e10-q

The registrant meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is, therefore, filing this Form with the reduced disclosure format.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

The Results of Operations discussion for MichCon is presented in accordance with General Instruction H(2)(a) of Form 10-Q.

Results reflect merger and restructuring charges, and losses from Gas Sales Program – MichCon reported losses of $43.3 million and $66.0 million for the 2001 third quarter and nine-month period, respectively, compared with a loss of $8.8 million in the 2000 third quarter and earnings of $62.1 million for the 2000 nine-month period. MichCon typically records third quarter losses due to seasonally lower demand for natural gas during the summer months. The earnings comparisons for both the quarter and nine-month period reflect lower margins resulting from losses under the Gas Sales Program and charges recorded in connection with completing the merger with DTE in May 2001.

Operating revenues decreased $10.4 million in the 2001 third quarter and increased $17.8 million in the 2001 nine-month period. As subsequently discussed, operating revenues reflect the operations of MichCon’s Gas Sales Program and the impact of weather which was slightly warmer in the 2001 third quarter and 3.9% colder in the 2001 nine-month period as compared to the same 2000 periods. MichCon’s three-year Gas Sales Program is part of its Regulatory Reform Plan (Note 5a) which was implemented in January 1999. Under the Gas Sales Program, MichCon’s gas sales rates include a gas commodity component that is fixed at $2.95 per thousand cubic feet (Mcf).

Gas sales and end user transportation revenues in total decreased $6.7 million in the 2001 third quarter and increased $26.1 million in the 2001 nine-month period. Revenues for the 2001 quarter reflect a .9 billion cubic feet (Bcf) decrease in gas sales volumes due primarily to warmer weather, partially offset by a .8 Bcf increase in end user transportation deliveries. The 2001 nine-month period reflects an increase in gas sales revenues due to higher sales volumes, partially offset by lower end user transportation revenues. Gas sales volumes increased 6.8 Bcf in the 2001 nine-month period due to colder weather and an increase in the number of customers who chose to purchase their gas from MichCon rather than other suppliers under MichCon’s Customer Choice Program. End user transportation deliveries decreased 9.6 Bcf in the 2001 nine-month period reflecting volumes associated with the fewer number of customers participating in the Customer Choice Program. Customers participating in this program are classified as end user transportation customers rather than gas sales customers. Accordingly, gas sales revenues have increased, partially offset by a decrease in end user transportation revenues, resulting in a net increase in total operating revenues from these customers due to the gas commodity component included in gas sales rates. The gas sales comparison for the nine-month period was also impacted by a $2.4 million provision for customer refunds recorded in the 2000 second quarter.

Intermediate transportation revenues decreased $2.0 million and $5.4 million in the 2001 third quarter and nine-month period, respectively, whereas intermediate transportation deliveries increased 21.6 Bcf and 47.2 Bcf for the same periods. A significant portion of the volume increase was due to customers who pay a fixed fee for intermediate transportation capacity regardless of actual usage. Although volumes associated with these fixed-fee customers may vary, the related revenues are not affected. The decrease in intermediate transportation revenues for the nine-month period is attributable to the expiration of some fixed-fee contracts and the dissolution of a partnership that owned a 126-mile northern Michigan natural gas gathering system. MichCon held a 66% interest in the partnership that was dissolved in June 2000. Under the terms of the dissolution, MichCon received the 67-mile northern portion of the gathering system in return for its partnership interest. Although there are lower revenues attributable to the gathering system, such decline

represents the joint venture partners’ share of revenues. Accordingly, the decline in revenues was offset by a reduction in minority interest expense.

Other operating revenues decreased $1.7 million and $2.9 million in the 2001 third quarter and nine-month period, respectively, due to a decline in revenues from providing appliance maintenance and other gas-related services.

Cost of gas is affected by variations in sales volumes, cost of purchased gas and related transportation costs, and the effects of any permanent liquidation of inventory gas. Cost of gas sold increased $21.6 million in the 2001 third quarter and $88.0 million for the nine-month period, primarily due to higher prices paid for fixed-price supply. The average price paid for gas purchased in the 2001 third quarter and nine-month period increased $1.21 per Mcf (44%) and $1.02 per Mcf (36%), respectively, from the comparable 2000 periods. MichCon recorded the benefits of an inventory liquidation that was estimated at 25 Bcf in the 2001 first quarter, which was subsequently adjusted to 17.5 Bcf in the 2001 second quarter due to warmer than normal weather (Note 4). MichCon estimated its 2001 average gas purchase rate to be $3.26 per Mcf higher than the average LIFO liquidation rate. The effect of the inventory liquidation lowered cost of gas for the 2001 nine-month period. Cost of gas was also affected by variations in sales volumes due to weather and the number of customers who have chosen to purchase gas from MichCon rather than other suppliers under MichCon’s Customer Choice Program.

Operation and maintenance expenses increased $15.9 million and $24.0 million for the 2001 third quarter and nine-month period, respectively, primarily due to allocations from DTE for corporate support functions. The results also reflect higher employee medical costs as well as accruals for injuries and damages. Additionally, the nine-month comparison was affected by a benefit recorded in the 2000 first quarter for insurance proceeds resulting from the settlement of environmental claims with certain insurance carriers. Partially offsetting the increases were lower pension and retiree healthcare costs.

Property and other taxes increased $5.9 million in the 2001 third quarter and decreased $.1 million in the 2001 nine-month period. The results include a charge in the 2001 third quarter for the unlikely favorable resolution of pending tax appeals filed with various local governments in 1996 and 1997. This charge was offset in the nine-month period by a change in the taxable value of personal property subject to taxation by local taxing jurisdictions. New valuation tables approved by the Michigan State Tax Commission more accurately recognize the impact of regulation on the value of a utility’s personal property based on the property’s age. The new tables impacted property tax expense beginning in mid-2000.

Merger and restructuring charges decreased $.3 million in the 2001 third quarter and increased $100.2 million in the 2001 nine-month period (Notes 2 and 3). In the 2001 second quarter, MichCon recorded a restructuring charge in connection with the merger between MCN and DTE which reflects the costs associated with 273 employees electing to retire early under a program designed to reduce the workforce in overlapping corporate support functions. The merger and restructuring charges decreased earnings by $1.4 million in the 2001 third quarter and $80.7 million in the 2001 nine-month period. Merger costs represent legal, consulting, accounting, employee benefit and other expenses associated with the merger.

Interest income increased $2.1 million and $5.4 million in the 2001 quarter and nine-month period, respectively. The increase results from MichCon leasing a portion of its pipeline system to the Vector Pipeline Partnership through a capital lease arrangement that began in December 2000.

Loss on joint venture totaled $2.6 million and $9.3 million in the 2001 quarter and nine-month period, respectively, which is attributable to write-downs associated with the expected sale of MichCon’s 33% to 50% interests in a series of partnerships that own a residential community on the Detroit riverfront (Harbortown) (Note 6).

Income taxes decreased $18.8 million in the 2001 third quarter and $68.7 million in the 2001 nine-month period due to a decline in pre-tax earnings.

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve certain risks and uncertainties as set forth in MichCon’s 2000 Annual Report on Form 10-K.

Asset Retirement Obligations – In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This statement requires that the fair value of an asset retirement obligation be recognized in the period in which it is incurred. The associated asset retirement costs would be capitalized as part of the carrying amount of the long-lived asset. It would apply to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset. This statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. MichCon has not yet determined the impact of this statement on the consolidated financial statements.

Long-Lived Assets – In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” This statement establishes a single accounting model for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. This statement is effective for financial statements issued for fiscal years beginning after December 15, 2001. MichCon has not yet determined the impact of this statement on the consolidated financial statements.

The consolidated financial statements (unaudited) should be read in conjunction with the MichCon 2000 Annual Report on Form 10-K. Certain reclassifications have been made to the prior year’s financial statements to conform to the 2001 presentation. In the opinion of management, the unaudited information furnished herein reflects all adjustments necessary for a fair presentation of the financial statements for the periods presented.

Because of seasonal and other factors, revenues, expenses and net income for the interim periods should not be construed as representative of revenues, expenses and net income for all or any part of the balance of the current year or succeeding periods.

On May 31, 2001, DTE completed the acquisition of MCN, parent company of MichCon. The acquisition by DTE was accounted for using the purchase method. MichCon’s assets and liabilities included in the accompanying financial statements have not been adjusted to allocate the purchase price to their fair values. Certain losses reflected in the accompanying financial statements have been eliminated at DTE as a result of purchase accounting adjustments.

As a result of the merger, DTEE incurred merger-related expenses, a portion of which were allocated to MichCon. Additionally, MichCon directly incurred merger-related costs. The merger-related costs include legal, accounting, consulting, employee benefit and other expenses that had the effect of decreasing earnings by $22.6 million pre-tax ($14.7 million net of taxes) for the nine-month period ended September 30, 2001. Merger-related costs reduced earnings by $1.7 million pre-tax ($1.1 million net of taxes) and $3.2 million pre-tax ($2.0 million net of taxes) for the three- and nine-month periods ended September 30, 2000, respectively.

In June 2001, DTE offered certain employees the option to retire early under a program to reduce the workforce in overlapping corporate support functions. As a result of the program, approximately 10% of MichCon’s workforce, or 273 employees retired in July 2001 resulting in a restructuring charge that decreased earnings by $1.4 million pre-tax ($.9 million net of taxes) and $80.7 million pre-tax ($52.4 million net of taxes) for the three- and nine-month period ended September 30, 2001. Benefit payments in the amount of $2.1 million have been made as of September 30, 2001. Benefit payments are primarily distributed from assets of the retirement plan and a trust fund.

Inventory gas is priced using the last-in, first-out (LIFO) method. During the second quarter of 2001, MichCon revised the expected permanent decrement recorded in the first quarter of 2001 from 25 billion cubic feet (Bcf) to 17.5 Bcf due to warmer than normal weather. The 17.5 Bcf of prior years’ LIFO layers that are not expected to be replaced prior to December 31, 2001 were liquidated at an average cost of $.38 per thousand cubic feet (Mcf). MichCon estimated its 2001 average gas purchase rate to be $3.26 per Mcf higher than the average LIFO liquidation rate. Applying LIFO costs in valuing the liquidation, as opposed to using the estimated average gas purchase rate, decreased cost of gas for the nine-month period ended September 30, 2001 by $57.1 million and increased earnings by $37.1 million, net of taxes.

MichCon is currently operating under its Regulatory Reform Plan that began in January 1999. The Plan includes a three-year Gas Sales Program under which MichCon’s gas sales rates include a gas commodity component that is fixed at $2.95 per Mcf. As part of its gas acquisition strategy, MichCon has entered into fixed-price contracts for nearly all of its remaining 2001 gas supply requirements assuming normal weather. The average cost of MichCon’s fixed-price supplies for the remainder of 2001 is significantly higher than $2.95 per Mcf. The level of margins ultimately generated from selling gas will be affected by: (i) the actual level of gas sales volumes; and (ii) the level of gas consumed in December 2001 that will be billed in January 2002 at rates under a gas cost recovery mechanism.

The Plan also includes a comprehensive experimental three-year Customer Choice Program, which is subject to annual caps on the level of participation. The Customer Choice Program began in April 1999, with approximately 70,000 customers choosing to purchase natural gas from suppliers other than MichCon. Year two of the program began in April 2000 with approximately 55,000 customers choosing to participate. Year three of the program began in April 2001, and the number of participating customers decreased to approximately 30,000. MichCon will continue to transport and deliver the gas to the customers’ premises at prices that generate favorable margins.

