESEE COUNTY

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

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

                  Beginning at a point of the West line of Duffield Road, 100
         feet wide, (as now established) distant 829.46 feet measured N01
         degrees42'56"W and 50 feet measured S88 degrees14'04"W` from the South
         quarter corner, Section 8, T5N, R5E; thence S88 degrees14'04"W a
         distance of 550 feet; thence N01 degrees42'56"W a distance of 500 feet
         to a point on the North line of the South half of the Southwest quarter
         of said Section 8; thence N88 degrees14'04"E along the North line of
         South half of the Southwest quarter of said Section 8 a distance 550
         feet to a point on the West line of Duffield Road, 100 feet wide (as
         now established); thence S01 degrees42'56"E along the West line of said
         Duffield Road a distance of 500 feet to the point of beginning.

                                 GLADWIN COUNTY

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

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

                              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.

                                     - 21 -

<PAGE>

                                 GRATIOT COUNTY

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

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

                                HILLSDALE COUNTY

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

                  Lot 238 of Assessors Plat of the Village of Litchfield.

                                  HURON COUNTY

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

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

                                 INGHAM COUNTY

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

                  A parcel of land 660 feet wide in the Southwest 1/4 of Section
         7 lying South of the centerline of Sitts Road as extended to the
         North-South 1/4 line of said Section 7, T2N, R1W, more particularly
         described as follows: Commence at the Southwest corner of said Section
         7, thence North along the West line of said Section 2502.71 feet to the
         centerline of Sitts Road; thence South 89 degrees54'45" East along said
         centerline 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:

                                     - 22 -

<PAGE>

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

                                  IOSCO COUNTY

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

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

                                 ISABELLA COUNTY

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

                  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

                                     - 23 -

<PAGE>

         Trunkline Highway 414.22 feet to the West line of said section; thence
         N 00 degrees 55' 10" E along the West line of said section 74.35 feet;
         thence S 89 degrees 32' 00" E, 5356.02 feet to the East line of said
         section; thence S 01 degrees 03' 40" W along the East line of said
         section 250 feet to the place of beginning.

                                KALAMAZOO COUNTY

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

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

                                 KALKASKA COUNTY

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

                  The NW 1/4 of the SW 1/4 of Section 4, T27N, R7W, excepting
         therefrom all mineral, coal, oil and gas and such other rights as were
         reserved unto the State of Michigan in that certain deed running from
         the Department of Conservation for the State of Michigan to George
         Welker 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

                                     - 24 -

<PAGE>

         River to a point which said point is S 88 degrees 58' 30" W of a point
         on the East bank of the Thornapple River herein designated "Point B",
         said "Point B" being N 23 degrees 41' 35" W 360.75 feet from said
         above-described "Point A", thence N 88 degrees 58' 30" E to said "Point
         B", thence continuing N 88 degrees 58' 30" E 2650.13 feet to the place
         of beginning. (Bearings are based on the East line of Section 15, T5N,
         R10W between the East 1/4 corner of said section and the Northeast
         corner of said section assumed as N 0 degrees 59' 55" W.)

                                   LAKE COUNTY

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

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

                                  LAPEER COUNTY

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

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

                                 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.

                                     - 25 -

<PAGE>

                                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 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.

                                     - 26 -

<PAGE>

                                  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
         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.)

                                     - 27 -

<PAGE>

                                  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.

                                 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

                                     - 28 -

<PAGE>

         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:

                  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

                                     - 29 -

<PAGE>

         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.

                                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.

                                     - 30 -

<PAGE>

                                 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:

                  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

                                     - 31 -

<PAGE>

         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 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;

                                     - 32 -

<PAGE>

         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 said JPMorgan Chase Bank, as Trustee as aforesaid, to evidence
its acceptance hereof, has caused this Supplemental Indenture to be executed in
its corporate name by a Vice President and its corporate seal to be hereunto
affixed and to be attested by a Trust Officer, in several counterparts, all as
of the day and year first above written.

                                     - 33 -

<PAGE>

                                               CONSUMERS ENERGY COMPANY

(SEAL)                                    By
                                               ---------------------------------
                                                   Paul A. Stadnikia
Attest:                                               Treasurer

----------------------------
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 28th day of
March, 2003, by Paul A. Stadnikia, Treasurer of CONSUMERS ENERGY COMPANY, a
Michigan corporation, on behalf of the corporation.

                                          --------------------------------------
                                          Margaret Hillman, Notary Public
[Seal]                                    Jackson County, Michigan
                                          My Commission Expires: June 14, 2004

                                       S-1

<PAGE>

                                          JPMORGAN CHASE BANK, AS TRUSTEE

(SEAL)                                    By
                                               ---------------------------------
                                               L. O'Brien
Attest:                                        Vice President

------------------
Rosa Ciaccia
Trust Officer

Signed, sealed and delivered
by JPMORGAN CHASE BANK
in the presence of

----------------------------
James D. Heaney
Vice President

----------------------------
William G. Keenan
Vice President

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

         The foregoing instrument was acknowledged before me this 28th day of
March, 2003, by L. O'Brien, a Vice President of JPMORGAN CHASE BANK, a New York
corporation, on behalf of the corporation.

                                            ------------------------------------
                                                                   Notary Public
[Seal]
                                            New York County, New York
                                            My Commission Expires:

Prepared by:                                When recorded, return to:
Kimberly C. Wilson                          Consumers Energy Company
212 West Michigan Avenue                    Business Services Real Estate Dept.
Jackson, MI 49201                           Attn: Nancy Fisher EP7-439
                                            One Energy Plaza
                                            Jackson, MI 49201

                                       S-2

<PAGE>

                                   EXHIBIT B-1

                             REQUIRED OPINIONS FROM

                           MICHAEL D. VANHEMERT, ESQ.

         1.       The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Michigan.

         2.       The execution and delivery of the Loan Documents by the
Company and the performance by the Company of the Obligations have been duly
authorized by all necessary corporate action and proceedings on the part of the
Company and will not:

                  (a)      contravene the Company's Restated Articles of
         Incorporation, as amended, or bylaws;

                  (b)      contravene any law or any contractual restriction
         imposed by any indenture or any other agreement or instrument
         evidencing or governing indebtedness for borrowed money of the Company;
         or

                  (c)      result in or require the creation of any Lien upon or
         with respect to any of the Company's properties except the lien of the
         Indenture securing the Bonds.

         3.       The Loan Documents have been duly executed and delivered by
the Company.

         4.       To the best of my knowledge, there is no pending or threatened
action or proceeding against the Company or any of its Consolidated Subsidiaries
before any court, governmental agency or arbitrator (except (i) to the extent
described in the Company's annual report on Form 10-K/A for the year ended
December 31, 2001, quarterly report on Form 10-Q/A for the quarter ended
September 30, 2002, and current reports on Form 8-K filed by the Company on May
29, 2002, July 30, 2002 and September 8, 2002, in each case as filed with the
SEC, and (ii) such other similar actions, suits and proceedings predicated on
the occurrence of the same events giving rise to any actions, suits and
proceedings described in the reports filed with the SEC set forth in clause (i)
of this paragraph 4) which might reasonably be expected to materially adversely
affect the financial condition or results of operations of the Company and its
Consolidated Subsidiaries, taken as a whole, or that would materially adversely
affect the Company's ability to perform its obligations under any Loan Document.
To the best of my knowledge, there is no litigation challenging the validity or
the enforceability of any of the Loan Documents.

         5.       No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Company of any Loan Document,
except for the authorization to issue, sell or guarantee secured and/or
unsecured long-term debt granted by the Federal Energy Regulatory Commission in
Docket No. ES02-36-001 (hereinafter the "FERC Order"). The FERC Order is in full
force and effect as of the date hereof.

<PAGE>

         6.       The Bonds, assuming due authentication in accordance with the
terms of the Indenture, are in due and proper form and, when delivered to the
Agent pursuant to the Bond Delivery Agreement, will evidence and secure the
Obligations owing under the Agreement and will be valid and enforceable
obligations of the Company in accordance with their terms, secured by the lien
of the Indenture on an equal and ratable basis with all other bonds issued
thereunder and otherwise entitled to the benefits provided by the Indenture.

         7.       The Indenture has been qualified under the Trust Indenture Act
of 1939, as amended, and the execution and delivery of the Supplemental
Indenture will not cause the Indenture to not be so qualified.

         8.       The Company is not an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.

         9.       The Company (i) is a "public utility" and a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended (the "Holding Company Act"), and (ii) is
currently exempt from all provisions of the Holding Company Act, except Section
9(a)(2) thereof.

         10.      In a properly presented case, a Michigan court or a federal
court applying Michigan choice of law rules should give effect to the choice of
law provisions of the Agreement and should hold that the Agreement is to be
governed by the laws of the State of New York rather than the laws of the State
of Michigan, except in the case of those provisions set forth in the Agreement
the enforcement of which would contravene a fundamental policy of the State of
Michigan. In the course of our review of the Agreement, nothing has come to my
attention to indicate that any of such provisions would do so. Notwithstanding
the foregoing, even if a Michigan court or a federal court holds that the
Agreement is to be governed by the laws of the State of Michigan, the Agreement
constitutes a legal, valid and binding obligation of the Company, enforceable
under Michigan law (including usury provisions) against the Company in
accordance with its terms, subject to (a) the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

<PAGE>

                                   EXHIBIT B-2

                             REQUIRED OPINIONS FROM

                    SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

         1.       The Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to (a) the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) the application of general principles of
equity (regardless of whether considered in a preceding in equity or at law).

<PAGE>

                                   EXHIBIT B-3

                             REQUIRED OPINIONS FROM

                   MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.

         1.       The Bonds, assuming due authentication in accordance with the
terms of the Indenture, are in due and proper form and, when delivered to the
Agent pursuant to the Bond Delivery Agreement, will evidence and secure the
Obligations owing under the Agreement and will be valid and enforceable
obligations of the Company in accordance with their terms, secured by the lien
of the Indenture on an equal and ratable basis with all other bonds issued
thereunder and otherwise entitled to the benefits provided by the Indenture.

<PAGE>

                                    EXHIBIT C

                         FORM OF COMPLIANCE CERTIFICATE

         I, ___________, _________ of Consumers Energy Company, a Michigan
corporation (the "Company"), DO HEREBY CERTIFY in connection with the Term Loan
Agreement dated as of March 28, 2003 (the "Loan Agreement"; the terms defined
therein being used herein as so defined) among the Company, various financial
institutions and Citicorp North America, Inc., as Agent, that;

I.       Section 8.1 of the Loan Agreement provides that the Company shall: "At
         all times, maintain a ratio of Total Consolidated Debt to Total
         Consolidated Capitalization of not greater than 0.65 to 1.0."

         The following calculations are made in accordance with the definitions
         of Total Consolidated Debt and Total Consolidated Capitalization in the
         Loan Agreement and are correct and accurate as of ________, __:

<TABLE>
<S>      <C>                                                    <C>
A.       Total Consolidated Debt

         (a)      Indebtedness for borrowed money               $

plus     (b)      Indebtedness for deferred purchase
                  price of property/services

plus     (c)      Unfunded Vested Liabilities

plus     (d)      Obligations under acceptance facilities

plus     (e)      Obligations under Capital Leases

plus     (f)      Obligations under interest rate swap,
                  "cap", "collar" or other hedging
                  agreement

minus    (g)      Guaranties, endorsements and other
                  contingent obligations

minus    (h)      Principal amount of any Securitized
                  Bonds

minus    (i)      Junior Subordinated Debt owned by
                  any Hybrid Preferred Securities
                  Subsidiary

minus    (j)      Subordinated guaranties by the
                  Company of payments with respect to
</TABLE>

<PAGE>

<TABLE>
<S>      <C>                                                    <C>
                  Hybrid Preferred Securities

                  Hybrid Preferred Securities

minus    (k)      Agreed upon percentage of Net
                  Proceeds from issuance of hybrid
                  debt/equity securities (other than
                  Junior Subordinated Debt and Hybrid
                  Preferred Securities                          ________________

                                                       Total    $

B.       Total Consolidated Capitalization:

(a)      Total Consolidated Debt                                $

(b)      Equity of common stockholders

(c)      Equity of preference stockholders

(d)      Equity of preferred stockholders                       ________________

                                                       Total    $

C.       Debt to Capital Ratio                                  ___ to 1.00
         (total of A divided by total of B)
</TABLE>

II.      Section 8.2 of the Loan Agreement provides that the Company shall: "Not
         permit the ratio, determined as of the end of each of its fiscal
         quarters for the then most-recently ended four fiscal quarters, of (i)
         Consolidated EBIT to (ii) Consolidated Interest Expense to be less than
         2.0 to 1.0"

         The following calculations are made in accordance with the definitions
of Consolidated EBIT and Consolidated Interest Expense in the Loan Agreement and
are correct and accurate as of ___________, __:

<TABLE>
<S>      <C>                                                    <C>
A.       Consolidated EBIT

         (a)      Consolidated Net Income                       $

plus     (b)      Consolidated Interest Expense                 $

plus     (c)      Expense for taxes paid or accrued             $

plus     (d)      Non-cash write-offs and write-downs           $
                  contained in the Company's
</TABLE>

<PAGE>

<TABLE>
<S>      <C>                                                    <C>
                  Consolidated Net Income, including,
                  without limitation, write-offs or write-
                  downs related to the sale of assets,
                  impairment of assets and loss on
                  contracts

plus     (e)      The pre-tax under recovery arising            $
                  from the loss on Power Purchase
                  Agreement - MCV Partnership

minus    (f)      Extraordinary gains realized other than       $
                  in the ordinary course of business            ________________

                                                       Total    $

B.       Consolidated Interest Expense                          $

C.       Interest Coverage Ratio                                ___ to 1.00
         (total of A divided by total of B)
</TABLE>

         IN WITNESS WHEREOF, I have signed this Certificate this __ day of
_________, ____.

<PAGE>

                                    EXHIBIT D

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

         This Assignment and Assumption (the "Assignment and Assumption") is
dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor], (the "Assignor") and [Insert name of
Assignee] (the "Assignee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Loan Agreement identified below (as
amended, the "Loan Agreement "), receipt of a copy of which is hereby
acknowledged by the Assignee. The Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in full.

         For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Loan Agreement, as of the Effective Date inserted by the
Agent as contemplated below, the interest in and to all of the Assignor's rights
and obligations in its capacity as a Bank under the Loan Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor's outstanding
rights and obligations under the respective facilities identified below
(including without limitation, to the extent permitted to be assigned under
applicable law, all claims (including without limitation contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in
equity), suits, causes of action and any other right of the Assignor against any
Person whether known or unknown arising under or in connection with the Loan
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby) (the "Assigned Interest"). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.

1     Assignor:       ________________________

2.    Assignee:       ________________________ [and is an affiliate of Assignor]

3     Borrower:       CONSUMERS ENERGY COMPANY

4.    Agent:          Citicorp North America, Inc., as the Agent under the Loan
Agreement.

5.     Loan Agreement: The Term Loan Agreement dated as of March 28, 2003 among
Consumers Energy Company, the Banks party thereto, and Citicorp North America,
Inc., as Agent.

<PAGE>

 6.      Assigned Interest:

<TABLE>
<CAPTION>
                         Aggregate Amount of
                         Outstanding Term
                         Loans for all Banks**    Amount of Outstanding         Percentage Assigned of
Facility Assigned        ?                        Term Loans Assigned*          Outstanding Term Loans(1)
-----------------------------------------------------------------------------------------------------------
<S>                      <C>                      <C>                           <C>
Term Loans                  $______________             $________________               _______%
-----------------------------------------------------------------------------------------------------------
</TABLE>

7.       Trade Date: _______________________________________
Effective Date: _____________, 20__ [TO BE INSERTED BY AGENT AND WHICH SHALL
BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE AGENT](2)
     The terms set forth in this Assignment and Assumption are hereby agreed to:

                                               ASSIGNOR
                                               [NAME OF ASSIGNOR]

                                               By:______________________________
                                                    Title:

                                               ASSIGNEE
                                               [NAME OF ASSIGNEE]

                                               By:______________________________
                                                    Title:

[Consented to and (3)] Accepted:

CITICORP NORTH AMERICA, INC., as Agent

By:_________________
Title:

----------------------------
* Amount to be adjusted by the counter parties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.

(1)Set forth, to at least 9 decimals, as a percentage of the Term Loans of all
Banks hereunder.

(2)Insert if satisfaction of minimum amounts is to be determined as of the Trade
Date.

(3)To be added only if the consent of the Agent is required by the terms of the
Loan Agreement.

<PAGE>

                                     ANNEX 1
                            TERMS AND CONDITIONS FOR
                           ASSIGNMENT AND ASSUMPTION

         1.       Representations and Warranties.

                           1.1.     Assignor. The Assignor represents and
warrants that(i) it is the legal and beneficial owner of the Assigned Interest,
(ii) the Assigned Interest is free and clear of any lien, encumbrance or other
adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby. Neither the Assignor nor any of
its officers, directors, employees, agents or attorneys shall be responsible for
(i) any statements, warranties or representations made in or in connection with
the Loan Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency, perfection, priority,
collectibility, or value of the Loan Documents or any collateral thereunder,
(iii) the financial condition of the Company, any of its Subsidiaries or
Affiliates or any other Person obligated in respect of any Loan Document, (iv)
the performance or observance by the Company, any of its Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any
Loan Document, (v) inspecting any of the property, books or records of the
Company, or any guarantor, or (vi) any mistake, error of judgment, or action
taken or omitted to be taken in connection with the Term Loans or the Loan
Documents.

                           1.2.     Assignee. The Assignee (a) represents and
warrants that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Bank under the
Loan Agreement, (ii) from and after the Effective Date, it shall be bound by the
provisions of the Loan Agreement as a Bank thereunder and, to the extent of the
Assigned Interest, shall have the obligations of a Bank thereunder, (iii) its
payment instructions and notice instructions are delivered with this Assignment
and Assumption, (iv) none of the funds, monies, assets or other consideration
being used to make the purchase and assumption hereunder are "plan assets" as
defined under ERISA and that its rights, benefits and interests in and under the
Loan Documents will not be "plan assets" under ERISA, (v) it shall indemnify and
hold the Assignor harmless against all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment and Assumption,
(vi) it has received a copy of the Loan Agreement, together with copies of
financial statements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Agent or any other Bank, and (vii) together with this Assignment and
Assumption is any documentation required to be delivered by the Assignee with
respect to its tax status pursuant to the terms of the Loan Agreement, duly
completed and executed by the Assignee and (b) agrees that (i) it will,
independently and without reliance on the Agent, the Assignor or any other Bank,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will

<PAGE>

perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Bank.

         2.       Payments. The Assignee shall pay the Assignor, on the
Effective Date, the amount agreed to by the Assignor and the Assignee. From and
after the Effective Date, the Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to but excluding the
Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.

         3.       General Provisions. This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law
of the State of New York.

<PAGE>

                                                                      SCHEDULE 1

                          ADMINISTRATIVE DETAILS FORM

DEAL NAME: CONSUMERS ENERGY COMPANY

                               GENERAL INFORMATION

YOUR INSTITUTIONS LEGAL NAME:

TAX WITHHOLDING:

Note: To avoid the potential of having interest income withheld, all investors
must deliver all current and appropriate tax forms.
Tax ID #: _________________

SUB-ALLOCATION: (United States only)

Note: If your institution is sub-allocating its allocation, please fill out the
information below. Additionally, an administrative detail form is required for
each legal entity. Execution copies (e.g. Credit Agreement/Assignment Agreement)
will be sent for signature to the Sub-Allocation Contact below.

Sub-Allocated Amount:                      $
                                           ______________________
Signing Credit Agreement?                  [ ] Yes          [ ] No
Coming In Via Assignment?                  [ ] Yes          [ ] No

SUB-ALLOCATION CONTACT:

                                                     NAME:

         Address:     ___________________________________   E- mail: ___________
                      ___________________________________
         City:        _______________ State:  ___________   Phone #: ___________
         Postal Code: _______________ Country:___________   Fax #:   ___________

                                  CONTACT LIST

BUSINESS/CREDIT MATTERS: (Responsible for trading and credit approval process of
                         the deal)

Primary:

                                                     NAME:

         Address:     ___________________________________   E- mail: ___________
                      ___________________________________
         City:        _______________ State:  ___________   Phone #: ___________
         Postal Code: _______________ Country:___________   Fax #:   ___________

Backup:

         NAME:

         Address:     ___________________________________   E- mail: ___________
                      ___________________________________
         City:        _______________ State:  ___________   Phone #: ___________
         Postal Code: _______________ Country:___________   Fax #:   ___________

--------------------------------------------------------------------------------
Admin Details can be submitted online, via Citigroup's Global Loans Web Site.
Send an e- mail to oploanswebadmin@ssmb.com with your contact information and
the deal name to request a user ID/password to submit/modify Admin Details
online.

<PAGE>

                          ADMINISTRATIVE DETAILS FORM

ADMIN/OPERATIONS MATTERS: (Responsible for interest, fee, principal payment,
                          borrowing & pay-downs)

Primary:

                                                     NAME:

         Address:     ___________________________________   E- mail: ___________
                      ___________________________________
         City:        _______________ State:  ___________   Phone #: ___________
         Postal Code: _______________ Country:___________   Fax #:   ___________

Backup:

                                                     NAME:

         Address:     ___________________________________   E- mail: ___________
                      ___________________________________
         City:        _______________ State:  ___________   Phone #: ___________
         Postal Code: _______________ Country:___________   Fax #:   ___________

CLOSING CONTACT: (Responsible for Deal Closing matters)

                                                     NAME:

         Address:     ___________________________________   E- mail: ___________
                      ___________________________________
         City:        _______________ State:  ___________   Phone #: ___________
         Postal Code: _______________ Country:___________   Fax #:   ___________

DISCLOSURE CONTACT: (Receives disclosure materials, such as financial reports,
                    via our web site)

                                                     NAME:

         Address:     ___________________________________   E- mail: ___________
                      ___________________________________
         City:        _______________ State:  ___________   Phone #: ___________
         Postal Code: _______________ Country:___________   Fax #:   ___________

Admin Details can be submitted online, via Citigroup's Global Loans Web Site.
Send an e- mail to oploanswebadmin@ssmb.com with your contact information and
the deal name to request a user ID/password to submit/modify Admin Details
online.

<PAGE>

                           ADMINISTRATIVE DETAILS FORM

                              ROUTING INSTRUCTIONS

ROUTING INSTRUCTIONS FOR THIS DEAL:

         City:           _____ State: ________   ACCOUNT NAME:      ____________
         Postal Code:          _______           ACCOUNT#:          ____________
         Payment Type:                           BENEF. ACCT. NAME: ____________
         [ ]Fed          [ ]ABA  [ ]CHIPS        BENEF. ACCT. #:    ____________

ABA/CHIPS #:

                       REFERENCE: ________________________
                       Attention: ________________________

                        ADMINISTRATIVE AGENT INFORMATION

BANK LOANS SYNDICATION - AGENT CONTACT                 AGENT WIRING INSTRUCTIONS

                      Name:         Jason Trala

                      Telephone:    302-894-6086       Citibank, NA
                      Fax:          302-894-6120       ABA #: 021-00-0089
                                                       Acct Name: Agency

                      Address:      2 Penn's Way       Medium Term Finance
                                    Suite 200          Acct #: 36852248
                                    New Castle, De
                                    19720

INITIAL FUNDING STANDARDS: LIBOR - Fund 2 days after rates are set.

Admin Details can be submitted online, via Citigroup's Global Loans Web Site.
Send an e-mail to oploanswebadmin@ssmb.com with your contact information and the
deal name to request a user ID/password to submit/modify Admin Details online.

<PAGE>

                                    EXHIBIT E

                             TERMS OF SUBORDINATION

                           [JUNIOR SUBORDINATED DEBT]

                                   ARTICLE ___
                                  SUBORDINATION

         Section __.1. Applicability of Article; Securities Subordinated to
Senior Indebtedness.

         (a)      This Article __ shall apply only to the Securities of any
series which, pursuant to Section __, are expressly made subject to this
Article. Such Securities are referred to in this Article __ as "Subordinated
Securities."

         (b)      The Issuer covenants and agrees, and each Holder of
Subordinated Securities by his acceptance thereof likewise covenants and agrees,
that the indebtedness represented by the Subordinated Securities and the payment
of the principal and interest, if any, on the Subordinated Securities is
subordinated and subject in right, to the extent and in the manner provided in
this Article, to the prior payment in full of all Senior Indebtedness.

         "Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date hereof or thereafter
incurred, created or assumed: (i) indebtedness of the Issuer for money borrowed
by the Issuer (including purchase money obligations) or evidenced by debentures
(other than the Subordinated Securities), notes, bankers' acceptances or other
corporate debt securities, or similar instruments issued by the Issuer; (ii) all
capital lease obligations of the Issuer; (iii) all obligations of the Issuer
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Issuer and all obligations of the Issuer under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) obligations with respect to letters of
credit; (v) all indebtedness of others of the type referred to in the preceding
clauses (i) through (iv) assumed by or guaranteed in any manner by the Issuer or
in effect guaranteed by the Issuer; (vi) all obligations of the type referred to
in clauses (i) through (v) above of other persons secured by any lien on any
property or asset of the Issuer (whether or not such obligation is assumed by
the Issuer), except for (1) any such indebtedness that is by its terms
subordinated to or pari passu with the Subordinated Notes, as the case may be,
including all other debt securities and guaranties in respect of those debt
securities, issued to any other trusts, partnerships or other entities
affiliated with the Issuer which act as a financing vehicle of the Issuer in
connection with the issuance of preferred securities by such entity or other
securities which rank pari passu with, or junior to, the Preferred Securities,
and (2) any indebtedness between or among the Issuer and its affiliates; and/or
(vii) renewals, extensions or refundings of any of the indebtedness referred to
in the preceding clauses unless, in the case of any particular indebtedness,
renewal, extension or refunding, under the express provisions of the instrument
creating or evidencing the same or the assumption or guarantee of the same, or
pursuant to which the same is outstanding, such indebtedness or such renewal,
extension or refunding thereof is not superior in right of payment to the
Subordinated Securities.

<PAGE>

         This Article shall constitute a continuing obligation to all Persons
who, in reliance upon such provisions become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions.

         Section __.2. Issuer Not to Make Payments with Respect to Subordinated
Securities in Certain Circumstances.

         (a)      Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal thereof and premium and interest
thereon shall first be paid in full, or such payment duly provided for in cash
in a manner satisfactory to the holders of such Senior Indebtedness, before any
payment is made on account of the principal of, or interest on, Subordinated
Securities or to acquire any Subordinated Securities or on account of any
sinking fund provisions of any Subordinated Securities (except payments made in
capital stock of the Issuer or in warrants, rights or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before the maturity of such Senior
Indebtedness, and payments made through the exchange of other debt obligations
of the Issuer for such Subordinated Securities in accordance with the terms of
such Subordinated Securities, provided that such debt obligations are
subordinated to Senior Indebtedness at least to the extent that the Subordinated
Securities for which they are exchanged are so subordinated pursuant to this
Article __).

         (b)      Upon the happening and during the continuation of any default
in payment of the principal of, or interest on, any Senior Indebtedness when the
same becomes due and payable or in the event any judicial proceeding shall be
pending with respect to any such default, then, unless and until such default
shall have been cured or waived or shall have ceased to exist, no payment shall
be made by the Issuer with respect to the principal of, or interest on,
Subordinated Securities or to acquire any Subordinated Securities or on account
of any sinking fund provisions of Subordinated Securities (except payments made
in capital stock of the Issuer or in warrants, rights, or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before such default and notice thereof, and
payments made through the exchange of other debt obligations of the Issuer for
such Subordinated Securities in accordance with the terms of such Subordinated
Securities, provided that such debt obligations are subordinated to Senior
Indebtedness at least to the extent that the Subordinated Securities for which
they are exchanged are so subordinated pursuant to this Article __).

         (c)      In the event that, notwithstanding the provisions of this
Section __.2, the Issuer shall make any payment to the Trustee on account of the
principal of or interest on Subordinated Securities, or on account of any
sinking fund provisions of such Securities, after the maturity of any Senior
Indebtedness as described in Section __.2(a) above or after the happening of a
default in payment of the principal of or interest on any Senior Indebtedness as
described in Section __.2(b) above, then, unless and until all Senior
Indebtedness which shall have matured, and all premium and interest thereon,
shall have been paid in full (or the declaration of acceleration thereof shall
have been rescinded or annulled), or such default shall have been cured or
waived or shall have ceased to exist, such payment (subject to the provisions of
Sections __.6 and __.7) shall be held by the Trustee, in trust for the benefit
of, and shall be paid forthwith over and

<PAGE>

delivered to, the holders of such Senior Indebtedness (pro rata as to each of
such holders on the basis of the respective amounts of Senior Indebtedness held
by them) or their representative or the trustee under the indenture or other
agreement (if any) pursuant to which such Senior Indebtedness may have been
issued, as their respective interests may appear, for application to the payment
of all such Senior Indebtedness remaining unpaid to the extent necessary to pay
the same in full in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness. The Issuer shall give prompt written notice to the Trustee of any
default in the payment of principal of or interest on any Senior Indebtedness.

         Section __.3. Subordinated Securities Subordinated to Prior Payment of
All Senior Indebtedness on Dissolution. Liquidation or Reorganization of Issuer.
Upon any distribution of assets of the Issuer in any dissolution, winding up,
liquidation or reorganization of the Issuer (whether voluntary or involuntary,
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise):

         (a)      the holders of all Senior Indebtedness shall first be entitled
to receive payments in full of the principal thereof and premium and interest
due thereon, or provision shall be made for such payment, before the Holders of
Subordinated Securities are entitled to receive any payment on account of the
principal of or interest on such Securities;

         (b)      any payment or distribution of assets of the Issuer of any
kind or character, whether in cash, property or securities (other than
securities of the Issuer as reorganized or readjusted or securities of the
Issuer or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Article __ with respect to Subordinated Securities, to the
payment in full without diminution or modification by such plan of all Senior
Indebtedness), to which the Holders of Subordinated Securities or the Trustee on
behalf of the Holders of Subordinated Securities would be entitled except for
the provisions of this Article __ shall be paid or delivered by the liquidating
trustee or agent or other person making such payment or distribution directly to
the holders of Senior Indebtedness or their representative, or to the trustee
under any indenture under which Senior Indebtedness may have been issued (pro
rata as to each such holder, representative or trustee on the basis of the
respective amounts of unpaid Senior Indebtedness held or represented by each),
to the extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or distribution
or provision thereof to the holders of such Senior Indebtedness; and

         (c)      in the event that notwithstanding the foregoing provisions of
this Section __.3, any payment or distribution of assets of the Issuer of any
kind or character, whether in cash, property or securities (other than
securities of the Issuer as reorganized or readjusted or securities of the
Issuer or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Article __ with respect to Subordinated Securities, to the
payment in full without diminution or modification by such plan of all Senior
Indebtedness shall be received by the Trustee or the Holders of the Subordinated
Securities on account of principal of or interest on the Subordinated Securities
before all Senior Indebtedness is paid in full, or effective provision made for
its payment, such payment or distribution (subject to the provisions of Section
_.6 and _.7) shall be received and

<PAGE>

held in trust for and shall be paid over to the holders of the Senior
Indebtedness remaining unpaid or unprovided for or their representative, or to
the trustee under any indenture under which such Senior Indebtedness may have
been issued (pro rata as provided in subsection (b) above), for application to
the payment of such Senior Indebtedness until all such Senior Indebtedness
shall have been paid in full, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Indebtedness,

         The Issuer shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Issuer.

         The consolidation of the Issuer with, or the merger of the Issuer into,
another corporation or the liquidation or dissolution of the Issuer following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided for
in Article __ hereof shall not be deemed a dissolution, winding up, liquidation
or reorganization for the purposes of this Section __.3 if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated such in Article __.

         Section __.4. Holders of Subordinated Securities to be Subrogated to
Right of Holders of Senior Indebtedness. Subject to the payment in full of all
Senior Indebtedness, the Holders of Subordinated Securities shall be subrogated
to the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Issuer applicable to the Senior Indebtedness
until all amounts owing on Subordinated Securities shall be paid in full, and
for the purposes of such subrogation no payments or distributions to the holders
of the Senior Indebtedness by or on behalf of the Issuer or by or on behalf of
the Holders of Subordinated Securities by virtue of this Article __ which
otherwise would have been made to the Holders of Subordinated Securities shall,
as between the Issuer, its creditors other than holders of Senior Indebtedness
and the Holders of Subordinated Securities, be deemed to be payment by the
Issuer to or on account of the Senior Indebtedness, it being understood that the
provisions of this Article __ are and are intended solely for the purpose of
defining the relative rights of the Holders of the Subordinated Securities, on
the one hand, and the holders of the Senior Indebtedness, on the other hand.