In addition, the Plan encompasses an income sharing mechanism that allows customers to share profits when actual returns on equity from utility operations exceed predetermined thresholds. MichCon filed its income sharing report with the MPSC in March 2001, using the MPSC approved formula, indicating that no income sharing was required for 2000.

The MPSC is continuing its initiatives designed to give all of Michigan’s natural gas customers added choices and the opportunity to benefit from lower gas costs resulting from competition. In October 2000, the MPSC issued an order that provides uniform terms and conditions for a new voluntary customer choice program in Michigan. In December 2000, MichCon filed applications with the MPSC to modify the experimental Customer Choice and Gas Sales Programs as outlined

in the MPSC’s October 2000 order. MichCon had proposed the modifications to become effective in April 2001. On March 22, 2001, MichCon withdrew its applications with the MPSC.

MichCon will return to a GCR mechanism in January 2002 when the current Regulatory Reform Plan expires. Under the GCR mechanism, MichCon’s gas sales rates will be based on market prices and set through the GCR process. In August 2001, MichCon filed an application with the MPSC that proposes a maximum GCR factor of $4.54 per Mcf.

In March 2000, several shippers on MichCon’s northern Michigan gathering system filed a complaint requesting that the MPSC issue an order reducing the rate charged for Antrim gas transportation services from $.090 per Mcf to approximately $.039 to $.031 per Mcf. The complaint also included a request for refunds of approximately $21.0 million for periods during which the rate was in effect. In July 2001, the MPSC issued an order authorizing a rate of $.051 per Mcf, effective May 2001, and denied the request for additional retroactive refunds. In August 2001, MichCon refunded $.7 million in settlement of this matter.

In May 2001, MichCon recorded a $6.7 million pre-tax ($4.4 million net of taxes) loss from the expected sale of its 33% to 50% interests in a series of partnerships that own a residential community on the Detroit riverfront (Harbortown). An additional loss of $2.6 million pre-tax ($1.7 million net of taxes) was recorded in September 2001. The carrying value of the investment was reduced to fair value based on the estimated selling price less cost to sell. The sale of Harbortown is no longer expected to take place within one year and is therefore not classified as held for sale.

Effective January 1, 2001, MichCon adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The Statement, as amended, requires all derivatives to be recognized in the statement of financial position as either assets or liabilities measured at their fair value and sets forth conditions in which a derivative instrument may be designated as a hedge. The Statement requires that changes in the fair value of derivatives be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to be recorded to other comprehensive income or to offset related results on the hedged item in earnings.

MichCon identified its interest rate swaps, firm-priced supply contracts, and options embedded in certain debt instruments as derivatives. The cumulative effect of adopting SFAS No. 133 was not material.

In order to manage interest costs, MichCon has interest rate swap agreements to exchange fixed- and variable-rate interest payment obligations over the life of the agreements without the exchange of the underlying principal amounts. While the swaps are effective in managing MichCon’s interest

costs, they do not qualify for hedge accounting under SFAS No. 133. Accordingly, the interest rate swaps are recorded at fair value and shown within “Other Deferred Charges or Credits” in the Consolidated Statement of Financial Position. Unrealized gains or losses resulting from marking to market these swaps are recognized as an adjustment to interest expense in the Consolidated Statement of Operations. Furthermore, SFAS No. 133 required adjusting the carrying value of the related debt that substantially offset the transition adjustment from marking to market the interest rate swaps. The adjustment to debt will be accreted to interest expense over the life of the related swaps.

MichCon has firm-priced contracts for a substantial portion of its expected gas supply requirements through 2001. These contracts are designated and qualify for the “normal purchases” exception under SFAS No. 133. Accordingly, MichCon does not account for such contracts as derivatives. Additionally, MichCon has debt outstanding with embedded options that will not be accounted for as derivatives as a result of a “grandfather” provision in SFAS No. 133.

In August 2001, MichCon issued $200 million of 6.125% senior secured notes, due 2008. Interest is payable on a semi-annual basis, beginning March 2002. In August 2001, MichCon paid the entire outstanding balance of a $40 million mortgage bond that was due in May 2021.

MichCon is involved in certain legal (including commercial matters), administrative and environmental proceedings before various courts, arbitration panels and governmental agencies concerning claims arising in the ordinary course of business. These proceedings include certain contract disputes, environmental reviews and investigations, and pending judicial matters. Management cannot predict the final disposition of such proceedings. Management regularly reviews legal matters and records provisions for claims that are considered probable of loss. The resolution of pending proceedings is not expected to have a material effect on MichCon’s financial statements in the period they are resolved.

We have reviewed the accompanying condensed consolidated statements of financial position of Michigan Consolidated Gas Company and subsidiaries (the “Company”) as of September 30, 2001, the related condensed consolidated statements of operations and retained earnings for the three-month and nine-month periods ended September 30, 2001 and 2000, and the condensed consolidated statement of cash flows for the nine-month periods ended September 30, 2001 and 2000. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures to the financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated statement of financial position of the Company as of December 31, 2000, and the related consolidated statements of income, capitalization, and cash flows for the year then ended (not presented herein); and in our report dated March 13, 2001, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2000 is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	By:	/s/ DANIEL G. BRUDZYNSKI



	Daniel G. Brudzynski
	Chief Accounting Officer,
	Vice President and Controller

Michigan Consolidated Gas Company File No. 1-7310
Quarterly Report on Form 10-Q for Quarter Ended
September 30, 2001

EX-4.2 4 k65469ex4-2.txt THIRD SUPPLEMENTAL INDENTURE ================================================================================ THIRD SUPPLEMENTAL INDENTURE FROM MICHIGAN CONSOLIDATED GAS COMPANY TO CITIBANK, N.A. TRUSTEE ----------- Dated as of August 15, 2001 SUPPLEMENT TO INDENTURE Dated as of June 1, 1998 Providing for 6 1/8% Senior Notes due 2008 ================================================================================ This THIRD SUPPLEMENTAL INDENTURE is made as of the 15th day of August, 2001, by and between MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and existing under the laws of the State of Michigan (the "Company"), and CITIBANK, N.A., a national banking association incorporated and existing under and by virtue of the laws of the United States of America, as trustee (the "Trustee"). RECITALS OF THE COMPANY: WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated as of June 1, 1998 (the "Original Indenture"), as amended, supplemented and modified (as so amended, supplemented and modified, the "Indenture"), providing for the issuance by the Company from time to time of its senior debt securities (the "Securities"); and WHEREAS, the Company desires to provide for the issuance of a series of its Securities pursuant to the Indenture; and WHEREAS, the Company, in the exercise of the power and authority conferred upon and reserved to it under the provisions of the Original Indenture, including Section 10.1 thereof, and pursuant to appropriate resolutions of the Board of Directors, has duly determined to make, execute and deliver to the Trustee this Supplemental Indenture to the Original Indenture as permitted by Section 2.1 and Section 3.1 of the Original Indenture in order to establish the form or terms of, and to provide for the creation and issue of, a series of its Securities under the Original Indenture, which shall be known as the "6 1/8% Senior Notes due 2008" (the "Senior Notes"); and WHEREAS, all things necessary to make such Securities, when executed by the Company and authenticated and delivered by the Trustee or any Authenticating Agent and issued upon the terms and subject to the conditions hereinafter and in the Original Indenture set forth against payment therefor, the valid, binding and legal obligations of the Company and to make this Supplemental Indenture a valid, binding and legal agreement of the Company, have been done; NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE that, in order to establish the terms of a series of Securities, and for and in consideration of the premises and of the covenants contained in the Original Indenture and in this Supplemental Indenture and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, it is mutually covenanted and agreed as follows: Article I RELATION TO INDENTURE; DEFINITIONS Section 1.01. This Supplemental Indenture constitutes an integral part of the Indenture. Section 1.02. For all purposes of this Supplemental Indenture: 2 (a) Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to such terms in the Indenture; (b) All references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture; and (c) The terms "hereof," "herein," "hereby," "hereto," "hereunder," and "herewith" refer to this Supplemental Indenture. Article II THE SECURITIES This Supplemental Indenture hereby establishes a series of Securities, known as and entitled "6 1/8% Senior Notes due 2008." The aggregate principal amount of the Securities shall be limited initially to Two Hundred Million Dollars ($200,000,000) (except for Senior Notes authenticated and delivered upon transfer of, or in exchange for, or in lieu of, other Senior Notes); provided that the Company may, without the consent of the Holders, "reopen" the series of Senior Notes so as to increase the aggregate principal amount of the Senior Notes in compliance with the procedures set forth in the Original Indenture, including Section 3.1 and Section 3.3 thereof, and subject to limitations, if any, on the Company's ability to issue Collateral Bonds securing the additional Senior Notes, so long as any such additional Senior Notes have the same tenor and terms as the Senior Notes then Outstanding. The Senior Notes are not subject to repayment at the option of Holders thereof and are not subject to any sinking fund. As provided in the form of Senior Notes attached hereto as Appendix I, the Senior Notes are subject to optional redemption, as a whole or in part, by the Company prior to the Stated Maturity of the principal thereof on the terms set forth therein. Except as modified in the form of the Senior Notes, redemptions shall be effected in accordance with Article Twelve of the Original Indenture. The Senior Notes shall have such other terms and provisions as are set forth in the form of the Senior Notes attached hereto as Appendix I (which is incorporated by reference in and made a part of this Supplemental Indenture as if set forth in full at this place). The Senior Notes shall be issuable only in fully registered form and, as permitted by Section 3.1 and Section 3.2 of the Original Indenture, in denominations of $1,000 and integral multiples thereof. The Senior Notes will initially be issued in global form (the "Global Notes") under a book-entry system, registered in the name of The Depository Trust Company, as depository ("DTC"), or its nominee, which is hereby designated as "U.S. Depositary" under the Indenture. Further to Section 3.5 of the Original Indenture, any Global Note shall be exchangeable for Senior Notes registered in the name of, and a transfer of a Global Note may be registered to, any Person other than the U.S. Depositary for such Senior Note or its nominee only if (i) such U.S. Depositary notifies the Company that it is unwilling or unable to continue as U.S. Depositary for such Global Note or if at any time such U.S. Depositary ceases to be a clearing agency registered under the Exchange Act, and, in either such case, the Company does not appoint a successor U.S. Depositary within 90 days thereafter, (ii) the Company executes and 3 delivers to the Trustee a Company Order that such Global Note shall be so exchangeable and the transfer thereof so registrable or (iii) there shall have occurred and be continuing an Event of Default or an event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default with respect to the Senior Notes. Upon the occurrence in respect of any Global Note of any or more of the conditions specified in clause (i), (ii) or (iii) of the preceding sentence, such Global Note may be exchanged for Senior Notes registered in the name of, and the transfer of such Global Note may be registered to, such Persons (including Persons other than the U.S. Depositary and its nominees) as such U.S. Depositary, in the case of an exchange, and the Company, in the case of a transfer, shall direct. Article III TRANSFER OF COLLATERAL BONDS The Company hereby issues, delivers and transfers to the Trustee in connection with the issuance of the Senior Notes, Two Hundred Million Dollars ($200,000,000) aggregate principal amount of a related issue of Collateral Bonds of the Company designated "First Mortgage Bonds, 6 1/8% Collateral Bonds due 2008" (the "Related Issue of Collateral Bonds" and, together with all other First Mortgage Bonds issued under the First Mortgage Indenture as security for Securities issued under the Indenture, "Collateral Bonds"), which has been fully registered in the name of the Trustee in such capacity, to be held in trust for the benefit of the Holders from time to time of the Senior Notes as security for any and all obligations of the Company in respect of the Senior Notes of this series under the Indenture, this Supplemental Indenture and the Senior Notes, including but not limited to (1) the full and prompt payment of the interest on, principal of, and premium, if any, on the Senior Notes when and as the same shall become due and payable in accordance with the terms and provisions of the Indenture and this Supplemental Indenture and the Senior Notes, either at the Stated Maturity, upon acceleration of the maturity or upon redemption of the Senior Notes, and (2) the full and prompt payment of any interest on the Senior Notes when and as the same shall become due and payable in accordance with the terms and provisions of the Indenture and this Supplemental Indenture and the Senior Notes. The Trustee shall enforce all of its rights under the First Mortgage Indenture as a holder of the Related Issue of Collateral Bonds transferred to it as provided in this Article III for the benefit of the Holders of the Senior Notes and the proceeds of the enforcement of such rights shall be applied by the Trustee to satisfy the Company's obligations under the Indenture, this Supplemental Indenture and the Senior Notes. The Company shall make payments of the principal of, and premium or interest on, the Related Issue of Collateral Bonds to the Trustee, which payments shall be applied by the Trustee to satisfaction of all obligations then due on the Senior Notes. The Related Issue of Collateral Bonds shall not be sold or transferred by the Trustee until the earlier of the Release Date or the prior retirement of the Senior Notes through redemption, repurchase or otherwise. The "Release Date" shall be the date that all First Mortgage Bonds of the Company issued and outstanding under the First Mortgage Indenture, other than the Collateral Bonds, have been retired (at, before or after the maturity thereof) through payment, redemption or otherwise, provided that no default or Event of Default has occurred and, at such time, is continuing under the Indenture. 4 Article IV COVENANTS Section 4.01. The covenant set forth in Section 11.10 of the Indenture shall apply to the Senior Notes only from and after the Release Date (unless Substituted Collateral Bonds are issued to secure the Senior Notes from and after the Release Date); provided, that, in any case, the Company may issue, assume or guarantee Indebtedness secured by a Lien not otherwise permitted under Section 11.10 so long as it effectively secures the Senior Notes equally and ratably with such Indebtedness. Section 4.02. The covenant set forth in Section 11.11 of the Indenture shall apply to the Senior Notes only from and after the Release Date (unless Substituted Collateral Bonds are issued to secure the Senior Notes from and after the Release Date). Article V MISCELLANEOUS Section 5.01. The Trustee has accepted the amendment of the Indenture effected by this Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, and without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect of any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Company, or for or with respect to (a) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (b) the proper authorization hereof by the Company by corporate action or otherwise, and (c) the due execution hereof by the Company. Section 5.02. This Supplemental Indenture and the Senior Notes shall be construed in connection with and as a part of the Indenture and shall be governed by the laws (other than the choice of law provisions) of the State of New York. Section 5.03. (a) If any provision of this Supplemental Indenture conflicts with another provision of the Indenture required to be included in indentures qualified under the Trust Indenture Act of 1939, as amended (as enacted prior to the date of this Supplemental Indenture), by any of the provisions of Section 310 to 317, inclusive, of said act, such required provision shall control. 5 (b) In case any one or more of the provisions contained in this Supplemental Indenture or in the Senior Notes issued hereunder should be invalid, illegal, or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected, impaired, prejudiced or disturbed thereby. Section 5.04. Whenever in this Supplemental Indenture either of the parties hereto is named or referred to, such name or reference shall be deemed to include the successors or assigns of such party, and all the covenants and agreements contained in this Supplemental Indenture by or on behalf of the Company or by or on behalf of the Trustee shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not. Section 5.05. (a) This Supplemental Indenture may be simultaneously executed in several counterparts, and all such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. (b) The descriptive headings of the several Articles of this Supplemental Indenture were formulated, used and inserted in this Supplemental Indenture for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. 6 IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this Supplemental Indenture to be executed by its duly authorized Officer and its corporate seal to be hereunto affixed, and CITIBANK, N.A., as Trustee as aforesaid, has caused this Supplemental Indenture to be executed by one of its authorized signatories, as of August 15, 2001. MICHIGAN CONSOLIDATED GAS COMPANY By: /s/ N.A. Khouri ------------------------------- Name: N.A. Khouri Title: Vice President and Treasurer CITIBANK, N.A., as Trustee By: /s/ Wafaa Orfy ------------------------------- Name: Wafaa Orfy Title: Assistant Vice President 7 Appendix I FORM OF 6 1/8% SENIOR NOTE CUSIP: 594457 BQ5 No. [ ] $200,000,000 THIS NOTE IS IN GLOBAL FORM WITHIN THE MEANING OF THE SENIOR INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A U.S. DEPOSITARY OR A NOMINEE OF A U.S. DEPOSITARY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR A NOTE IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE U.S. DEPOSITARY TO A NOMINEE OF THE U.S. DEPOSITARY OR BY A NOMINEE OF THE U.S. DEPOSITARY TO THE U.S. DEPOSITARY OR ANOTHER NOMINEE OF THE U.S. DEPOSITARY OR BY THE U.S. DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company (as defined below) or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. MICHIGAN CONSOLIDATED GAS COMPANY 6 1/8% Senior Notes due 2008 Principal Amount: $200,000,000 Authorized Denomination: $1,000 Regular Record Date: close of business on the 15th calendar day (whether or not a Business Day) prior to the relevant Interest Payment Date Original Issue Date: August 22, 2001 Stated Maturity: September 1, 2008 Interest Payment Dates: March 1 and September 1 of each year, commencing March 1, 2002 Interest Rate: 6 1/8% per annum I-1 MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and existing under the laws of the State of Michigan (the "Company", which term includes any successor corporation under the Senior Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co. or registered assigns, at the office or agency of the Company in The City of New York, New York, the principal sum of TWO HUNDRED MILLION DOLLARS ($200,000,000) on September 1, 2008 (the "Stated Maturity"), in the coin or currency of the United States, and to pay interest thereon from the Original Issue Date shown above, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on each Interest Payment Date as specified above, commencing on March 1, 2002 and on the Stated Maturity at the rate per annum shown above (the "Interest Rate") until the principal hereof is paid or made available for payment and on any overdue principal and premium and on any overdue installment of interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Senior Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered on the Regular Record Date as specified above next preceding such Interest Payment Date; provided that any interest payable at Stated Maturity or on a Redemption Date will be paid to the Person to whom principal is payable. Except as otherwise