         Section __.5. Obligation of the Issuer Unconditional. Nothing contained
in this Article __ or elsewhere in this Indenture or in any Subordinated
Security is intended to or shall impair, as among the Issuer, its creditors
other than holders of Senior Indebtedness and the Holders of Subordinated
Securities, the obligation of the Issuer, which is absolute and unconditional,
to pay to the Holders of Subordinated Securities the principal of, and interest
on, Subordinated Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of Subordinated Securities and creditors of the Issuer
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the Holder of any Subordinated Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article __ of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Issuer received upon the exercise of any such remedy. Upon any payment or
distribution of assets of the Issuer referred to in this Article __, the Trustee
and Holders of Subordinated Securities shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or

<PAGE>

reorganization proceedings are pending, or, subject to the provisions of Section
__ and __, a certificate of the receiver, trustee in bankruptcy, liquidating
trustee or agent or other Person making such payment or distribution to the
Trustee or the Holders of Subordinated Securities, for the purposes of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Issuer, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article __.

         Nothing contained in this Article __ or elsewhere in this Indenture or
in any Subordinated Security is intended to or shall affect the obligation of
the Issuer to make, or prevent the Issuer from making, at any time except during
the pendency of any dissolution, winding up, liquidation or reorganization
proceeding, and, except as provided in subsections (a) and (b) of Section __.2,
payments at any time of the principal of, or interest on, Subordinated
Securities.

         Section __.6. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice. The Issuer shall give prompt written notice to the Trustee of
any fact known to the Issuer which would prohibit the making of any payment or
distribution to or by the Trustee in respect of the Subordinated Securities.
Notwithstanding the provisions of this Article __ or any provision of this
Indenture, the Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment or
distribution to or by the Trustee, unless at least two Business Days prior to
the making of any such payment, the Trustee shall have received written notice
thereof from the Issuer or from one or more holders of Senior Indebtedness or
from any representative thereof or from any trustee therefor, together with
proof satisfactory to the Trustee of such holding of Senior Indebtedness or of
the authority of such representative or trustee; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections __
and __, shall be entitled to assume conclusively that no such facts exist. The
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness (or a
representative or trustee on behalf of the holder) to establish that such notice
has been given by a holder of Senior Indebtedness (or a representative of or
trustee on behalf of any such holder). In the event that the Trustee determines,
in good faith, that further evidence is required with respect to the right of
any Person as a holder of Senior Indebtedness to participate in any payments or
distribution pursuant of this Article __, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, as to the extent to which such
Person is entitled to participate in such payment or distribution, and as to
other facts pertinent to the rights of such Person under this Article __, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The Trustee, however, shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and nothing in this Article __ shall apply to
claims of, or payments to, the Trustee under or pursuant to Section __.

         Section __.7. Application by Trustee of Monies or Government
Obligations Deposited with It. Money or Government Obligations deposited in
trust with the Trustee pursuant to and in accordance with Section __ shall be
for the sole benefit of Securityholders and, to the extent allocated for the
payment of Subordinated Securities, shall not be subject to the subordination
provisions of this Article __, if the same are deposited in trust prior to the
happening of any

<PAGE>

event specified in Section __.2. Otherwise, any deposit of monies or Government
Obligations by the Issuer with the Trustee or any paying agent (whether or not
in trust) for the payment of the principal of, or interest on, any Subordinated
Securities shall be subject to the provisions of Section __.1, __.2 and __.3
except that, if prior to the date on which by the terms of this Indenture any
such monies may become payable for any purposes (including, without limitation,
the payment of the principal of, or the interest, if any, on any Subordinated
Security) the Trustee shall not have received with respect to such monies the
notice provided for in Section __.6, then the Trustee or the paying agent shall
have full power and authority to receive such monies and Government Obligations
and to apply the same to the purpose for which they were received, and shall not
be affected by any notice to the contrary which may be received by it on or
after such date. This Section __.7 shall be construed solely for the benefit of
the Trustee and paying agent and, as to the first sentence hereof, the
Securityholders, and shall not otherwise effect the rights of holders of Senior
Indebtedness.

         Section __.8. Subordination Rights Not Impaired by Acts or Omissions of
Issuer or Holders of Senior Indebtedness. No rights of any present or future
holders of any Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Issuer or by any act or failure to act, in good faith, by
any such holders or by any noncompliance by the Issuer with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.

         Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Issuer may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of the
Subordinated Securities, without incurring responsibility to the Holders of the
Subordinated Securities and without impairing or releasing the subordination
provided in this Article __ or the obligations hereunder of the Holders of the
Subordinated Securities to the holders of such Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, such Senior Indebtedness, or
otherwise amend or supplement in any manner such Senior Indebtedness or any
instrument evidencing the same or any agreement under which such Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior Indebtedness;
(iii) release any Person liable in any manner for the collection for such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Issuer, as the case may be, and any other Person.

         Section __.9. Securityholders Authorize Trustee to Effectuate
Subordination of Securities. Each Holder of Subordinated Securities by his
acceptance thereof authorizes and expressly directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article __ and appoints the Trustee his
attorney-in-fact for such purpose, including in the event of any dissolution,
winding up, liquidation or reorganization of the Issuer (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise) the immediate filing of a claim for the unpaid balance
of his Subordinated Securities in the form required in said proceedings and
causing said claim to be approved. If the Trustee does not file a proper claim
or proof of debt in the form required in such proceeding prior to 30 days before
the expiration of the time to file

<PAGE>

such claim or claims, then the holders of Senior Indebtedness have the right to
file and are hereby authorized to file an appropriate claim for and on behalf of
the Holders of said Securities.

         Section __.10. Right of Trustee to Hold Senior Indebtedness. The
Trustee in its individual capacity shall be entitled to all of the rights set
forth in this Article __ in respect of any Senior Indebtedness at any time held
by it to the same extent as any other holder of Senior Indebtedness, and nothing
in this Indenture shall be construed to deprive the Trustee of any of its rights
as such holder.

         With respect to the holders of Senior Indebtedness of the Issuer, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article __, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Sections __.2 and __.3, the Trustee shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Holders of Subordinated Securities, the Issuer or any other Person money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article __ or otherwise.

         Section __.11. Article Not to Prevent Events of Defaults. The failure
to make a payment on account of principal or interest by reason of any provision
in this Article __ shall not be construed as preventing the occurrence of an
Event of Default under Section ____.

<PAGE>

                                    EXHIBIT F

                             TERMS OF SUBORDINATION

                    [GUARANTY OF HYBRID PREFERRED SECURITIES]

         SECTION __. This Guarantee will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
other liabilities of the Guarantor and pari passu with any guarantee now or
hereafter entered into by the Guarantor in respect of the securities
representing common beneficial interests in the assets of the Issuer or of any
preferred or preference stock of any affiliate of the Guarantor.

<PAGE>

                                    EXHIBIT G

                         FORM OF BOND DELIVERY AGREEMENT

                             BOND DELIVERY AGREEMENT

                            CONSUMERS ENERGY COMPANY

                                       TO

                     CITICORP NORTH AMERICA, INC., AS AGENT

                           Dated as of March 28, 2003

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

                                   Relating to
           First Mortgage Bonds, Collateral Series due March 28, 2006

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

<PAGE>

         THIS BOND DELIVERY AGREEMENT (this "Agreement"), dated as of March 28,
2003, is between Consumers Energy Company (the "Company"), and Citicorp North
America, Inc., as agent (the "Agent") under the Term Loan Agreement (as amended,
supplemented or otherwise modified from time to time, the "Loan Agreement")
dated as of March 28, 2003, among the Company, the financial institutions
parties thereto (the "Banks"), and the Agent. Capitalized terms used but not
otherwise defined herein have the respective meanings assigned to such terms in
the Loan Agreement.

         Whereas, the Company has established its First Mortgage Bonds,
Collateral Series due 2006, in the aggregate principal amount of $150,000,000
(the "Bonds"), to be issued under and in accordance with the Eighty-Ninth
Supplemental Indenture dated as of March 28, 2003 (the "Supplemental
Indenture"), to the Indenture of the Company to JPMorgan Chase Bank (formerly
known as The Chase Manhattan Bank) dated as of September 1, 1945 (as amended and
supplemented, the "Indenture"); and

         Whereas, the Company proposes to issue and deliver to the Agent, for
the benefit of the Banks, the Bonds in order to provide the Bonds as evidence of
(and the benefit of the lien of the Indenture with respect to the Bonds for) the
Obligations of the Company arising under the Loan Agreement;

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

                                    ARTICLE I
                                    THE BONDS

Section 1.1 Delivery of Bonds.

         In order to provide the Bonds as evidence of (and through the Bonds the
benefit of the Lien of the Indenture for) the Obligations of the Company under
the Loan Agreement as aforesaid, the Company hereby delivers to the Agent the
Bonds in the aggregate principal amount of $150,000,000, maturing on March 28,
2006 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 Obligations, all as
set forth in the Bonds and in Section 1 of the Supplemental Indenture.

         The Bonds are registered in the name of the Agent and shall be owned
and held by the Agent, subject to the provisions of this Agreement, for the
benefit of the Banks, and the Company shall have no interest therein. The Agent
shall be entitled to exercise all rights of bondholders under the Indenture with
respect to the Bonds.

Section 1.2 Payments on the Bonds.

         Any payments received by the Agent on account of the principal of or
interest on the Bonds shall be deemed to be and treated in all respects as
payments of the Obligations, and such payments shall be distributed by the Agent
to the Banks in accordance with the provisions of the

<PAGE>

Loan Agreement applicable to payments received by the Agent in respect of the
Obligations (and the Company hereby consents to such distributions).

                                   ARTICLE II
                    NO TRANSFER OF BONDS; SURRENDER OF BONDS

Section 2.1 No Transfer of the Bonds.

         The Agent shall not sell, assign or otherwise transfer any Bonds
delivered to it under this Agreement except to a successor administrative agent
under the Loan 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 Agent shall forthwith surrender to or upon the order of
the Company all Bonds held by it at the first time at which all Obligations
shall have been paid in full.

         (b)      Upon any prepayments of Term Loans pursuant to the terms of
the Loan Agreement, the Agent 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 Agent over the aggregate
outstanding Term Loans.

                                   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]

<PAGE>

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

CONSUMERS ENERGY COMPANY

_______________________________

Name:
Title:

CITICORP NORTH AMERICA, INC., as Agent

_______________________________

Name:
Title:

<PAGE>

                               COMMITMENT SCHEDULE

<TABLE>
<CAPTION>
                                                                 TERM LOAN
          BANK                                                   COMMITMENT
          ----                                                   ----------
<S>                                                           <C>
Citicorp North America, Inc.                                  $ 150,000,000.00

                                                              $

                                                              $

                                                              $

                                                              $

                                                              $

AGGREGATE TERM LOAN                                           $ 150,000,000
COMMITMENTS
</TABLE><PAGE>

                                                                    EXHIBIT 4(h)

                                                                  EXECUTION COPY
--------------------------------------------------------------------------------

                                  $409,000,000

                       SECOND AMENDED AND RESTATED CREDIT
                                    AGREEMENT

                           Dated as of March 30, 2003,

                                      Among

                             CMS ENERGY CORPORATION
                                   as Borrower

                             THE BANKS NAMED HEREIN
                                    as Banks

                              CITICORP USA, INC.
                  as Administrative Agent and Collateral Agent

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

                            SALOMON SMITH BARNEY INC.
                   as Sole Book Manager and Sole Lead Arranger

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                                              Page
<S>                                                                                                  <C>
                                                   ARTICLE I
                                         DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.  Certain Defined Terms...........................................................        1
SECTION 1.02.  Computation of Time Periods; Construction.......................................       22
SECTION 1.03.  Accounting Terms................................................................       22

                                                 ARTICLE II
                                LOANS, FEES, PREPAYMENTS AND OUTSTANDINGS

SECTION 2.01.  Re-Evidencing of "Loans" under the Initial Amendment and Restatement............       23
SECTION 2.02.  Fees............................................................................       24
SECTION 2.03.  Mandatory Prepayments...........................................................       24
SECTION 2.04.  Computations of Outstandings....................................................       26

                                                  ARTICLE III
                                                     LOANS

SECTION 3.01.  Evidence of Loans...............................................................       26
SECTION 3.02.  Conversion of Loans.............................................................       27
SECTION 3.03.  Interest Periods................................................................       27
SECTION 3.04.  Other Terms Relating to the Making and Conversion of Loans......................       28
SECTION 3.05.  Repayment of Loans; Interest....................................................       30

                                                  ARTICLE IV
                                    PAYMENTS, COMPUTATIONS AND YIELD PROTECTION

SECTION 4.01.  Payments and Computations.......................................................       30
SECTION 4.02.  Interest Rate Determination.....................................................       32
SECTION 4.03.  Prepayments.....................................................................       32
SECTION 4.04.  Yield Protection................................................................       33
SECTION 4.05.  Sharing of Payments, Etc........................................................       34
SECTION 4.06.  Taxes...........................................................................       35
SECTION 4.07.  Apportionment of Payments.......................................................       36
SECTION 4.08.  Proceeds of Collateral..........................................................       37

                                                   ARTICLE V
                                              CONDITIONS PRECEDENT

SECTION 5.01.  Conditions Precedent to the Effectiveness of this Agreement.....................       38
SECTION 5.02.  Conditions Precedent to Each Extension of Credit................................       40
SECTION 5.03.  Reliance on Certificates........................................................       41
</TABLE>

                                        i

<PAGE>

                           TABLE OF CONTENTS (CONT'D)

<TABLE>
<CAPTION>
SECTION                                                                                              PAGE
<S>                                                                                                  <C>
                                                   ARTICLE VI
                                          REPRESENTATIONS AND WARRANTIES

SECTION 6.01.  Representations and Warranties of the Borrower..................................       42

                                                   ARTICLE VII
                                            COVENANTS OF THE BORROWER

SECTION 7.01.  Affirmative Covenants...........................................................       46
SECTION 7.02.  Negative Covenants..............................................................       49
SECTION 7.03.  Reporting Obligations...........................................................       56

                                                   ARTICLE VIII
                                                     DEFAULTS

SECTION 8.01.  Events of Default...............................................................       59
SECTION 8.02.  Remedies........................................................................       61

                                                   ARTICLE IX
                                                   THE AGENTS

SECTION 9.01.  Authorization and Action........................................................       62
SECTION 9.02.  Indemnification.................................................................       64
SECTION 9.03.  Concerning the Collateral and the Loan Documents................................       64
SECTION 9.04.  Release of Guarantors...........................................................       65

                                                   ARTICLE X
                                                 MISCELLANEOUS

SECTION 10.01.  Amendments, Etc................................................................       65
SECTION 10.02.  Notices, Etc...................................................................       66
SECTION 10.03.  No Waiver of Remedies..........................................................       67
SECTION 10.04.  Costs, Expenses and Indemnification............................................       67
SECTION 10.05.  Right of Set-off...............................................................       68
SECTION 10.06.  Binding Effect.................................................................       68
SECTION 10.07.  Assignments and Participation..................................................       68
SECTION 10.08.  Confidentiality................................................................       71
SECTION 10.09.  Waiver of Jury Trial...........................................................       72
SECTION 10.10.  GOVERNING LAW; SUBMISSION TO JURISDICTION......................................       72
SECTION 10.11.  Relation of the Parties; No Beneficiary........................................       73
SECTION 10.12.  Execution in Counterparts......................................................       73
SECTION 10.13.  Survival of Agreement..........................................................       73
</TABLE>

                                       ii

<PAGE>

                           TABLE OF CONTENTS (CONT'D)

<TABLE>
<CAPTION>
SECTION                                                                                              PAGE
<S>                                                                                                  <C>
                                                ARTICLE XI
                         NO NOVATION; REFERENCES TO THIS AGREEMENT IN LOAN DOCUMENTS

SECTION 11.01.  No Novation....................................................................       75
SECTION 11.02.  References to This Agreement In Loan Documents.................................       75
</TABLE>

                                       iii

<PAGE>

<TABLE>
<CAPTION>
Exhibits
--------
<S>                          <C>
EXHIBIT A               -    Form of Notice of Borrowing
EXHIBIT B               -    Form of Notice of Conversion
EXHIBIT C               -    Form of Opinion of Belinda Foxworth, Esq., counsel to the Borrower
EXHIBIT D               -    Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special
                             counsel to the Borrower
EXHIBIT E               -    Form of Compliance Schedule
EXHIBIT F               -    Form of Lender Assignment
EXHIBIT G               -    Terms of Subordination (Junior Subordinated Debt)
EXHIBIT H               -    Terms of Subordination (Guaranty of Hybrid Preferred Securities)
EXHIBIT I               -    Form of Guaranty
EXHIBIT J               -    Form of Amended and Restated Pledge and Security Agreement
                             (Borrower)
EXHIBIT K               -    Form of Pledge and Security Agreement (Grantors)
EXHIBIT L               -    AIG Pledge Agreement
EXHIBIT M               -    Intercreditor Agreement
</TABLE>

<TABLE>
<CAPTION>
Schedules
---------
<S>                         <C>
COMMITMENT
SCHEDULE
SCHEDULE I                  Certain Debt
SCHEDULE II                 Pledged Ownership Interests

ATTACHMENT A                Reaffirmation
</TABLE>

                                       iv

<PAGE>

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                           Dated as of March 30, 2003

         THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the "AGREEMENT") is
made by and among:

         (i)      CMS Energy Corporation, a Michigan corporation (the
                  "BORROWER"),

         (ii)     the banks (the "BANKS") listed on the signature pages hereof
                  and the other Lenders (as hereinafter defined) from time to
                  time party hereto, and

         (iii)    Citicorp USA, Inc. ("CUSA"), as administrative agent (the
                  "ADMINISTRATIVE AGENT") for the Lenders hereunder and as
                  collateral agent (the "COLLATERAL AGENT") for the Lenders
                  hereunder.

                             PRELIMINARY STATEMENTS

         The Borrower has requested the Banks (i) to amend and restate the
Existing Credit Agreements (as hereafter defined) on the Initial Funding Date as
a revolving credit facility on the same terms and conditions set forth in the
Existing Credit Agreements (the "Initial Amendment and Restatement"), which
Initial Amendment and Restatement is evidenced in full pursuant to this
paragraph, and to make Loans in an amount equal to the "Available Commitments"
(such term having the same meaning as set forth in the Existing 3-Year Credit
Agreement) pursuant to such Initial Amendment and Restatement (such Loans being
the "Initial Amendment and Restatement Revolving Loans"), and (ii) immediately
thereafter to amend and restate the Initial Amendment and Restatement to provide
the credit facility hereinafter described in the amount and on the terms and
conditions set forth herein. The Banks have so agreed on the terms and
conditions set forth herein, and the Agents have agreed to act as agents for the
Lenders on such terms and conditions.

         The parties hereto acknowledge and agree that neither Consumers (as
hereinafter defined) nor any of its Subsidiaries (as hereinafter defined) will
be a party to, or will in any way be bound by any provision of, this Agreement
or any other Loan Document (as hereinafter defined), and that no Loan Document
will be enforceable against Consumers or any of its Subsidiaries or their
respective assets.

         Accordingly, the parties hereto agree as follows:

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

         SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:

                                       1

<PAGE>

                  "ABR", when used in reference to any Loan or Borrowing, refers
         to whether such Loan, or the Loans comprising such Borrowing, are
         bearing interest at a rate determined by reference to the Alternate
         Base Rate.

                  "ABR LOAN" means a Loan that bears interest as provided in
         Section 3.05(b)(i).

                  "ADJUSTED LIBO RATE" means, for each Interest Period for each
         Eurodollar Rate Loan made as part of the same Borrowing, an interest
         rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
         equal to (a) the LIBO Rate for such Interest Period multiplied by (b)
         the Statutory Reserve Rate.

                  "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative
         Questionnaire in a form supplied by the Administrative Agent.

                  "AFFILIATE" means, with respect to any Person, any other
         Person directly or indirectly controlling (including but not limited to
         all directors and officers of such Person), controlled by, or under
         direct or indirect common control with such Person. A Person shall be
         deemed to control another entity if such Person possesses, directly or
         indirectly, the power to direct or cause the direction of the
         management and policies of such entity, whether through the ownership
         of voting securities, by contract, or otherwise.

                  "AGENT" means, as the context may require, the Administrative
         Agent or the Collateral Agent, and "AGENTS" means any or all of the
         foregoing.

                  "AIG PLEDGE AGREEMENT" means that certain Pledge and Security
         Agreement, dated as of January 8, 2003, by and among Enterprises and
         the other grantors parties thereto in favor of American Home Assurance
         Company, as collateral agent, a copy of which is attached hereto as
         Exhibit L, as amended, restated, supplemented or otherwise modified
         from time to time.

                  "ALTERNATE BASE RATE" means, for any day, a rate per annum
         equal to the greater of (a) the Prime Rate in effect on such day, (b)
         1/2 of one percent above the CD Rate, and (c) the Federal Funds
         Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
         Alternate Base Rate due to a change in the Prime Rate, the CD Rate or
         the Federal Funds Effective Rate shall be effective from and including
         the effective date of such change in the Prime Rate, CD Rate or the
         Federal Funds Effective Rate, respectively.

                  "APPLICABLE LENDING OFFICE" means, with respect to each
         Lender, at the address specified for such Lender on its signature page
         to this Agreement or in the Lender Assignment pursuant to which it
         became a Lender, as applicable, or at any office, branch, subsidiary or
         affiliate of such Lender specified in a notice received by the
         Administrative Agent and the Borrower from such Lender.

                  "APPLICABLE MARGIN" means, on any date of determination with
         respect to any Loans, the per annum rate specified in the table below
         for such Loans:

                                       2

<PAGE>

<TABLE>
<CAPTION>
                                  Applicable Margin     Applicable Margin
                                   for Facility A         for Facility B
                                        Loans                 Loans
<S>                               <C>                   <C>
ABR Loans                               4.50%                 6.00%
Eurodollar
Rate Loans                              5.50%                 7.00%
</TABLE>

                  " APPLICABLE RATE" means:

                           (i)      in the case of each ABR Loan, a rate per
                  annum equal at all times to the sum of the Alternate Base Rate
                  in effect from time to time plus the Applicable Margin; and

                           (ii)     in the case of each Eurodollar Rate Loan
                  comprising part of the same Borrowing, a rate per annum during
                  each Interest Period equal at all times to the sum of the
                  Adjusted LIBO Rate for such Interest Period plus the
                  Applicable Margin.

                  "APPROVED FUND" means, with respect to any Lender that is a
         fund that invests in commercial loans, any other fund that invests in
         commercial loans and is managed or advised by the same investment
         advisor as such Lender or by an affiliate of such investment advisor.

                  "ARRANGER" means Salomon Smith Barney Inc.

                  "AVAILABLE FACILITY A REVOLVING COMMITMENT" means, for each
         Lender on any day, the unused portion of such Lender's Facility A
         Revolving Commitment, computed after giving effect to all Extensions of
         Credit or prepayments to be made on such day and the application of
         proceeds therefrom. "AVAILABLE FACILITY A REVOLVING COMMITMENTS" means
         the aggregate of the Lenders' Available Facility A Revolving
         Commitments.

                  "BOARD" means the Board of Governors of the Federal Reserve
         System of the United States of America.

                  "BORROWER INTEREST EXPENSE" means at any date, the total
         interest expense in respect of Debt of the Borrower for the four
         calendar quarters immediately preceding such date, including, without
         duplication, (i) interest expense attributable to capital leases, (ii)
         amortization of debt discount, (iii) capitalized interest, (iv) cash
         and noncash payments, (v) commissions, discounts and other fees and
         charges owed with respect to letters of credit and bankers' acceptance
         financing, (vi) net costs under interest rate swap, "cap", "collar" or
         other hedging agreements (including amortization of discount) and (vii)
         interest expense in respect of obligations of Persons deemed to be Debt
         of the Borrower under clause (viii) of the definition of Debt,
         provided, however that Borrower Interest Expense shall exclude any
         costs otherwise included in interest expense recognized on early
         retirement of debt.

                                       3

<PAGE>

                  "BORROWING" means a borrowing consisting of Loans of the same
         Type, having the same Interest Period and made or Converted on the same
         day by the Lenders, ratably in accordance with their respective
         Percentages. Any Borrowing consisting of Loans of a particular Type may
         be referred to as being a Borrowing of such "TYPE". All Loans of the
         same Type, having the same Interest Period and made or Converted on the
         same day shall be deemed a single Borrowing hereunder until repaid or
         next Converted.

                  "BUSINESS DAY" means a day of the year on which banks are not
         required or authorized to close in New York City and Detroit, Michigan,
         and, if the applicable Business Day relates to any Eurodollar Rate
         Loan, on which dealings are carried on in the London interbank market.

                  "CASH DIVIDEND INCOME" means, for any period, the amount of
         all cash dividends received by the Borrower from its Subsidiaries
         during such period that are paid out of the net income or loss (without
         giving effect to: any extraordinary gains in excess of $25,000,000, the
         amount of any write-off or write-down of assets, including, without
         limitation, write-offs or write-downs related to the sale of assets,
         impairment of assets and loss on contracts, in each case in accordance
         with GAAP consistently applied, and up to $200,000,000 of other
         non-cash write-offs) of such Subsidiaries during such period.

                  "CD RATE" means the latest three-week moving average of
         secondary market morning offering rates in the United States for
         three-month certificates of deposit of major United States money market
         banks, such three-week moving average being determined weekly on each
         Monday (or, if such day is not a Business Day, on the next succeeding
         Business Day) for the three-week period ending on the previous Friday
         by Citibank on the basis of such rates reported by certificate of
         deposit dealers to and published by the Federal Reserve Bank of New
         York or, if such publication shall be suspended or terminated, on the
         basis of quotations for such rates received by Citibank from three New
         York certificate of deposit dealers of recognized standing selected by
         Citibank, in either case, adjusted to the nearest 1/16 of one percent
         or, if there is no nearest 1/16 of one percent, to the next higher 1/16
         of one percent.

                  "CHANGE OF CONTROL" means (a) any "person" or "group" within
         the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act shall
         become the "beneficial owner" (as defined in Rule 13d-3 under the
         Exchange Act) of more than 50% of the then outstanding voting capital
         stock of the Borrower, or (b) the majority of the board of directors of
         the Borrower shall fail to consist of Continuing Directors, or (c) a
         consolidation or merger of the Borrower shall occur after which the
         holders of the outstanding voting capital stock of the Borrower
         immediately prior thereto hold less than 50% of the outstanding voting
         capital stock of the surviving entity, or (d) more than 50% of the
         outstanding voting capital stock of the Borrower shall be transferred
         to any entity of which the Borrower owns less than 50% of the
         outstanding voting capital stock.

                  "CITIBANK" means Citibank, N.A., a national banking
         association.

                                       4

<PAGE>

                  "CITIGROUP PARTIES" means Citibank, CUSA, Salomon Smith Barney
         Inc. and each of their respective Affiliates, and each of their
         respective officers, directors, employees, agents, advisors, and
         representatives.

                  "CLOSING DATE" means March 30, 2003.

                  "COLLATERAL" means all property and interests in property now
         owned or hereafter acquired by any Loan Party upon which a Lien is
         granted under any of the Loan Documents.

                  "COMMITMENT" means, for each Lender, such Lender's Facility A
         Commitment (including such Lender's Facility A Revolving Commitment)
         and Facility B Commitment. "COMMITMENTS" means the total of the
         Lenders' Commitments hereunder. As of the Closing Date the aggregate of
         all of the Lenders' Commitments equals $409,000,000.

                  "COMMITMENT FEE MARGIN" means a per annum rate equal to the
         sum of the Adjusted LIBO Rate for such Interest Period plus 5.50%.

                  "COMMITMENT SCHEDULE" means the Schedule identifying each
         Lender's Commitment as of the Closing Date attached hereto and
         identified as such.

                  "COMMITMENT TERMINATION DATE" means the earlier of (i) the
         Conversion Date, (ii) the date of delivery of any Notice to Convert,
         and (iii) the date of termination or reduction in whole of the Facility
         A Revolving Commitments pursuant to Section 2.03 or 8.02.

                  "COMMUNICATIONS" is defined in Section 10.15.

                  "CONFIDENTIAL INFORMATION" has the meaning assigned to that
         term in Section 10.08.

                  "CONSOLIDATED DEBT" means, without duplication, as determined
         on a consolidated basis in accordance with GAAP, at any date of
         determination, the sum of the aggregate Debt of the Borrower plus the
         aggregate debt (as such term is construed in accordance with GAAP) of
         the Consolidated Subsidiaries; provided, however, that:

                           (a)      Consolidated Debt shall not include any
                  Support Obligation described in clause (iv) or (v) of the
                  definition thereof if such Support Obligation or the primary
                  obligation so supported is not fixed or conclusively
                  determined or is not otherwise reasonably quantifiable as of
                  the date of determination;

                           (b)      Consolidated Debt shall not include (i) any
                  Junior Subordinated Debt owned by any Hybrid Preferred
                  Securities Subsidiary or (ii) any guaranty by the Borrower of
                  payments with respect to any Hybrid Preferred Securities,
                  provided that such guaranty is subordinated to the rights of
                  the Lenders hereunder and under the other Loan Documents
                  pursuant to terms of subordination

                                       5

<PAGE>

                  substantially similar to those set forth in Exhibit H, or
                  pursuant to other terms and conditions satisfactory to the
                  Required Lenders;

                           (c)      for purposes of this definition only, the
                  percentage of the Net Proceeds from any issuance of hybrid
                  debt/equity securities (other than Junior Subordinated Debt
                  and Hybrid Preferred Securities) by the Borrower or any
                  Consolidated Subsidiary that shall be considered Consolidated
                  Debt shall be agreed by the Arranger and the Borrower (and
                  consented to by the Required Lenders) and shall be based on,
                  among other things, the treatment (if any) given to such
                  hybrid securities by the rating agencies;

                           (d)      with respect to any Support Obligations
                  provided by the Borrower in connection with a purchase or sale
                  by MS&T or its Subsidiaries of natural gas, natural gas
                  liquids, gas condensates, electricity, oil, propane, coal, any
                  other commodity, weather derivatives or any derivative
                  instrument with respect to any commodity with any other Person
                  (a "COUNTERPARTY"), Consolidated Debt shall include only the
                  excess, if any, of (A) the aggregate amount of any Support
                  Obligations provided by the Borrower in respect of MS&T's or
                  any of its Subsidiary's obligations under any such purchase or
                  sale transaction (a "COVERING TRANSACTION") entered into by
                  MS&T or any of its Subsidiaries in connection with such
                  purchase or sale over (B) the aggregate amount of (i) any
                  Support Obligations provided by the direct or indirect parent
                  company of such Counterparty (the "COUNTERPARTY GUARANTOR")
                  and (ii) any irrevocable letter of credit provided by any
                  financial institution for the account of such Counterparty or
                  Counterparty Guarantor, in each case for the benefit of MS&T
                  or any of its Subsidiaries in support of such Counterparty's
                  payment obligations to MS&T or such Subsidiary arising from
                  such purchase or sale, provided that (x) the senior,
                  unsecured, non-credit enhanced indebtedness of such
                  Counterparty Guarantor or such financial institution (as the
                  case may be) is rated BBB- (or its equivalent) or higher by
                  any two of S&P, Fitch and Moody's, provided that in the event
                  that such Counterparty Guarantor has no such rated
                  indebtedness, Dun & Bradstreet Inc. has rated such
                  Counterparty Guarantor at least investment grade, (y) no
                  default by such Counterparty Guarantor in respect of any such
                  Support Obligations provided by such Counterparty Guarantor
                  has occurred and is continuing and (z) such Counterparty
                  Guarantor is not the Borrower or any Affiliate of the Borrower
                  or any of its Subsidiaries;

                           (e)      Consolidated Debt shall not include any
                  Project Finance Debt of the Borrower or any Consolidated
                  Subsidiary; and

                           (f)      Consolidated Debt shall not include the
                  principal amount of any Securitized Bonds.