provided in the Senior Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Senior Note is registered at the close of business on a Special Record Date for the payment of such defaulted Interest to be fixed by the Senior Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Securities of this series shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Senior Indenture. Payments of interest on this Senior Note will include interest accrued to but excluding the respective Interest Payment Dates. Interest payments for this Senior Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and premium, if any, and, to the extent lawful, on overdue installments of interest at the rate per annum borne by this Senior Note. In the event that any Interest Payment Date, Redemption Date or Maturity Date is not a Business Day, then the required payment of principal, premium, if any, and interest will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). "Business Day" means any day other than a day on which banking institutions in The State of New York or the State of Michigan are authorized or obligated pursuant to law or executive order to close. Payment of principal of, premium, if any, and interest on the Securities of this series shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal of, premium, if any, and interest on Securities of this series represented by a Global Security shall be made by wire transfer of immediately available funds to the Holder of such Global Security, provided that, in the case of payments of principal and premium, if any, such Global Security is first surrendered to the Paying Agent (as defined in the Senior Indenture). If any of the Securities of this series are no longer represented by a Global Security, (i) payments of principal, premium, if any, and interest due at the Stated Maturity or earlier redemption of such Securities shall be made at the I-2 office of the Paying Agent upon surrender of such Securities to the Paying Agent, and (ii) payments of interest shall be made, at the option of the Company, subject to such surrender where applicable, (A) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (B) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Senior Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto. UNTIL THE RELEASE DATE (AS DEFINED ON THE REVERSE HEREOF), THIS SENIOR NOTE SHALL BE SECURED BY FIRST MORTGAGE BONDS (THE "FIRST MORTGAGE BONDS") ISSUED AND DELIVERED BY THE COMPANY TO THE SENIOR TRUSTEE (AS DEFINED ON THE REVERSE HEREOF) UNDER THE COMPANY'S TWENTY-NINTH SUPPLEMENTAL INDENTURE DATED AS OF JULY 15, 1989, PROVIDING FOR THE RESTATEMENT OF THE INDENTURE OF MORTGAGE AND DEED OF TRUST DATED AS OF MARCH 1, 1994 BETWEEN THE COMPANY AND CITIBANK, N.A. (THE "MORTGAGE TRUSTEE"), AS SUPPLEMENTED BY THE THIRTY-SIXTH SUPPLEMENTAL INDENTURE (AS SO SUPPLEMENTED, THE "MORTGAGE INDENTURE"). ON THE RELEASE DATE, THE SENIOR NOTES SHALL CEASE TO BE SECURED BY SUCH FIRST MORTGAGE BONDS AND, AT THE COMPANY'S OPTION, EITHER (i) SHALL BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (ii) SHALL BE SECURED BY FIRST MORTGAGE BONDS UNDER A SECURED MORTGAGE INDENTURE OTHER THAN THE MORTGAGE INDENTURE. Reference is made to the further provisions of this Senior Note set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Senior Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Senior Trustee under the Senior Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this instrument to be duly executed under its corporate seal. Dated: MICHIGAN CONSOLIDATED GAS COMPANY By: ----------------------------- Title: Attest: By: ----------------------- Title: I-3 CERTIFICATION OF AUTHENTICATION Dated: This is one of the Securities of the series designated therein referred to in the within-mentioned Senior Indenture. CITIBANK, N.A., as Trustee By: ------------------------------- Authorized Signatory I-4 MICHIGAN CONSOLIDATED GAS COMPANY 6 1/8% Senior Notes due 2008 1. Senior Indenture. (a) This Senior Note is one of the duly authorized issue of Securities of the Company (hereinafter called the "Securities") of the series hereinafter specified, all issued or to be issued under and pursuant to an Indenture, dated as of June 1, 1998, as supplemented by the First Supplemental Indenture, dated as of June 18, 1998, the Second Supplemental Indenture, dated as of June 9, 1999, and the Third Supplemental Indenture, dated as of August 15, 2001, between the Company and the Trustee (as so supplemented, the "Senior Indenture"), duly executed and delivered by the Company to Citibank, N.A., as Trustee (herein called the "Senior Trustee," which term includes any successor trustee under the Senior Indenture), to which Senior Indenture reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Senior Trustee, the Company and the Holders of the Securities. The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions (if any) and may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as provided in the Senior Indenture. This Security is one of the series designated as the "6 1/8% Senior Notes due 2008" (the "Senior Notes") of the Company. (b) The Senior Indenture contains provisions for defeasance at any time of the entire indebtedness of the Senior Notes or certain covenants with respect thereto upon compliance by the Company with certain conditions set forth therein. 2. Transfer. No service charge will be made for any transfer or exchange of Senior Notes, but payment will be required of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. The Company shall not be required (a) to issue, transfer or exchange any Senior Notes during a period beginning at the opening of business fifteen (15) days before the day of the mailing of a notice pursuant to Section 12.4 of the Indenture identifying the serial numbers of the Senior Notes to be called for redemption, and ending at the close of business on the day of the mailing, or (b) to transfer or exchange any Senior Notes theretofore selected for redemption in whole or in part, except the unredeemed portion of any Note redeemed in part. 3. Redemption at the Company's Option. The Senior Notes shall be subject to redemption at the option of the Company, in whole at any time or in part from time to time (any such date of optional redemption, a "Redemption Date" for purposes of the Indenture), at an optional redemption price (which shall be a "Redemption Price" for purposes of the Indenture) equal to the greater of (i) 100% of the principal amount of the Senior Notes to be redeemed and (ii) the sum of the present values of the principal amount of the Senior Notes to be redeemed and the remaining scheduled payments of interest on the principal amount of the Senior Notes to be redeemed (exclusive of interest accrued to the related Redemption Date) until Stated Maturity, in each case discounted from their respective scheduled payment dates to such Redemption Date on I-5 a semiannual basis (assuming a 360-day year consisting of 30-day months) at the Adjusted Treasury Rate (as defined below) plus 25 basis points, plus in either case, accrued interest thereon to the date of redemption. "Adjusted Treasury Rate" means, with respect to any Redemption Date, the rate per annum equal to the semiannual yield to maturity of the Comparable Treasury Issue, calculated on the third Business Day preceding such Redemption Date, using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. "Comparable Treasury Issue" means the United States Treasury security determined by the Reference Treasury Dealer selected by the Company as having a maturity comparable to the remaining term of the Senior Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity with the remaining term of the Senior Notes. "Comparable Treasury Price" means, with respect to any Redemption Date, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Senior Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such quotations, or (iii) if only one Reference Treasury Dealer Quotation is received, such quotation. "Reference Treasury Dealer" means each of: (i) Credit Suisse First Boston Corporation, J. P. Morgan Securities Inc. and Barclays Capital Inc. (or their respective affiliates which are Primary Treasury Dealers), and their respective successors; provided, however, that if any of the foregoing cease to be a primary U.S. Government securities dealer in The City of New York (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer; and (ii) any other Primary Treasury Dealer(s) selected by the Senior Trustee after consultation with the Company. "Reference Treasury Dealer Quotation" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Senior Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Senior Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date. Unless the Company defaults in payment of the applicable Redemption Price, on and after the applicable Redemption Date interest will cease to accrue on the principal amount of the Senior Notes called for redemption. If money sufficient to pay the applicable Redemption Price with respect to the principal amount of and accrued interest on the principal amount of the Senior Notes to be redeemed on the applicable Redemption Date is deposited with the Senior Trustee or Paying Agent on or before the related Redemption Date and certain other conditions are satisfied, then on or after such date, interest will cease to accrue on the principal amount of the Senior Notes called for redemption. I-6 If the Senior Notes are only partially redeemed by the Company, the Senior Trustee shall select which Senior Notes are to be redeemed in a manner it deems fair and appropriate in accordance with the terms of the Indenture. In the event of redemption of the Senior Notes in part only, a new Senior Note or Notes for the unredeemed portion will be issued in the name or names of the Holders thereof upon the surrender thereof. The Senior Notes will not have a sinking fund. Notice of redemption shall be given as provided in Section 12.4 of the Indenture. Any redemption of less than all of the Senior Notes shall, with respect to the principal thereof, be divisible by $1,000. 4. Security; Release Date. Prior to the Release Date (as hereinafter defined), the Senior Notes shall be secured by First Mortgage Bonds designated as 6 1/8% Collateral Bonds due 2008 (the "Collateral Bonds"), delivered by the Company to the Senior Trustee for the benefit of the Holders of the Senior Notes. Prior to the Release Date, the Company shall make payments of the principal of, and premium, if any, and or interest on, the Collateral Bonds to the Senior Trustee, which payments shall be applied by the Senior Trustee to satisfaction of all obligations then due on the Senior Notes. Reference is made to the Mortgage Indenture and the Senior Indenture for a description of the rights of the Senior Trustee as holder of the Collateral Bonds, the property mortgaged and pledged under the Mortgage Indenture and the rights of the Company and of the Mortgage Trustee in respect thereof, the duties and immunities of the Mortgage Trustee and the terms and conditions upon which the Collateral Bonds are secured and the circumstances under which additional First Mortgage Bonds may be issued. FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN COLLATERAL BONDS) ISSUED UNDER THE MORTGAGE INDENTURE HAVE BEEN RETIRED THROUGH PAYMENT, REDEMPTION OR OTHERWISE AT, BEFORE OR AFTER THE MATURITY THEREOF (THE "RELEASE DATE"), THE COLLATERAL BONDS SHALL CEASE TO SECURE THE SENIOR NOTES IN ANY MANNER PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND AT SUCH TIME IS CONTINUING UNDER THE SENIOR INDENTURE. IN CERTAIN CIRCUMSTANCES PRIOR TO THE RELEASE DATE AS PROVIDED IN THE SENIOR INDENTURE, THE COMPANY IS PERMITTED TO REDUCE THE AGGREGATE PRINCIPAL AMOUNT OF A SERIES OF COLLATERAL BONDS HELD BY THE TRUSTEE, BUT IN NO EVENT PRIOR TO THE RELEASE DATE TO AN AMOUNT LESS THAN THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE SERIES OF SENIOR NOTES INITIALLY ISSUED CONTEMPORANEOUSLY WITH SUCH COLLATERAL BONDS. 5. Effect of Event of Default. In case an Event of Default with respect to the Senior Notes shall occur and be continuing, the unpaid principal of the Senior Notes may be declared due and payable, in the manner, with the effect and subject to the conditions provided in the Senior Indenture. I-7 6. Amendments and Waivers. The Senior Indenture may be modified by the Company and the Senior Trustee without consent of any Holder with respect to certain matters as described in the Indenture. In addition, the Senior Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Senior Indenture at any time by the Company and the Senior Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Senior Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Senior Indenture and certain past defaults under the Senior Indenture and their consequences. Any such consent or waiver by the Holder of this Senior Note shall bind such Holder and all future Holders of this Senior Note and of any note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Senior Note. 7. Obligations of Company. No reference herein to the Senior Indenture and no provision of this Senior Note or of the Senior Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest on this Senior Note at the time, place, and rate and in the coin or currency herein prescribed. 8. Denominations, Transfer and Exchange. (a) The Senior Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Senior Indenture and subject to certain limitations therein set forth, Senior Notes of this series are exchangeable for a like aggregate principal amount of Senior Notes of this series of a different authorized denomination, as requested by the Holder surrendering the same. (b) As provided in the Senior Indenture and subject to certain limitations therein set forth, the transfer of this Senior Note is registrable in the Security Register, upon surrender of this Senior Note for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest on this Senior Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Senior Notes of this series, and of like tenor, of authorized denominations and for the same maturity and aggregate principal amount, shall be issued to the designated transferee or transferees. (c) No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Senior Note for registration of transfer, the Company, the Senior Trustee and any agent of the Company or the Senior Trustee may treat the Person in whose name this Senior Note is registered as the owner hereof for all purposes, whether or not this Senior Note be overdue, and neither the Company, the Senior Trustee nor any such agent shall be affected by notice to the contrary. I-8 9. No Liability of Certain Persons. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under this Senior Note or the Senior Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder, by accepting a Senior Note, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Senior Note. 10. Governing Law. The Senior Indenture and this Senior Note shall for all purposes be governed by, and construed in accordance with, the internal laws of the State of New York. I-9 THE FOLLOWING ABBREVIATIONS SHALL BE CONSTRUED AS THOUGH THE WORDS SET FORTH BELOW OPPOSITE EACH ABBREVIATION WERE WRITTEN OUT IN FULL WHERE SUCH ABBREVIATION APPEARS: TEN COM -- as tenants in common (Name) CUST (Name) UNIF -- (Name) as Custodian TEN ENT -- as tenants by the entirety GIFT MIN ACT (state) for (name) under the (State) JF TEN -- as joint tenants with Uniform Gifts to right of survivorship Junior Act and not as tenants in common

ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST. ----------------------------------------------------------- To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's social security or tax I.D. number) - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint agent to transfer -------------------------------------- this Note on the books of the Company. the agent may substitute another to act for him. Dated: Your Signature: ------------------ --------------------------------------------- (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: (Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Transfer Agent, which requirements will include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Transfer Agent in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act.)

~~Social Security Number or Taxpayer Identification Number: ---------------------------------------- I-10~~ EX-4.3 5 k65469ex4-3.txt MORTGAGE SUPPLEMENTAL INDENTURE Executed in ____Counterparts of which this is Counterpart No. ______ ================================================================================ THIRTY-SIXTH SUPPLEMENTAL INDENTURE TO INDENTURE OF MORTGAGE AND DEED OF TRUST DATED AS OF MARCH 1, 1944 ------------ AS RESTATED IN PART II OF THE TWENTY-NINTH SUPPLEMENTAL INDENTURE DATED AS OF JULY 15, 1989 WHICH BECAME EFFECTIVE ON APRIL 1, 1994 ------------ MICHIGAN CONSOLIDATED GAS COMPANY TO CITIBANK, N.A. TRUSTEE DATED AS OF AUGUST 15, 2001 ------------ CREATING AN ISSUE OF FIRST MORTGAGE BONDS, DESIGNATED AS 6 1/8% COLLATERAL BONDS DUE 2008 ================================================================================ MICHIGAN CONSOLIDATED GAS COMPANY THIRTY-SIXTH SUPPLEMENTAL INDENTURE DATED AS OF AUGUST 15, 2001 SUPPLEMENTAL TO INDENTURE OF MORTGAGE AND DEED OF TRUST DATED AS OF MARCH 1, 1944 TABLE OF CONTENTS ------------
PAGE ---- ARTICLE I ESTABLISHMENT OF AN ISSUE OF FIRST MORTGAGE BONDS, OF THE SERIES DESIGNATED AND DISTINGUISHED AS "COLLATERAL BONDS".............................3 SECTION 1.............................................................3 SECTION 2............................................................11 SECTION 3............................................................11 SECTION 4............................................................11 SECTION 5............................................................12 ARTICLE II ISSUE OF COLLATERAL BONDS.................................................... 13 ARTICLE III THE TRUSTEE.................................................................. 13 ARTICLE IV MISCELLANEOUS PROVISIONS..................................................... 13
THIS THIRTY-SIXTH SUPPLEMENTAL INDENTURE, dated as of the 15th day of August, 2001, between MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and existing under and by virtue of the laws of the State of Michigan (hereinafter called the "Company"), having its principal place of business at 500 Griswold Street, Detroit, Michigan, and CITIBANK, N.A. (formerly First National City Bank), a national banking association incorporated and existing under and by virtue of the laws of the United States of America, having an office at 111 Wall Street in the Borough of Manhattan, The City of New York, New York, successor to CITY BANK FARMERS TRUST COMPANY (hereinafter with its predecessors as trustee called the "Mortgage Trustee" or the "Trustee"): WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture of Mortgage and Deed of Trust (the "Original Indenture"), dated as of March 1, 1944; WHEREAS, the Company has heretofore executed and delivered to the Trustee the Twenty-ninth Supplemental Indenture, which became effective April 1, 1994, to provide for the modification and restatement of the Original Indenture as previously amended (as so amended, supplemented and modified the "Indenture"), and to secure the Company's First Mortgage Bonds, unlimited in aggregate principal amount except as therein otherwise provided, issued pursuant to the: Thirtieth Supplemental Indenture, dated as of September 1, 1991; Thirty-first Supplemental Indenture, dated as of December 15, 1991; Thirty-second Supplemental Indenture, dated as of January 5, 1993; Thirty-third Supplemental Indenture, dated as of May 1, 1995; Thirty-fourth Supplemental Indenture, dated as of November 1, 1996; and Thirty-fifth Supplemental Indenture, dated as of June 18, 1998; WHEREAS, at the date hereof there were outstanding First Mortgage Bonds of the Company issued under the Indenture, of 6 series in the principal amounts set forth below (including Collateral Bonds): 1 AMOUNT AMOUNT DESIGNATION OF SERIES INITIALLY ISSUED OUTSTANDING --------------------- ---------------- ----------- First Mortgage Bonds 9-1/2% Series due 2021 $40,000,000 $40,000,000 First Mortgage Bonds (Secured Term Notes, Series A) 8% Series due 2002 70,000,000 17,314,000 7-1/2% Series due 2020 10,000,000 9,608,000 6-3/4% Series due 2023 20,000,000 15,100,000 First Mortgage Bonds (Secured Term Notes, Series B) 8-1/4% Series due 2014 80,000,000 80,000,000 7-1/2% Series due 2020 20,000,000 18,955,000 7% Series due 2025 40,000,000 40,000,000 First Mortgage Bonds (Secured Term Notes, Series B) 6.72% Series due 2003 4,150,000 4,150,000 6.80% Series due 2003 15,850,000 15,850,000 7.15% Series due 2006 40,000,000 40,000,000 7.06% Series due 2012 40,000,000 40,000,000 First Mortgage Bonds (Secured Medium-Term Notes, Series C) 7.21% Series due 2007 30,000,000 30,000,000 7.60% Series due 2017 15,000,000 14,680,000 Collateral Bonds (Remarketable Securities) Collateral Series A 75,000,000 75,000,000 Collateral Series B 75,000,000 75,000,000 (Senior Notes) Collateral Series C 55,000,000 52,811,000 Collateral Series D 55,000,000 55,000,000
2 and WHEREAS, the Company desires in and by this Supplemental Indenture to establish an issue of bonds to be issued under the Indenture of the series established under the Thirty-fifth Supplemental Indenture, to designate the terms thereof, to specify the particulars necessary to describe and define the same and to specify such other provisions and agreements in respect thereof as are in the Indenture provided or permitted; and WHEREAS, all the conditions and requirements necessary to make this Supplemental Indenture, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Supplemental Indenture in the form and with the terms hereof have been in all respects duly authorized; NOW, THEREFORE, in consideration of the premises and in further consideration of the sum of One Dollar in lawful money of the United States of America paid to the Company by the Trustee at or before the execution and delivery of this Thirty-sixth Supplemental Indenture, the receipt whereof is hereby acknowledged, and of other good and valuable consideration, it is agreed by and between the Company and the Trustee as follows: Article I ESTABLISHMENT OF AN ISSUE OF FIRST MORTGAGE BONDS, OF THE SERIES DESIGNATED AND DISTINGUISHED AS "COLLATERAL BONDS" Section 1. There is hereby established an issue of bonds to be issued under and secured by the Indenture, to be known as "First Mortgage Bonds," designated and distinguished as "Collateral Bonds" of the Company (herein collectively sometimes called the "Collateral Bonds") of the series established under the Thirty-fifth Supplemental Indenture. The Collateral Bonds may be issued without limitation as to aggregate principal amount except as provided in the Indenture (including the Thirty-fifth Supplemental Indenture) and in this Supplemental Indenture. The Collateral Bonds shall be registered bonds without coupons and shall be dated as of the date of the authentication thereof by the Mortgage Trustee. A separate issue of Collateral Bonds, designated "6 1/8% Collateral Bonds due 2008," is being issued by the Company hereunder contemporaneously with the issuance of a separate series of senior debt securities of the Company 3 designated as the Company's "6 1/8% Senior Notes due 2008" (the "Senior Notes") and is being issued and assigned and delivered to Citibank, N.A., as trustee (in such capacity, together with any successor trustee(s), the "Senior Trustee") under the Indenture, dated as of June 1, 1998, as amended, supplemented and modified, governing such senior debt securities (as so amended, supplemented and modified, the "Senior Indenture"), in such capacity, as collateral for the benefit of the holders of the Senior Notes. The series of such senior debt securities collateralized by any Collateral Bonds issued hereunder shall be referred to as the "Related Notes" with respect to such Collateral Bonds. The issue of Collateral Bonds established hereby shall bear interest at such rate or rates and be payable on such date or dates, shall mature and be subject to mandatory or optional redemption on such date or dates and shall have such other terms and provisions not inconsistent with the Indenture as are set forth in the form of Collateral Bond, and the form of Trustee's Certificate to be endorsed on such bonds, as are set forth substantially in the following forms respectively (herein sometimes called the "Bond Form"): FORM OF COLLATERAL BONDS No. R-1 Principal Amount $200,000,000 MICHIGAN CONSOLIDATED GAS COMPANY FIRST MORTGAGE BONDS, 6 1/8% COLLATERAL BONDS DUE 2008 being a series of FIRST MORTGAGE BONDS ORIGINAL ISSUE DATE: AUGUST 22, 2001 MATURITY DATE: SEPTEMBER 1, 2008 THE FIRST MORTGAGE BONDS, 6 1/8% COLLATERAL BONDS DUE 2008 (HEREINAFTER, "COLLATERAL BONDS"), REPRESENTED BY THIS CERTIFICATE ARE BEING ISSUED AND DELIVERED BY THE COMPANY TO CITIBANK, N.A., AS TRUSTEE (IN SUCH CAPACITY, THE "SENIOR TRUSTEE") UNDER AN INDENTURE, DATED AS OF JUNE 1, 1998, BETWEEN THE COMPANY AND THE SENIOR TRUSTEE, AS AMENDED, SUPPLEMENTED AND MODIFIED FROM TIME TO TIME AND AS SUPPLEMENTED BY THE SUPPLEMENTAL INDENTURE 4 THERETO DATED AS OF AUGUST 15, 2001 (AS SO AMENDED, SUPPLEMENTED AND MODIFIED, THE "SENIOR INDENTURE"). THE COLLATERAL BONDS ARE TO BE HELD IN TRUST AS COLLATERAL FOR THE BENEFIT OF THE HOLDERS OF $200,000,000 AGGREGATE PRINCIPAL AMOUNT OF 6 1/8% SENIOR NOTES DUE 2008 (THE "RELATED NOTES") ISSUED PURSUANT TO THE SENIOR INDENTURE. THE COLLATERAL BONDS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED (EXCEPT TO A SUCCESSOR TRUSTEE UNDER THE SENIOR INDENTURE) UNTIL THE EARLIER OF THE RELEASE DATE (AS DEFINED BELOW) OR THE PRIOR RETIREMENT OF THE RELATED NOTES THROUGH REDEMPTION, REPURCHASE OR OTHERWISE. THE INTEREST RATE ON THE COLLATERAL BONDS SHALL AT ALL TIMES BE IDENTICAL TO THAT OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN, THE RELATED NOTES. THE INTEREST PAYMENT DATES IN RESPECT OF THE COLLATERAL BONDS SHALL AT ALL TIMES BE IDENTICAL TO THOSE OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN, THE RELATED NOTES. THE COMPANY SHALL MAKE PAYMENTS OF THE PRINCIPAL OF, AND PREMIUM, IF ANY, AND INTEREST ON, THE COLLATERAL BONDS, TO THE SENIOR TRUSTEE, WHICH PAYMENTS SHALL BE APPLIED BY THE SENIOR TRUSTEE TO THE SATISFACTION OF OBLIGATIONS ON THE RELATED NOTES. THE MATURITY DATE SPECIFIED ABOVE IS ALSO THE MATURITY DATE OF THE RELATED NOTES. MICHIGAN CONSOLIDATED GAS COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to CITIBANK, N.A., as trustee for the benefit of the holders of the Related Notes, or registered assigns (in such capacity, the "Senior Trustee"), the sum of Two Hundred Million Dollars ($200,000,000) on the Maturity Date specified above, at the corporate trust office of the Mortgage Trustee hereinafter named in the Borough of Manhattan, The City of New York, New York, or at the principal office of any successor in trust, in lawful money of the United States of America, and to pay interest thereon at the Interest Rate(s) from time to time specified in or determined pursuant to the Related Notes, in like lawful money payable at the office or agency of the Company in the Borough of Manhattan, The 5 City of New York, New York on such interest payment date(s) and on the Maturity Date (each an "Interest Payment Date") as provided in the Related Notes, from the Original Issue Date specified above or from the most recent Interest Payment Date to which interest has been paid, commencing on the Interest Payment Date next succeeding the Original Issue Date, until the Company's obligation with respect to the payment of such principal sum shall be discharged as provided in the Indenture hereinafter mentioned and the Senior Indenture. If the date of the Collateral Bonds represented by this certificate is after a Record Date (as defined below) with respect to any Interest Payment Date and prior to such Interest Payment Date, then payment of interest shall commence on the second Interest Payment Date succeeding such date. If the Company shall default in the payment of interest due on any Interest Payment Date, then interest shall be payable from the next preceding Interest Payment Date to which interest has been paid, or, if no such interest has been paid on the Collateral Bonds represented by this certificate, from the Original Issue Date. So long as there is no existing default in the payment of interest, the person in whose name the Collateral Bonds represented by this certificate were registered at the close of business on the relevant Record Date with respect to an Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date, except that if the Company shall default in the payment of interest due on such Interest Payment Date, such defaulted interest shall be paid to the person in whose name the Collateral Bonds represented by this Certificate are registered on the Record Date for the Interest Payment Date fixed by the Company for the payment of such defaulted