                  "CONSOLIDATED EBITDA" means, with reference to any period, the
         pretax operating income of the Borrower and its Subsidiaries ("PRETAX
         OPERATING INCOME") for such period plus, to the extent deducted in
         determining Pretax Operating Income (without duplication), (i)
         depreciation, depletion and amortization, and (ii) any non-cash

                                       6

<PAGE>

         write-offs and write-downs contained in the Borrower's Pretax Operating
         Income, including, without limitation, write-offs or write-downs
         related to the sale of assets, impairment of assets and loss on
         contracts, in each case in accordance with GAAP consistently applied,
         all calculated for the Borrower and its Subsidiaries on a consolidated
         basis for such period; provided, however that Consolidated EBITDA shall
         not include any operating income attributable to that portion of the
         revenues of Consumers dedicated to the repayment of the Securitized
         Bonds.

                  "CONSOLIDATED SUBSIDIARY" means any Subsidiary whose accounts
         are or are required to be consolidated with the accounts of the
         Borrower in accordance with GAAP.

                  "CONSUMERS" means Consumers Energy Company, a Michigan
         corporation, all of whose common stock is on the Closing Date owned by
         the Borrower.

                  "CONSUMERS CREDIT FACILITY" means, collectively, Consumer's
         existing (i) $300,000,000 term loan facility, (ii) $150,000,000 term
         loan B facility, (iii) $140,000,000 term loan facility and (iv)
         $250,000,000 revolving loan facility, as in effect on the date hereof.

                  "CONSUMERS DIVIDEND RESTRICTION" means any restriction enacted
         or imposed after October 1, 1992 upon the ability of Consumers to pay
         cash dividends to the Borrower in respect of Consumers' capital stock,
         whether such restriction is imposed by statute, regulation, decisions
         or rulings by the Michigan Public Service Commission or the Federal
         Energy Regulatory Commission (or any successor agency or agencies),
         final judgments of any court of competent jurisdiction, indentures,
         agreements, contracts or restrictions to which Consumers is a party or
         by which it is bound or otherwise; provided, that no restriction on
         such dividends existing on October 1, 1992 shall be a Consumers
         Dividend Restriction at any time.

                  "CONTINUING DIRECTOR" means, as of any date of determination,
         any member of the board of directors of the Borrower who (a) was a
         member of such board of directors on the Closing Date, or (b) was
         nominated for election or elected to such board of directors with the
         approval of the Continuing Directors who were members of such board of
         directors at the time of such nomination or election; provided that an
         individual who is so elected or nominated in connection with a merger,
         consolidation, acquisition or similar transaction shall not be a
         Continuing Director unless such individual was a Continuing Director
         prior thereto.

                  "CONVERSION", "CONVERT" or "CONVERTED" refers to a conversion
         of Loans of one Type into Loans of another Type, or to the selection of
         a new, or the renewal of the same, Interest Period for Loans, as the
         case may be, pursuant to Section 3.02 or 3.03.

                  "CONVERSION DATE" is defined in Section 2.01(d).

                  "DEBT" means, for any Person, without duplication, any and all
         indebtedness, liabilities and other monetary obligations of such Person
         (whether for principal, interest, fees, costs, expenses or otherwise,
         and whether contingent or otherwise) (i) for borrowed money or
         evidenced by bonds, debentures, notes or other similar instruments,
         (ii) to pay

                                       7

<PAGE>

         the deferred purchase price of property or services (except trade
         accounts payable arising in the ordinary course of business which are
         not overdue), (iii) as lessee under leases which shall have been or
         should be, in accordance with GAAP, recorded as capital leases, (iv)
         under reimbursement or similar agreements with respect to letters of
         credit issued thereunder (except reimbursement obligations and letters
         of credit that are cash collateralized), (v) under any interest rate
         swap, "cap", "collar" or other hedging agreements; provided, however,
         for purposes of the calculation of Debt for this clause (v) only, the
         actual amount of Debt of such Person shall be determined on a net basis
         to the extent such agreements permit such amounts to be calculated on a
         net basis, (vi) to pay rent or other amounts under leases entered into
         in connection with sale and leaseback transactions involving assets of
         such Person being sold in connection therewith, (vii) arising from any
         accumulated funding deficiency (as defined in Section 412(a) of the
         Internal Revenue Code of 1986, as amended) for a Plan, (viii) arising
         in connection with any withdrawal liability under ERISA to any
         Multiemployer Plan and (ix) arising from (A) direct or indirect
         guaranties in respect of, and obligations to purchase or otherwise
         acquire, or otherwise to warrant or hold harmless, pursuant to a
         legally binding agreement, a creditor against loss in respect of, Debt
         of others referred to in clauses (i) through (viii) above and (B) other
         guaranty or similar financial obligations in respect of the performance
         of others, including Support Obligations. Notwithstanding the
         foregoing, solely for purposes of the calculation required under
         Section 7.01(j)(ii), Debt shall not include any Junior Subordinated
         Debt issued by the Borrower and owned by any Hybrid Preferred
         Securities Subsidiary.

                  "DEBT FOR BORROWED MONEY" means, for any Person, without
         duplication, the sum of (i) Debt of such Person described in clause (i)
         of the definition of "Debt", plus (ii) all obligations of such Person
         with respect to receivables sold or otherwise discounted with recourse,
         plus (iii) all Project Finance Debt entered into by such Person on or
         after the Closing Date (other than Project Finance Debt incurred
         substantially contemporaneously with the acquisition or construction of
         the assets securing such Project Finance Debt), but shall exclude (a)
         notes, bills and checks presented in the ordinary course of business by
         such Person to banks for collection or deposit, (b) with respect to the
         Borrower and its Subsidiaries, all obligations of the Borrower and its
         Subsidiaries of the character referred to in this definition to the
         extent owing to the Borrower or any of its Subsidiaries, (c) with
         respect to Panhandle and its Subsidiaries, refinancings of Debt of
         Panhandle and its Subsidiaries existing as of the Closing Date, and
         Debt incurred or collateral delivered on or after the Closing Date with
         respect to any Support Obligations of Panhandle or its Subsidiaries
         existing as of the Closing Date, and (d) refinancings of Debt existing
         as of the Closing Date or incurred after the Closing Date in accordance
         with this Agreement, as applicable, to the extent such refinancing Debt
         is otherwise permitted under this Agreement.

                  "DEFAULT" means an event that, with the giving of notice or
         lapse of time or both, would constitute an Event of Default.

                  "DEFAULT RATE" means a rate per annum equal at all times to
         (i) in the case of any amount of principal of any Loan that is not paid
         when due, 2% per annum above the Applicable Rate required to be paid on
         such Loan immediately prior to the date on which

                                       8

<PAGE>

         such amount became due, and (ii) in the case of any amount of interest,
         fees or other amounts payable hereunder that is not paid when due, 2%
         per annum above the Applicable Rate for an ABR Loan in effect from time
         to time.

                  "DESIGNATED PREPAYMENT" means each mandatory prepayment
         required by clauses (i), (ii) and (iii) of Section 2.03(b).

                  "DIVIDEND COVERAGE RATIO" means, at any date, the ratio of (i)
         Pro Forma Dividend Amounts to (ii) Borrower Interest Expense.

                  "DOLLARS" and the sign "$" each means lawful money of the
         United States.

                  "ENTERPRISES" means CMS Enterprises Company, a Michigan
         corporation, all of whose common stock is on the Closing Date owned by
         the Borrower.

                  "ENTERPRISES CREDIT AGREEMENT" means that certain $150,000,000
         Credit Agreement, dated as of July 12, 2002, by and among Enterprises,
         as borrower, the Borrower, the lenders from time to time parties
         thereto, and Citicorp USA, Inc., as administrative agent and as
         collateral agent, which agreement has been paid in full and terminated.

                  "ENTERPRISES 2003 CREDIT AGREEMENT" means that certain
         revolving Credit Agreement, dated as of March 30, 2003, by and among
         Enterprises, as borrower, the Borrower, the lenders from time to time
         parties thereto, and CUSA, as administrative agent, as the same may be
         amended, restated, supplemented or otherwise modified from time to
         time.

                  "ENTERPRISES SIGNIFICANT SUBSIDIARY" means CMS Generation Co.,
         CMS Gas Transmission Company, Panhandle, any direct or indirect
         subsidiary of Panhandle and any other direct subsidiary of Enterprises
         having a net worth in excess of $50,000,000.

                  "ENVIRONMENTAL LAWS" means all laws, rules, regulations,
         codes, ordinances, orders, decrees, judgments, injunctions, notices or
         binding agreements issued, promulgated or entered into by any
         governmental agency or authority, relating in any way to the
         environment, preservation or reclamation of natural resources, the
         management, release or threatened release of any Hazardous Substance or
         to health and safety matters.

                  "ENVIRONMENTAL LIABILITY" means any liability, contingent or
         otherwise (including any liability for damages, costs of environmental
         remediation, fines, penalties or indemnities), of the Borrower or any
         of its Subsidiaries directly or indirectly resulting from or based upon
         (a) violation of any Environmental Law, (b) the generation, use,
         handling, transportation, storage, treatment or disposal of any
         Hazardous Substances, (c) exposure to any Hazardous Substances, (d) the
         release or threatened release of any Hazardous Substances into the
         environment or (e) any contract, agreement or other consensual
         arrangement pursuant to which liability is assumed or imposed with
         respect to any of the foregoing.

                                       9

<PAGE>

                  "EQUITY DISTRIBUTIONS" means, for any period, the aggregate
         amount of cash received by the Borrower from its Subsidiaries during
         such period that are paid out of proceeds from the sale of common
         equity of Subsidiaries of the Borrower.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time.

                  "ERISA AFFILIATE" means, with respect to any Person, any trade
         or business (whether or not incorporated) that is a member of a
         commonly controlled trade or business under Sections 414(b), (c), (m)
         and (o) of the Internal Revenue Code of 1986, as amended.

                  "EURODOLLAR", when used in reference to any Loan or Borrowing,
         refers to whether such Loan, or the Loans comprising such Borrowing,
         are bearing interest at a rate determined by reference to the Adjusted
         LIBO Rate.

                  "EURODOLLAR RATE LOAN" means a Loan that bears interest as
         provided in Section 3.05(b)(ii).

                  "EVENT OF DEFAULT" is defined in Section 8.01.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
         amended.

                  "EXISTING CREDIT AGREEMENTS" means, collectively, (i) that
         certain $300,000,000 Amended and Restated Credit Agreement (the
         "EXISTING 3-YEAR CREDIT AGREEMENT"), and (ii) that certain $295,800,000
         Amended and Restated Credit Agreement (the "EXISTING 364-DAY CREDIT
         AGREEMENT"), each dated as of July 12, 2002, among the Borrower, the
         lenders party thereto, Barclays Bank PLC, as administrative agent,
         Citicorp USA, Inc, as collateral agent, Bank of America, N.A. and
         JPMorgan Chase Bank, as co-syndication agents, and Citicorp USA, Inc.
         and Union Bank of California, N.A., as documentation agents, as the
         same may have been amended, restated, supplemented or otherwise
         modified from time to time.

                  "EXTENSION OF CREDIT" means the making of a Borrowing
         (including any Conversion).

                  "FACILITY A COMMITMENT" means, for each Lender, the obligation
         of such Lender to make Facility A Loans (including Facility A Revolving
         Loans pursuant to such Lender's Facility A Revolving Commitment) to the
         Borrower in an aggregate amount no greater than the amount set forth
         opposite such Lender's name on the Commitment Schedule under the
         heading "Facility A Commitment".

                  "FACILITY A LOAN" means, for any Lender, term loans made by
         such Lender as set forth in Section 2.01 and such Lender's Facility A
         Revolving Loans.

                  "FACILITY A MATURITY DATE" means April 30, 2004.

                                       10

<PAGE>

                  "FACILITY A REVOLVING COMMITMENT" means, for each Lender, the
         obligation of such Lender to make Facility A Revolving Loans to the
         Borrower prior to the Commitment Termination Date in an aggregate
         amount no greater than aggregate outstanding principal amount of the
         Initial Amendment and Restatement Revolving Loans as of the Closing
         Date, or, if such Lender has entered into one or more Lender
         Assignments, set forth for such Lender in the Register maintained by
         the Administrative Agent pursuant to Section 10.07(c), in each such
         case as such amount may be reduced from time to time pursuant to
         Section 2.03.

                  "FACILITY A REVOLVING LOANS" means, for each Lender, Loans
         made pursuant to such Lender's Facility A Revolving Commitment
         hereunder.

                  "FACILITY B COMMITMENT" means, for each Lender, the obligation
         of such Lender to make Facility B Loans to the Borrower in an aggregate
         amount no greater than the amount set forth opposite such Lender's name
         on the Commitment Schedule under the heading "Facility B Commitment".

                  "FACILITY B LOAN" is defined in Section 2.01.

                  "FACILITY B MATURITY DATE" means September 30, 2004.

                  "FAIR MARKET VALUE" means, with respect to any asset, the
         value of the consideration obtainable in a sale of such asset in the
         open market, assuming a sale by a willing seller to a willing purchaser
         dealing at arm's length and arranged in an orderly manner over a
         reasonable period of time, each having reasonable knowledge of the
         nature and characteristics of such asset, neither being under any
         compulsion to act, and, if in excess of $50,000,000, as determined in
         good faith by the Board of Directors of the Borrower.

                  "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the
         weighted average (rounded upwards, if necessary, to the next 1/100 of
         1%) of the rates on overnight Federal funds transactions with members
         of the Federal Reserve System arranged by Federal funds brokers, as
         published on the next succeeding Business Day by the Federal Reserve
         Bank of New York, or, if such rate is not so published for any day that
         is a Business Day, the average (rounded upwards, if necessary, to the
         next 1/100 of 1%) of the quotations for such day for such transactions
         received by the Administrative Agent from three Federal funds brokers
         of recognized standing selected by it.

                  "FEE LETTER" is defined in Section 2.02(b).

                  "FITCH" means Fitch, Inc. or any successor thereto.

                  "FOREIGN LENDER" means any Lender that is organized under the
         laws of a jurisdiction other than that in which the Borrower is
         located. For purposes of this definition, the United States of America,
         each State thereof and the District of Columbia shall be deemed to
         constitute a single jurisdiction.

                  "FOREIGN SUBSIDIARY" is defined in Section 7.01(l).

                                       11

<PAGE>

                  "GAAP" is defined in Section 1.03.

                  "GOVERNMENTAL APPROVAL" means any authorization, consent,
         approval, license, permit, certificate, exemption of, or filing or
         registration with, any governmental authority or other legal or
         regulatory body, required in connection with (i) the execution,
         delivery, or performance of any Loan Document by any Loan Party, (ii)
         the grant and perfection of any Lien in favor of the Collateral Agent
         contemplated by the Loan Documents, or (iii) the exercise by any Agent
         (on behalf of the Lenders) of any right or remedy provided for under
         the Loan Documents.

                  "GRANTOR(S)" means each Guarantor and each of the following
         Subsidiaries of the Borrower: CMS Capital, L.L.C., a Michigan limited
         liability company, CMS Electric & Gas, L.L.C. (formerly known as CMS
         Electric and Gas Company), a Michigan limited liability company, MS&T,
         CMS International Ventures, L.L.C., a Michigan limited liability
         company, CMS Field Services, Inc., a Michigan corporation, Dearborn
         Industrial Energy, L.L.C., a Michigan limited liability company,
         Dearborn Industrial Generation, L.L.C., a Michigan limited liability
         company, CMS Generation Michigan Power L.L.C., a Michigan limited
         liability company, CMS Gas Processing, L.L.C., an Oklahoma limited
         liability company, CMS Natural Gas Gathering, L.L.C., an Oklahoma
         limited liability company and CMS Field Services Holdings Company, an
         Oklahoma corporation.

                  "GUARANTOR" means Enterprises, CMS Generation Co., a Michigan
         corporation, CMS Gas Transmission Company, a Michigan corporation, and
         each other Restricted Subsidiary (excluding Panhandle and its
         Subsidiaries) that has delivered, or shall be obligated to deliver, a
         guaranty under and pursuant to the terms of Section 7.01(l).

                  "GUARANTY" means that certain Guaranty (and any and all
         supplements thereto) executed from time to time by each Guarantor in
         favor of the Collateral Agent for the benefit of itself and the
         Lenders, in substantially the form of Exhibit I attached hereto, as
         amended, restated, supplemented or otherwise modified from time to
         time.

                  "HAZARDOUS SUBSTANCE" means any waste, substance, or material
         identified as hazardous, dangerous or toxic by any office, agency,
         department, commission, board, bureau, or instrumentality of the United
         States or of the State or locality in which the same is located having
         or exercising jurisdiction over such waste, substance or material.

                  "HYBRID PREFERRED SECURITIES" means any preferred securities
         issued by a Hybrid Preferred Securities Subsidiary, where such
         preferred securities have the following characteristics:

                           (i)      such Hybrid Preferred Securities Subsidiary
                  lends substantially all of the proceeds from the issuance of
                  such preferred securities to the Borrower or a wholly-owned
                  direct or indirect Subsidiary of the Borrower in exchange for
                  Junior Subordinated Debt issued by the Borrower or such
                  wholly-owned direct or indirect Subsidiary, respectively;

                                       12

<PAGE>

                           (ii)     such preferred securities contain terms
                  providing for the deferral of interest payments corresponding
                  to provisions providing for the deferral of interest payments
                  on the Junior Subordinated Debt; and

                           (iii)    the Borrower or a wholly-owned direct or
                  indirect Subsidiary of the Borrower (as the case may be) makes
                  periodic interest payments on the Junior Subordinated Debt,
                  which interest payments are in turn used by the Hybrid
                  Preferred Securities Subsidiary to make corresponding payments
                  to the holders of the preferred securities.

                  "HYBRID PREFERRED SECURITIES SUBSIDIARY" means any Delaware
         business trust (or similar entity) (i) all of the common equity
         interest of which is owned (either directly or indirectly through one
         or more wholly-owned Subsidiaries of the Borrower or Consumers) at all
         times by the Borrower or a wholly-owned direct or indirect Subsidiary
         of the Borrower, (ii) that has been formed for the purpose of issuing
         Hybrid Preferred Securities and (iii) substantially all of the assets
         of which consist at all times solely of Junior Subordinated Debt issued
         by the Borrower or a wholly-owned direct or indirect Subsidiary of the
         Borrower (as the case may be) and payments made from time to time on
         such Junior Subordinated Debt.

                  "INDEMNIFIED PERSON" is defined in Section 10.04(b).

                  "INDENTURE" means that certain Indenture, dated as of
         September 15, 1992, between the Borrower and the Trustee, as
         supplemented by the First Supplemental Indenture, dated as of October
         1, 1992, the Second Supplemental Indenture, dated as of October 1,
         1992, the Third Supplemental Indenture, dated as of May 6, 1997, the
         Fourth Supplemental Indenture, dated as of September 26, 1997, the
         Fifth Supplemental Indenture, dated as of November 4, 1997, the Sixth
         Supplemental Indenture, dated as of January 13, 1998, the Seventh
         Supplemental Indenture, dated as of January 25, 1999, the Eighth
         Supplemental Indenture, dated as of February 3, 1999, the Ninth
         Supplemental Indenture, dated as of June 22, 1999, the Tenth
         Supplemental Indenture, dated as of October 12, 2000, the Eleventh
         Supplemental Indenture, dated as of March 29, 2001, and the Twelfth
         Supplemental Indenture, dated as of July 2, 2001, as said Indenture may
         be further amended or otherwise modified from time to time in
         accordance with its terms.

                  "INITIAL AMENDMENT AND RESTATEMENT" is defined in the first
         recital hereto.

                  "INITIAL AMENDMENT AND RESTATEMENT REVOLVING LOANS" is defined
         in the first recital hereto.

                  "INITIAL FUNDING DATE" mean the initial date the Loans are
         made hereunder.

                  "INTERCREDITOR AGREEMENT" means that certain Intercreditor and
         Lien Subordination Agreement, dated as of January 8, 2003, by and among
         Citicorp USA, Inc., as senior collateral agent, American Home Assurance
         Company, individually and as junior collateral agent, and St. Paul Fire
         and Marine Insurance Company, individually, a copy of which is attached
         hereto as Exhibit M, as amended, restated, supplemented or otherwise
         modified from time to time.

                                       13

<PAGE>

                  "INTEREST PERIOD" is defined in Section 3.03.

                  "JUNIOR SUBORDINATED DEBT" means any unsecured Debt of the
         Borrower or a Subsidiary of the Borrower (i) issued in exchange for the
         proceeds of Hybrid Preferred Securities and (ii) subordinated to the
         rights of the Lenders hereunder and under the other Loan Documents
         pursuant to terms of subordination substantially similar to those set
         forth in Exhibit G, or pursuant to other terms and conditions
         satisfactory to the Required Lenders.

                  "LENDER ASSIGNMENT" is defined in Section 10.07(e).

                  "LENDERS" means the Banks listed on the signature pages
         hereof, together with their successors and assigns.

                  "LIBO RATE" means, with respect to any Eurodollar Borrowing
         for any Interest Period, the greater of (i) 2.00% per annum and (ii)
         the rate appearing on Page 3750 of the Telerate Service (or on any
         successor or substitute page of such Service, or any successor to or
         substitute for such Service, providing rate quotations comparable to
         those currently provided on such page of such Service, as determined by
         the Administrative Agent from time to time for purposes of providing
         quotations of interest rates applicable to dollar deposits in the
         London interbank market) at approximately 11:00 a.m., London time, two
         Business Days prior to the commencement of such Interest Period, as the
         rate for dollar deposits with a maturity comparable to such Interest
         Period. In the event that such rate is not available at such time for
         any reason, then the "LIBO RATE" with respect to such Eurodollar
         Borrowing for such Interest Period shall be the rate at which dollar
         deposits of $5,000,000 and for a maturity comparable to such Interest
         Period are offered by the principal London office of the Administrative
         Agent in immediately available funds in the London interbank market at
         approximately 11:00 a.m., London time, two Business Days prior to the
         commencement of such Interest Period.

                  "LIEN" is defined in Section 7.02(a).

                  "LOAN" means a loan by a Lender to the Borrower, and refers to
         an ABR Loan or a Eurodollar Rate Loan (each of which shall be a "TYPE"
         of Loan). All Loans by a Lender of the same Type having the same
         Interest Period and made or Converted on the same day shall be deemed
         to be a single Loan by such Lender until repaid or next Converted.

                  "LOAN DOCUMENTS" means this Agreement, any Promissory Notes,
         the Fee Letter, the Guaranty, the Pledge Agreements, and all other
         agreements, instruments and documents now or hereafter executed and/or
         delivered pursuant hereto or thereto.

                  "LOAN PARTY" is defined in Section 5.01(a)(i).

                  "MATERIAL ADVERSE CHANGE" means any event, development or
         circumstance that has had or could reasonably be expected to have a
         material adverse effect on (a) the business, assets, property,
         financial condition, results of operations or prospects of the Borrower
         and its Subsidiaries, considered as a whole, (b) the Borrower's and the

                                       14

<PAGE>

         Guarantors' ability, taken as a whole, to perform their obligations
         under this Agreement or any other Loan Document to which it is or will
         be a party or (c) the validity or enforceability of any Loan Document
         or the rights or remedies of any Agent or the Lenders thereunder;
         provided that the occurrence of any Restatement Event shall not
         constitute a Material Adverse Change.

                  "MEASUREMENT QUARTER" is defined in Section 7.01(i).

                  "MOODY'S" means Moody's Investors Service, Inc. or any
         successor thereto.

                  "MS&T" means CMS Marketing, Services and Trading Company, a
         Michigan corporation, all of whose capital stock is on the Closing Date
         owned by Enterprises.

                  "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
         Section 4001(a)(3) of ERISA.

                  "NET PROCEEDS" means, with respect to any sale, assignment or
         other disposition of (but not the lease or license of) any property, or
         with respect to any sale or issuance of securities or incurrence of
         Debt, by any Person, gross cash proceeds received by such Person or any
         Subsidiary of such Person from such sale, assignment, disposition,
         issuance or incurrence (including cash received as consideration for
         the assumption or incurrence of liabilities incurred in connection with
         or in anticipation of such transaction) after (i) provision for all
         income or other taxes measured by or resulting from such transaction,
         (ii) payment of all customary underwriting commissions, auditing and
         legal fees, printing costs, rating agency fees and other customary and
         reasonable fees and expenses incurred by such Person in connection with
         such transaction, (iii) all amounts used to repay Debt (and any premium
         or penalty thereon) secured by a Lien on any asset disposed of in such
         sale, assignment or other disposition or which is or may be required
         (by the express terms of the instrument governing such Debt or by
         applicable law) to be repaid in connection with such sale, assignment,
         or other disposition, and (iv) deduction of appropriate amounts to be
         provided by such Person or a Subsidiary of such Person as a reserve, in
         accordance with GAAP consistently applied, against any liabilities
         associated with the assets sold, transferred or disposed of in such
         transaction and retained by such Person or a Subsidiary of such Person
         after such transaction, provided that "Net Proceeds" shall include on a
         dollar-for-dollar basis all amounts remaining in such reserve after
         such liability shall have been satisfied in full or terminated;
         provided, however, that notwithstanding the foregoing, "Net Proceeds"
         shall exclude (a) any amounts received or deemed to be received by the
         Borrower for the purchase of the Borrower's capital stock in connection
         with the Borrower's dividend reinvestment program and (b) amounts
         received by the Borrower or any Subsidiary of the Borrower pursuant to
         any transaction with the Borrower or any Subsidiary of the Borrower
         otherwise permitted hereunder.

                  "NET WORTH" means, with respect to any Person, the excess of
         such Person's total assets over its total liabilities, total assets and
         total liabilities each to be determined in accordance with GAAP
         consistently applied, excluding, however, from the determination of
         total assets (i) goodwill, organizational expenses, research and
         development expenses, trademarks, trade names, copyrights, patents,
         patent applications, licenses and rights in

                                       15

<PAGE>

         any thereof, and other similar intangibles, (ii) cash held in a
         sinking, escrow or other analogous fund established for the purpose of
         redemption, retirement or prepayment of capital stock or Debt, and
         (iii) any items not included in clauses (i) or (ii) above, that are
         treated as intangibles in conformity with GAAP.

                  "NOTICE OF BORROWING" is defined in Section 3.01(a).

                  "NOTICE OF CONVERSION" is defined in Section 3.02.

                  "NOTICE TO CONVERT" is defined in Section 2.01(d).

                  "OBLIGATIONS" means all unpaid principal of and accrued and
         unpaid interest on the Loans, all accrued and unpaid fees and all
         expenses, reimbursements, indemnities and other obligations of the
         Borrower and other Loan Parties to any of the Agents, the Arranger, the
         Lenders or any other indemnified party arising under the Loan
         Documents.

                  "OECD" means the Organization for Economic Cooperation and
         Development.

                  "OFF-BALANCE SHEET LIABILITY" of a Person shall mean any of
         the following obligations not appearing on such Person's consolidated
         balance sheet: (i) all lease obligations, leveraged leases, sale and
         leasebacks and other similar lease arrangements of such Person, (ii)
         any liability under any so called "synthetic lease" or "tax ownership
         operating lease" transaction entered into by such Person, and (iii) any
         obligation arising with respect to any other transaction if and to the
         extent that such obligation is the functional equivalent of borrowing
         but that does not constitute a liability on the consolidated balance
         sheet of such Person.

                  "OWNERSHIP INTEREST" of the Borrower in any Consolidated
         Subsidiary means, at any date of determination, the percentage
         determined by dividing (i) the aggregate amount of Project Finance
         Equity in such Consolidated Subsidiary owned or controlled, directly or
         indirectly, by the Borrower and any other Consolidated Subsidiary on
         such date, by (ii) the aggregate amount of Project Finance Equity in
         such Consolidated Subsidiary owned or controlled, directly or
         indirectly, by all Persons (including the Borrower and the Consolidated
         Subsidiaries) on such date. Notwithstanding anything to the contrary
         set forth above, if the "Ownership Interest," calculated as set forth
         above, is 50% or less, such percentage shall be deemed to equal 0%.

                  "PANHANDLE" means Panhandle Eastern Pipe Line Company, a
         Delaware corporation, all of whose capital stock is on the Closing Date
         owned indirectly by Enterprises.

                  "PARTICIPANT" is defined in Section 10.07(b).

                  "PBGC" means the Pension Benefit Guaranty Corporation (or any
         successor entity) established under ERISA.

                  "PERCENTAGE" means, for any Lender on any date of
         determination (a) prior to the Commitment Termination Date, the
         percentage obtained by dividing the aggregate

                                       16

<PAGE>

         outstanding principal amount of such Lender's Loans (other than
         Facility A Revolving Loans) on such day plus such Lender's Facility A
         Revolving Commitment on such day by the total of the Lenders' Loans
         (other than Facility A Revolving Loans) plus Facility A Revolving
         Commitments on such date, and multiplying the quotient so obtained by
         100%, and (b) from and after the Commitment Termination Date, the
         percentage obtained by dividing the aggregate outstanding principal
         amount of such Lender's Loans on such day by the total of the Lenders'
         Loans on such date, and multiplying the quotient so obtained by 100%.

                  "PERMITTED INVESTMENTS" means each of the following so long as
         no such Permitted Investment shall have a final maturity later than six
         months from the date of investment therein:

                           (i)      direct obligations of the United States, or
                  of any agency thereof, or obligations guaranteed as to
                  principal and interest by the United States or any agency
                  thereof;

                           (ii)     certificates of deposit or bankers'
                  acceptances issued, or time deposits held, or investment
                  contracts guaranteed, by any Lender, any nationally-recognized
                  securities dealer or any other commercial bank, trust company,
                  savings and loan association or savings bank organized under
                  the laws of the United States, or any State thereof, or of any
                  other country which is a member of the OECD, or a political
                  subdivision of any such country, and in each case having
                  outstanding unsecured indebtedness that (on the date of
                  acquisition thereof) is rated AA- or better by S&P or Aa3 or
                  better by Moody's (or an equivalent rating by another
                  nationally-recognized credit rating agency of similar standing
                  if neither of such corporations is then in the business of
                  rating unsecured bank indebtedness);

                           (iii)    obligations with any Lender, any other bank
                  or trust company described in clause (ii), above, or any
                  nationally-recognized securities dealer, in respect of the
                  repurchase of obligations of the type described in clause (i),
                  above, provided that such repurchase obligations shall be
                  fully secured by obligations of the type described in said
                  clause (i) and the possession of such obligations shall be
                  transferred to, and segregated from other obligations owned
                  by, such Lender, such other bank or trust company or such
                  securities dealer;

                           (iv)     commercial paper rated (on the date of
                  acquisition thereof) A-1 or P-1 or better by S&P or Moody's,
                  respectively (or an equivalent rating by another
                  nationally-recognized credit rating agency of similar standing
                  if neither of such corporations is then in the business of
                  rating commercial paper);

                           (v)      any eurodollar certificate of deposit issued
                  by any Lender or any other commercial bank, trust company,
                  savings and loan association or savings bank organized under
                  the laws of the United States, or any State thereof, or of any
                  country which is a member of the OECD, or a political
                  subdivision of any such country, and in each case having
                  outstanding unsecured indebtedness that (on the

                                       17

<PAGE>

                  date of acquisition thereof) is rated AA- or better by S&P or
                  Aa3 or better by Moody's (or an equivalent rating by another
                  nationally-recognized credit rating agency of similar standing
                  if neither of such corporations is then in the business of
                  rating unsecured bank indebtedness); and

                           (vi)     interests in any money market mutual fund
                  which at the date of investment in such fund has the highest
                  fund rating by each of Moody's and S&P which has issued a
                  rating for such fund (which, for S&P, shall mean a rating of
                  AAAm or AAAmg).

                  "PERSON" means an individual, partnership, corporation
         (including a business trust), joint stock company, limited liability
         company, trust, unincorporated association, joint venture or other
         entity, or a government or any political subdivision or agency thereof.

                  "PLAN" means, with respect to any Person, an "employee benefit
         plan" as defined in Section 3(3) of ERISA (other than a Multiemployer
         Plan) maintained for employees of such Person or any ERISA Affiliate of
         such Person that is subject to Title IV of ERISA and has "unfunded
         benefit liabilities" as determined under Section 4001(a)(18) of ERISA.