interest, provided that in no case shall such Record Date be less than ten days after notice thereof shall have been mailed to all registered holders of Collateral Bonds. The term "Record Date" as used herein with respect to any Interest Payment Date otherwise shall mean the fifteenth calendar (whether or not a Business Day) prior to such Interest Payment Date. "Business Day" means any day other than a day on which banking institutions in The State of New York or the State of Michigan are authorized or obligated pursuant to law or executive order to close. In the event that any Interest Payment Date, redemption date or maturity date is not a Business Day, then the required payment of principal, premium, if any, and interest will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). The bonds represented by this certificate, of the series hereinafter specified, are bonds of the Company (herein called the "bonds") known as its "First Mortgage Bonds," issued and to be issued in one or more series under, and all equally and ratably secured by, an Indenture of Mortgage and Deed of Trust dated as of March 1, 1944, duly executed by the Company to City Bank Farmers 6 Trust Company (now known as Citibank, N.A., successor trustee, as "Mortgage Trustee") and Ralph E. Morton as restated in Part II of the Twenty-ninth Supplemental Indenture dated as of July 15, 1989, which became effective on April 1, 1994, to which indenture and all indentures supplemental thereto executed on and after July 15, 1989 reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the terms and conditions upon which the bonds are, and are to be, issued and secured, and the rights of the holders of the bonds and of the Mortgage Trustee in respect of such security (which indenture and all indentures supplemental thereto, including the Thirty-sixth Supplemental Indenture dated as of August 15, 2001, are hereinafter collectively called the "Original Indenture"). As provided in the Original Indenture, the bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as therein provided. The bonds represented by this certificate are part of a Series designated "Collateral Bonds," herein called Collateral Bonds, created by the Thirty-fifth Supplemental Indenture, dated as of June 18, 1998, as supplemented by the Thirty-sixth Supplemental Indenture dated as of August 15, 2001, as provided for in the Indenture. With the consent of the Company and to the extent permitted by and as provided in the Indenture and the Senior Indenture, the rights and obligations of the Company and/or the rights of the holders of the issue of Collateral Bonds established by the Thirty-sixth Supplemental Indenture and/or the terms and provisions of the Indenture may be modified or altered by such affirmative vote or votes of the holders of the Related Notes then outstanding as are specified in the Senior Indenture. The Collateral Bonds shall be redeemed if and to the extent Related Notes are redeemed, as provided in the Senior Indenture with respect to the Related Notes and in the Related Notes. In case an Event of Default as defined in the Indenture or the Senior Indenture shall occur, the principal of the Collateral Bonds may become or be declared due and payable in the manner, with the effect, and subject to the conditions provided in the Indenture and the Senior Indenture. The Senior Trustee has agreed pursuant to the Senior Indenture to hold the Collateral Bonds as collateral for the benefit of the holders of the Related Notes under all circumstances and not to transfer (except to a successor trustee) such Collateral Bonds until the earlier of the Release Date or the prior retirement of the Related Notes through redemption, repurchase or otherwise. "Release Date" means the date on which all First Mortgage Bonds of the Company issued and 7 outstanding under the Original Indenture, other than the Collateral Bonds, have been retired (at, before or after the maturity thereof) through payment, redemption or otherwise provided that no default or event of default has occurred and is continuing under the Senior Indenture. On the Release Date, the Senior Trustee shall deliver to the Company for cancellation all Collateral Bonds, and the Company shall cause the Senior Trustee to provide notice to all holders of Related Notes of the occurrence of the Release Date. As a result, on the Release Date, the Collateral Bonds shall cease to secure the Related Notes, and, at the option of the Company, the Related Notes, either (i) will become unsecured general obligations of the Company or (ii) will be secured by substituted Collateral Bonds. Following the Release Date, the Company shall cause the Indenture to be closed, and the Company shall not issue any additional Collateral Bonds to be issued thereunder. From and after the Release Date, the Company's obligations in respect of the Collateral Bonds shall be satisfied and discharged. No recourse shall be had for the payment of the principal of, or the interest on, the Collateral Bonds, or for any claim based hereon or otherwise in respect of the Collateral Bonds or the Indenture, the Senior Indenture or any indenture supplemental to either thereof, or against any incorporator, stockholder, director or officer, past, present or future, of the Company, as such, or any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability, whether at common law, in equity, by any constitution, statute or otherwise, of incorporators, stockholders, directors or officers being waived and released by the owner hereof and every owner of any Related Note by the acceptance of the Collateral Bonds or such Related Note, as the case may be, and as part of the consideration for the issue thereof, and being likewise waived and released pursuant to the Indenture and the Senior Indenture. This bond shall not be valid or become obligatory for any purpose unless and until the certificate of authentication hereon shall have been manually executed by the Mortgage Trustee or its successor in trust under the Indenture. 8 IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this certificate to be executed under its name with the signature of its duly authorized Officer, under its corporate seal, which may be a facsimile, attested with the signature of its Assistant Corporate Secretary. Dated: August 22, 2001 MICHIGAN CONSOLIDATED GAS COMPANY By: --------------------------------- Attest: The bonds represented by this certificate constitute Collateral Bonds of the series designated and described in the within-mentioned Indenture. CITIBANK, N.A., as Mortgage Trustee By: --------------------------------- Authorized Officer 9 So long as there is no existing default in the payment of interest on the Collateral Bonds, all Collateral Bonds authenticated by the Trustee after the Record Date specified for any Interest Payment Date, and prior to such Interest Payment Date (unless the issue date hereinafter specified is after such Record Date) shall be dated the date of authentication, but shall bear interest from such Interest Payment Date, and the person in whose name any Collateral Bond is registered at the close of business on any Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date notwithstanding any transfer or exchange of such Collateral Bond subsequent to the Record Date and on or prior to such Interest Payment Date, except if and to the extent the Company shall default in the payment of the interest due on such Interest Payment Date, in which case such defaulted interest shall be paid to the person in whose name such Collateral Bond is registered on the Record Date for the special Interest Payment Date fixed by the Company for the payment of such defaulted interest, provided that in no case shall such Record Date be less than ten days after notice thereof shall have been mailed to all registered holders of Collateral Bonds; and provided that interest payable on a maturity date shall be payable to the person to whom the principal thereof is payable. If the issue date of any Collateral Bond is after such Record Date, such Collateral Bond shall bear interest from the issue date but payment of interest shall commence on the second Interest Payment Date next succeeding the issue date. Any notice which is mailed as herein provided shall be conclusively presumed to have been properly and sufficiently given on the date of such mailing, whether or not the holder receives notice. The terms "Interest Payment Date", "Record Date" and "Business Day" as used herein are defined in the Bond Form. The term "issue date" as used herein with respect to the issue of Collateral Bonds established hereby shall mean the date of first authentication of such Collateral Bonds. As used in this Section 1, the term "default in the payment of interest" means failure to pay interest on the applicable Interest Payment Date disregarding any period of grace permitted by Section 9.01 of the Indenture. The Company shall make payments of the principal of, and premium or interest on, the Collateral Bonds to the Senior Trustee, which payments shall be applied by the Senior Trustee to satisfaction of obligations on the Related Notes in respect of such Collateral Bonds. 10 SECTION 2. The issue of Collateral Bonds established hereby shall be redeemed if and to the extent the Related Notes with respect to such Collateral Bonds are redeemed, as provided in the Senior Indenture and in such Related Notes. The redemption price in respect of any Collateral Bonds (including principal, premium, if any, and interest thereon) shall be the redemption price applicable to the Related Notes with respect to such Collateral Bonds. Any notice required to be furnished to the holders of the Collateral Bonds or the Trustee relating to the redemption of such Collateral Bonds shall be considered furnished by the delivery of appropriate notice to the holders of the Related Notes or the Senior Trustee, as the case may be, as provided in the Senior Indenture and the Related Notes with respect to such Collateral Bonds. Any redemption payment made by the Company on the Related Notes (whether for principal, premium, if any, or interest) shall be applied by the Senior Trustee as payment of the redemption price in respect of the correspondingly redeemed Collateral Bonds. In the event the Related Notes with respect to the issue of Collateral Bonds established hereby are redeemed in part, an equivalent aggregate principal amount of the issue of Collateral Bonds established hereby shall be so redeemed, the Senior Trustee, as holder of the Collateral Bonds as collateral for such Related Notes, shall deliver to the Mortgage Trustee for cancellation an equivalent principal amount of the issue of Collateral Bonds established hereby corresponding to the Related Notes so redeemed, and the Company shall execute and the Mortgage Trustee shall authenticate and deliver, without charge, to the Senior Trustee, as holder thereof, one or more new Collateral Bonds of authorized denominations for the unredeemed balance of any Collateral Bonds surrendered for redemption in connection with the redemption of the Related Notes. SECTION 3. The Collateral Bonds shall be registered bonds without coupons. The Mortgage Trustee shall be the registrar and paying agent for the Collateral Bonds, which duties it hereby accepts. Collateral Bonds may be issued in the denomination of $1,000 or any integral multiple thereof. SECTION 4. As further provided in the Bond Form, the Collateral Bonds shall not be assignable or transferable except as may be set forth under Article IV of the Senior Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Senior Indenture. Subject to the foregoing, the Collateral Bonds shall be exchangeable upon surrender thereof at the corporate trust office of the Trustee in the Borough of Manhattan, The City of New York, New York, for registered bonds of the same aggregate principal amount and other terms, but of different authorized denomination or denominations, such exchanges to be made without service charge (except for any stamp tax or other governmental charge). 11 Every bond so surrendered shall be accompanied by a proper transfer power duly executed by the registered owner or by duly authorized attorney transferring such bond to the Company, and the signature to such transfer power shall be guaranteed to the satisfaction of the Trustee. All bonds so surrendered shall be forthwith canceled and delivered to or upon the order of the Company. All bonds executed, authenticated and delivered in exchange for bonds so surrendered shall be valid obligations of the Company, evidencing the same debt as the bonds surrendered, and shall be secured by the same lien and be entitled to the same benefits and protection as the bonds in exchange for which they are executed, authenticated and delivered. The Company shall not be required to make any such exchange or any registration of transfer (1) during a period of fifteen days next preceding any Interest Payment Date, but only if there is an existing default in the payment of interest on the Collateral Bonds on which such payment is due or (2) after the bond so presented for exchange or registration of transfer, or any portion thereof, has been called for redemption and notice thereof given to the registered owner. SECTION 5. Pending the preparation of definitive Collateral Bonds, the Company may from time to time execute, and upon its written order, the Trustee shall authenticate and deliver, in lieu of such definitive bonds and subject to the same provisions, limitations and conditions, one or more temporary bonds, in registered form, of any denomination specified in the written order of the Company for the authentication and delivery thereof, and with such omissions, insertions and variations as may be determined by the Board of Directors of the Company. Such temporary bonds shall be substantially of the tenor of the bonds to be issued as herein before recited. If any such temporary Collateral Bonds shall at any time be so authenticated and delivered in lieu of definitive bonds, the Company shall upon request at its own expense prepare, execute and deliver to the Trustee and thereupon, upon the presentation and surrender of temporary bonds, the Trustee shall authenticate and deliver in exchange therefor, without charge to the holder, definitive bonds of the same series and other terms, if any, and for the same principal sum in the aggregate as the temporary bonds surrendered. All temporary bonds so surrendered shall be forthwith canceled by the Trustee and delivered to or upon the order of the Company. Until exchanged for definitive bonds the temporary bonds shall in all respects be entitled to the lien and security of the Indenture and all supplemental indentures. 