                  "PLAN TERMINATION EVENT" means, (i) with respect to any Plan,
         a "reportable event" within the meaning of Section 4043 of ERISA and
         the regulations issued thereunder (other than a "reportable event" not
         subject to the provision for 30-day notice to the PBGC under such
         regulations or a "reportable event" for which the provision for the
         30-day notice to the PBGC under such regulations has been waived), or
         (ii) the withdrawal by the Borrower or any of its ERISA Affiliates from
         a Plan during a plan year in which it was a "substantial employer" as
         defined in Section 4001(a)(2) of ERISA resulting in liability to the
         Borrower or any of its ERISA Affiliates under Section 4063 or 4064 of
         ERISA, or (iii) the filing of a notice of intent to terminate a Plan or
         the termination of a Plan under Section 4041 of ERISA, or (iv) the
         institution of proceedings to terminate a Plan by the PBGC, or (v) any
         other event or condition which is reasonably likely to constitute
         grounds under Section 4042 of ERISA for the termination of, or the
         appointment of a trustee to administer, any Plan.

                  "PLATFORM" is defined in Section 10.15

                  "PLEDGE AGREEMENTS" means each of (i) that certain Amended and
         Restated Pledge and Security Agreement, dated as of March 30, 2003, by
         and between the Borrower and the Collateral Agent, in substantially the
         form of Exhibit J attached hereto, pursuant to which the Borrower shall
         grant a security interest in the capital stock of Consumers and
         Enterprises and a security interest in accounts receivable and notes
         owed by Enterprises or any Subsidiary of Enterprises to the Borrower,
         and (ii) that certain Pledge and Security Agreement, dated as of July
         12, 2002, by and among the Grantors and the Collateral Agent in
         substantially the form of Exhibit K hereto, pursuant to which such
         Grantors shall grant a security interest in the capital stock (or
         comparable interest) of each of the Subsidiaries of the Borrower
         identified as owned by it on Schedule II

                                       18

<PAGE>

         hereto and a security interest in accounts receivable and notes owed by
         the Borrower or Enterprises or any Subsidiary of Enterprises to such
         Grantor, in each case as the same may be amended, restated,
         supplemented or otherwise modified from time to time.

                  "PRIMARY WEB PORTAL" is defined in Section 10.15.

                  "PRIME RATE" means the rate of interest per annum publicly
         announced from time to time by Citibank as its base rate in effect at
         its principal office in New York City; each change in the Prime Rate
         shall be effective from and including the date such change is publicly
         announced as being effective.

                  "PRO FORMA DIVIDEND AMOUNT" means, from and after any date of
         any Consumers Dividend Restriction, the sum of (a) the aggregate amount
         which Consumers could have paid to the Borrower during the four
         calendar quarters immediately preceding such date had such Consumers
         Dividend Restriction been in effect during such quarters plus (b) cash
         dividends received by the Borrower from any other Subsidiary during
         such quarters.

                  "PROJECT FINANCE DEBT" means Debt of any Person that is
         non-recourse to such Person (unless such Person is a special-purpose
         entity) and any Affiliate of such Person, other than with respect to
         the interest of the holder of such Debt in the collateral, if any,
         securing such Debt.

                  "PROJECT FINANCE EQUITY" means, at any date of determination,
         consolidated equity of the common, preference and preferred
         stockholders of the Borrower and the Consolidated Subsidiaries relating
         to any obligor with respect to Project Finance Debt.

                  "PROMISSORY NOTE" means any promissory note of the Borrower
         payable to the order of a Lender (and, if requested, its registered
         assigns) issued pursuant to Section 3.01(c); and "PROMISSORY NOTES"
         means any or all of the foregoing.

                  "RECIPIENT" is defined in Section 10.08.

                  "REGISTER" is defined in Section 10.07(h).

                  "RELATED PARTIES" means, with respect to any specified Person,
         such Person's Affiliates and the respective directors, officers,
         employees, agents and advisors of such Person and such Person's
         Affiliates.

                  "REQUIRED LENDERS" means, on any date of determination,
         Lenders that, collectively, on such date hold more than 50% of the then
         aggregate unpaid principal amount of the Loans owing to Lenders. Any
         determination of those Lenders constituting the Required Lenders shall
         be made by the Administrative Agent and shall be conclusive and binding
         on all parties absent manifest error.

                  "RESTATEMENT" means the restatement of the financial
         statements of the Borrower or its Subsidiaries for any fiscal quarter
         of 2001, as well as any adjustment of previously announced quarterly
         results, but only if made to reflect the restatement of such quarters.

                                       19

<PAGE>

                  "RESTATEMENT EVENT" means (i) the Restatement, (ii) any
         lawsuit or other action previously or hereafter brought against the
         Borrower, any of its Subsidiaries or any of their Affiliates or any
         present or former officer or director of the Borrower, any of its
         Subsidiaries or any of their Affiliates involving or arising out of the
         Restatement, and any settlement thereof, or other development with
         respect thereto, or (iii) the occurrence of any default or event of
         default under any indenture, instrument or other agreement or contract,
         or the exercise of any remedy in respect thereof, that arises directly
         or indirectly as a result of any of the matters described in any of the
         foregoing clauses (i) or (ii) or this clause (iii); provided, however,
         that, for purposes of the definition of "MATERIAL ADVERSE CHANGE", (a)
         the foregoing clause (ii) shall be inapplicable if such lawsuit or
         other action, settlement (in an amount in the aggregate together with
         all other settlements of such lawsuits or actions) or other development
         described in such clause (ii) could reasonably be expected, in each
         case, to result in liability to such Person in excess of $6,000,000 and
         (b) the foregoing clause (iii) shall be inapplicable if any such event
         described in such clause (iii) would constitute an Event of Default
         under Section 8.01(e).

                  "RESTRICTED SUBSIDIARY" means (i) Enterprises and (ii) any
         other Subsidiary of the Borrower (other than Consumers and its
         Subsidiaries) that, on a consolidated basis with any of its
         Subsidiaries as of any date of determination, accounts for more than
         10% of the consolidated assets of the Borrower and its Consolidated
         Subsidiaries.

                  "S&P" means Standard & Poor's Ratings Group, a division of The
         McGraw Hill Companies, Inc., or any successor thereto.

                  "SECURITIZED BONDS" means any nonrecourse bonds or similar
         asset-backed securities issued by a special-purpose subsidiary of
         Consumers which are payable solely from specialized charges authorized
         by the utility commission of the relevant state in connection with the
         recovery of regulatory assets or other qualified costs.

                  "6.75% SENIOR NOTES" means the Borrower's 6.75% Senior Notes
         due January 2004, the aggregate outstanding principal amount of which
         was equal to $287,025,000 as of February 28, 2003.

                  "SOLVENT", when used with respect to any Person, means that at
         the time of determination:

                           (i) the fair market value of its assets is in excess
                  of the total amount of its liabilities (including, without
                  limitation, net contingent liabilities); and

                           (ii) it is then able and expects to be able to pay
                  its debts (including, without limitation, contingent debts and
                  other commitments) as they mature; and

                           (iii) it has capital sufficient to carry on its
                  business as conducted and as proposed to be conducted.

For purposes of this definition, the amount of contingent liabilities at any
time shall be computed as the amount that, in light of all the facts and
circumstances known to such Person at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

                                       20

<PAGE>

                  "STATUTORY RESERVE RATE" means a fraction (expressed as a
         decimal), the numerator of which is the number one and the denominator
         of which is the number one minus the aggregate of the maximum reserve
         percentages (including any marginal, special, emergency or supplemental
         reserves) expressed as a decimal established by the Board to which the
         Administrative Agent is subject for eurocurrency funding (currently
         referred to as "Eurocurrency Liabilities" in Regulation D of the
         Board). Such reserve percentages shall include those imposed pursuant
         to such Regulation D. Eurodollar Rate Loans shall be deemed to
         constitute eurocurrency funding and to be subject to such reserve
         requirements without benefit of or credit for proration, exemptions or
         offsets that may be available from time to time to any Lender under
         such Regulation D or any comparable regulation. The Statutory Reserve
         Rate shall be adjusted automatically on and as of the effective date of
         any change in any reserve percentage.

                  "SUBSIDIARY" means, with respect to any Person, any
         corporation or unincorporated entity of which more than 50% of the
         outstanding capital stock (or comparable interest) having ordinary
         voting power (irrespective of whether at the time capital stock (or
         comparable interest) of any other class or classes of such corporation
         or entity shall or might have voting power upon the occurrence of any
         contingency) is at the time directly or indirectly owned by said Person
         (whether directly or through one or more other Subsidiaries). In the
         case of an unincorporated entity, a Person shall be deemed to have more
         than 50% of interests having ordinary voting power only if such
         Person's vote in respect of such interests comprises more than 50% of
         the total voting power of all such interests in the unincorporated
         entity.

                  "SUPPORT OBLIGATIONS" means, for any Person, without
         duplication, any financial obligation, contingent or otherwise, of such
         Person guaranteeing or otherwise supporting any Debt or other
         obligation of any other Person in any manner, whether directly or
         indirectly, and including any obligation of such Person, direct or
         indirect (including, but not limited to, letters of credit and surety
         bonds in connection therewith), (i) to purchase or pay (or advance or
         supply funds for the purchase or payment of) such Debt or to purchase
         (or to advance or supply funds for the purchase of) any security for
         the payment of such Debt, (ii) to purchase property, securities or
         services for the purpose of assuring the owner of such Debt of the
         payment of such Debt, (iii) to maintain working capital, equity
         capital, available cash or other financial statement condition of the
         primary obligor so as to enable the primary obligor to pay such Debt,
         (iv) to provide equity capital under or in respect of equity
         subscription arrangements (to the extent that such obligation to
         provide equity capital does not otherwise constitute Debt), or (v) to
         perform, or arrange for the performance of, any non-monetary
         obligations or non-funded debt payment obligations of the primary
         obligor.

                  "TAX SHARING AGREEMENT" means the Amended and Restated
         Agreement for the Allocation of Income Tax Liabilities and Benefits,
         dated as of January 1, 1994, by and among the Borrower, each of the
         members of the Consolidated Group (as defined therein), and each of the
         corporations that become members of the Consolidated Group.

                  "TRUSTEE" has the meaning assigned to that term in the
         Indenture.

                                       21

<PAGE>

                  "TYPE" has the meaning assigned to such term (i) in the
         definition of "Loan" when used in such context and (ii) in the
         definition of "Borrowing" when used in such context.

         SECTION 1.02. COMPUTATION OF TIME PERIODS; CONSTRUCTION.

                  (a)      Unless otherwise indicated, each reference in this
Agreement to a specific time of day is a reference to New York City time. In the
computation of periods of time under this Agreement, any period of a specified
number of days or months shall be computed by including the first day or month
occurring during such period and excluding the last such day or month. In the
case of a period of time "from" a specified date "to" or "until" a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each means "to but excluding".

                  (b)      The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes", and "including" shall be deemed
to be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (iii) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement and (v)
the words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

         SECTION 1.03. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 6.01(e) ("GAAP"), it being
understood that such financial statements do not reflect the Restatement. If any
changes in generally accepted accounting principles are hereafter required or
permitted and are adopted by the Borrower or any of its Subsidiaries, or the
Borrower or any of its Subsidiaries shall change its application of generally
accepted accounting principles with respect to any Off-Balance Sheet
Liabilities, in each case, with the agreement of its independent certified
public accountants, and such changes result in a change in the method of
calculation of any of the financial covenants, tests, restrictions or standards
herein or in the related definitions or terms used therein ("ACCOUNTING
CHANGES"), the parties hereto agree, at the Borrower's request, to enter into
negotiations, in good faith, in order to amend such provisions in a credit
neutral manner so as to reflect equitably such changes with the desired result
that the criteria for evaluating the Borrower's and its Subsidiaries' financial
condition shall be the same after such changes as if such changes had not been
made; provided, however, until such provisions are amended in a manner
reasonably satisfactory to the Agents, the Arranger and the Required

                                       22

<PAGE>

Lenders, no Accounting Change shall be given effect in such calculations. In the
event such amendment is entered into, all references in this Agreement to GAAP
shall mean generally accepted accounting principles as of the date of such
amendment. Notwithstanding the foregoing, all financial statements to be
delivered by the Borrower pursuant to Section 7.03 shall be prepared in
accordance with generally accepted accounting principles in effect at such time.

                                   ARTICLE II
             COMMITMENTS, LOANS, FEES, PREPAYMENTS AND OUTSTANDINGS

         SECTION 2.01. RE-EVIDENCING OF "LOANS" UNDER THE INITIAL AMENDMENT AND
RESTATEMENT.

                  (a)      Subject to the terms and conditions set forth in this
Agreement, on the Initial Funding Date, outstanding loans under the Initial
Amendment and Restatement (other than the Initial Amendment and Restatement
Revolving Loans) in an amount equal to each Lender's Facility A Commitment
(exclusive of each Lender's Facility A Revolving Commitment) shall be
re-evidenced hereunder as term loans, in Dollars, to the Borrower from such
Lender in an amount equal to such Lender's Facility A Commitment (exclusive of
each Lender's Facility A Revolving Commitment) (each individually, a "Facility A
Loan" and, collectively, the "Facility A Loans").

                  (b)      Subject to the terms and conditions set forth in this
Agreement, on the Initial Funding Date, outstanding loans under the Initial
Amendment and Restatement (other than the Initial Amendment and Restatement
Revolving Loans) in an amount equal to each Lender's Facility B Commitment shall
be re-evidenced hereunder as term loans, in Dollars, to the Borrower from such
Lender in an amount equal to such Lender's Facility B Commitment (each
individually, a "Facility B Loan" and, collectively, the "Facility B Loans").

                  (c)      Each Lender severally agrees, on the terms and
conditions hereinafter set forth to make Facility A Revolving Loans to the
Borrower during the period from the Initial Funding Date until the Commitment
Termination Date in an aggregate outstanding amount not to exceed on any day
such Lender's Available Facility A Revolving Commitment (after giving effect to
all Extensions of Credit to be made on such day and the application of the
proceeds thereof). Within the limits hereinafter set forth, the Borrower may
request Extensions of Credit hereunder, prepay Facility A Revolving Loans, and
use the resulting increase in the Available Facility A Revolving Commitments for
further Extensions of Credit in accordance with the terms hereof.

                  (d)      (x) At the Borrower's option prior to the date all or
a portion of the secondary syndication of the Commitments shall be effective,
upon written notice (a "Notice to Convert") to the Administrative Agent (who
shall promptly notify each of the Lenders), or (y) automatically, if not
converted prior to such date, on the later of (A) the 21st day after the Initial
Funding Date and (B) the date all or a portion of the secondary syndication of
the Commitments shall be effective (such date of conversion under clauses (x) or
(y) being the "Conversion Date"), the then outstanding aggregate principal
amount of the Loans hereunder shall be converted to a term loan. Any Notice to
Convert shall expressly state the applicable Conversion Date and shall be
irrevocable once given. The Borrower shall be deemed to have represented and
warranted

                                       23

<PAGE>

that the conditions contained in Section 5.03 have been satisfied as of the date
of any Notice to Convert. Upon delivery of such Notice to Convert (or if no such
Notice to Convert is given, upon the automatic Conversion Date described above),
(i) the Borrower's option to borrow and reborrow Facility A Revolving Loans
shall terminate, (ii) the aggregate of the Lenders' Facility A Revolving
Commitments shall be reduced to zero, and (iii) the outstanding principal
balance of all Facility A Revolving Loans hereunder shall be due and payable on
the Facility A Termination Date. All references in this Agreement to Facility A
Loans shall include such Facility A Revolving Loans as converted hereunder.

         SECTION 2.02.  FEES.

                  (a)      The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee equal to the product of
(i) the average daily amount of such Lender's Available Facility A Revolving
Commitment from the Initial Funding Date, in the case of each Bank, and from the
effective date specified in the Lender Assignment pursuant to which it became a
Lender, in the case of each other Lender, until the Commitment Termination Date
multiplied by (ii) the Commitment Fee Margin in effect as of the date upon which
such fee is payable. Such fees shall be payable quarterly in arrears on the last
day of each March, June, September and December, commencing the first such date
to occur following the Initial Funding Date, and on the Commitment Termination
Date.

                  (b)      In addition to the fees provided for in subsection
(a) above, the Borrower shall pay to the Administrative Agent, for the account
of CUSA and the other Persons entitled thereto, such other fees as are provided
for in that certain letter agreement, dated March 30, 2003 among the Borrower,
the Agents, the Arranger (the "FEE LETTER"), in the amounts and at the times
specified therein.

         SECTION 2.03.  MANDATORY PREPAYMENTS.

                  (a)      The Borrower may (and shall provide notice thereof to
the Administrative Agent not later than 10:00 a.m. (New York City time) on the
date of termination or reduction, and the Administrative Agent shall promptly
distribute copies thereof to the Lenders) terminate in whole or reduce ratably
in part the unused portions of the Facility A Revolving Commitments; provided
that any such partial reduction shall be in the aggregate amount of $5,000,000
or an integral multiple of $1,000,000 in excess thereof.

                  (b)      Upon the occurrence of a Change of Control the
Commitments shall be reduced to zero and the principal amount outstanding
hereunder, all interest thereon and all other amounts payable under this
Agreement and the other Loan Documents shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower.

                  (c)      From and after the date that all of the obligations
under the Enterprises 2003 Credit Agreement shall have been paid in full in cash
and the Enterprises 2003 Credit Agreement shall have been terminated, the
Borrower shall make the following mandatory prepayments:

                                       24

<PAGE>

                  (i)      Promptly and in any event within 3 Business Days
         after the Borrower's or any of its Subsidiaries' receipt of any Net
         Proceeds from the sale or issuance of equity securities, the Borrower
         shall make or cause to be made a mandatory prepayment of the
         Obligations in an amount equal to one hundred percent (100%) of such
         Net Proceeds;

                  (ii)     Promptly and in any event within 3 Business Days
         after the Borrower's or any of its Subsidiaries' receipt of any Net
         Proceeds from the incurrence of Debt For Borrowed Money, other than
         Debt incurred by Consumers or any Subsidiary of Consumers, the Borrower
         shall make or cause to be made a mandatory prepayment of the
         Obligations in an amount equal to one hundred percent (100%) of such
         Net Proceeds; and

                  (iii)    Promptly and in any event within 3 Business Days
         after the Borrower's or any of its Subsidiaries' receipt of any Net
         Proceeds from the sale, assignment or other disposition of (but not the
         lease or license of) any property, including, without limitation, any
         sale of capital stock or other equity interest in any of the Borrower's
         direct or indirect Subsidiaries, in an amount, when combined with the
         Net Proceeds of all other such transactions since the Closing Date that
         have not been applied to the prepayment of the Obligations in
         accordance with this clause (iii), in excess of $10,000,000, the
         Borrower shall make or cause to be made a mandatory prepayment of the
         Obligations in an amount equal to one hundred percent (100%) of such
         aggregate Net Proceeds, provided that such amount shall exclude Net
         Proceeds arising from (A) any sale, assignment or other disposition of
         property by Consumers or any Subsidiary of Consumers (other than the
         capital stock of Consumers), (B) the sale of all or substantially all
         of the electrical power book of MS&T and (C) any sale or other
         disposition by the Borrower or any of its Subsidiaries in the ordinary
         course of business consistent with past practice, provided, further
         that any Designated Prepayment under this clause (iii) shall be made
         without regard to whether the obligations under the Enterprises 2003
         Credit Agreement shall have been paid in full in cash and terminated if
         an "Event of Default" under (and as defined in) the AIG Pledge
         Agreement arising from the non-compliance with the terms of Section 4.5
         of the AIG Pledge Agreement has occurred and is continuing, or would
         result from the transaction giving rise to such Designated Prepayment.

Nothing in this Section 2.03(c) shall be construed to constitute the Lenders'
consent to any transaction referenced in clauses (i), (ii) and (iii) above which
is not expressly permitted by Article VII. The Borrower shall give the
Administrative Agent prior written notice or telephonic notice promptly
confirmed in writing (each of which the Administrative Agent shall promptly
transmit to each Lender), when a Designated Prepayment will be made (which date
of prepayment shall be no later than the date on which such Designated
Prepayment becomes due and payable pursuant to this Section 2.03(c)). Designated
Prepayments shall be allocated and applied first to the outstanding Facility A
Loans (and amounts applied thereunder being deemed to be applied first to
Facility A Revolving Loans (and shall permanently reduce on a ratable basis the
Facility A Revolving Commitments) or any Facility A Loans following the
Conversion Date that re-evidence such Facility A Revolving Loans, and thereafter
all other Facility A Loans) and then to the outstanding Facility B Loans. So
long as any Facility B Loans shall be outstanding, any Lender with a Facility A
Loan may, after the repayment of the Facility A Revolving Loans and termination
of the Facility A Revolving Commitments, or any Facility A Loans following the
Conversion Date that re-evidence such Facility A Revolving Loans, decline any
Designated

                                       25

<PAGE>

Prepayment, in which case the amount declined will be applied pro rata and
ratably to prepayment of the Facility B Loans. Any Lender with a Facility B Loan
may decline any Designated Prepayment, in which case the amount declined shall
be paid as the Borrower so designates. All Designated Prepayments shall be
applied first to repay outstanding ABR Loans and then to repay outstanding
Eurodollar Rate Loans with those Eurodollar Rate Loans which have earlier
expiring Interest Periods being repaid prior to those which have later expiring
Interest Periods.

         SECTION 2.04. COMPUTATIONS OF OUTSTANDINGS. Whenever reference is made
in this Agreement to the principal amount outstanding on any date under this
Agreement, such reference shall refer to the aggregate principal amount of all
Loans outstanding on such date under this Agreement after giving effect to all
Extensions of Credit to be made on such date and the application of the proceeds
thereof. At no time shall the outstanding principal amount of the Facility A
Revolving Loans exceed the aggregate amount of the Facility A Revolving
Commitment hereunder. References to the unused portion of the Facility A
Revolving Commitments shall refer to the excess, if any, of the Facility A
Revolving Commitments hereunder over the outstanding principal amount of the
Facility A Revolving Loans; and references to the unused portion of any Lender's
Facility A Revolving Commitment shall refer to such Lender's Percentage of the
unused Facility A Revolving Commitments.

                                   ARTICLE III
                                      LOANS

                  (a)      LOANS. The Borrower may request a Borrowing (other
than a Conversion) by delivering a notice (a "NOTICE OF BORROWING") to the
Administrative Agent no later than 12:00 noon (New York City time) on the third
Business Day or, in the case of ABR Loans, on the first Business Day, prior to
the date of the proposed Borrowing. The Administrative Agent shall give each
Lender prompt notice of each Notice of Borrowing. Each Notice of Borrowing shall
be in substantially the form of Exhibit A and shall specify the requested (i)
date of such Borrowing, (ii) Type of Loans to be made in connection with such
Borrowing, (iii) Interest Period, if any, for such Facility A Revolving Loans
and (iv) amount of such Borrowing. Each proposed Borrowing shall conform to the
requirements of Sections 3.03 and 3.04.

                  (b)      Each Lender shall, before 12:00 noon (New York City
time) on the date of such Borrowing, make available for the account of its
Applicable Lending Office to the Administrative Agent at the Administrative
Agent's offices at 2 Penns Way, Suite 200, New Castle, DE 19270, in same day
funds, such Lender's Percentage of such Borrowing. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article V, the Administrative Agent will make such funds available
to the Borrower at the Administrative Agent's aforesaid address. Notwithstanding
the foregoing, unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's Percentage of such
Borrowing, the Administrative Agent may assume that such Lender has made such
Percentage available to the Administrative Agent on the date of such Borrowing
in accordance with the first sentence of this subsection (b), and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount.

                                       26
<PAGE>

                  (c)      Any Lender may request that Loans made by it be
evidenced by a Promissory Note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a Promissory Note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such Promissory Note and interest thereon shall at all times
(including after assignment pursuant to Section 10.07) be represented by one or
more Promissory Notes in such form payable to the order of the payee named
therein (or, if such Promissory Note is a registered note, to such payee and its
registered assigns).

         SECTION 3.02. CONVERSION OF LOANS. The Borrower may from time to time
Convert any Loan (or portion thereof) of any Type to one or more Loans of the
same or any other Type by delivering a notice of such Conversion (a "NOTICE OF
CONVERSION") to the Administrative Agent no later than 12:00 noon (New York City
time) on (x) the third Business Day prior to the date of any proposed Conversion
into a Eurodollar Rate Loan and (y) the first Business Day prior to the date of
any proposed Conversion into an ABR Loan. The Administrative Agent shall give
each Lender prompt notice of each Notice of Conversion. Each Notice of
Conversion shall be in substantially the form of Exhibit B and shall specify (i)
the requested date of such Conversion, (ii) the Type of, and Interest Period, if
any, applicable to, the Loans (or portions thereof) proposed to be Converted,
(iii) the requested Type of Loans to which such Loans (or portions thereof) are
proposed to be Converted, (iv) the requested initial Interest Period, if any, to
be applicable to the Loans resulting from such Conversion and (v) the aggregate
amount of Loans (or portions thereof) proposed to be Converted. Each proposed
Conversion shall be subject to the provisions of Sections 3.03 and 3.04.

         SECTION 3.03. INTEREST PERIODS. The period between the date of each
Eurodollar Rate Loan and the date of payment in full of such Loan shall be
divided into successive periods of months ("INTEREST PERIODS") for purposes of
computing interest applicable thereto. The initial Interest Period for each such
Loan shall begin on the day such Loan is made, and each subsequent Interest
Period shall begin on the last day of the immediately preceding Interest Period
for such Loan. The duration of each Interest Period shall be 1, 2, 3, or 6
months, as the Borrower may, in accordance with Section 3.01 or 3.02, select;
provided, however, that:

                  (i)      the Borrower may not select any Interest Period for a
         Eurodollar Rate Loan that is (a) a Facility A Loan that ends after the
         Facility A Maturity Date or (b) a Facility B Loan that ends after the
         Facility B Maturity Date;

                  (ii)     whenever the last day of any Interest Period would
         otherwise occur on a day other than a Business Day, the last day of
         such Interest Period shall occur on the next succeeding Business Day,
         provided that if such extension would cause the last day of such
         Interest Period to occur in the next following calendar month, the last
         day of such Interest Period shall occur on the next preceding Business
         Day; and

                  (iii)    any Interest Period that commences on the last
         Business Day of a calendar month (or on a day for which there is no
         numerically corresponding day in the last calendar month of such
         Interest Period) shall end on the last Business Day of the last
         calendar month of such Interest Period.

                                       27
<PAGE>

         SECTION 3.04. OTHER TERMS RELATING TO THE MAKING AND CONVERSION OF
LOANS.

                  (a)      Notwithstanding anything in Section 3.01 or 3.02 to
the contrary:

                  (i)      each Borrowing shall be in an aggregate amount not
         less than $5,000,000, or an integral multiple of $1,000,000 in excess
         thereof (or such lesser amount as shall be equal to the total amount of
         the Available Facility A Commitments on such date, after giving effect
         to all other Extensions of Credit to be made on such date), and shall
         consist of Loans of the same Type, having the same Interest Period and
         made or Converted on the same day by the Lenders ratably according to
         their respective Percentages;

                  (ii)     at no time shall the number of Borrowings comprising
         Eurodollar Rate Loans outstanding hereunder be greater than ten (10);

                  (iii)    no Eurodollar Rate Loan may be Converted on a date
         other than the last day of the Interest Period applicable to such Loan
         unless the corresponding amounts, if any, payable to the Lenders
         pursuant to Section 4.04(b) are paid contemporaneously with such
         Conversion;

                  (iv)     if the Borrower shall either fail to give a timely
         Notice of Conversion pursuant to Section 3.02 in respect of any Loans
         or fail, in any Notice of Conversion that has been timely given, to
         select the duration of any Interest Period for Loans to be Converted
         into Eurodollar Rate Loans in accordance with Section 3.03, such Loans
         shall, on the last day of the then existing Interest Period therefor,
         automatically Convert into, or remain as, as the case may be, ABR
         Loans; and

                  (v)      if, on the date of any proposed Conversion, any Event
         of Default or Default shall have occurred and be continuing, all Loans
         then outstanding shall, on such date, automatically Convert into, or
         remain as, as the case may be, ABR Loans.

                  (b)      If any Lender shall notify the Administrative Agent
that the introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or that any central bank or other governmental
authority asserts that it is unlawful, for such Lender or its Applicable Lending
Office to perform its obligations hereunder to make, or to fund or maintain,
Eurodollar Rate Loans hereunder, (i) the obligation of such Lender to make, or
to Convert Loans into, Eurodollar Rate Loans for such Borrowing or any
subsequent Borrowing from such Lender shall be forthwith suspended until the
earlier to occur of the date upon which (A) such Lender shall cease to be a
party hereto and (B) it is no longer unlawful for such Lender to make, fund or
maintain Eurodollar Rate Loans, and (ii) if the maintenance of Eurodollar Rate
Loans then outstanding through the last day of the Interest Period therefor
would cause such Lender to be in violation of such law, regulation or assertion,
the Borrower shall either prepay or Convert all Eurodollar Rate Loans from such
Lender within five days after such notice. Promptly upon becoming aware that the
circumstances that caused such Lender to deliver such notice no longer exist,
such Lender shall deliver notice thereof to the Administrative Agent (but the
failure to do so shall impose no liability upon such Lender). Promptly upon
receipt of such notice from such Lender (or upon such Lender's assigning all of
its Commitment, Loans, participation and other

                                       28
<PAGE>

rights and obligations hereunder pursuant to Section 10.07), the Administrative
Agent shall deliver notice thereof to the Borrower and the Lenders and such
suspension shall terminate.

                  (c)      If the Required Lenders shall, at least one Business
Day before the date of any requested Borrowing, notify the Administrative Agent
that the Adjusted LIBO Rate for Eurodollar Rate Loans to be made in connection
with such Borrowing will not adequately reflect the cost to such Required
Lenders of making, funding or maintaining their respective Eurodollar Rate Loans
for such Borrowing, or that they are unable to acquire funding in a reasonable
manner so as to make available Eurodollar Rate Loans in the amount and for the
Interest Period requested, or if the Administrative Agent shall determine that
adequate and reasonable means do not exist to be able to determine the Adjusted
LIBO Rate, then the right of the Borrower to select Eurodollar Rate Loans for
such Borrowing and any subsequent Borrowing shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist, and each Loan to be made
or Converted in connection with such Borrowing shall be an ABR Loan.

                  (d)      If any Lender shall have delivered a notice to the
Administrative Agent described in Section 3.04(b), and if and so long as such
Lender shall not have withdrawn such notice in accordance with said Section
3.04(b), the Borrower or the Administrative Agent may demand that such Lender
assign in accordance with Section 10.07, to one or more banks or other financial
institutions designated by the Borrower or the Administrative Agent (each a
"Prospective Lender"), all (but not less than all) of such Lender's Commitment,
Loans, participation and other rights and obligations hereunder; provided that
any such demand by the Borrower during the continuance of an Event of Default or
Default shall be ineffective without the consent of the Required Lenders. If,
within 30 days following any such demand by the Administrative Agent or the
Borrower, any such Prospective Lender so designated shall fail to consummate
such assignment on terms reasonably satisfactory to such Lender, or the Borrower
and the Administrative Agent shall have failed to designate any such Prospective
Lender, then such demand by the Borrower or the Administrative Agent shall
become ineffective, it being understood for purposes of this provision that such
assignment shall be conclusively deemed to be on terms reasonably satisfactory
to such Lender, and such Lender shall be compelled to consummate such assignment
forthwith, if such Prospective Lender (i) shall agree to such assignment in
substantially the form of the Lender Assignment attached hereto as Exhibit F and
(ii) shall tender payment to such Lender in an amount equal to the full
outstanding dollar amount accrued in favor of such Lender hereunder (as computed
in accordance with the records of the Administrative Agent), including, without
limitation, all accrued interest and fees and, to the extent not paid by the
Borrower, any payments required pursuant to Section 4.04(b).

                  (e)      Each Notice of Borrowing and Notice of Conversion
shall be irrevocable and binding on the Borrower. In the case of any Borrowing
which the related Notice of Borrowing or Notice of Conversion specifies is to be
comprised of Eurodollar Rate Loans, the Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill, on or before the date specified in such Notice of Borrowing
or Notice of Conversion for such Borrowing, the applicable conditions (if any)
set forth in this Article III (other than failure pursuant to the provisions of
Section 3.04(b) or (c) hereof) or in Article V, including any such loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender

                                       29
<PAGE>

to fund the Loan to be made by such Lender when such Loan, as a result of such
failure, is not made on such date.

         SECTION 3.05. REPAYMENT OF LOANS; INTEREST

                  (a)      Principal. The Borrower shall repay the outstanding
principal amount of the Facility A Loans on the Facility A Maturity Date (or
such earlier date as may be required pursuant to Section 2.03 or 8.02) and shall
repay the outstanding principal amount of the Facility B Loans on the Facility B
Maturity Date (or such earlier date as may be required pursuant to Section 2.03
or 8.02). No installment of any Loan (other than Facility A Revolving Loans
prior to the Conversion Date) may be reborrowed once repaid.

                  (b)      Interest. The Borrower shall pay interest on the
unpaid principal amount of each Loan owing to each Lender from the date of such
Loan until such principal amount shall be paid in full, at the Applicable Rate
for such Loan (except as otherwise provided in this subsection (b)), payable as
follows:

                  (i)      ABR Loans. If such Loan is an ABR Loan, interest
         thereon shall be payable quarterly in arrears on the last day of each
         March, June, September and December, on the date of any Conversion of
         such ABR Loan and on the date such ABR Loan shall become due and
         payable or shall otherwise be paid in full; provided that any amount of
         principal that is not paid when due (whether at stated maturity, by
         acceleration or otherwise) shall bear interest, from the date on which
         such amount is due until such amount is paid in full, payable on
         demand, at a rate per annum equal at all times to the Default Rate.

                  (ii)     Eurodollar Rate Loans. If such Loan is a Eurodollar
         Rate Loan, interest thereon shall be payable on the last day of such
         Interest Period and, if the Interest Period for such Loan has a
         duration of more than three months, on that day of each third month
         during such Interest Period that corresponds to the first day of such
         Interest Period (or, if any such month does not have a corresponding
         day, then on the last day of such month); provided that any amount of
         principal that is not paid when due (whether at stated maturity, by
         acceleration or otherwise) shall bear interest, from the date on which
         such amount is due until such amount is paid in full, payable on
         demand, at a rate per annum equal at all times to the Default Rate.

                                   ARTICLE IV
                    PAYMENTS, COMPUTATIONS AND YIELD PROTECTION

         SECTION 4.01. PAYMENTS AND COMPUTATIONS.

                  (a)      The Borrower shall make each payment hereunder and
under the other Loan Documents not later than 2:00 p.m. (New York City time) on
the day when due in Dollars to the Administrative Agent at its offices at 2
Penns Way, Suite 200, New Castle, DE 19270, in same day funds; any payment
received after 3:00 p.m. (New York City time) shall be deemed to have been
received at the start of business on the next succeeding Business Day, unless
the Administrative Agent shall have received from, or on behalf of, the Borrower
a Federal Reserve reference number with respect to such payment before 4:00 p.m.
(New York City time). The

                                       30
<PAGE>

Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal, interest, fees or other amounts payable to
the Lenders, to the respective Lenders to which the same are payable, for the
account of their respective Applicable Lending Offices, in each case to be
applied in accordance with the terms of this Agreement. If and to the extent
that any distribution of any payment from the Borrower required to be made to
any Lender pursuant to the preceding sentence shall not be made in full by the
Administrative Agent on the date such payment was received by the Administrative
Agent, the Administrative Agent shall pay to such Lender, upon demand, interest
on the unpaid amount of such distribution, at a rate per annum equal to the
Federal Funds Effective Rate, from the date of such payment by the Borrower to
the Administrative Agent to the date of payment in full by the Administrative
Agent to such Lender of such unpaid amount. Upon the Administrative Agent's
acceptance of a Lender Assignment and recording of the information contained
therein in the Register pursuant to Section 10.07, from and after the effective
date specified in such Lender Assignment, the Administrative Agent shall make
all payments hereunder and under any Promissory Notes in respect of the interest
assigned thereby to the Lender assignee thereunder, and the parties to such
Lender Assignment shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.

                  (b)      The Borrower hereby authorizes the Administrative
Agent and each Lender, if and to the extent payment owed to the Administrative
Agent or such Lender, as the case may be, is not made when due hereunder (or, in
the case of a Lender, under any Promissory Note held by such Lender), to charge
from time to time against any or all of the Borrower's accounts with the
Administrative Agent or such Lender, as the case may be, any amount so due.

                  (c)      All computations of interest based on the Alternate
Base Rate (when the Alternate Base Rate is based on the Prime Rate) shall be
made by the Administrative Agent on the basis of a year of 365 or 366 days, as
the case may be. All other computations of interest and fees hereunder
(including computations of interest based on the Adjusted LIBO Rate and the
Federal Funds Effective Rate) shall be made by the Administrative Agent on the
basis of a year of 360 days. In each such case, such computation shall be made
for the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest or fees are payable. Each
such determination by the Administrative Agent or a Lender shall be conclusive
and binding for all purposes, absent manifest error.

                  (d)      Whenever any payment hereunder or under any other
Loan Document shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest
and fees hereunder; provided, however, that if such extension would cause
payment of interest on or principal of Eurodollar Rate Loans to be made in the
next following calendar month, such payment shall be made on the next preceding
Business Day and such reduction of time shall in such case be included in the
computation of payment of interest hereunder.

                  (e)      Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Lenders hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date, and the

                                       31
<PAGE>

Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Borrower shall not have so made such
payment in full to the Administrative Agent, such Lender shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender,
together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Administrative Agent, at the Federal Funds Effective Rate.

                  (f)      Any amount payable by the Borrower hereunder or under
any of the Promissory Notes that is not paid when due (whether at stated
maturity, by acceleration or otherwise) shall (to the fullest extent permitted
by law) bear interest, from the date when due until paid in full, at a rate per
annum equal at all times to the Default Rate, payable on demand.

                  (g)      If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied, subject to
Section 4.07, (i) first, toward payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, toward payment of
principal then due hereunder, ratably among the parties entitled thereto.

         SECTION 4.02. INTEREST RATE DETERMINATION. The Administrative Agent
shall give prompt notice to the Borrower and the Lenders of the applicable
interest rate determined by the Administrative Agent for purposes of Section
3.05(b)(i) or (ii).

         SECTION 4.03. PREPAYMENTS. The Borrower shall have no right to prepay
any principal amount of any Loans other than as follows:

                  (a)      The Borrower may (and shall provide notice thereof to
the Administrative Agent not later than 10:00 a.m. (New York City time) on the
date of prepayment, and the Administrative Agent shall promptly distribute
copies thereof to the Lenders), and if such notice is given, the Borrower shall,
prepay the outstanding principal amounts of Loans made as part of the same
Borrowing, in whole or ratably in part, together with (i) accrued interest to
the date of such prepayment on the principal amount prepaid and (ii) in the case
of Eurodollar Rate Loans, any amount payable to the Lenders pursuant to Section
4.04(b); provided, however, that (a) each partial prepayment shall be in an
aggregate principal amount of not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and (b) the Borrower shall not prepay any
Facility B Loans unless and until all Facility A Loans have been prepaid in full
in cash.

                  (b)      On the date of any termination or optional or
mandatory reduction of the Facility A Revolving Commitments pursuant to Section
2.03, the Borrower shall pay or prepay the principal outstanding on the Facility
A Revolving Loans in full in cash in an amount equal to the excess of (i) the
sum of the aggregate principal amount of the Facility A Revolving Loans
outstanding (after giving effect to all Extensions of Credit to be made on such
date and the application of the proceeds thereof) over (ii) the aggregate amount
of the Facility A Revolving Commitments (following such termination or
reduction, if any), together with (x) accrued interest to the date of such
prepayment on the principal amount repaid and (y) in the case of prepayments of
Eurodollar Rate Loans, any amount payable to the Lenders pursuant to Section

                                       32
<PAGE>

4.04(b). Any payments and prepayments required by this subsection (b) shall be
applied to outstanding ABR Loans up to the full amount thereof before they are
applied to outstanding Eurodollar Rate Loans.

         SECTION 4.04. YIELD PROTECTION.

                  (a)      Increased Costs. If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation after the Closing Date, or (ii) the compliance with any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) issued or made after the Closing Date, there shall be
reasonably incurred any increase in the cost to any Lender of agreeing to make
or making, funding or maintaining Eurodollar Rate Loans, then the Borrower shall
from time to time, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost and giving
a reasonable explanation thereof, submitted to the Borrower and the
Administrative Agent by such Lender shall constitute such demand and shall be
conclusive and binding for all purposes, absent manifest error.

                  (b)      Breakage. If, due to any prepayment pursuant to
Section 4.03, an acceleration of maturity of the Loans pursuant to Section 8.02,
or any other reason, any Lender receives payments of principal of any Eurodollar
Rate Loan other than on the last day of the Interest Period relating to such
Loan or if the Borrower shall Convert any Eurodollar Rate Loans on any day other
than the last day of the Interest Period therefor, or if the Borrower shall fail
to prepay a Eurodollar Rate Loan on the date specified in a notice of
prepayment, the Borrower shall, promptly after demand by such Lender (with a
copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender any amounts required to compensate such
Lender for additional losses, costs, or expenses (including anticipated lost
profits) that such Lender may reasonably incur as a result of such payment,
Conversion or failure to prepay, including any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain such Loan. For purposes of this subsection (b),
a certificate setting forth the amount of such additional losses, costs, or
expenses and giving a reasonable explanation thereof, submitted to the Borrower
and the Administrative Agent by such Lender, shall constitute such demand and
shall be conclusive and binding for all purposes, absent manifest error.

                  (c)      Capital. If any Lender determines that (i) compliance
with any law or regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender, whether directly, or indirectly as a result of commitments of any
corporation controlling such Lender (but without duplication), and (ii) the
amount of such capital is increased by or based upon (A) the existence of such
Lender's commitment to lend hereunder, or (B) the issuance or maintenance of any
Loan and (C) other similar such commitments, then, upon demand by such Lender,
the Borrower shall immediately pay to the Administrative Agent for the account
of such Lender from time to time as specified by such Lender additional amounts
sufficient to compensate such Lender in the light of such circumstances, to the
extent that such Lender reasonably determines such increase in capital to

                                       33
<PAGE>

be allocable to the transactions contemplated hereby. A certificate as to such
amounts and giving a reasonable explanation thereof (to the extent permitted by
law), submitted to the Borrower and the Administrative Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error.

                  (d)      Notices. Each Lender hereby agrees to use its best
efforts to notify the Borrower of the occurrence of any event referred to in
subsection (a), (b) or (c) of this Section 4.04 promptly after becoming aware of
the occurrence thereof. The failure of any Lender to provide such notice or to
make demand for payment under said subsection shall not constitute a waiver of
such Lender's rights hereunder; provided that, notwithstanding any provision to
the contrary contained in this Section 4.04, the Borrower shall not be required
to reimburse any Lender for any amounts or costs incurred under subsection (a),
(b) or (c) above, more than 90 days prior to the date that such Lender notifies
the Borrower in writing thereof, in each case unless, and to the extent that,
any such amounts or costs so incurred shall relate to the retroactive
application of any event notified to the Borrower which entitles such Lender to
such compensation. If any Lender shall subsequently determine that any amount
demanded and collected under this Section 4.04 was done so in error, such Lender
will promptly return such amount to the Borrower.

                  (e)      Survival of Obligations. Subject to subsection (d)
above, the Borrower's obligations under this Section 4.04 shall survive the
repayment of all other amounts owing to the Lenders and the Agents under the
Loan Documents and the termination of the Commitments. If and to the extent that
the obligations of the Borrower under this Section 4.04 are unenforceable for
any reason, the Borrower agrees to make the maximum contribution to the payment
and satisfaction thereof which is permissible under applicable law.

         SECTION 4.05. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Loans owing to it (other than pursuant
to Section 4.04 or Section 4.06) in excess of its ratable share of payments
obtained by all the Lenders on account of the Loans of such Lenders, such Lender
shall forthwith purchase from the other Lenders such participation in the Loans
owing to them as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such Lender's required repayment to (ii) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 4.05 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.
Notwithstanding the foregoing, if any Lender shall obtain any such excess
payment involuntarily, such Lender may, in lieu of purchasing participations
from the other Lenders in accordance with this Section 4.05, on the date of
receipt of such excess payment, return such excess payment to the Administrative
Agent for distribution in accordance with Section 4.01(a).

                                       34
<PAGE>

         SECTION 4.06. TAXES.

                  (a)      All payments by the Borrower hereunder and under the
other Loan Documents shall be made in accordance with Section 4.01, free and
clear of and without deduction for all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and each Agent, taxes imposed on its
overall net income, and franchise taxes imposed on it by the jurisdiction under
the laws of which such Lender or Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes imposed on
its overall net income, and franchise taxes imposed on it by the jurisdiction of
such Lender's Applicable Lending Office or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "TAXES"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any other Loan Document to any Lender or Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 4.06) such Lender or Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.

                  (b)      In addition, the Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or under
any other Loan Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "OTHER TAXES").

                  (c)      The Borrower will indemnify each Lender and Agent for
the full amount of Taxes and Other Taxes (including any Taxes and any Other
Taxes imposed by any jurisdiction on amounts payable under this Section 4.06)
paid by such Lender or Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within thirty (30) days from the date such
Lender or Agent (as the case may be) makes written demand therefor; provided,
that such Lender or Agent (as the case may be) shall not be entitled to demand
payment under this Section 4.06 for an amount if such demand is not made within
one year following the date upon which such Lender or Agent (as the case may be)
shall have been required to pay such amount.

                  (d)      Within thirty (30) days after the date of any payment
of Taxes, the Borrower will furnish to the Administrative Agent, at its address
referred to in Section 10.02, the original or a certified copy of a receipt
evidencing payment thereof.

                  (e)      Each Bank represents and warrants that either (i) it
is organized under the laws of a jurisdiction within the United States or (ii)
it has delivered to the Borrower or the Administrative Agent duly completed
copies of such form or forms prescribed by the United States Internal Revenue
Service indicating that such Bank is entitled to receive payments without
deduction or withholding of any United States federal income taxes, as permitted
by the Internal

                                       35
<PAGE>

Revenue Code of 1986, as amended. Each other Lender agrees that, on or prior to
the date upon which it shall become a party hereto, and upon the reasonable
request from time to time of the Borrower or the Administrative Agent, such
Lender will deliver to the Borrower and the Administrative Agent (to the extent
that it is not prohibited by law from doing so) either (A) a statement that it
is organized under the laws of a jurisdiction within the United States or (B)
duly completed copies of such form or forms as may from time to time be
prescribed by the United States Internal Revenue Service, indicating that such
Lender is entitled to receive payments without deduction or withholding of any
United States federal income taxes, as permitted by the Internal Revenue Code of
1986, as amended. Each Bank that has delivered, and each other Lender that
hereafter delivers, to the Borrower and the Administrative Agent the form or
forms referred to in the two preceding sentences further undertakes to deliver
to the Borrower and the Administrative Agent, to the extent that it is not
prohibited by law from doing so, further copies of such form or forms, or
successor applicable form or forms, as the case may be, as and when any previous
form filed by it hereunder shall expire or shall become incomplete or inaccurate
in any respect. Each Lender represents and warrants that each such form supplied
by it to the Administrative Agent and the Borrower pursuant to this subsection
(e), and not superseded by another form supplied by it, is or will be, as the
case may be, complete and accurate.

         SECTION 4.07. APPORTIONMENT OF PAYMENTS.

                  (a)      Subject to the provisions of Section 2.03 and Section
4.07(b), all payments of principal and interest in respect of outstanding Loans,
all payments of fees and all other payments in respect of any other Obligations
hereunder, shall be allocated among such of the Lenders as are entitled thereto,
ratably or otherwise as expressly provided herein. Except as provided in Section
4.07(b) with respect to payments and proceeds of Collateral received after the
occurrence of an Event of Default, all such payments and any other amounts
received by the Administrative Agent from or for the benefit of the Borrower
shall be applied

                  (i)      first, to pay principal of and interest on any
         portion of the Loans which the Administrative Agent may have advanced
         on behalf of any Lender other than CUSA for which the Administrative
         Agent has not then been reimbursed by such Lender or the Borrower,

                  (ii)     second, to pay interest on the Facility A Loans and
         the interest on the Facility B Loans, and then the principal of the
         Facility A Loans and the principal of the Facility B Loans, in each
         case, then due and payable (in the order described hereinbelow),

                  (iii)    third, to pay all other Obligations of any Loan Party
         under any Loan Document then due and payable, ratably, and

                  (iv)     fourth, as the Borrower so designates.

All amounts applied in respect of Facility A Loans shall be deemed to be applied
first to Facility A Revolving Loans (and shall permanently reduce on a ratable
basis the Facility A Revolving Commitment of each Lender) or any Facility A
Loans following the Conversion Date that re-evidence such Facility A Revolving
Loans, and thereafter all other Facility A Loans. All such

                                       36
<PAGE>

principal and interest payments in respect of the Loans shall be applied first
to repay outstanding ABR Loans and then to repay outstanding Eurodollar Rate
Loans with those Eurodollar Rate Loans which have earlier expiring Interest
Periods being repaid prior to those which have later expiring Interest Periods

                  (b)      During the continuance of an Event of Default and
after declaration thereof by written notice from the Administrative Agent to the
Borrower, the Administrative Agent shall apply all payments in respect of any
Loans, and the Collateral Agent shall deliver all proceeds of Collateral to the
Administrative Agent for application, in the following order:

                  (i)      first, to pay principal of and interest on any
         portion of the Loans which the Administrative Agent may have advanced
         on behalf of any Lender other than CUSA for which the Administrative
         Agent has not then been reimbursed by such Lender or the Borrower;

                  (ii)     second, to pay any fees, expense reimbursements or
         indemnities then due to the Agents under any of the Loan Documents;

                  (iii)    third, to pay any fees, expense reimbursements or
         indemnities then due to the Lenders under any of the Loan Documents;

                  (iv)     fourth, to pay interest due in respect of the
         Facility A Loans and the interest in respect of the Facility B Loans,
         in each case, ratably, in accordance with the Lenders' respective
         Percentages;

                  (v)      fifth, to the payment or prepayment of principal
         outstanding on all Facility A Loans and then on all Facility B Loans;

                  (vi)     sixth, to the ratable payment of all other
         Obligations of the Loan Parties then outstanding under the Loan
         Documents.

Notwithstanding the foregoing, if the obligations under the Enterprises 2003
Credit Agreement shall not have been paid in full, the Collateral Agent shall
apply the proceeds of any voluntary sale of Collateral (other than Collateral in
respect of which the Collateral Agent and/or the Administrative Agent shall have
a prior security interest on behalf of the Lenders hereunder) as contemplated by
the Enterprises 2003 Credit Agreement unless an "Event of Default" under (and as
defined in) the AIG Pledge Agreement arising from the non-compliance with the
terms of Section 4.5 of the AIG Pledge Agreement has occurred and is continuing,
or would result from the transaction giving rise to such proceeds. The order of
priority set forth in this Section 4.07(b) and the related provisions of this
Agreement are set forth solely to determine the rights and priorities of the
Agents and the Lenders as among themselves.

         SECTION 4.08. Proceeds of Collateral. During the continuance of an
Event of Default and after declaration thereof by written notice from the
Administrative Agent to the Borrower, the Borrower shall cause all proceeds of
Collateral (other than Collateral in respect of which the Collateral Agent
and/or the Administrative Agent shall have a prior security interest on behalf
of the Lenders hereunder) to be deposited pursuant to arrangements for the
collection of such amounts established by the Borrower and the Administrative
Agent (or the Collateral Agent, as

                                       37
<PAGE>

applicable) for application pursuant to Section 4.07 or, unless an "Event of
Default" under (and as defined in) the AIG Pledge Agreement arising from the
non-compliance with the terms of Section 4.5 of the AIG Pledge Agreement has
occurred and is continuing, or would result from the transaction giving rise to
such proceeds, as otherwise required under the Enterprises 2003 Credit Agreement
so long as such agreements shall be in effect. All collections of proceeds of
Collateral which are received directly by the Borrower or any Subsidiary of the
Borrower shall be deemed to have been received by the Borrower or such
Subsidiary of the Borrower as the Collateral Agent's trustee and, during the
continuance of an Event of Default and after declaration thereof by written
notice from the Administrative Agent to the Borrower, upon the Borrower's or
such Subsidiary's receipt thereof, the Borrower shall immediately transfer or
cause to be transferred all such amounts to the Administrative Agent for
application pursuant to Section 4.07 or, unless an "Event of Default" under (and
as defined in) the AIG Pledge Agreement arising from the non-compliance with the
terms of Section 4.5 of the AIG Pledge Agreement has occurred and is continuing,
or would result from the transaction giving rise to such proceeds, as otherwise
required under the Enterprises 2003 Credit Agreement so long as such agreements
shall be in effect. All other proceeds of Collateral received by the Collateral
Agent and/or the Administrative Agent, whether through direct payment or
otherwise, will be deemed received by such Agent, will be the sole property of
such Agent, and will be held by such Agent, for the benefit of the Lenders for
application pursuant to Section 4.07 or, unless an "Event of Default" under (and
as defined in) the AIG Pledge Agreement arising from the noncompliance with the
terms of Section 4.5 of the AIG Pledge Agreement has occurred and is continuing,
or would result from the transaction giving rise to such proceeds, as otherwise
required under the Enterprises 2003 Credit Agreement so long as such agreements
shall be in effect.

                                    ARTICLE V
                              CONDITIONS PRECEDENT

         SECTION 5.01. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS
AGREEMENT. The effectiveness of this Agreement is subject to the fulfillment of
the following conditions precedent:

                  (a)      The Administrative Agent shall have received, on or
before the Closing Date, the following, in form and substance satisfactory to
each Lender (except where otherwise specified below) and (except for any
Promissory Notes) in sufficient copies for each Lender:

                  (i)      Certified copies of the resolutions of the Board of
         Directors, or of the Executive Committee of the Board of Directors (or
         persons performing similar functions), of the Borrower, each Guarantor
         and each other Grantor (each a "LOAN PARTY") authorizing each such Loan
         Party to enter into each Loan Document to which it is, or is to be, a
         party, and of all documents evidencing other necessary corporate or
         other action and Governmental Approvals, if any, with respect to each
         such Loan Document.

                  (ii)     A certificate of the Secretary or an Assistant
         Secretary of each Loan Party certifying the names, true signatures and
         incumbency of (A) the officers of such Loan Party authorized to sign
         the Loan Documents to which it is, or is to be, a party, and the other
         documents to be delivered hereunder and thereunder and (B) the
         representatives of

                                       38
<PAGE>

         such Loan Party authorized to sign notices to be provided under the
         Loan Documents to which it is, or is to be, a party, which
         representatives shall be acceptable to the Administrative Agent.

                  (iii)    Copies of the Certificate of Incorporation and
         by-laws (or comparable constitutive documents) of each Loan Party,
         together with all amendments thereto, certified by the Secretary or an
         Assistant Secretary of each such Loan Party.

                  (iv)     Good Standing Certificates (or other similar
         certificate) for each of the Loan Parties, issued by the Secretary of
         State of the jurisdiction of organization of each such Loan Party as of
         a recent date.

                  (v)      The Guaranty, duly executed by each Guarantor.

                  (vi)     The Pledge Agreements, duly executed by the Borrower
         and each Grantor, as applicable.

                  (vii)    A certified copy of Schedule I hereto, in form and
         substance reasonably satisfactory to the Administrative Agent setting
         forth:

                           (A)      all Project Finance Debt of the Consolidated
                  Subsidiaries, together with the Borrower's Ownership Interest
                  in each such Consolidated Subsidiary, as of February 28, 2003;
                  and

                           (B)      debt (as such term is construed in
                  accordance with GAAP) of the Loan Parties as of February 28,
                  2003.

                  (viii)   A certificate, executed by a duly authorized officer
         of the Borrower, (a) confirming that attached thereto is a true,
         correct and complete copy of the Enterprises 2003 Credit Agreement, as
         in effect on the Closing Date and (b) certifying that as of December
         31, 2002 the Borrower was in compliance with the requirements of
         Section 4.4 of the AIG Pledge Agreement (which certificate shall set
         forth in reasonable detail the calculations upon which the Borrower
         determined such compliance).

                  (ix)     Favorable opinions of:

                           (A)      Belinda Foxworth, Esq., Deputy General
                  Counsel of the Borrower and counsel for the other Loan
                  Parties, in substantially the form of Exhibit C and as to such
                  other matters as the Required Lenders, through the
                  Administrative Agent, may reasonably request; and

                           (B)      Skadden, Arps, Slate, Meagher & Flom LLP,
                  special counsel to the Loan Parties in substantially the form
                  of Exhibit D and as to such other matters as the
                  Administrative Agent may reasonably request.

                  (x)      Duly executed copies of a Reaffirmation in the form
         of Attachment A attached hereto from each of the Borrower's
         Subsidiaries identified thereon.

                                       39
<PAGE>

                  (b)      The following statements shall be true and the
Administrative Agent shall have received a certificate of a duly authorized
officer of the Borrower, dated the Closing Date and in sufficient copies for
each Lender stating that:

                  (i)      the representations and warranties set forth in
         Section 6.01 of this Agreement are true and correct on and as of the
         Closing Date as though made on and as of such date,

                  (ii)     no event has occurred and is continuing that
         constitutes a Default or an Event of Default, and

                  (iii)    all Governmental Approvals necessary in connection
         with the Loan Documents and the transactions contemplated thereby have
         been obtained and are in full force and effect, and all third party
         approvals necessary or advisable in connection with the Loan Documents
         and the transactions contemplated thereby have been obtained and are in
         full force and effect, other than filings necessary to create or
         perfect security interests in the Collateral or as may be required
         under applicable energy, antitrust or securities laws in connection
         with the exercise of remedies with respect to certain Collateral.

                  (c)      The Administrative Agent shall have received evidence
satisfactory to it that all financing statements relating to the Collateral have
been completed for filing or recording and/or filed, and all certificates
representing capital stock or other ownership interests included in the
Collateral have been delivered to the Collateral Agent (with duly executed stock
powers).

         SECTION 5.02. CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. The
obligation of each Lender to make an Extension of Credit (including the initial
Extension of Credit, but excluding the Conversion of a Eurodollar Rate Loan into
an ABR Loan) shall be subject to the further conditions precedent that, on the
date of such Extension of Credit and after giving effect thereto:

                  (a)      The following statements shall be true (and each of
the giving of the applicable notice or request with respect thereto and the
making of such Extension of Credit without prior correction by the Borrower
shall (to the extent that such correction has been previously consented to by
the Lenders) constitute a representation and warranty by the Borrower that, on
the date of such Extension of Credit, such statements are true):

                  (i)      the representations and warranties contained in
         Section 6.01 of this Agreement (other than those contained in
         subsections (e)(iii) and (f) thereof) are correct on and as of the date
         of such Extension of Credit, before and after giving effect to such
         Extension of Credit and to the application of the proceeds thereof, as
         though made on and as of such date; and

                  (ii)     no Default or Event of Default has occurred and is
         continuing, or would result from such Extension of Credit or the
         application of the proceeds thereof.

                  (b)      The Administrative Agent shall have received such
other approvals, opinions and documents as any Lender, through the
Administrative Agent, may reasonably

                                       40
<PAGE>

request as to the legality, validity, binding effect or enforceability of the
Loan Documents or the business, assets, property, financial condition, results
of operations or prospects of the Borrower and its Consolidated Subsidiaries.

         SECTION 5.03. CONDITIONS PRECEDENT TO CERTAIN EXTENSIONS OF CREDIT. The
obligation of each Lender to make an Extension of Credit (including the initial
Extension of Credit) that would (after giving effect to all Extensions of Credit
on such date and the application of proceeds thereof) increase the principal
amount outstanding hereunder, shall be subject to the further conditions
precedent that, on the date of such Extension of Credit and after giving effect
thereto:

                  (a)      the following statements shall be true (and each of
the giving of the applicable notice or request with respect thereto and the
making of such Extension of Credit without prior correction by the Borrower
shall (to the extent that such correction has been previously consented to by
the Lenders) constitute a representation and warranty by the Borrower that, on
the date of such Extension of Credit, such statements are true):

                  (i)      the representations and warranties contained in
         subsections (e)(iii) and (f) of Section 6.01 of this Agreement are
         correct on and as of the date of such Extension of Credit, before and
         after giving effect to such Extension of Credit and to the application
         of the proceeds thereof, as though made on and as of such date; and

                  (ii)     no Default or Event of Default has occurred and is
         continuing, or would result from such Extension of Credit or the
         application of the proceeds thereof; and

                  (b)      the Administrative Agent shall have received such
other approvals, opinions and documents as any Lender, through the
Administrative Agent, may reasonably request.

         SECTION 5.04. RELIANCE ON CERTIFICATES. The Lenders and each Agent
shall be entitled to rely conclusively upon the certificates delivered from time
to time by officers of the Borrower as to the names, incumbency, authority and
signatures of the respective persons named therein until such time as the
Administrative Agent may receive a replacement certificate, in form acceptable
to the Administrative Agent, from an officer of such Person identified to the
Administrative Agent as having authority to deliver such certificate, setting
forth the names and true signatures of the officers and other representatives of
such Person thereafter authorized to act on behalf of such Person.

         SECTION 5.05. CONDITION PRECEDENT TO THE INITIAL EXTENSION OF CREDIT.
The obligation of each Lender to make its initial Extension of Credit is subject
to the fulfillment of the following conditions precedent:

                  (a)      The Borrower shall have paid all fees under or
referenced in Section 2.02(b) and all expenses referenced in Section 10.04(a),
in each case to the extent then due and payable.

                  (b)      The Administrative Agent shall have received, on or
before the day of the initial Extension of Credit, in form and substance
satisfactory to it with sufficient copies for each Lender:

                                       41
<PAGE>

                  (i)      A certificate, executed by the chief executive
         officer and the chief financial officer of the Borrower and Consumers,
         as applicable, in favor of the Agents and the Lenders with respect to
         the financial statements described in Section 6.01(e)(i) and (ii)
         certifying that such financial statements have been prepared in
         accordance with GAAP (except for changes resulting from any Restatement
         Event) and are true and correct as of the date of such certificate;

                  (ii)     Copies of the financial statements of the Borrower
         and Consumers described in Section 6.01(e)(i) and (ii); and

                  (iii)    Copies of the Borrower's Annual Report on Form 10-K
         for the fiscal years ended December 31, 2001 and December 31, 2002.

                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

         SECTION 6.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants as follows:

                  (a)      Each of the Borrower, Consumers and each of the
Restricted Subsidiaries is duly organized, validly existing and in good standing
under the laws of the state of its organization and is duly qualified to do
business in, and is in good standing in, all other jurisdictions where the
nature of its business or the nature of property owned or used by it makes such
qualification necessary.

                  (b)      The execution, delivery and performance by each Loan
Party of each Loan Document to which it is or will be a party (i) are within
such Loan Party's powers, (ii) have been duly authorized by all necessary
corporate or other organizational action or proceedings and (iii) do not and
will not (A) require any consent or approval of the stockholders (or other
applicable holder of equity) of such Loan Party (other than such consents and
approvals which have been obtained and are in full force and effect), (B)
violate any provision of the charter or by-laws (or other comparable
constitutive documents) of such Loan Party or of law, (C) violate any legal
restriction binding on or affecting such Loan Party, (D) result in a breach of,
or constitute a default under, any indenture or loan or credit agreement or any
other agreement, lease or instrument to which such Loan Party is a party or by
which it or its properties may be bound or affected, or (E) result in or require
the creation of any Lien (other than pursuant to the Loan Documents and pursuant
to the "Loan Documents" as defined in the Enterprises 2003 Credit Agreement)
upon or with respect to any of its respective properties.

                  (c)      No Governmental Approval is required, other than
filings necessary to create or perfect security interests in the Collateral or
as may be required under applicable energy, antitrust or securities laws in
connection with the exercise of remedies with respect to certain Collateral.