12 ARTICLE II ISSUE OF COLLATERAL BONDS The Company hereby increases the principal amount of Collateral Bonds of the Thirty-second Series issuable under the Indenture to $500,000,000, in addition to the aggregate principal amount of Collateral Bonds previously issued, subject to change from time to time as permitted by the provisions of the Indenture, without the consent of the holders of the Collateral Bonds, and subject further to the provisions of the Indenture with respect to exchanges and replacements of bonds. Collateral Bonds in the aggregate principal amount of $200,000,000 in respect of the Related Notes may be executed, authenticated and delivered from time to time as permitted by the provisions of the Indenture, including with respect to exchange and replacement of bonds. The Company further may, without the consent of the holders of the Collateral Bonds, "reopen" the issue of Collateral Bonds established hereby so as to increase the aggregate principal amount of such Collateral Bonds outstanding under the Indenture in compliance with the procedures set forth in the Indenture, to equal the aggregate principal amount of Related Notes outstanding upon a "reopening" of such series, so long as any such additional Collateral Bonds have the same tenor and terms as the issue of Collateral Bonds established hereby. ARTICLE III THE TRUSTEE The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company, or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Except as herein otherwise provided, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Supplemental Indenture other than as set forth in the Indenture and this Supplemental Indenture is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Indenture, as fully to all intents as if the same were herein set forth at length. ARTICLE IV MISCELLANEOUS PROVISIONS Except insofar as herein otherwise expressly provided, all the provisions, terms and conditions of the Indenture shall be deemed to be incorporated in, and 13 made a part of, this Thirty-sixth Supplemental Indenture and the Twenty-ninth Supplemental Indenture dated as of July 15, 1989, by the Thirtieth Supplemental Indenture dated as of September 1, 1991, by the Thirty-first Supplemental Indenture dated as of December 15, 1991, by the Thirty-second Supplemental Indenture dated as of January 5, 1993, by the Thirty-third Supplemental Indenture dated as of May 1, 1995, by the Thirty-fourth Supplemental Indenture dated as of November 1, 1996, by the Thirty-fifth Supplemental Indenture dated as of June 18, 1998 and by this Supplemental Indenture is in all respects ratified and confirmed; and the Indenture and said Supplemental Indentures shall be read, taken and construed as one and the same instrument. Except to the extent specifically provided therein, no provision of this Supplemental Indenture or any future supplemental indenture is intended to modify, and the parties do hereby adopt and confirm, the provisions of Section 318(c) of the Trust Indenture Act, which amend and supersede provisions of the Indenture in effect prior to November 15, 1990. Nothing in this Supplemental Indenture is intended, or shall be construed, to give to any person or corporation, other than the parties hereto and the holders of Collateral Bonds issued and to be issued under and secured by the Indenture, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture, or under any covenant, condition or provision herein contained, all the covenants, conditions and provisions of this Supplemental Indenture being intended to be, and being, for the sole and exclusive benefit of the parties hereto and of the holders of bonds issued and to be issued under the Indenture and secured thereby. All covenants, promises and agreements in this Supplemental Indenture contained by or on behalf of the Company shall bind its successors and assigns whether so expressed or not. This Supplemental Indenture may be executed in any number of counterparts, and each of such counterparts when so executed shall be deemed to be an original; but all such counterparts shall together constitute but one and the same instrument. 14 IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this Supplemental Indenture to be executed by its duly authorized Officer, and its corporate seal to be hereunto affixed, and Citibank, N.A., as Mortgage Trustee as aforesaid, has caused the same to be executed by one of its authorized signatories and its corporate seal to be hereunto affixed, on the respective dates of their acknowledgments hereinafter set forth, as of the date and year first above written. MICHIGAN CONSOLIDATED GAS COMPANY By: /s/ Robert J. Buckler ------------------------------------- Name: Robert J. Buckler Title: Group President Signed, sealed, acknowledged and delivered by MICHIGAN CONSOLIDATED GAS COMPANY in the presence of: /s/ Nancy M. Kosch - ------------------------------------------ Nancy M. Kosch /s/ Janet G. Seefried - ------------------------------------------ Janet G. Seefried Citibank, N.A., as Mortgage Trustee, By: /s/ Wafaa Orfy ------------------------------------- Name: Wafaa Orfy Title: Assistant Vice President Signed, sealed, acknowledged and delivered by CITIBANK, N.A. in the presence of: /s/ Cindy Tsang -------------------------------------- Cindy Tsang /s/ Jenny Cheng -------------------------------------- Jenny Cheng 16 State of Michigan } } ss. County of Wayne } The foregoing instrument was acknowledged before me this 16th day of August, 2001, by Robert J. Buckler, of MICHIGAN CONSOLIDATED GAS COMPANY, a Michigan corporation, on behalf of the corporation. /s/ Susan E. Riske ------------------------------- Notary Public, Wayne County, Michigan My Commission Expires: 9/25/03 State of New York } } ss. County of New York } The foregoing instrument was acknowledged before me this 16th day of August, 2001, by Wafaa Orfy, as Assistant Vice President of Citibank, N.A., a national banking association, on behalf of the association, as Trustee, as in said instrument described. /s/ Peter M. Pavlyshin -------------------------------- Notary Public, State of New York No. 41-4991297 Commission Expires: Jan. 27, 2002 EX-15.2 6 k65469ex15-2.txt AWARENESS LETTER OF DELOITTE & TOUCHE LLP EXHIBIT 15-2 Michigan Consolidated Gas Company Detroit, Michigan We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Michigan Consolidated Gas Company for the periods ended September 30, 2001 and 2000, as indicated in our report dated November 13, 2001; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, is incorporated by reference in Registration Statement No. 333-63370 on Form S-3. We are also aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP November 13, 2001 EX-99.1 7 k65469ex99-1.txt $300 MILLION CREDIT AGREEMENT EXHIBIT 99.1 EXECUTION COPY CREDIT AGREEMENT Dated as of November 7, 2001 Among MICHIGAN CONSOLIDATED GAS COMPANY, as Borrower and THE INITIAL LENDERS NAMED HEREIN, as Initial Lenders and BANK ONE, NA (MAIN OFFICE - CHICAGO), as Administrative Agent and BARCLAYS BANK PLC, SALOMON SMITH BARNEY INC., as Co-Syndication Agent as Co-Syndication Agent and THE BANK OF NEW YORK COMERICA BANK as Co-Documentation Agent as Co-Documentation Agent ================================================================================ BANC ONE CAPITAL MARKETS, INC. BARCLAYS CAPITAL as Co-Lead Arrangers and Joint Book Runners ================================================================================ TABLE OF CONTENTS
PAGE ---- ARTICLE I: DEFINITIONS AND ACCOUNTING TERMS ...........................................................1 SECTION 1.01. Certain Defined Terms ........................................................1 SECTION 1.02. Computation of Time Periods .................................................12 SECTION 1.03. Accounting Terms ............................................................12 ARTICLE II: AMOUNTS AND TERMS OF THE REVOLVING CREDIT ADVANCES .......................................12 SECTION 2.01. The Revolving Credit Advances ...............................................12 SECTION 2.02. Making the Revolving Credit Advances ........................................12 SECTION 2.03. Fees ........................................................................14 SECTION 2.04. Termination or Reduction of the Commitments .................................14 SECTION 2.05. Repayment of Revolving Credit Advances ......................................14 SECTION 2.06. Interest on Revolving Credit Advances .......................................14 SECTION 2.07. Interest Rate Determination .................................................15 SECTION 2.08. Optional Conversion of Revolving Credit Advances ............................16 SECTION 2.09. Prepayments of Revolving Credit Advances ....................................17 SECTION 2.10. Increased Costs .............................................................17 SECTION 2.11. Illegality ..................................................................18 SECTION 2.12. Payments and Computations ...................................................18 SECTION 2.13. Taxes .......................................................................19 SECTION 2.14. Sharing of Payments, Etc ....................................................21 SECTION 2.15. Use of Proceeds .............................................................22 SECTION 2.16. Extensions of Revolver Termination Date .....................................22 SECTION 2.17. Noteless Agreement; Evidence of Indebtedness ................................23 ARTICLE III: CONDITIONS TO EFFECTIVENESS AND LENDING .................................................23 SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01 .......................23 SECTION 3.02. Conditions Precedent to Each Borrowing ......................................25 SECTION 3.03. Determinations Under Section 3.01 ...........................................25 ARTICLE IV: REPRESENTATIONS AND WARRANTIES ...........................................................26 SECTION 4.01. Representations and Warranties of the Borrower ..............................26
i ARTICLE V: COVENANTS OF THE BORROWER .................................................................28 SECTION 5.01. Affirmative Covenants .......................................................28 SECTION 5.02. Negative Covenants ..........................................................30 ARTICLE VI: EVENTS OF DEFAULT ........................................................................31 SECTION 6.01. Events of Default ...........................................................31 ARTICLE VII: THE AGENT ...............................................................................34 SECTION 7.01. Authorization and Action ....................................................34 SECTION 7.02. Agent's Reliance, Etc .......................................................34 SECTION 7.03. Bank One and Affiliates .....................................................35 SECTION 7.04. Lender Credit Decision ......................................................35 SECTION 7.05. Indemnification .............................................................35 SECTION 7.06. Successor Agent .............................................................36 ARTICLE VIII: MISCELLANEOUS ..........................................................................36 SECTION 8.01. Amendments, Etc .............................................................36 SECTION 8.02. Notices, Etc ................................................................36 SECTION 8.03. No Waiver; Remedies .........................................................37 SECTION 8.04. Costs and Expenses ..........................................................37 SECTION 8.05. Right of Set-off ............................................................38 SECTION 8.06. Binding Effect ..............................................................38 SECTION 8.07. Assignments, Designations and Participations ................................39 SECTION 8.08. Confidentiality .............................................................43 SECTION 8.09. Governing Law ...............................................................43 SECTION 8.10. Execution in Counterparts ...................................................43 SECTION 8.11. Jurisdiction, Etc ...........................................................43 SECTION 8.12. Waiver of Jury Trial ........................................................44