                  (d)      Each Loan Document executed on the Closing Date is,
and each other Loan Document to which any Loan Party will be a party when
executed and delivered hereunder will (i) where applicable, create valid and,
upon filing of the financing statements delivered on the Closing Date and
described in Section 5.01(c), perfected Liens in the Collateral covered

                                       42
<PAGE>

thereby securing the payment of all of the Loans purported to be secured
thereby, which Liens (x) with respect to all Collateral subject to a Lien under
the AIG Pledge Agreement shall be first perfected Liens and (y) with respect to
all other Collateral shall be pari-passu with any Liens thereon securing the
Borrower's guaranty of Enterprises' obligations under the Enterprises 2003
Credit Agreement, and (ii) be, legal, valid and binding obligations of such Loan
Party enforceable against such Loan Party in accordance with their respective
terms; subject to the qualification, however, that the enforcement of the rights
and remedies herein and therein is subject to bankruptcy and other similar laws
of general application affecting rights and remedies of creditors and the
application of general principles of equity (regardless of whether considered in
a proceeding in equity or at law).

                  (e)      (i) The consolidated balance sheets of the Borrower
and its Consolidated Subsidiaries as at December 31, 2001 and December 31, 2002,
and the related consolidated statements of income, retained earnings and cash
flows of the Borrower and its Consolidated Subsidiaries for the fiscal years
then ended, included in the Borrower's Annual Report on Form 10-K for the fiscal
years ended December 31, 2001 and December 31, 2002, in each case as such
financial statements are proposed to be restated in connection with the
Restatement, copies of each of which have been furnished to each Lender, fairly
present the financial condition of the Borrower and its Consolidated
Subsidiaries as at such dates and the results of operations of the Borrower and
its Consolidated Subsidiaries for the periods ended on such dates (it being
understood that such financial statements do not give effect to any Restatement
Event), all in accordance with generally accepted accounting principles
consistently applied (except for changes resulting from any Restatement Event);
(ii) the consolidated balance sheets of Consumers and its consolidated
Subsidiaries as at December 31, 2001 and December 31, 2002, and the related
consolidated statements of income, retained earnings and cash flows of Consumers
and its consolidated Subsidiaries for the fiscal years then ended, included in
the Borrower's Annual Report on Form 10-K for the fiscal years ended December
31, 2001 and December 31, 2002, in each case as such financial statements are
proposed to be restated in connection with the Restatement, copies of each of
which have been furnished to each Lender, fairly present the financial condition
of Consumers and its consolidated Subsidiaries as at such dates and the results
of operations of Consumers and its consolidated Subsidiaries for the periods
ended on such dates (it being understood that such financial statements do not
give effect to any Restatement Event), all in accordance with generally accepted
accounting principles consistently applied (except for changes resulting from
any Restatement Event); (iii) since December 31, 2002, except as disclosed in
the Borrower's Annual Report on Form 10-K for the fiscal year ended December 31,
2002, there has been no Material Adverse Change; and (iv) except as a result of
any Restatement Event, no Loan Party has any material liabilities or obligations
except as reflected in the foregoing financial statements and in Schedule I, as
evidenced by the Loan Documents and as may be incurred, in accordance with the
terms of this Agreement, in the ordinary course of business (as presently
conducted) following the Closing Date.

                  (f)      Except (i) as disclosed in the Borrower's Annual
Report on Form 10-K for the fiscal year ended December 31, 2002, and (ii) such
other similar actions, suits and proceedings predicated on the occurrence of the
same events giving rise to any actions, suits and proceedings described in the
Annual Report filed with the Securities and Exchange Commission set forth in
clause (i) above (all such matters in clauses (i) and (ii) being the "Disclosed
Matters") and (iii) any Restatement Event, there are no pending or threatened
actions, suits or

                                       43
<PAGE>

proceedings against or, to the knowledge of the Borrower, affecting the Borrower
or any of its Subsidiaries or the properties of the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator, that would, if
adversely determined, reasonably be expected to materially adversely affect the
financial condition, properties, business or operations of the Borrower and its
Subsidiaries, considered as a whole, or affect the legality, validity or
enforceability of this Agreement or any other Loan Document. There have been no
adverse developments with respect to the Disclosed Matters that have had or
could reasonably be expected to result in a Material Adverse Change.

                  (g)      All insurance required by Section 7.01(b) is in full
force and effect.

                  (h)      No Plan Termination Event has occurred nor is
reasonably expected to occur with respect to any Plan of the Borrower or any of
its ERISA Affiliates which would result in a material liability to the Borrower,
except as disclosed and consented to by the Required Lenders in writing from
time to time. Except as disclosed in the Borrower's Annual Report on Form 10-K
for the period ended December 31, 2002, since the date of the most recent
Schedule B (Actuarial Information) to the annual report of the Borrower (Form
5500 Series), if any, there has been no material adverse change in the funding
status of the Plans referred therein and no "prohibited transaction" has
occurred with respect thereto which is reasonably expected to result in a
material liability to the Borrower. Neither the Borrower nor any of its ERISA
Affiliates has incurred nor reasonably expects to incur any material withdrawal
liability under ERISA to any Multiemployer Plan, except as disclosed and
consented to by the Required Lenders in writing from time to time.

                  (i)      No fire, explosion, accident, strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public enemy or other casualty (except for any such circumstance, if any,
which is covered by insurance which coverage has been confirmed and not disputed
by the relevant insurer) affecting the properties, business or operations of the
Borrower, Consumers or any Restricted Subsidiary has occurred that could
reasonably be expected to have a material adverse effect on the business,
assets, property, financial condition, results of operations or prospects of (A)
the Borrower and its Subsidiaries, considered as a whole, or (B) Consumers and
its Subsidiaries, considered as a whole.

                  (j)      The Borrower and its Subsidiaries have filed all tax
returns (Federal, state and local) required to be filed and paid all taxes shown
thereon to be due, including interest and penalties, or, to the extent the
Borrower or any of its Subsidiaries is contesting in good faith an assertion of
liability based on such returns, has provided adequate reserves for payment
thereof in accordance with GAAP.

                  (k)      No extraordinary judicial, regulatory or other legal
constraints exist which limit or restrict Consumers' ability to declare or pay
cash dividends with respect to its capital stock, other than pursuant to the
Consumers Credit Facility.

                  (l)      The Borrower owns not less than 80% of the
outstanding shares of common stock of Enterprises.

                                       44
<PAGE>

                  (m)      The Borrower owns not less than 80% of the
outstanding shares of common stock of Consumers.

                  (n)      The Consolidated 2002-2007 Projections of Consumers,
Enterprises and the Borrower (the "PROJECTIONS") are based upon assumptions that
the Borrower believed were reasonable at the time the Projections were
delivered, and all other financial information delivered by the Borrower to the
Administrative Agent and the Banks on and after March 30, 2003 is true and
correct in all material respects as at the dates and for the periods indicated
therein (it being understood that such Projections and financial information do
not give effect to any Restatement Event).

                  (o)      No Loan Party is engaged in the business of extending
credit for the purpose of buying or carrying margin stock (within the meaning of
Regulation U issued by the Board), and no proceeds of any Loan will be used to
buy or carry any margin stock or to extend credit to others for the purpose of
buying or carrying any margin stock.

                  (p)      No Loan Party is an investment company (within the
meaning of the Investment Company Act of 1940, as amended).

                  (q)      No proceeds of any Extension of Credit will be used
to acquire any security in any transaction without the approval of the board of
directors of the Person issuing such security if (i) the acquisition of such
security would cause the Borrower to own, directly or indirectly, 5.0% or more
of any outstanding class of securities issued by such Person, or (ii) such
security is being acquired in connection with a tender offer.

                  (r)      Following application of the proceeds of each
Extension of Credit, not more than 25 percent of the value of the assets of the
Borrower and its Subsidiaries on a consolidated basis will be margin stock
(within the meaning of Regulation U issued by the Board).

                  (s)      No Loan Party is a registered "holding company" or a
"subsidiary" or an "affiliate" of a registered "holding company," as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended, 15
USC 79 et seq.

                  (t)      The Borrower has not withheld any fact from the
Administrative Agent or the Lenders in regard to the occurrence of any Material
Adverse Change.

                  (u)      After giving effect to the Loans to be made on the
Initial Funding Date or such other date as Loans requested hereunder are made,
and the disbursement of the proceeds of such Loans pursuant to the Borrower's
instructions, the Borrower and its Subsidiaries, taken as a whole, are Solvent.

                  (v)      Schedule I sets forth as of February 28, 2003 (i) all
Project Finance Debt of the Consolidated Subsidiaries, and (ii) debt (as such
term is construed in accordance with GAAP) of the Loan Parties, and, as of the
Closing Date, there are no defaults in the payment of principal or interest on
any such Debt and no payments thereunder have been deferred or extended beyond
their stated maturity (except as disclosed on such Schedule).

                                       45
<PAGE>

                                   ARTICLE VII
                            COVENANTS OF THE BORROWER

         SECTION 7.01. AFFIRMATIVE COVENANTS. So long as any Loan or any other
amount payable hereunder or under any Promissory Note shall remain unpaid, or
any Lender shall have any Commitment:

                  (a)      Payment of Taxes, Etc. The Borrower shall pay and
discharge, and each of its Subsidiaries shall pay and discharge, before the same
shall become delinquent, all taxes, assessments and governmental charges,
royalties or levies imposed upon it or upon its property except, in the case of
taxes, to the extent the Borrower or any Subsidiary, as the case may be, is
contesting the same in good faith and by appropriate proceedings and has set
aside adequate reserves for the payment thereof in accordance with GAAP.

                  (b)      Maintenance of Insurance. The Borrower shall
maintain, and each of its Restricted Subsidiaries and Consumers shall maintain,
insurance covering the Borrower, each of its Restricted Subsidiaries, Consumers
and their respective properties in effect at all times in such amounts and
covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general geographical area
in which the Borrower, its Restricted Subsidiaries and Consumers operates,
either with reputable insurance companies or, in whole or in part, by
establishing reserves of one or more insurance funds, either alone or with other
corporations or associations.

                  (c)      Preservation of Existence, Etc. Except as otherwise
permitted by Section 7.02, the Borrower shall preserve and maintain, and each of
its Restricted Subsidiaries and Consumers shall preserve and maintain, its
corporate or limited liability company existence, material rights (statutory and
otherwise) and franchises, and take such other action as may be necessary or
advisable to preserve and maintain its right to conduct its business in the
states where it shall be conducting its business.

                  (d)      Compliance with Laws, Etc. The Borrower shall comply,
and each of its Restricted Subsidiaries and Consumers shall comply, in all
material respects with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, including any such laws,
rules, regulations and orders relating to zoning, environmental protection, use
and disposal of Hazardous Substances, land use, construction and building
restrictions, and employee safety and health matters relating to business
operations.

                  (e)      Inspection Rights. Subject to the requirements of
laws or regulations applicable to the Borrower or its Subsidiaries, as the case
may be, and in effect at the time, at any time and from time to time upon
reasonable notice, the Borrower shall permit (i) each Agent and its agents and
representatives to examine and make copies of and abstracts from the records and
books of account of, and the properties of, the Borrower or any of its
Subsidiaries and (ii) each Agent, each of the Lenders, and their respective
agents and representatives to discuss the affairs, finances and accounts of the
Borrower and its Subsidiaries with the Borrower and its Subsidiaries and their
respective officers, directors and accountants. Each such visitation and
inspection described in the preceding sentence by or on behalf of any Lender
shall, unless

                                       46
<PAGE>

occurring at a time when a Default or Event of Default shall be continuing, be
at such Lender's expense; all other such inspections and visitations shall be at
the Borrower's expense.

                  (f)      Keeping of Books. From and after December 31, 2002,
the Borrower shall keep, and each of its Subsidiaries shall keep, proper records
and books of account, in which full and correct entries shall be made of all
financial transactions of the Borrower and its Subsidiaries and the assets and
business of the Borrower and its Subsidiaries, in accordance with GAAP (except
as related to the Restatement).

                  (g)      Maintenance of Properties, Etc. The Borrower shall
maintain, and each of its Restricted Subsidiaries shall maintain, in substantial
conformity with all laws and material contractual obligations, good and
marketable title to all of its properties which are used or useful in the
conduct of its business; provided, however, that the foregoing shall not
restrict the sale of any asset of the Borrower or any Restricted Subsidiary to
the extent not prohibited by Section 7.02(i). In addition, the Borrower shall
preserve, maintain, develop, and operate, and each of its Subsidiaries shall
preserve, maintain, develop and operate, in substantial conformity with all laws
and material contractual obligations, all of its material properties which are
used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.

                  (h)      Use of Proceeds. The Borrower shall use all
Extensions of Credit for general corporate purposes (subject to the terms and
conditions of this Agreement).

                  (i)      Consolidated Leverage Ratio. The Borrower shall
maintain, as of the last day of each fiscal quarter (in each case, the
"MEASUREMENT QUARTER"), a maximum ratio of (i) Consolidated Debt for the
immediately preceding four-fiscal-quarter period ending on the last day of such
Measurement Quarter (calculated exclusive of Panhandle and its Subsidiaries), to
(ii) Consolidated EBITDA for such period (calculated exclusive of Panhandle and
its Subsidiaries), of not more than 7.00 to 1.00, commencing with the period
ending June 30, 2003.

                  (j)      Cash Dividend Coverage Ratio. The Borrower shall
maintain, as of the last day of each Measurement Quarter, a minimum ratio of (i)
the sum of (A) Cash Dividend Income for the four-fiscal-quarter period ending on
such day, plus (B) 25% of the amount of Equity Distributions received by the
Borrower during such period but in no event in excess of $10,000,000 to (ii) an
amount equal to (A) interest expense (excluding all arrangement, underwriting
and other similar fees payable in connection with this Agreement and the
Enterprises 2003 Credit Agreement) accrued by the Borrower in respect of all
Debt during such period, minus (B) cash interest income received by the Borrower
and its Subsidiaries from Persons other than the Borrower or any of its
Subsidiaries, minus (C) all amounts received by the Borrower from its
Subsidiaries and Affiliates during such period constituting reimbursement of
interest expense and commitment, guaranty and letter of credit charges of the
Borrower to such Subsidiary or Affiliate, of not less than 1.20 to 1.00,
commencing with the Measurement Quarter ending on June 30, 2003; provided, that
the Borrower shall be deemed not to be in breach of the foregoing covenant if,
during the Measurement Quarter, it has permanently reduced the principal amount
outstanding under this Agreement and the Promissory Notes, such that the amount
determined pursuant to clause (ii) above, when recalculated on a pro forma basis
assuming that the amount of such reduced principal amount outstanding under such
agreements and promissory

                                       47
<PAGE>

notes were in effect at all times during such four-fiscal-quarter period, would
result in the Borrower being in compliance with such ratio.

                  (k)      Further Assurances. The Borrower shall promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or that any Lender through the Administrative
Agent may reasonably request in order to give effect to the transactions
contemplated by this Agreement and the other Loan Documents. In addition, the
Borrower will use all reasonable efforts to duly obtain or make Governmental
Approvals required from time to time on or prior to such date as the same may
become legally required.

                  (l)      Subsidiary Guarantees. The Borrower will (i) with
respect to each Person that becomes a Restricted Subsidiary after the Closing
Date (other than (a) any Subsidiary of the Borrower organized under the laws of
a jurisdiction located other than in the United States (each a "FOREIGN
SUBSIDIARY") if the execution of the Guaranty by such Subsidiary would result in
any materially adverse tax consequences to the Borrower, (b) Panhandle and its
Subsidiaries, and (c) MS&T), subject to any limitations under contractual
restrictions as in effect as of the Closing Date or applicable law with respect
to each Foreign Subsidiary, cause each such Restricted Subsidiary to execute the
Guaranty pursuant to which it agrees to be bound by the terms and provisions of
the Guaranty, and (ii) cause such Persons identified in clause (i) above to
deliver resolutions, opinions of counsel and such other constitutive
documentation as the Administrative Agent may reasonably request, all in form
and substance reasonably satisfactory to the Administrative Agent.

                  (m)      Compliance with Fee Letter. The Borrower and
Enterprises shall comply with its obligations under the Fee Letter.

                  (n)      Payment of Declared Dividend. The Borrower shall
cause each of its direct Subsidiaries to pay all dividends within 30 days after
declaration thereof.

                  (o)      Securities Demand. Unless (x) the "Loans" and
"Commitments" under (and as defined in) the Enterprises 2003 Credit Agreement
and Loans and Commitments hereunder shall have been permanently reduced in an
aggregate principal amount of $550,000,000 or more on or before January 2, 2004,
or (y) the Borrower's reset put securities due July 1, 2003 shall have been
reissued or remarketed pursuant to the terms thereof or refinanced, then, upon
notice from the Administrative Agent (at the direction of the Required Lenders)
(a "SECURITIES DEMAND"), to the extent permitted under each of the Borrower's
indentures (and each supplement issued thereunder), the Borrower will cause the
issuance and sale of debt and/or equity securities ("SECURITIES") the proceeds
of which shall be used to repay the 6.75% Senior Notes on their maturity date
upon such terms and conditions specified in the Securities Demand; provided that
(i) the interest rate (whether floating or fixed) shall be determined by
Administrative Agent in light of the then prevailing market conditions for
comparable securities, (ii) the Administrative Agent in their reasonable
discretion and after consultation with the Borrower, shall determine whether the
Securities shall be issued through a public offering or a private placement;
(iii) the Securities will be issued pursuant to an indenture or indentures,
which shall contain such terms, conditions, and covenants as are typical and
customary for similar financings and are reasonably satisfactory in all respects
to the Administrative Agent; and (iv) all other arrangements with respect to the
Securities shall be

                                       48
<PAGE>

reasonably satisfactory in all respects to the Administrative Agent in light of
the then prevailing market conditions.

         SECTION 7.02. NEGATIVE COVENANTS. So long as any Loan or any other
amount payable hereunder or under any Promissory Note shall remain unpaid or any
Lender shall have any Commitment, the Borrower shall not, without the written
consent of the Required Lenders:

                  (a)      Liens, Etc. (1) Create, incur, assume or suffer to
exist, or permit any of the Loan Parties to create, incur, assume or suffer to
exist, any lien, security interest, or other charge or encumbrance (including
the lien or retained security title of a conditional vendor) of any kind, or any
other type of arrangement intended or having the effect of conferring upon a
creditor a preferential interest upon or with respect to any of its properties
of any character (including capital stock and other ownership interests of the
Borrower's directly-owned Subsidiaries, intercompany obligations and accounts)
(any of the foregoing being referred to herein as a "LIEN"), whether now owned
or hereafter acquired, or (2) file, or permit any of the other Loan Parties to
file, under the Uniform Commercial Code of any jurisdiction a financing
statement which names the Borrower or any other Loan Party as debtor (other than
financing statements that do not evidence a Lien), or (3) sign, or permit any of
the other Loan Parties to sign, any security agreement authorizing any secured
party thereunder to file such financing statement, or (4) assign, or permit any
of the other Loan Parties to assign, accounts, excluding, however, from the
operation of the foregoing restrictions the Liens created under the Loan
Documents and the following:

                  (i)      Liens for taxes, assessments or governmental charges
         or levies to the extent not past due;

                  (ii)     cash pledges or deposits to secure (A) obligations
         under workmen's compensation laws or similar legislation, (B) public or
         statutory obligations of the Borrower or any of the other Loan Parties,
         (C) Support Obligations of the Borrower or any Loan Party, or (D)
         obligations of Enterprises or MS&T in respect of hedging arrangements
         and commodity purchases and sales (including any cash margins with
         respect thereto); provided that with respect to clauses (C) and (D)
         above the aggregate amount of cash pledges or deposits securing such
         Support Obligations and such obligations of Enterprises or MS&T shall
         not exceed $400,000,000 at any one time outstanding;

                  (iii)    Liens imposed by law, such as materialmen's,
         mechanics', carriers', workmen's and repairmen's liens and other
         similar Liens arising in the ordinary course of business securing
         obligations which are not overdue or which have been fully bonded and
         are being contested in good faith;

                  (iv)     Liens securing the obligations under the Loan
         Documents and under the "Loan Documents" as defined in the Enterprises
         2003 Credit Agreement (and subordinated Liens securing the refinancing
         of all or any portion of such obligations, which Liens shall be
         subordinated on terms and conditions acceptable to the Administrative
         Agent and the Collateral Agent);

                                       49
<PAGE>

                  (v)      Liens securing Off-Balance Sheet Liabilities (and all
         refinancings and recharacterizations thereof permitted under Section
         7.02(b)(iv)) in an aggregate amount not to exceed $775,000,000;

                  (vi)     purchase money Liens or purchase money security
         interests upon or in property acquired or held by the Borrower or any
         of the other Loan Parties in the ordinary course of business to secure
         the purchase price of such property or to secure indebtedness incurred
         solely for the purpose of financing the acquisition of any such
         property to be subject to such Liens or security interests, or Liens or
         security interests existing on any such property at the time of
         acquisition, or extensions, renewals or replacements of any of the
         foregoing for the same or a lesser amount, provided that no such Lien
         or security interest shall extend to or cover any property other than
         the property being acquired and no such extension, renewal or
         replacement shall extend to or cover property not theretofore subject
         to the Lien or security interest being extended, renewed or replaced,
         and provided, further, that the aggregate principal amount of the Debt
         at any one time outstanding secured by Liens permitted by this clause
         (vi) shall not exceed $15,000,000;

                  (vii)    Utility easements, building restrictions and such
         other encumbrances or charges against real property as are of a nature
         generally existing with respect to properties of a similar character
         and which do not in any material way affect the marketability of the
         same or interfere with the use thereof in the business of the Borrower
         or any other Loan Party;

                  (viii)   Liens existing on any capital asset of any Person at
         the time such Person is merged or consolidated with or into, or
         otherwise acquired by, the Borrower or any other Loan Party and not
         created in contemplation of such event, provided that such Liens do not
         encumber any other property or assets and such merger, consolidation or
         acquisition is otherwise permitted under this Agreement;

                  (ix)     Liens existing on any capital asset prior to the
         acquisition thereof by the Borrower or any other Loan Party and not
         created in contemplation thereof; provided that such Liens do not
         encumber any other property or assets;

                  (x)      Liens existing as of the Closing Date;

                  (xi)     Liens securing Project Finance Debt otherwise
         permitted under this Agreement;

                  (xii)    Liens arising out of the refinancing, extension,
         renewal or refunding of any Debt secured by any Lien permitted by any
         of the foregoing clauses (v), (viii), (ix), (x) or (xi); provided that
         (a) such Debt is not secured by any additional assets, and (b) the
         amount of such Debt secured by any such Lien is otherwise permitted
         under this Agreement;

                  (xiii)   Liens on accounts receivable (other than intercompany
         receivables) and other contract rights of MS&T and its Subsidiaries
         arising on or after the Closing Date in favor of any Person (other than
         an Affiliate of the Borrower or any of its Subsidiaries) that
         facilitates the origination of such accounts receivable or other
         contract rights;

                                       50
<PAGE>

                  (xiv)    subordinated Liens granted pursuant to the terms of
         the AIG Pledge Agreement, which Liens shall be subordinated pursuant to
         the terms of the Intercreditor Agreement, to secure certain surety bond
         obligations as described in the AIG Pledge Agreement; and

                  (xv)     subordinated Liens arising out of the refinancing,
         extension, renewal or refunding of the 6.75% Senior Notes, the
         Borrower's reset put securities due July 1, 2003 and the Borrower's
         general term notes due in 2003, which Liens shall be subordinated on
         terms and conditions acceptable to the Administrative Agent and the
         Collateral Agent.

                  (b)      Enterprises Debt. Permit Enterprises or any
Subsidiary of Enterprises (other than Panhandle and its Subsidiaries) to create,
incur, assume or suffer to exist any debt (as such term is construed in
accordance with GAAP) other than:

                  (i)      debt arising by reason of the endorsement of
         negotiable instruments for deposit or collection or similar
         transactions in the ordinary course of Enterprises' or its
         Subsidiaries' business;

                  (ii)     in the form of indemnities in respect of unfiled
         mechanics' liens and Liens affecting Enterprises' or its Subsidiaries'
         properties permitted under Section 7.02(a)(iii);

                  (iii)    debt arising under (a) the Loan Documents and (b) the
         "Loan Documents" as defined in the Enterprises 2003 Credit Agreement in
         a principal amount equal to $441,000,000 minus any principal payments
         (but with respect to principal payments of revolving loans prior to the
         "Conversion Date" thereunder, only to the extent of any concurrent
         reduction or termination of the "Commitments" as defined therein) made
         from time to time thereunder;

                  (iv)     debt constituting Off-Balance Sheet Liabilities
         (including any recharacterization thereof as debt pursuant to any
         changes in generally accepted accounting principles hereafter required
         or permitted and which are adopted by the Borrower or any of its
         Subsidiaries with the agreement of its independent certified public
         accountants) to the extent permitted by Section 7.02(o), and any
         extensions, renewals, refundings or replacements thereof, provided that
         any such extension, renewal, refunding or replacement is in an
         aggregate principal amount not greater than the principal amount of, is
         an obligation of the same Person that is the obligor in respect of, and
         has a weighted average life to maturity not less than the weighted
         average life to maturity of, the debt so extended, renewed, refunded or
         replaced;

                  (v)      other debt of Enterprises and its Subsidiaries
         outstanding on the Closing Date (including the debt of the Loan Parties
         as of February 28, 2003 as set forth on Schedule I), and any
         extensions, renewals, refundings or replacements thereof, provided that
         any such extension, renewal, refunding or replacement is in an
         aggregate principal amount not greater than the principal amount of, is
         an obligation of the same Person that is the obligor in respect of, and
         has a weighted average life to maturity not less than the weighted
         average life to maturity of, the debt so extended, renewed, refunded or
         replaced;

                                       51
<PAGE>

                  (vi)     (a) unsecured, subordinated debt owed (i) to the
         Borrower by Enterprises, (ii) to Enterprises or CMS Capital, L.L.C. (or
         any successor by merger to CMS Capital, L.L.C.) and (iii) to any
         Grantor by any Loan Party, and (b) unsecured debt owed to any
         Subsidiary of Enterprises (other than a Grantor) by CMS Capital, L.L.C.
         (or any successor by merger to CMS Capital, L.L.C.), and (c) unsecured
         debt of any Foreign Subsidiary of Enterprises owed to another Foreign
         Subsidiary of Enterprises provided that the proceeds of any repayment
         of such debt are remitted to a Loan Party;

                  (vii)    Project Finance Debt of any Loan Party or any of its
         Subsidiaries incurred on or after the Closing Date, provided that the
         Net Proceeds thereof shall be applied in accordance with Section
         2.03(c) if required to be so applied; and

                  (viii)   capital lease obligations and other Debt secured by
         purchase money Liens to the extent such Liens shall be permitted under
         Section 7.02(a)(vi).

                  (c)      Lease Obligations. Create, incur, assume or suffer to
exist, or permit any of the other Loan Parties to create, incur, assume or
suffer to exist, any obligations as lessee for the rental or hire of real or
personal property of any kind under leases or agreements to lease (other than
leases which constitute Debt) having an original term of one year or more which
would cause the aggregate direct or contingent liabilities of the Borrower and
the other Loan Parties in respect of all such obligations payable in any period
of 12 consecutive calendar months to exceed $50,000,000.

                  (d)      Investments in Other Persons. Make, or permit any of
the other Loan Parties to make, any loan or advance to any Person, or purchase
or otherwise acquire any capital stock, obligations or other securities of, make
any capital contribution to, or otherwise invest in, any Person, other than (i)
Permitted Investments, (ii) pursuant to the contractual or contingent
obligations of the Borrower or any other Loan Party as in effect as of the
Closing Date and in amounts not to exceed the estimated amounts as set forth on
Schedule I hereto (whether such obligation is conditioned upon a change in the
ratings of the securities issued by such Person or otherwise) and, in each case,
in an amount not to exceed such contractual or contingent obligation as in
effect on the Closing Date, (iii) investments, directly or indirectly, by any
Loan Party (x) in the capital of any Subsidiary of the Borrower that is a Loan
Party and (y) in assets contributed to such Loan Party, provided that if any
such assets constitute Collateral prior to such contribution, such assets shall
remain Collateral after giving effect to such contribution and prior to such
contribution the Borrower shall, and shall cause each applicable Subsidiary to,
execute and deliver to the Administrative Agent all agreements, instruments and
documents as may be necessary or reasonably requested by the Administrative
Agent to perfect its security interest in such Collateral, (iv) investments in
the capital stock or other ownership interests of any of the Borrower's
Subsidiaries arising from the conversion of intercompany indebtedness to equity,
(v) intercompany loans and advances to the extent the corresponding debt is
permitted under Section 7.02(b)(vi), (vi) investments constituting non-cash
consideration received in connection with the sale of any asset permitted under
Section 7.02(i), and (vii) additional loans, advances, purchases, contributions
and other investments in an amount not to exceed $340,000,000 in the aggregate
at any time; provided, however, that investments described in clauses (iv)
(solely with respect to investments made in any Subsidiary that is not a Loan
Party) and (vii) above shall not be permitted to be made at a time when either a
Default or an Event of Default shall be continuing

                                       52
<PAGE>

or would result therefrom; provided, further, that, notwithstanding the
foregoing, neither the Borrower nor any Loan Party shall make any loans or
advances to any of the Borrower's Subsidiaries other than, to the extent
otherwise permitted hereunder, Enterprises or any Subsidiary of Enterprises.

                  (e)      Restricted Payments. Declare or pay, or permit any
other Loan Party to declare or pay, directly or indirectly, any dividend,
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any share of any class of capital stock or other
ownership interests of the Borrower or any of the other Loan Parties (other than
(1) stock splits and dividends payable solely in nonconvertible equity
securities of the Borrower and (2) dividends and distributions made to the
Borrower or a Loan Party), or purchase, redeem, retire, or otherwise acquire for
value, or permit any of the other Loan Parties to purchase, redeem, retire, or
otherwise acquire for value, any shares of any class of capital stock or other
ownership interests of the Borrower or any of the other Loan Parties or any
warrants, rights, or options to acquire any such shares, now or hereafter
outstanding, or make, or permit any of the other Loan Parties to make, any
distribution of assets to any of its shareholders (other than distributions to
the Borrower or any other Loan Party) (any such dividend, payment, distribution,
purchase, redemption, retirement or acquisition being hereinafter referred to as
a "RESTRICTED PAYMENT") other than (i) pursuant to the terms of any class of
capital stock of the Borrower issued and outstanding (and as in effect on) the
Closing Date, any purchase or redemption of capital stock of the Borrower made
by exchange for, or out of the proceeds of the substantially concurrent sale of,
capital stock of the Borrower (other than Redeemable Stock or Exchangeable Stock
(as such terms are defined in the Indenture on the Closing Date)); and (ii)
payments made by the Borrower or any other Loan Party pursuant to the Tax
Sharing Agreement.

                  (f)      Compliance with ERISA. (i) Permit to exist any
"accumulated funding deficiency" (as defined in Section 412(a) of the Internal
Revenue Code of 1986, as amended), (ii) terminate, or permit any ERISA Affiliate
to terminate, any Plan or withdraw from, or permit any ERISA Affiliate to
withdraw from, any Multiemployer Plan, so as to result in any material (in the
opinion of the Required Lenders) liability of the Borrower, any other Loan Party
or Consumers to such Plan, Multiemployer Plan or the PBGC, or (iii) permit to
exist any occurrence of any Reportable Event (as defined in Title IV of ERISA),
or any other event or condition, which presents a material (in the opinion of
the Required Lenders) risk of such a termination by the PBGC of any Plan or
withdrawal from any Multiemployer Plan so as to result in a material liability
to the Borrower, any other Loan Party or Consumers.

                  (g)      Transactions with Affiliates. Enter into, or permit
any of its Subsidiaries to enter into, any transaction with any of its
Affiliates unless such transaction is on terms no less favorable to the Borrower
or such Subsidiary than if the transaction had been negotiated in good faith on
an arm's-length basis with a non-Affiliate; provided that (x) the purchase by,
or other transfer to, Trunkline Field Services Company of certain assets of CMS
Field Services, Inc. as described to the Administrative Agent and the Lenders
prior to the date hereof shall be permitted hereunder and (y) any transaction
permitted under Sections 7.02(b), 7.02(e) or 7.02(h) shall be permitted
hereunder.

                  (h)      Mergers, Etc. Merge with or into or consolidate with
or into, or permit any of the other Loan Parties or Consumers to merge with or
into or consolidate with or into, any

                                       53
<PAGE>

other Person, except that (i) (x) any Loan Party may merge with or into any
other Loan Party, (y) any Subsidiary of a Loan Party that is not a Loan Party
may merge into such Loan Party or with or into any other Subsidiary of any Loan
Party, provided that (a) in any such merger with or into the Borrower, the
Borrower is the surviving corporation, (b) in any such merger into a Loan Party
under clause (y) above, the Loan Party is the survivor thereof, (c) no Default
or Event of Default shall be continuing or result therefrom and (d) such Loan
Party shall not be liable with respect to any Debt or allow its property to be
subject to any Lien which it could not become liable with respect to or allow
its property to become subject to under this Agreement or any other Loan
Document on the date of such transaction, and (ii) any Loan Party may merge with
or into any other Person, provided that (a) the Loan Party is the survivor
thereof, or, in the case of any Loan Party that is a corporation reconstituting
itself as limited liability company, such limited liability company shall be the
survivor thereof and shall be thereafter deemed to be a Loan Party hereunder,
(b) no Default or Event of Default shall be continuing or result therefrom, (c)
such Loan Party shall not be liable with respect to any Debt or allow its
property to be subject to any Lien which it could not become liable with respect
to or allow its property to become subject to under this Agreement or any other
Loan Document on the date of such transaction, and (d) immediately after giving
effect to such merger, the Net Worth of such Loan Party shall be equal to or
greater than the Net Worth of such Loan Party as of the last day of the fiscal
quarter immediately preceding the date of such merger.

                  (i)      Sales, Etc., of Assets. Sell, lease, transfer,
assign, or otherwise dispose of all or any substantial part of its assets, or
permit any of the other Loan Parties (other than MS&T) to sell, lease, transfer,
or otherwise dispose of all or any substantial part of its assets, except (i) to
give effect to a transaction permitted by subsection (h) above or subsection (j)
below, and (ii) with respect to Enterprises or any of its Subsidiaries, as
permitted under the Enterprises 2003 Credit Agreement; provided, further, that
neither the Borrower nor any of the other Loan Parties (other than MS&T) shall
sell, assign, transfer, lease, convey or otherwise dispose of any property,
whether now owned or hereafter acquired, or any income or profits therefrom, or
enter into any agreement to do so, except:

                  (A)      the sale of property for consideration not less than
         the Fair Market Value thereof so long as (i) any non-cash consideration
         resulting from such sale shall be pledged or assigned to the Collateral
         Agent, for the benefit of the Lenders, pursuant to an instrument in
         form and substance reasonably acceptable to the Collateral Agent, (ii)
         cash consideration resulting from such sale shall be (x) in an amount
         determined by the Borrower for any sale the consideration of which is
         $10,000,000 or less, or, together with all other such sales under this
         clause (x), $25,000,000 or less, (y) in the case of the sale of
         substantially all or any portion of the capital stock and assets of CMS
         Field Services, Inc. and its Subsidiaries, not less than 60% of the
         aggregate consideration resulting from such sale, (z) for all other
         sales, not less than 90% of the aggregate consideration resulting from
         such sale, and (iii) the Borrower complies with the mandatory
         prepayment provisions set forth in Section 2.03(c);

                  (B)      the transfer of property from a Loan Party to any
         other Loan Party;

                  (C)      the transfer of property constituting an investment
         otherwise permitted under Section 7.02(d);

                                        54
<PAGE>

                  (D)      the sale of electricity and natural gas and other
         property in the ordinary course of Borrower's and its Subsidiaries
         respective businesses consistent with past practice;

                  (E)      any transfer of an interest in receivables and
         related security, accounts or notes receivable on a limited recourse
         basis in connection with the incurrence of Off-Balance Sheet
         Liabilities, provided that such transfer qualifies as a legal sale and
         as a sale under GAAP and the incurrence of such Off-Balance Sheet
         Liabilities is permitted under Section 7.02(o);

                  (F)      the transfer of property constituting not more than
         two percent (2%) of the ownership interests held by the Borrower and
         its Subsidiaries as of the Closing Date in CMS International Ventures,
         L.L.C. to CMS Energy Foundation and/or Consumers Foundation and/or any
         other third-party 501(c)(3) charitable organization;

                  (G)      the disposition of equipment if such equipment is
         obsolete or no longer useful in the ordinary course of the Borrower's
         or such Subsidiary's business;

                  (H)      the sale of substantially all of the capital stock
         and assets of Panhandle; provided that such sale shall be consummated
         substantially in accordance with, and on terms not materially more
         adverse to the interests of the Agents and the Lenders than the terms
         and conditions set forth in, that certain Stock Purchase Agreement,
         dated as of December 21, 2002, by and among CMS Gas Transmission
         Company, AIG Highstar Capital, L.P., AIG Highstar II Funding Corp.,
         Southern Union Company and Southern Union Panhandle Corp.

                  (j)      Maintenance of Ownership of Subsidiaries. Sell,
transfer,  assign or otherwise  dispose of any shares of capital  stock or other
ownership  interests  of  any of the  Loan  Parties  or  Consumers  (other  than
preferred or preference  stock of Consumers) or any warrants,  rights or options
to acquire such capital stock or other ownership interests,  or permit any other
Loan Party or Consumers to issue, sell, transfer, assign or otherwise dispose of
any shares of its capital  stock (other than  preferred or  preference  stock of
Consumers) or other ownership  interests or the capital stock or other ownership
interests of any other Loan Party or any warrants,  rights or options to acquire
such capital stock or other ownership interests,  except (i) to give effect to a
transaction  permitted  by  subsection  (d),  (h)  or (i)  above,  and  (ii)  in
connection   with  the   foreclosure  of  any  Liens   permitted  under  Section
7.02(a)(iv).

                  (k)      Amendment of Tax Sharing Agreement. Directly or
indirectly,  amend,  modify,  supplement,  waive  compliance with, seek a waiver
under, or assent to noncompliance with, any term,  provision or condition of the
Tax Sharing Agreement if the effect of such amendment, modification, supplement,
waiver or assent is to (i) reduce  materially any amounts  otherwise payable to,
or increase  materially any amounts  otherwise owing or payable by, the Borrower
thereunder,  or (ii) change  materially the timing of any payments made by or to
the Borrower thereunder.

                  (l)      Prepayments of Indebtedness. Make or agree to pay or
make,  or permit any of the other Loan  Parties to make or agree to pay or make,
directly or indirectly, any

                                       55

<PAGE>

payment or other distribution (whether in cash, securities or other property) of
or in respect of principal of or interest on any Debt, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Debt (other than the
obligations of the Loan Parties under the Loan Documents and under the "Loan
Documents" as defined in the Enterprises 2003 Credit Agreement), other than (i)
any payments on account of (a) any Debt when and as such payment was due
(including at the maturity thereof if the initial stated maturity thereof is on
or prior to the Facility A Maturity Date) pursuant to the mandatory payment
provisions applicable to such Debt at the time it was incurred (including,
without limitation, regularly scheduled payment dates for principal, interest,
fees and other amounts due thereon) or any extension thereof thereafter granted
by the holder of such Debt, (b) refinancings of Debt otherwise permitted under
this Agreement, (c) any Debt owed to the Borrower or any of its Subsidiaries,
(d) Debt secured by a Lien on assets subject to an asset sale permitted by
Section 7.02(i) and (e) the extinguishment of any intercompany Debt in
connection with a dividend or distributions permitted under Section 7.02(e),
(ii) payments constituting the exchange of the Borrower's common stock for the
Borrower's outstanding Debt (and any cash payments made in lieu of the issuance
of fractional shares) to the extent such exchange is permitted under the
Securities and Exchange Act of 1933, as amended and (iii) prepayments of (x) the
Borrower's reset put securities due July 1, 2003 and the Borrower's general term
notes due in 2003, (y) if the aggregate principal amount of the Loans shall be
less than $250,000,000, any securities with maturities on or after January 1,
2004 but prior to April 1, 2004, and (z) if the aggregate principal amount of
the Loans shall be less than $175,000,000, any securities with maturities on or
after January 1, 2004.

                  (m)      Conduct of Business. Engage, or permit any Restricted
Subsidiary to engage, in any business other than (a) the business engaged in by
the Borrower and its Subsidiaries on the date hereof, and (b) any business or
activities which are substantially similar, related or incidental thereto.

                  (n)      Organizational Documents. Amend, modify or otherwise
change, or permit any Restricted Subsidiary to amend, modify or otherwise change
any of the terms or provisions in any of their respective certificate of
incorporation and by-laws (or comparable constitutive documents) as in effect on
the Closing Date in any manner adverse to the interests of the Lenders.

                  (o)      Off-Balance Sheet Liabilities. Create, incur, assume
or suffer to exist, or permit any Subsidiary (other than Consumers and its
Subsidiaries) to create, incur, assume or suffer to exist, Off-Balance Sheet
Liabilities (exclusive of lease obligations otherwise permitted under Section
7.02(c)) in the aggregate in excess of $775,000,000 at any time.

         SECTION 7.03. REPORTING OBLIGATIONS. So long as any Loan or any other
amount payable hereunder or under any Promissory Note shall remain unpaid or any
Lender shall have any Commitment, the Borrower will, unless the Required Lenders
shall otherwise consent in writing, furnish to the Administrative Agent (with
sufficient copies for each Lender), the following:

                                       56

<PAGE>

                  (a)      as soon as possible and in any event within five days
after the Borrower knows or should have reason to know of the occurrence of each
Default or Event of Default continuing on the date of such statement, a
statement of the chief financial officer or chief accounting officer of the
Borrower setting forth details of such Default or Event of Default and the
action that the Borrower proposes to take with respect thereto;

                  (b)      as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year of the
Borrower, commencing with the fiscal quarter ending on March 31, 2003, a
consolidated balance sheet and consolidated statements of income and retained
earnings and of cash flows of the Borrower and its Subsidiaries as at the end of
such quarter and for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter (which requirement shall be deemed
satisfied by the delivery of the Borrower's quarterly report on Form 10-Q for
such quarter), all in reasonable detail and duly certified (subject to year-end
audit adjustments) by the chief financial officer or chief accounting officer of
the Borrower as having been prepared in accordance with GAAP, together with (A)
a schedule (substantially in the form of Exhibit E appropriately completed) of
(1) the computations used by the Borrower in determining compliance with the
covenants contained in Sections 7.01(i) and 7.01(j) and the ratio set forth in
Section 8.01(j), (2) all Project Finance Debt of the Consolidated Subsidiaries,
together with the Borrower's Ownership Interest in each such Consolidated
Subsidiary and (3) all Support Obligations of the Borrower of the types
described in clauses (iv) and (v) of the definition of Support Obligations
(whether or not each such Support Obligation or the primary obligation so
supported is fixed, conclusively determined or reasonably quantifiable) to the
extent such Support Obligations have not been previously disclosed as
"Consolidated Debt" pursuant to clause (1) above, and (B) a certificate of said
officer stating that no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is continuing,
a statement as to the nature thereof and the action that the Borrower proposes
to take with respect thereto;

                  (c)      as soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower and its Subsidiaries,
commencing with the fiscal year ending on December 31, 2003, a copy of the
Annual Report on Form 10-K (or any successor form) for the Borrower and its
Subsidiaries for such year, including therein a consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such fiscal year and
consolidated statements of income and retained earnings and of cash flows of the
Borrower and its Subsidiaries for such fiscal year, accompanied by a report
thereon of a nationally-recognized independent public accounting firm, together
with (1) a schedule in form satisfactory to the Required Lenders of (A) the
computations used by such accounting firm in determining, as of the end of such
fiscal year, compliance with the covenants contained in Sections 7.01(i) and
7.01(j) and the ratio set forth in Section 8.01(j), (B) all Project Finance Debt
of the Consolidated Subsidiaries, together with the Borrower's Ownership
Interest in each such Consolidated Subsidiary and (C) all Support Obligations of
the Borrower of the types described in clauses (iv) and (v) of the definition of
Support Obligations (whether or not each such Support Obligation or the primary
obligation so supported is fixed, conclusively determined or reasonably
quantifiable) to the extent such Support Obligations have not been previously
disclosed as "Consolidated Debt" pursuant to clause (A) above, and (2) a
certificate of the chief financial officer or chief accounting officer of the
Borrower stating that no Default or Event of Default has occurred and

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<PAGE>

is continuing or, if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action that the
Borrower proposes to take with respect thereto;

                  (d)      as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year of the
Borrower, commencing with the fiscal quarter ending on March 31, 2003, a balance
sheet and statements of income and retained earnings and of cash flows of the
Borrower as at the end of such quarter and for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, all in
reasonable detail and duly certified (subject to year-end audit adjustments) by
the chief financial officer or chief accounting officer of the Borrower as
having been prepared in accordance with GAAP;

                  (e)      as soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower, commencing with the fiscal
year ending on December 31, 2003, a balance sheet of the Borrower as at the end
of such fiscal year and statements of income and retained earnings and of cash
flows of the Borrower for such fiscal year, all in reasonable detail and duly
certified (subject to year end audit adjustments) by the chief financial officer
or chief accounting officer of the Borrower as having been prepared in
accordance with GAAP;

                  (f)      as soon as possible and in any event (A) within 30
days after the Borrower knows or has reason to know that any Plan Termination
Event described in clause (i) of the definition of Plan Termination Event with
respect to any Plan of the Borrower or any ERISA Affiliate of the Borrower has
occurred and could reasonably be expected to result in a material liability to
the Borrower and (B) within 10 days after the Borrower knows or has reason to
know that any other Plan Termination Event with respect to any Plan of the
Borrower or any ERISA Affiliate of the Borrower has occurred and could
reasonably be expected to result in a material liability to the Borrower, a
statement of the chief financial officer or chief accounting officer of the
Borrower describing such Plan Termination Event and the action, if any, which
the Borrower proposes to take with respect thereto;

                  (g)      except as may arise in connection with the sale of
Panhandle, promptly after receipt thereof by the Borrower or any of its ERISA
Affiliates from the PBGC copies of each notice received by the Borrower or any
such ERISA Affiliate of the PBGC's intention to terminate any Plan or to have a
trustee appointed to administer any Plan;

                  (h)      except as may arise in connection with the sale of
Panhandle, promptly and in any event within 30 days after the filing thereof
with the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each Plan
(if any) to which the Borrower is a contributing employer;

                  (i)      promptly after receipt thereof by the Borrower or any
of its ERISA Affiliates from a Multiemployer Plan sponsor, a copy of each notice
received by the Borrower or any of its ERISA Affiliates concerning the
imposition or amount of withdrawal liability in an aggregate principal amount of
at least $250,000 pursuant to Section 4202 of ERISA in respect of which the
Borrower is reasonably expected to be liable;

                  (j)      promptly after the Borrower becomes aware of the
occurrence thereof, notice of all actions, suits, proceedings or other events of
the type described in Section 6.01(f);

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<PAGE>

                  (k)      promptly after the sending or filing thereof, notice
to the Administrative Agent and each Lender of any sending or filing of all
proxy statements, financial statements and reports which the Borrower sends to
its public security holders (if any), all regular, periodic and special reports
which the Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange, pursuant to the Exchange Act, and all final prospectuses
with respect to any securities issued or to be issued by the Borrower or any of
its Subsidiaries;

                  (l)      as soon as possible and in any event within five days
after the occurrence of any material default under any material agreement to
which the Borrower or any of its Subsidiaries is a party, which default would
materially adversely affect the business, assets, property, financial condition,
results of operations or prospects of the Borrower and its Subsidiaries,
considered as a whole, any of which is continuing on the date of such
certificate, a certificate of the chief financial officer of the Borrower
setting forth the details of such material default and the action which the
Borrower or any such Subsidiary proposes to take with respect thereto; and

                  (m)      promptly after requested, such other information
respecting the business, properties, condition or operations, financial or
otherwise, of the Borrower and its Subsidiaries as any Agent or the Required
Lenders may from time to time reasonably request in writing.

The Borrower shall be deemed to have fulfilled its obligations pursuant to
clauses (b), (c), (d), (e) and (k) above to the extent the Administrative Agent
(and the Lenders, if applicable) receives an electronic copy of the requisite
document or documents in a format reasonably acceptable to the Administrative
Agent, provided that (1) an executed, tangible copy of any report required
pursuant to clause (e) above is delivered to the Administrative Agent at the
time of any such electronic delivery, and (2) a tangible copy of each requisite
document delivered electronically is made available by the Borrower promptly
upon request by any Agent or Lender.

                                  ARTICLE VIII
                                    DEFAULTS

         SECTION 8.01. EVENTS OF DEFAULT. If any of the following events (each
an "EVENT OF DEFAULT") shall occur and be continuing, the Administrative Agent
and the Lenders shall be entitled to exercise the remedies set forth in Section
8.02:

                  (a)      The Borrower shall fail to pay (i) any principal of
any Loan when due or (ii) any interest thereon, fees or other amounts (other
than any principal of any Loan) payable hereunder within two Business Days after
such interest, fees or other amounts shall have become due; or

                  (b)      Any representation or warranty made by or on behalf
of the Borrower in any Loan Document or certificate or other writing delivered
pursuant thereto shall prove to have been incorrect in any material respect when
made or deemed made; or

                  (c)      The Borrower or any of its Subsidiaries shall fail to
perform or observe any term or covenant on its part to be performed or observed
contained in Section 7.01(c), (h),

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<PAGE>

(i), (j), (l), (n) or (o) or in Section 7.02 hereof (and the Borrower, each
Lender and each Agent hereby agrees that an Event of Default under this
subsection (c) shall be given effect as if the defaulting Subsidiary were a
party to this Agreement); or

                  (d)      The Borrower or any of its Subsidiaries shall fail to
perform or observe any other term or covenant on its part to be performed or
observed contained in any Loan Document and any such failure shall remain
unremedied, after written notice thereof shall have been given to the Borrower
by the Administrative Agent, for a period of 10 Business Days (and the Borrower,
each Lender and each Agent hereby agrees that an Event of Default under this
subsection (d) shall be given effect as if the defaulting Subsidiary were a
party to this Agreement); or

                  (e)      The Borrower, any Restricted Subsidiary or Consumers
shall fail to pay any of its Debt (including any interest or premium thereon but
excluding Debt incurred under this Agreement) (i) under the Enterprises 2003
Credit Agreement, or (ii) otherwise aggregating, in the case of the Borrower and
each Restricted Subsidiary, $6,000,000 or more or, in the case of Consumers,
$25,000,000 or more, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in any agreement or
instrument relating to such Debt; or any other default under any agreement or
instrument relating to any such Debt (including any "amortization event" or
event of like import in connection with any Off-Balance Sheet Liabilities), or
any other event, shall occur and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of such
default or event is (i) to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; unless in each such case the
obligee under or holder of such Debt shall have waived in writing such
circumstance so that such circumstance is no longer continuing, or (ii) with
respect to any such event occurring in connection with any Off-Balance Sheet
Liabilities aggregating $6,000,000 or more, to terminate the reinvestment of
collections or proceeds of receivables and related security under any agreements
or instruments related thereto (other than a termination resulting solely from
the request of the Borrower or its Subsidiaries); or

                  (f)      (i) The Borrower, any Restricted Subsidiary or
Consumers shall generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make an
assignment for the benefit of creditors; or (ii) any proceeding shall be
instituted by or against the Borrower, any Restricted Subsidiary or Consumers
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of its debts under any law relating to bankruptcy, insolvency, or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and, in the case of a proceeding
instituted against the Borrower, either such proceeding shall remain undismissed
or unstayed for a period of 60 days or any of the actions sought in such
proceeding (including the entry of an order for relief against the Borrower, a
Restricted Subsidiary or Consumers or the appointment of a receiver, trustee,
custodian or other similar official for the Borrower, such Restricted Subsidiary
or Consumers or any of its property) shall occur; or (iii) the Borrower, any
Restricted Subsidiary or Consumers shall take

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<PAGE>

any corporate or other action to authorize any of the actions set forth above in
this subsection (f); or

                  (g)      Any judgment or order for the payment of money in
excess of $6,000,000 shall be rendered against the Borrower, any Guarantor or
any of their respective properties and either (i) enforcement proceedings shall
have been commenced by any creditor upon such judgment or order or (ii) there
shall be any period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or

                  (h)      Any material provision of any Loan Document, after
execution hereof or delivery thereof under Article V, shall for any reason other
than the express terms hereof or thereof cease to be valid and binding on any
party thereto; or any Loan Party shall so assert in writing; or any Guarantor
shall terminate or revoke any of its obligations under the applicable Guaranty;
or

                  (i)      Any "Event of Default" shall occur under and as
defined in the AIG Pledge Agreement as in effect on January 8, 2003 (and without
giving effect to any amendment or other modification thereto); or

                  (j)      There shall be imposed or enacted any Consumers
Dividend Restriction, the result of which is that the Dividend Coverage Ratio
shall be less than 1.15 to 1.0 at any time after the imposition of such
Consumers Dividend Restriction; or

                  (k)      At any time, for any reason (except to the extent
permitted by the terms of the Loan Documents or due to any failure by the
Collateral Agent to take any action on its part to be performed under applicable
law in order to maintain the perfection or priority of any such Liens), (i) the
Liens intended to be created under any of the Loan Documents with respect to
Collateral having a Fair Market Value of $6,000,000 or more become, or the
Borrower or any such Subsidiary seeks to render such Liens, invalid or
unperfected, or (ii) Liens in favor of the Collateral Agent for the benefit of
the Lenders contemplated by the Loan Documents with respect to Collateral having
a Fair Market Value of $6,000,000 or more shall, at any time, for any reason, be
invalidated or otherwise cease to be in full force and effect, or such Liens
shall not have the priority contemplated by this Agreement or the Loan
Documents.

         SECTION 8.02. REMEDIES. If any Event of Default has occurred and is
continuing, then the Administrative Agent or the Collateral Agent, as
applicable, shall at the request, or may with the consent, of the Required
Lenders, upon notice to the Borrower (i) declare the Commitments and the
obligation of each Lender to make or Convert Loans to be terminated, whereupon
the same shall forthwith terminate, (ii) declare the principal amount
outstanding hereunder, all interest thereon and all other amounts payable under
this Agreement and the other Loan Documents to be forthwith due and payable,
whereupon the principal amount outstanding hereunder, all such interest and all
such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower, and (iii) exercise in respect of any and all collateral,
in addition to the other rights and remedies provided for herein or otherwise
available to the Administrative Agent, the Collateral Agent or the Lenders, all
the rights and remedies of a

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<PAGE>

secured party on default under the Uniform Commercial Code in effect in the
State of New York and in effect in any other jurisdiction in which collateral is
located at that time; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Borrower or any
Guarantor under the Federal Bankruptcy Code, (A) the Commitments and the
obligation of each Lender to make or Convert Loans shall automatically be
terminated and (B) the principal amount outstanding hereunder, all such interest
and all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.

                                   ARTICLE IX
                                   THE AGENTS

         SECTION 9.01. AUTHORIZATION AND ACTION.

                  (a)      Each of the Lenders hereby irrevocably appoints each
Agent as its agent and authorizes each such Agent to take such actions on its
behalf and to exercise such powers as are delegated to such Agent by the terms
of the Loan Documents, together with such actions and powers as are reasonably
incidental thereto.

                  (b)      Any Lender serving as an Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not an Agent, and such Lender and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any of its Subsidiaries or other Affiliate
thereof as if it were not an Agent hereunder.

                  (c)      No Agent shall have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the generality
of the foregoing, (i) no Agent shall be subject to any fiduciary or other
implied duties, regardless of whether a Default or an Event of Default has
occurred and is continuing, (ii) no Agent shall have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that such Agent
is required to exercise in writing by the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.01), and (iii) except as expressly set forth in the Loan
Documents, no Agent shall have any duty to disclose, or shall be liable for the
failure to disclose, any information relating to the Borrower or any of its
Subsidiaries or Affiliates that is communicated to or obtained by the Lender
serving as such Agent or any of its Affiliates in any capacity. No Agent shall
be liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
10.01 or any other provision of this Agreement) or in the absence of its own
gross negligence or willful misconduct. Each Agent shall be deemed not to have
knowledge of any Default or Event of Default unless and until written notice
thereof is given to such Agent by the Borrower or a Lender (in which case such
Agent shall promptly give a copy of such written notice to the Lenders and the
other Agents). No Agent shall be responsible for or have any duty to ascertain
or inquire into (A) any statement, warranty or representation made in or in
connection with any Loan Document, (B) the contents of any certificate, report
or other document delivered thereunder or in connection therewith, (C) the
performance or observance of any of the covenants, agreements or other terms

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<PAGE>

or conditions set forth in any Loan Document, (D) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (E) the satisfaction of any condition set forth in
Article V or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to such Agent.

                  (d)      Each Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. Each Agent also
may rely upon any statement made to it orally or by telephone and believed by it
to be made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

                  (e)      Each Agent may perform any and all its duties and
exercise its rights and powers by or through one or more sub-agents appointed by
such Agent. Each Agent and any such sub-agent may perform any and all its duties
and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding subsections of this Section 9.01 shall
apply to any such sub-agent and to the Related Parties of each Agent and any
such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as an Agent.

                  (f)      Subject to the appointment and acceptance of a
successor Agent as provided in this subsection (f), any Agent may resign at any
time by notifying the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent which shall be a Lender with
an office in New York, New York, or an Affiliate of any such Lender. Upon the
acceptance of its appointment as an Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After an Agent's resignation hereunder, the provisions of this Article and
Section 10.04 shall continue in effect for the benefit of such retiring Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as an Agent.

                  (g)      Each Lender acknowledges that it has independently
and without reliance upon any Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or
any related agreement or any document furnished hereunder or thereunder. Each
Lender agrees (except as provided in Section

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10.05) that it will not take any legal action, nor institute any actions or
proceedings, against the Borrower or any other obligor hereunder or with respect
to any Collateral, without the prior written consent of the Required Lenders.
Without limiting the generality of the foregoing, no Lender may accelerate or
otherwise enforce its portion of the Loans, or unilaterally terminate its
Commitment except in accordance with Section 8.02.

         SECTION 9.02. INDEMNIFICATION. The Lenders agree to indemnify each
Agent (to the extent not reimbursed by the Borrower), ratably according to the
respective Percentages of the Lenders, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against such Agent in any way relating to or
arising out of this Agreement or any action taken or omitted by such Agent under
this Agreement, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agents and the Arranger promptly upon demand for its ratable share
of any out-of-pocket expenses (including counsel fees) incurred by the Agents in
connection with the preparation, syndication, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement to the extent that the Agents
are entitled to reimbursement for such expenses pursuant to Section 10.04 but
are not reimbursed for such expenses by the Borrower.

         SECTION 9.03. CONCERNING THE COLLATERAL AND THE LOAN DOCUMENTS.

                  (a)      Each Lender authorizes and directs the Collateral
Agent to enter into the Loan Documents relating to the Collateral for the
benefit of the Lenders. Each Lender agrees that any action taken by any Agent or
the Required Lenders (or, where required by the express terms of this Agreement,
a greater proportion of the Lenders) in accordance with the provisions of this
Agreement or the other Loan Documents, and the exercise by any Agent or the
Required Lenders (or, where so required, such greater proportion) of the powers
set forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of the Lenders.
Without limiting the generality of the foregoing, the Collateral Agent shall
have the sole and exclusive right and authority to (i) act as the disbursing and
collecting agent for the Lenders with respect to all payments and collections
arising in connection with this Agreement and the Loan Documents relating to the
Collateral; (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by the Borrower
or any other Loan Party a party thereto; (iii) act as collateral agent for the
Lenders for purposes of the perfection of all Liens created by such agreements
and all other purposes stated therein; provided, however, the Collateral Agent
hereby appoints, authorizes and directs the other Agents and the Lenders to act
as collateral sub-agent for the Collateral Agent and the Lenders for purposes of
the perfection of all Liens with respect to any property of the Borrower or any
of its Subsidiaries at any time in the possession of such Lender, including,
without limitation, deposit accounts maintained with, and cash held by, such
Lender; (iv) manage, supervise and otherwise deal with the Collateral; (v) take
such action as is necessary or desirable to maintain the perfection and priority
of the Liens created or purported to be created by the Loan Documents; and (vi)
except as may be otherwise specifically restricted by

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the terms of this Agreement or any other Loan Document, exercise all remedies
given to the Collateral Agent or the Lenders with respect to the Collateral
under the Loan Documents relating thereto, applicable law or otherwise.

                  (b)      The Administrative Agent and each Lender hereby
directs, in accordance with the terms of this Agreement, the Collateral Agent to
release any Lien held by the Collateral Agent for the benefit of the Lenders:

                  (i)      against all of the Collateral, upon payment in full
         of the Obligations of all of the Loan Parties under the Loan Documents
         and termination of this Agreement;

                  (ii)     against any part of the Collateral sold or disposed
         of by the Borrower or any of its Subsidiaries, if such sale or
         disposition is otherwise permitted under this Agreement, as certified
         to the Collateral Agent by the Borrower, or is otherwise consented to
         by the Required Lenders;

                  (iii)    against any part of the Collateral consisting of a
         promissory note, upon payment in full of the Debt evidenced thereby;
         and/or

                  (iv)     against any of the Collateral and any Grantor upon
         the occurrence of any event described in Section 8.10 of the Pledge
         Agreements.

The Administrative Agent and each Lender hereby directs the Collateral Agent to
execute and deliver or file such termination and partial release statements and
do such other things as are necessary to release Liens to be released pursuant
to this Section 9.03(b) promptly upon the effectiveness of any such release.

         SECTION 9.04. RELEASE OF GUARANTORS. Upon (x) the liquidation or
dissolution of any Guarantor, or sale of all of the capital stock or other
ownership interests of any Guarantor, in each case which is permitted pursuant
to the terms of any Loan Document or consented to in writing by the Required
Lenders or all of the Lenders, as applicable, and upon at least five (5)
Business Days' prior written request by the Borrower or (y) the occurrence of
any event described in Section 11 of the Guaranty, the Collateral Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the applicable Guarantor from its
obligations under the Guaranty; provided, however, that (i) the Collateral Agent
shall not be required to execute any such document on terms which, in the
Collateral Agent's opinion, would expose the Collateral Agent to liability or
create any obligation or entail any consequence other than the release of such
Guarantor without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Loans, any other Guarantor's obligations
under the Guaranty, or, if applicable, any obligations of the Borrower or any
Subsidiary in respect of the proceeds of any such sale retained by the Borrower
or any Subsidiary.

                                    ARTICLE X
                                  MISCELLANEOUS

         SECTION 10.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of any Loan Document, nor consent to any departure by the Borrower therefrom,
shall in any event be

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effective unless the same shall be in writing and signed by the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by all the
Lenders, do any of the following: (i) waive, modify or eliminate any of the
conditions specified in Article V, (ii) increase the Commitments of the Lenders
that may be maintained hereunder, (iii) reduce the principal of, or interest on,
any Loan, any Applicable Margin, any Commitment Fee Margin or any fees or other
amounts payable hereunder (other than fees payable to the Administrative Agent
pursuant to Section 2.02(b)), (iv) postpone any date fixed for any payment of
principal of, or interest on, any Loan or any fees or other amounts payable
hereunder (other than fees payable to the Administrative Agent pursuant to
Section 2.02(b)) (except with respect to any modifications of the provisions
relating to amounts, timing or application of prepayments of Loans and other
Obligations which modification shall require only the approval of the Required
Lenders (other than the provisions relating to the amounts, timing or
application of prepayments of (a) the Facility A Loans which modifications shall
also require the approval of Lenders with Facility A Loans greater than or equal
to 66 2/3% of all of the Facility A Loans, and (b) the Facility B Loans which
modifications shall also require the approval of Lenders with Facility B Loans
greater than or equal to 66 2/3% of all of the Facility B Loans)), (v) change
the definition of "Required Lenders" contained in Section 1.01 or change any
other provision that specifies the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans or the number of Lenders which
shall be required for the Lenders or any of them to take any action hereunder,
(vi) amend, waive or modify Section 2.03(b) or this Section 10.01, (vii) release
the Collateral Agent's Lien on all of the Collateral or any portion of the
Collateral in excess of $50,000,000 (except as provided in Section 9.03(b)), or
(viii) extend the Commitment Termination Date, the Facility A Maturity Date or
the Facility B Maturity Date; and provided, further, that no amendment, waiver
or consent shall, unless in writing and signed by each Agent in addition to the
Lenders required above to take such action, affect the rights or duties of any
Agent under this Agreement or any other Loan Document. Any request from the
Borrower for any amendment, waiver or consent under this Section 10.01 shall be
addressed to the Administrative Agent.

         SECTION 10.02. NOTICES, ETC. All notices and other communications
provided for hereunder and under the other Loan Documents shall be in writing
(including telegraphic, facsimile, telex or cable communication) and mailed,
telegraphed, telecopied, telexed, cabled or delivered, (i) if to the Borrower,
at its address at Fairlane Plaza South, 330 Town Center Drive, Suite 1100,
Dearborn, Michigan 48126, Attention: S. Kinnie Smith, Jr., General Counsel, with
a copy to Laura L. Mountcastle, Vice President, Investor Relations and
Treasurer, 330 Town Center Drive, Suite 1100, Dearborn, Michigan 48126; (ii) if
to any Bank, at the address set forth on its signature page hereto; (iii) if to
any Lender other than a Bank, at its Applicable Lending Office specified in the
Lender Assignment pursuant to which it became a Lender; (iv) if to the
Administrative Agent with respect to funding or payment of any amounts
hereunder, at its address at 2 Penns Way, Suite 200, New Castle, DE 19270, Attn:
Dawn Conover, Telephone No. (302) 894-6063, Telecopy No. (302) 894-6120; (v) if
to the Administrative Agent for any other reason or to the Collateral Agent, at
its address at 388 Greenwich Street, New York, New York 10003, Attn: Nick McKee,
Telephone No. (212) 816-8592, Telecopy No. (212) 816-8098; or, as to each party,
at such other address as shall be designated by such party in a written notice
to the other parties. All such notices and communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective five days after when
deposited in the mails, or when

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delivered to the telegraph company, telecopied, confirmed by telex answerback or
delivered to the cable company, respectively, except that notices and
communications to any Agent pursuant to Article II, III, or IX shall not be
effective until received by such Agent.

         SECTION 10.03. NO WAIVER OF REMEDIES. No failure on the part of the
Borrower, any Lender or any Agent to exercise, and no delay in exercising, any
right hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

         SECTION 10.04. COSTS, EXPENSES AND INDEMNIFICATION.

                  (a)      The Borrower agrees to (i) reimburse on demand all
reasonable costs and expenses of each Agent and the Arranger (including
reasonable fees and expenses of counsel to the Agents) in connection with (A)
the preparation, syndication, negotiation, execution and delivery of the Loan
Documents and (B) the care and custody of any and all collateral, and any
proposed modification, amendment, or consent relating to any Loan Document, and
(ii) to pay on demand all reasonable costs and expenses of each Agent and, on
and after the date upon which the principal amount outstanding hereunder becomes
or is declared to be due and payable pursuant to Section 8.02 or an Event of
Default specified in Section 8.01(a) shall have occurred and be continuing, each
Lender (including fees and expenses of counsel to the Agents, special Michigan
counsel to the Lenders and, from and after such date, counsel for each Lender
(including the allocated costs and expenses of in-house counsel)) in connection
with the workout, restructuring or enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement, the other Loan Documents and
the other documents to be delivered hereunder.

                  (b)      The Borrower shall indemnify each Agent, the
Arranger, each Lender, and each Related Party of any of the foregoing Persons
(each such Person being called an "INDEMNIFIED PERSON") against, and hold each
Indemnified Person harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the reasonable fees, charges and
disbursements of any counsel for any Indemnified Person, incurred by or asserted
against any Indemnified Person arising out of, in connection with, or as a
result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby or thereby, the performance by the
parties to the Loan Documents of their respective obligations thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) any Loan
or other Extension of Credit or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged presence or release of any Hazardous
Substance on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnified Person is a party thereto; provided that such indemnity shall
not, as to any Indemnified Person, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnified Person.

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<PAGE>

                  (c)      The Borrower's other obligations under this Section
10.04 shall survive the repayment of all amounts owing to the Lenders and the
Agents under the Loan Documents and the termination of the Commitments. If and
to the extent that the obligations of the Borrower under this Section 10.04 are
unenforceable for any reason, the Borrower agrees to make the maximum
contribution to the payment and satisfaction thereof which is permissible under
applicable law.

         SECTION 10.05. RIGHT OF SET-OFF.

                  (a)      Upon (i) the occurrence and during the continuance of
any Event of Default and (ii) the making of the request or the granting of the
consent specified by Section 8.02 to authorize the Administrative Agent to
declare the principal amount outstanding hereunder to be due and payable
pursuant to the provisions of Section 8.02, each Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the Borrower, against any
and all of the obligations of the Borrower now or hereafter existing under this
Agreement and the Promissory Notes held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such
Promissory Notes, as the case may be, and although such obligations may be
unmatured. Each Lender agrees to notify promptly the Borrower after any such
set-off and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section 10.05 are in addition to other rights
and remedies (including other rights of set-off) which such Lender may have.

                  (b)      The Borrower agrees that it shall have no right of
off-set, deduction or counterclaim in respect of its obligations hereunder, and
that the obligations of the Lenders hereunder are several and not joint. Nothing
contained herein shall constitute a relinquishment or waiver of the Borrower's
rights to any independent claim that the Borrower may have against any Agent or
any Lender for such Agent's or such Lender's, as the case may be, gross
negligence or willful misconduct, but no Lender shall be liable for any such
conduct on the part of any Agent or any other Lender, and no Agent shall be
liable for any such conduct on the part of any Lender.

         SECTION 10.06. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower and the Agents and when the
Administrative Agent shall have been notified by each Bank that such Bank has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agents and each Lender and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lenders.

         SECTION 10.07. ASSIGNMENTS AND PARTICIPATION.

                  (a)      Any Lender may sell participations in all or a
portion of its rights and obligations under this Agreement pursuant to
subsection (b) below and any Lender may assign all or any part of its rights and
obligations under this Agreement pursuant to subsection (c) below.

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<PAGE>

                  (b)      Any Lender may sell participations to one or more
banks or other entities (each a "PARTICIPANT") in all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and its outstanding Loan), provided that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender shall remain the holder of the Loans of
such Lender for all purposes of this Agreement and (iv) the Borrower shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Each Lender shall retain
the sole right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which would require consent
of all of the Lenders pursuant to the terms of Section 10.01 or of any other
Loan Document. The Borrower agrees that each Participant shall be deemed to have
the right of set-off provided in Section 10.05 in respect of its participating
interest in amounts owing under the Loan Documents to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
the Loan Documents, provided that each Lender shall retain the right of set-off
provided in Section 10.05 with respect to the amount of participating interests
sold to each Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of set-off provided in Section 10.05,
agrees to share with each Lender, any amount received pursuant to the exercise
of its right of set-off, such amounts to be shared in accordance with Section
10.05 as if each Participant were a Lender. The Borrower further agrees that
each Participant shall be entitled to the benefits of Sections 4.04 and 4.06 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 10.07(c); provided that (i) a Participant shall
not be entitled to receive any greater payment under Section 4.04 or 4.06 than
the Lender who sold the participating interest to such Participant would have
received had it retained such interest for its own account, unless the sale of
such interest to such Participant is made with the prior written consent of the
Borrower, and (ii) any Participant not incorporated under the laws of the United
States of America or any State thereof agrees to comply with the provisions of
Section 4.06 to the same extent as if it were a Lender.

                  (c)      Any Lender may, in the ordinary course of its
business and in accordance with applicable law, with the consent of the
Administrative Agent (such consent not to be unreasonably withheld or delayed),
at any time assign to one or more financial institutions all or any part of its
rights and obligations under this Agreement, provided that the minimum principal
amount of any such assignment (other than assignments to a Federal Reserve Bank,
or to any other Lender or affiliate or Approved Fund of a Lender, or to any
direct or indirect contractual counterparties in swap agreements relating to the
Loans to the extent required in connection with the physical settlement of any
Lender's obligations pursuant thereto) shall be $1,000,000 (or such lesser
amount consented to by the Administrative Agent); provided that, unless such
Lender is assigning all of its rights and obligations hereunder, after giving
effect to such assignment the assigning Lender shall have Loans in the aggregate
of not less than $1,000,000 (unless otherwise consented to by the Administrative
Agent).

                  (d)      Any Lender may, in connection with any sale or
participation or proposed sale or participation pursuant to this Section 10.07
disclose to the purchaser or Participant or

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<PAGE>

proposed purchaser or Participant any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower, provided that prior to
any such disclosure of non-public information, the purchaser or Participant or
proposed purchaser or Participant (which Participant is not an affiliate of a
Lender) shall agree to preserve the confidentiality of any confidential
information (except any such disclosure as may be required by law or regulatory
process) relating to the Borrower received by it from such Lender.

                  (e)      Assignments under this Section 10.07 shall be made
pursuant to an agreement (a "LENDER ASSIGNMENT") substantially in the form of
Exhibit F hereto or in such other form as may be agreed to by the parties
thereto and shall not be effective until a $3,500 fee has been paid to the
Administrative Agent by the assignee, which fee shall cover the cost of
processing such assignment, provided, that such fee shall not be incurred in the
event of an assignment by any Lender of all or a portion of its rights under
this Agreement to (i) a Federal Reserve Bank or (ii) a Lender or an affiliate or
Approved Fund of the assigning Lender or (iii) to any direct or indirect
contractual counterparties in swap agreements relating to the Loans to the
extent required in connection with the physical settlement of any Lender's
obligations pursuant thereto.

                  (f)      Notwithstanding anything to the contrary contained
herein, any Lender (a "GRANTING LENDER") may grant to a special purpose funding
vehicle (an "SPC"), identified as such in writing from time to time by the
Granting Lender to the Administrative Agent and the Borrower, the option to
provide to the Borrower all or any part of any Loan that such Granting Lender is
obligated to make to the Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to provide all
or any part of such Loan, the Granting Lender shall remain obligated to make
such Loan pursuant to the terms hereof, (iii) the Borrower shall not be required
to pay any amount under Section 4.06 that is greater than the amount which it
would have been required to pay had there been no grant to an SPC and (iv) any
SPC (or assignee of an SPC) will comply, if applicable, with the provisions
contained in Section 4.06. No grant by any Granting Lender to an SPC agreeing to
provide a Loan or the making of such Loan by such SPC shall operate to relieve
such Granting Lender of its liabilities and obligations hereunder, except to the
extent of the making of such Loan by such SPC. The making of a Loan by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). In addition, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that any SPC may (i)
with notice to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Lender or to any
financial institutions (consented to by the Administrative Agent in its sole
discretion) providing liquidity and/or credit support to or for the account of
such SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC. This Section 10.07(f) may not be
amended without the written consent of any SPC that holds an option to provide
Loans. No recourse under any obligation, covenant, or agreement of the SPC
contained in this Agreement shall be had against any shareholder, officer, agent
or

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director of the SPC as such, by the enforcement of any assessment or by any
proceeding, by virtue of any statute or otherwise; it being expressly agreed and
understood that this Agreement is a corporate obligation of the SPC and no
personal liability shall attach to or be incurred by any officer, agent or
member of the SPC as such, or any of them under or by reason of any of the
obligations, covenants or agreements of the SPC contained in this Agreement, or
implied therefrom, and that any and all personal liability for breaches by the
SPC of any such obligations, covenants or agreements, either at law or by
statute or constitution, of every such shareholder, officer, agent or director
is hereby expressly waived by all parties to this Agreement as a condition of
and consideration for the SPC entering into this Agreement; provided, however,
that the foregoing shall not relieve any such person or entity of any liability
they might otherwise have as a result of fraudulent actions or omissions taken
by them. All parties to this Agreement acknowledge and agree that the SPC shall
only be liable for any claims that each of them may have against the SPC only to
the extent of the SPC's assets. The provisions of this clause shall survive the
termination of this Agreement.

                  (g)      Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

                  (h)      The Administrative Agent shall maintain at its
address referred to in Section 10.02 a copy of each Lender Assignment delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time (the "REGISTER"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agents and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

         SECTION 10.08. CONFIDENTIALITY. In connection with the negotiation and
administration of this Agreement and the other Loan Documents, the Borrower has
furnished and will from time to time furnish to the Agents and the Lenders
(each, a "RECIPIENT") written information which is identified to the Recipient
when delivered as confidential (such information, other than any such
information which (i) was publicly available, or otherwise known to the
Recipient, at the time of disclosure, (ii) subsequently becomes publicly
available other than through any act or omission by the Recipient or (iii)
otherwise subsequently becomes known to the Recipient other than through a
Person whom the Recipient knows to be acting in violation of his or its
obligations to the Borrower, being hereinafter referred to as "CONFIDENTIAL
INFORMATION"). The Recipient will not knowingly disclose any such Confidential
Information to any third party (other than to those persons who have a
confidential relationship with the Recipient), and will take all reasonable
steps to restrict access to such information in a manner designed to maintain
the confidential nature of such information, in each case until such time as the
same ceases to be Confidential Information or as the Borrower may otherwise
instruct. It is understood, however, that the foregoing will not restrict the
Recipient's ability to freely exchange such Confidential Information with its
Affiliates or with prospective Participants in or assignees of the Recipient's

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position herein, but the Recipient's ability to so exchange Confidential
Information shall be conditioned upon any such Affiliate's or prospective
Participant's (as the case may be) entering into an agreement as to
confidentiality similar to this Section 10.08. It is further understood that the
foregoing will not prohibit the disclosure of any or all Confidential
Information if and to the extent that such disclosure may be required (1) by a
regulatory agency or otherwise in connection with an examination of the
Recipient's records by appropriate authorities, (2) pursuant to court order,
subpoena or other legal process or in connection with any proceeding, suit or
other action relating to any Loan Document or (3) otherwise, as required by law;
in the event of any required disclosure under clause (2) or (3), above, the
Recipient agrees to use reasonable efforts to inform the Borrower as promptly as
practicable to the extent not prohibited by law. Notwithstanding any other
provision of this Agreement, each party (and each Participant pursuant to
Section 10.07) (and each employee, representative or other agent of such party
(or Participant)) may disclose to any and all persons, without limitation of any
kind, the U.S. tax treatment and U.S. tax structure of the transactions
contemplated by the Loan Documents and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to such
U.S. tax treatment and U.S. tax structure, other than any information for which
nondisclosure is reasonably necessary in order to comply with applicable
securities laws.

         SECTION 10.09. Waiver of Jury Trial. THE BORROWER, THE AGENTS AND THE
LENDERS EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR
THEREUNDER.

         SECTION 10.10. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT AND THE PROMISSORY NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAWS OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES). THE BORROWER, THE LENDERS AND THE
AGENTS, EACH (I) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT OR FEDERAL COURT SITTING IN NEW YORK CITY IN ANY ACTION ARISING OUT OF ANY
LOAN DOCUMENT, (II) AGREES THAT ALL CLAIMS IN SUCH ACTION MAY BE DECIDED IN SUCH
COURT, (III) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM AND (IV) CONSENTS TO THE SERVICE OF PROCESS BY MAIL. A
FINAL JUDGMENT IN ANY SUCH ACTION SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR AFFECT ITS RIGHT TO BRING ANY
ACTION IN ANY OTHER COURT. THE BORROWER AGREES THAT THE AGENTS SHALL HAVE THE
RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION
TO ENABLE THE AGENTS AND THE LENDERS TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF THE AGENTS OR ANY LENDER. THE BORROWER AGREES THAT IT WILL
NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY ANY AGENT

                                       72

<PAGE>

OR ANY LENDER TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF ANY AGENT
OR ANY LENDER. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH ANY AGENT OR ANY LENDER MAY COMMENCE A PROCEEDING
DESCRIBED IN THIS SECTION.

         SECTION 10.11. RELATION OF THE PARTIES; NO BENEFICIARY. No term,
provision or requirement, whether express or implied, of any Loan Document, or
actions taken or to be taken by any party thereunder, shall be construed to
create a partnership, association, or joint venture between such parties or any
of them. No term or provision of the Loan Documents shall be construed to confer
a benefit upon, or grant a right or privilege to, any Person other than the
parties hereto. The Borrower hereby acknowledges that neither any Agent nor any
Lender has any fiduciary relationship with or fiduciary duty to the Borrower
arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Agents and the Lenders, on the one
hand, and the Borrower, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor.

         SECTION 10.12. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
Agreement.

         SECTION 10.13. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made herein and in the certificates pursuant
hereto shall be considered to have been relied upon by the Agents and the
Lenders and shall survive the making by the Lenders of the Extensions of Credit
and the execution and delivery to the Lenders of any Promissory Notes evidencing
the Extensions of Credit and shall continue in full force and effect so long as
any Promissory Note or any amount due hereunder is outstanding and unpaid or any
Commitment of any Lender has not been terminated.

         SECTION 10.14. LIMITATION OF LIABILITY: COMMUNICATIONS. WITH RESPECT TO
COMMUNICATIONS DELIVERED PURSUANT TO SECTION 10.15 OF THIS AGREEMENT, SUCH
COMMUNICATIONS AND THE PLATFORM ARE PROVIDED "AS IS" AND "AS AVAILABLE". THE
CITIGROUP PARTIES DO NOT WARRANT THE ACCURACY, ADEQUACY OR COMPLETENESS OF THE
COMMUNICATIONS OR THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR
OMISSIONS IN THE COMMUNICATIONS OR THE PLATFORM. NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE
CITIGROUP PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. THE
BORROWER HEREBY ACKNOWLEDGES THAT ALTHOUGH THE PRIMARY WEB PORTAL IS SECURED
WITH A DUAL FIREWALL AND A USER IDENTIFICATION/PASSWORD AUTHORIZATION SYSTEM AND
THE PLATFORM IS SECURED THROUGH A SINGLE USER PER DEAL AUTHORIZATION METHOD
WHEREBY EACH USER MAY ACCESS

                                       73

<PAGE>

THE PLATFORM ONLY ON A DEAL-BY-DEAL BASIS, THE DISTRIBUTION OF MATERIAL THROUGH
AN ELECTRONIC MEDIUM IS NOT NECESSARILY SECURE AND THAT THERE ARE
CONFIDENTIALITY AND OTHER RISKS ASSOCIATED WITH SUCH DISTRIBUTION. THE
PROVISIONS OF THIS SECTION 10.14 SHALL SURVIVE THE MAKING OF ANY LOAN, THE
REPAYMENT THEREOF AND THE TERMINATION OF THIS AGREEMENT AND ANY LOAN DOCUMENT.

         SECTION 10.15. PLATFORM AND PRIMARY WEB PORTAL.

                  (a)      The Borrower shall use its commercially reasonable
best efforts to transmit to the Administrative Agent all information, documents
and other materials that it is obligated to furnish to the Administrative Agent
pursuant to this Agreement and the other Loan Documents, including, without
limitation, all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that (i) relates to a notice of borrowing or other extension of
credit or a conversion of an existing interest rate on any Loan or borrowing
(including, without limitation, any Notice of Conversion), (ii) relates to the
payment of any principal or other amount due hereunder prior to the scheduled
date therefor, (iii) provides notice of any Default or Event of Default
hereunder or (iv) is required to be delivered to satisfy any condition precedent
to the effectiveness of this Agreement and/or any extension of credit hereunder
(all such non-excluded communications being referred to herein collectively as
"COMMUNICATIONS"), in an electronic/soft medium in a format reasonably
acceptable to the Administrative Agent to oploanswebadmin@citigroup.com. In
addition, the Borrower shall continue to provide the Communications to the
Administrative Agent in the manner specified in this Agreement but only to the
extent requested by the Administrative Agent. Each Lender and the Borrower
further agree that the Administrative Agent may make the Communications
available to the Lenders by posting the Communications on "e-Disclosure" (the
"PLATFORM"), the Administrative Agent's internet delivery system that is part of
SSB Direct, Global Fixed Income's primary web portal (the "PRIMARY WEB PORTAL").

                  (b)      The Administrative Agent agrees that the receipt of
the Communications by the Administrative Agent at its e-mail address set forth
in clause (a) above shall constitute effective delivery of the Communications to
the Administrative Agent for purposes of this Agreement and under the Loan
Documents. Each Lender agrees that notice to it at its e-mail address provided
in clause (a) above specifying that Communications have been posted to the
Platform shall constitute effective delivery of the Communications to such
Lender under this Agreement and under the Loan Documents.

                  (c)      Nothing in this Agreement or any other Loan Document
shall prejudice the right of the Administrative Agent or any Lender to give any
notice or other communication pursuant hereto or to any other Loan Document in
any other manner specified herein or therein.

                  (d)      The provisions of Section 10.15(a) and (b) shall
terminate on the date that neither CUSA nor any of the Citigroup Parties is the
Administrative Agent.

                                       74

<PAGE>
                                   ARTICLE XI
           NO NOVATION; REFERENCES TO THIS AGREEMENT IN LOAN DOCUMENTS

         SECTION 11.01. NO NOVATION. It is the express intent of the parties
hereto that the Initial Amendment and Restatement and this Agreement (i) shall
re-evidence, in part, the Borrower's indebtedness under the Existing Credit
Agreements and the Initial Amendment and Restatement, respectively, (ii) is
entered into in substitution for, and not in payment of, the obligations of the
Borrower under the Existing Credit Agreements and the Initial Amendment and
Restatement, respectively, and (iii) is in no way intended to constitute a
novation of any of the Borrower's indebtedness which was evidenced by the
Existing Credit Agreements, the Initial Amendment and Restatement, or any of the
other Loan Documents.

         SECTION 11.02. REFERENCES TO THIS AGREEMENT IN LOAN DOCUMENTS. Upon the
effectiveness of this Agreement, on and after the date hereof, each reference in
any other Loan Document (including any reference therein to "the Credit
Agreement," "thereunder," "thereof," "therein" or words of like import referring
thereto) shall mean and be a reference to this Agreement.

                            [Signature pages follow.]

                                       75

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                           CMS ENERGY CORPORATION

                                           By: /s/ Laura L. Mountcastle
                                               ---------------------------------
                                               Name:  Laura L. Mountcastle
                                               Title: Authorized Representative

                               Signature Pages to
                  Second Amended and Restated Credit Agreement

<PAGE>

                                    CITICORP USA, INC., as Administrative Agent

                                    By:  /s/ Dale R. Goncher
                                       -----------------------------------------
                                    Name: Dale R. Goncher
                                    Title: DIRECTOR

                                    CITIBANK, N.A., as a Lender

                                    By: /s/Dale R. Goncher
                                       -----------------------------------------
                                    Name: Dale R. Goncher
                                    Title:  DIRECTOR

         Signature Page to Second Amended and Restated Credit Agreement

<PAGE>

                               COMMITMENT SCHEDULE

<TABLE>
<CAPTION>
----------------------------------------------------
                        Facility A       Facility B
     LENDER             Commitment       Commitment
----------------------------------------------------
<S>                    <C>              <C>
CITIBANK, N.A.         $234,000,000     $175,000,000
----------------------------------------------------
Total Commitments:     $234,000,000     $175,000,000
----------------------------------------------------
</TABLE>

<PAGE>

                             CMS ENERGY CORPORATION
                                   SCHEDULE I
                               GAAP DEBT BREAKDOWN
                             AS OF FEBRUARY 28, 2003

<TABLE>
<CAPTION>
BORROWER                                            FACILITY                                  CURRENT BALANCE
<S>                                  <C>                                            <C>       <C>
CMS ENERGY
                                     $295.8MM Credit Agreement                                $   123,819,866
                                     $300MM Credit Agreement                                      133,800,000
                                     General Term Notes
                                                                                    Series D       79,922,000
                                                                                    Series E      215,955,000
                                                                                    Series F      297,686,000
                                     Sr. Unsecured Notes @ 7 5/8%                                 175,815,000
                                     Convert. Sub. Debentures                                     172,500,000
                                     Extend. Tenor Rate Adj. Sec.                                 180,000,000
                                     Sr. Unsecured Notes @ 7.5%                                   408,845,000
                                     Sr. Unsecured Notes @ 6.75%                                  287,025,000
                                     Sr. Notes @ 8.9%                                             260,475,000
                                     Sr. Notes @ 8 3/8%                                           150,000,000
                                     Sr. Notes @ 9.875%                                           467,558,000
                                     Premium Equity Participating Security Units                  220,000,000
                                     Sr. Notes @ 8.5%                                             300,375,000
                                     CMS Methanol Company                                          14,000,000

PANHANDLE EASTERN PIPE LINE
                                     Sr. Notes @ 6.125%                                           292,500,000
                                     Sr. Notes @ 6.5%                                             158,980,000
                                     Sr. Notes @ 7.0%                                             135,890,000
                                     Sr. Notes @ 8.25%                                             60,000,000
                                     Notes @ 7.785%                                               100,000,000
                                     Debentures @ 7.2%                                             58,000,000
                                     Debentures @ 7.95%                                            76,500,000
                                     Citibank Bridge Loan                                          40,000,000

CMS ENTERPRISES
                                     None

CMS GENERATION COMPANY
                                     CMS Capital LLC                                                4,957,214

CMS GAS TRANSMISSION
                                     CMS Capital LLC                                               11,394,197
                                     Antrim Gas Term Loan with BOM                                 22,625,000
                                     Jackson Pipeline RCF with Tor Dom                              2,687,000
</TABLE>

<PAGE>

<TABLE>
<S>                                  <C>                                                          <C>
CMS ELECTRIC & GAS
                                     None

CMS MARKETING SERVICES & TRADING
                                     CMS Capital LLC                                              127,353,473

CMS INTERNATIONAL VENTURES LLC
                                     None

DEARBORN INDUSTRIAL ENERGY LLC
                                     None

CMS GENERATION MICHIGAN POWER LLC
                                     None

DEARBORN INDUSTRIAL GENERATION
                                     CMS Capital LLC                                               13,337,242

CMS FIELD SERVICES
                                     The CIT Group                                                    731,204

CMS GAS PROCESSING LLC
                                     CMS Capital LLC                                                6,036,529

CMS NATURAL GAS GATHERING LLC
                                     CMS Capital LLC                                                3,346,852

PANHANDLE PIPE LINE COMPANY
                                     Trunkline Gas Company S-T                                    100,000,000
                                     Trunkline Gas Company L-T                                    100,000,000

CMS CAPITAL LLC
                                     CMS Enterprises Company                                       11,197,420
                                     CMSG Filer City Operating Company                                413,815
                                     CMSG Honey Lake Company                                          462,258
                                     CMS Jackson Pipeline Company                                      91,705
                                     CMS Bay Area Pipeline Company                                  1,054,924
                                     CMSG Graying Holdings Company                                  1,164,325
                                     CMSG Operating Company                                         1,323,669
                                     CMSG Mon Valley Company                                           11,563
                                     CMS Saginaw Bay Lateral Company                                  276,140
                                     CMS Antrim Gas LLC                                             1,370,523
                                     CMSG Holdings Company                                          1,206,958
                                     CMSG Altoona Company                                             182,228
                                     CMSG Genesee Company                                           1,513,182
                                     CMS Resource Development                                       2,855,881
</TABLE>

<PAGE>

<TABLE>
<S>                                  <C>                                                      <C>
                                     CMSG Recycling Company                                           371,025
                                     CMSG Lyonsdale Company                                            20,160
                                     Mon Valley Energy                                                    113
                                     CMSG Chateaugay Company                                           35,096
                                     CMS Grands Lacs LLC                                            1,400,457
                                     HYDRA-CO Enterprises, Inc.                                     1,696,027
                                     CMSG Operating Company II                                      1,055,368
                                     HCE Appomattox, Inc.                                             341,816
                                     HCE Jamaica Development, Inc.                                      5,780
                                     HCO Jamaica, Inc.                                                164,957
                                     CMS Electric & Gas Company                                     4,036,096
                                     CMS Texon Company                                                632,042
                                     CMS Marysville Gas Liquids Company                               670,134
                                     CMSG Stratton Company                                             72,258
                                     CMS Field Services, Inc.                                      34,262,090
                                     CMS Laverne Gas Processing, LLC                                   64,085
                                     Panhandle Eastern Pipeline Company                           308,744,037
                                     Taweeelah A2 Operating Company                                   810,173
                                     Dearborn Generation Operating, LLC                             3,955,220
                                     CMS Capital Financial Services, Inc.                             602,157
                                     CMSG Michigan Power, LLC                                         804,292
                                     CMS Enterprises Data Mart                                        243,398
                                     CMS MS&T Michigan, LLC                                        15,991,117
                                     CMS Energy UK Limited                                          1,879,798
                                     CMS MicroPower Systems, LLC                                    3,422,229
                                     CMSG Investment Company I                                        808,707
                                     CMS Business Development, LLC                                  3,266,068
                                     CMS Enterprises Development, LLC                                 232,701
                                     CMS International Ventures, LLC                                3,436,843
                                     CMS Enterprise Oil & Gas Company                             108,856,818
                                     CMSG Investment Company V                                      1,553,780

TOTAL GAAP DEBT                                                                               $ 5,324,674,009
</TABLE>

<PAGE>

                                   SCHEDULE II

                           Pledged Ownership Interests

<TABLE>
<CAPTION>
           GRANTOR                                 PLEDGED SUBSIDIARIES
           -------                                 --------------------
<S>                                  <C>
CMS Energy Corporation               CMS Enterprises Company (100%)

                                     Consumers Energy Company (100%)

CMS Enterprises Company              CMS Generation Co. (100%)

                                     CMS Gas Transmission Company (100%)

                                     CMS Capital, L.L.C. (100%)

                                     CMS Marketing, Services and Trading Company (100%)

                                     CMS International Ventures, L.L.C. (40.47%)

CMS International Ventures, L.L.C.   CMS Electric & Gas, L.L.C. (100%)

CMS Generation Co.                   CMS International Ventures, L.L.C. (21.02%)

                                     Dearborn Industrial Energy, L.L.C. (100%)

                                     CMS Generation Michigan Power L.L.C. (100%)

Dearborn Industrial Energy, L.L.C.   Dearborn Industrial Generation, L.L.C. (100%)

CMS Gas Transmission Company         CMS International Ventures, L.L.C. (37.01%)

                                     Panhandle Eastern Pipe Line Company (100%)

                                     CMS Field Services, Inc. (100%)
</TABLE>

<PAGE>

<TABLE>
<S>                                  <C>
CMS Field Services, Inc.             CMS Gas Processing, L.L.C. (100%)

                                     CMS Natural Gas Gathering, L.L.C. (100%)

                                     CMS Field Services Holdings Company (100%)
</TABLE>

<PAGE>

                                                                    ATTACHMENT A

                                  REAFFIRMATION

                  Each of the undersigned hereby acknowledges receipt of a copy
of the foregoing Second Amended and Restated Credit Agreement dated as of March
30, 2003 by and among CMS ENERGY CORPORATION (the "Borrower"), the financial
institutions from time to time party thereto (the "Lenders"), and CITICORP USA,
INC., in its capacity as contractual representative (the "Administrative Agent")
(as amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"). Capitalized terms used in this Reaffirmation and not
defined herein shall have the meanings given to them in the Credit Agreement.
Without in any way establishing a course of dealing by any Agent or any Lender,
each of the undersigned reaffirms the guaranty pursuant to the Guaranty and the
grant of a security interest pursuant to the Pledge Agreement executed by it and
acknowledges and agrees that each such Loan Document executed by the undersigned
in connection with the Credit Agreement remains in full force and effect and is
hereby reaffirmed, ratified and confirmed. All references to the Credit
Agreement contained in the above-referenced documents shall be a reference to
the Credit Agreement as the same may from time to time hereafter be amended,
modified or restated.

Dated as of March 30, 2003

CMS ENTERPRISES COMPANY                            CMS GENERATION CO.

By:__________________________                      By:__________________________
   Its:                                            Its:

CMS GAS TRANSMISSION                               CMS CAPITAL, L.L.C.
COMPANY

By:__________________________                      By:__________________________
   Its:                                            Its:

CMS ELECTRIC & GAS, L.L.C.                         CMS INTERNATIONAL
(formerly known as CMS Electric and                VENTURES, L.L.C.
Gas Company)
                                                   By:__________________________
By:__________________________                         Its:
   Its:

<PAGE>

CMS MARKETING, SERVICES                            CMS FIELD SERVICES
AND TRADING COMPANY                                HOLDINGS COMPANY

By:__________________________
   Its:                                            By:__________________________
                                                      Its:

CMS GENERATION MICHIGAN                            DEARBORN INDUSTRIAL
POWER L.L.C.                                       ENERGY, L.L.C.

By:__________________________                      By:__________________________
   Its:                                               Its:

DEARBORN INDUSTRIAL                                CMS FIELD SERVICES, INC.
GENERATION, L.L.C.

By:__________________________                      By:__________________________
   Its:                                               Its:

CMS GAS PROCESSING, L.L.C.                         CMS NATURAL GAS
                                                   GATHERING, L.L.C.

By:__________________________                      By:__________________________
   Its:                                               Its:

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