ii SCHEDULES AND EXHIBITS Schedules Schedule I - List of Applicable Lending Offices Pricing Schedule Exhibits Exhibit A - Form of Note (If Requested) Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Certificate by Borrower Exhibit E - Form of Opinion of Counsel to the Borrower Exhibit F - Form of Compliance Certificate iii CREDIT AGREEMENT dated as of November 7, 2001 among MICHIGAN CONSOLIDATED GAS COMPANY, a Michigan corporation (the "Borrower"), the banks, financial institutions and other institutional lenders (the "Initial Lenders") listed on the signature pages hereof, and BANK ONE, NA (Main Office - Chicago) ("Bank One"), as Administrative Agent (the "Agent") and BARCLAYS BANK PLC, as Co-Syndication Agent, and SALOMON SMITH BARNEY INC., as Co-Syndication Agent for the Lenders (as hereinafter defined). PRELIMINARY STATEMENTS. The Borrower has requested that the Initial Lenders enter into this Agreement, and the Initial Lenders have indicated their willingness to enter into this Agreement upon the terms and conditions stated herein. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto hereby agree, subject to the satisfaction of the conditions set forth in Article III, 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 (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling", "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or 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. "Agent's Account" means the account of the Agent maintained by the Agent at Bank One with its office at One Bank One Plaza, Suite 0634, Chicago, IL 60670, Account No. 4811-5286-0000, Attention: Gloria Steinbrenner. "Applicable Lending Office" means, with respect to each Lender, such Lender's Domestic Lending Office in the case of a Base Rate Advance and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance. "Applicable Margin" means, as of any date, (i) with respect to all Base Rate Advances, 0.0% per annum, and (ii) with respect to all Eurodollar Rate Advances, the percentage rate per annum which is applicable at such time with respect to Eurodollar Rate Advances as set forth in the Pricing Schedule. "Applicable Percentage" means, as of any date, the percentage rate per annum at which Facility Fees are accruing on each Lender's Commitment (without regard to usage) at such time as set forth in the Pricing Schedule. 1 "Applicable Utilization Fee Rate" means, as of any date, the percentage rate per annum at which Utilization Fees accrue on all Revolving Credit Advances at such time as set forth in the Pricing Schedule. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit C hereto. "Audited Statements" means the Consolidated balance sheets of the Borrower as at December 31, 2000, and the related Consolidated statements of income and cash flows of the Borrower for the fiscal year then ended, accompanied by the opinion thereon of the Borrower's independent public accountants. "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of: (a) the rate of interest established by Bank One in New York, New York, from time to time, as Bank One's base rate; (b) the sum (adjusted to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of (i) 1/2 of 1% per annum, plus (ii) the rate obtained by dividing (A) 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 such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Bank One 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 Bank One from three New York certificate of deposit dealers of recognized standing selected by Bank One, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for Bank One with respect to liabilities consisting of or including (among other liabilities) three-month U.S. dollar non-personal time deposits in the United States, plus (iii) the average during such three-week period of the annual assessment rates estimated by Bank One for determining the then current annual assessment payable by Bank One to the Federal Deposit Insurance Corporation (or any successor) for insuring U.S. dollar deposits of Bank One in the United States; and (c) 1/2 of one percent per annum above the Federal Funds Rate. 2 "Base Rate Advance" means a Revolving Credit Advance that bears interest as provided in Section 2.06(a)(i). "Borrower" has the meaning specified in the recital of parties to this Agreement. "Borrowing" means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type and (in the case of Eurodollar Rate Advances) having the same Interest Period, made by each of the Lenders pursuant to Section 2.01. "Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City or Chicago, Illinois and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Capitalization" means the sum of (a) total net worth plus (b) Consolidated Debt (other than Debt outstanding pursuant to the issuance of Debt with maturities of no more than 365 days) plus (c) an amount equal to the restructuring charges relating to the merger of MCN Energy Group Inc. with and into Enterprises. "Commitment" has the meaning specified in Section 2.01. "Confidential Information" means information that the Borrower furnishes to the Agent or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Agent or such Lender from a source other than the Borrower. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Convert", "Conversion" and "Converted" each refers to a conversion of Revolving Credit Advances of one Type into Revolving Credit Advances of the other Type pursuant to Section 2.07 or 2.08. "Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 60 days incurred in the ordinary course of such Person's business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (g) all obligations of such Person in respect of Hedge Agreements, (h) all Debt of others referred to in clauses (a) through (g) above or clause (i) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (1) to pay or purchase such Debt or to advance or supply funds for the 3 payment or purchase of such Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, and (i) all Debt referred to in clauses (a) through (h) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. See the definition of "Nonrecourse Debt" below. "Declining Lender" has the meaning specified in Section 2.16. "DECO" means The Detroit Edison Company, a Michigan corporation wholly owned by DTE Energy. "Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Designating Lender" has the meaning specified in Section 8.07(h). "Disclosed Litigation" has the meaning specified in Section 3.01(b). "Domestic Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "DTE Energy" means DTE Energy Company, a Michigan corporation. "EBITDA" means, for any period, net income (or net loss) plus the sum of (a) interest expense, (b) income tax expense, (c) depreciation expense and (d) amortization expense, in each case determined in accordance with GAAP for such period. "Effective Date" has the meaning specified in Section 3.01. "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender; (iii) a commercial bank organized under the laws of the United States, or any State thereof, and having a combined capital and surplus of at least $250,000,000; (iv) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having a combined capital and surplus of at least $250,000,000; (v) a commercial bank organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having a 4 combined capital and surplus of at least $250,000,000, so long as such bank is acting through a branch or agency located in the United States; (vi) the central bank of any country that is a member of the Organization for Economic Cooperation and Development; (vii) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and having a combined capital and surplus of at least $250,000,000; and (viii) any other Person approved by the Agent and, so long as no Event of Default shall be continuing, the Borrower, such approval not to be unreasonably withheld or delayed by either party; provided, however, that neither the Borrower nor an Affiliate of the Borrower shall qualify as an Eligible Assignee. "Enterprises" means DTE Enterprises, Inc., a Michigan corporation wholly owned by DTE Energy. "Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "Environmental Law" means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of the Borrower's controlled group, or under common control with the Borrower, within the meaning of Section 414 of the Internal Revenue Code. "ERISA Event" means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to 5 subsection (2) of such Section) are met with a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the Borrower or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Plan. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "Eurodollar Rate" means, for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount approximately equal to such Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. The Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.07. "Eurodollar Rate Advance" means a Revolving Credit Advance that bears interest as provided in Section 2.06(a)(ii). 6 "Eurodollar Rate Reserve Percentage" for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Excluded Hedging Debt" means all Debt arising under any Hedge Agreement in respect of fluctuations in commodity prices. "Existing Credit Agreement" means that certain Credit Agreement, dated as of July 11, 2001, among the Borrower, the lenders parties thereto, and Bank One, NA, as administrative agent, as the same has been amended, restated, supplemented or otherwise modified from time to time. "Extending Lenders" has the meaning specified in Section 2.16. "Facility Fee" has the meaning specified in Section 2.03(a). "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, for the next preceding 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 of the quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. "Financial Officer" of any Person means the chief executive officer, president, chief financial officer, any vice president, controller, assistant controller, treasurer or any assistant treasurer of such Person. "GAAP" has the meaning specified in Section 1.03. "Hazardous Materials" means (a) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law. 7 "Hedge Agreements" means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements. "Insufficiency" means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to Eurodollar Rate Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, as the Borrower may, upon notice received by the Agent not later than 10:00 A.M. (Chicago time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: (i) the Borrower may not select any Interest Period that ends after the Revolver Termination Date then in effect; (ii) Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration; (iii) 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 be extended to occur on the next succeeding Business Day, provided, however, 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 (iv) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Lenders" means the Initial Lenders and each Person that shall become a party hereto pursuant to Section 8.07(a), (b) and (c) and, except when used in reference to a Revolving Credit Advance, a Borrowing, a Note, a Commitment or a related term. "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien 8 or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Documents" means this Agreement and the Notes. "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower and its Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower and its Subsidiaries taken as a whole, (b) the rights and remedies of the Agent or any Lender under any Loan Document or (c) the ability of the Borrower to perform its obligations under any Loan Document to which it is a party. "Maximum Facility Amount" means $300,000,000. "Moody's" means Moody's Investors Service, Inc. "Moody's Rating" is defined in the Pricing Schedule. "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or any ERISA Affiliate and at least one Person other than the Borrower and the ERISA Affiliates or (b) was so maintained and in respect of which the Borrower or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Nonrecourse Debt" means Debt of the Borrower or any of its Subsidiaries in respect of which no recourse may be had by the creditors under such Debt against the Borrower or such Subsidiary in its individual capacity or against the assets of the Borrower or such Subsidiary, other than assets which were purchased by the Borrower or such Subsidiary with the proceeds of such Debt. "Note" has the meaning specified in Section 2.17. "Notice of Borrowing" has the meaning specified in Section 2.02(a). "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited 9 liability company or other entity, or a government or any political subdivision or agency thereof. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Pricing Schedule" means the Pricing Schedule identifying the Applicable Margin, the Applicable Percentage and the Applicable Utilization Fee Rate attached hereto identified as such. "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned by such Person. "Receivables Purchase Documents" means those documents entered into in connection with any series of receivables purchase or sale agreements generally consistent with terms contained in comparable structured finance transactions pursuant to which the Borrower or any of its Subsidiaries, in their respective capacities as sellers or transferors of any receivables, sell or transfer to SPCs all of their respective rights, title and interest in and to certain receivables for further sale or transfer to other purchasers of or investors in such assets (and the other documents, instruments and agreements executed in connection therewith), as any such agreements may be amended, restated, supplemented or otherwise modified from time to time, or any replacement or substitution therefor "Receivables Purchase Facility" means any securitization facility made available to the Borrower or any of its Subsidiaries, pursuant to which receivables of the Borrower or any of its Subsidiaries are transferred to one or more SPCs, and thereafter to certain investors, pursuant to the terms and conditions of the Receivables Purchase Documents "Reference Banks" means Citibank, N.A., Barclays Bank PLC and Bank One, NA (Main Office - Chicago). "Register" has the meaning specified in Section 8.07(d). "Required Lenders" means at any time Lenders owed more than fifty percent (50%) of the then aggregate unpaid principal amount of the Revolving Credit Advances owing to Lenders, or, if no such principal amount is then outstanding, Lenders having more than fifty percent (50%) of the Commitments. "Revolver Termination Date" means the earlier of (a) November 5, 2002 or, if extended pursuant to Section 2.16, the date that is 364 days after the Revolver Termination Date then in effect, and (b) the date of termination in whole of the Commitments pursuant to Section 2.04 or 6.01; provided, however, that the Revolver Termination Date of any Lender that is a Declining Lender to any requested extension pursuant to Section 2.16 shall be the Revolver Termination Date in effect immediately prior to the date on which such extension was granted for all purposes of this Agreement. 10 "Revolving Credit Advance" means an advance by a Lender to the Borrower as part of a Borrowing, and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a "Type" of Revolving Credit Advance). "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. "S&P Rating" is defined in the Pricing Schedule. "SEC Reports" means the following reports and financial statements of the Borrower: (i) the Borrower's Annual Report on Form 10-K for the year ended December 31, 2000, as filed with or sent to the Securities and Exchange Commission, including therein the Audited Statements of the Borrower; and (ii) the Borrower's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, including therein the Unaudited Statements of the Borrower, and the Borrower's Current Reports on Form 8-K, if any, provided to the Lenders prior to the date of this Agreement. "SPC" means any special purpose entity established for the purpose of purchasing receivables in connection with a receivables securitization transaction permitted under the terms of this Agreement "SPV" has the meaning specified in Section 8.07(h). "Significant Subsidiary" means any Subsidiary of the Borrower (A) the total assets (after intercompany eliminations) of which exceed 30% of the total assets of the Borrower and its Subsidiaries or (B) the net worth of which exceeds 30% of the Consolidated Net Worth of the Borrower and its Subsidiaries, in each case as shown on the audited consolidated financial statements of the Borrower as of the end of the fiscal year immediately preceding the date of determination. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or any ERISA Affiliate and no Person other than the Borrower and the ERISA Affiliates or (b) was so maintained and in respect of which the Borrower or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly owned or controlled by such Person, by such Person 11 and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Unaudited Statements" means the unaudited condensed Consolidated balance sheets of the Borrower, as at June 30, 2001, and the related condensed Consolidated statements of income and cash flows of the Borrower for the six-month period then ended, duly certified by a Financial Officer of the Borrower. "Utilization Fee" has the meaning specified in Section 2.03(c). "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. "Withdrawal Liability" has the meaning specified in Part I of Subtitle E of Title IV of ERISA. SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". 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 4.01(e) ("GAAP"). ARTICLE II: AMOUNTS AND TERMS OF THE REVOLVING CREDIT ADVANCES SECTION 2.01. The Revolving Credit Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Credit Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until the Revolver Termination Date in an aggregate amount not to exceed at any time outstanding the amount set forth opposite such Lender's name on Schedule 1 hereto or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by the Agent pursuant to Section 8 .07(d), as such amount may be reduced pursuant to Section 2.04 (such Lender's "Commitment"). Each Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Revolving Credit Advances of the same Type made on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, the Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.09 and reborrow under this Section 2.01. SECTION 2.02. Making the Revolving Credit Advances. (a) Each Borrowing shall be made on notice, given not later than 10:00 A.M. (Chicago time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances, or 9:00 A.M. (Chicago time) the Business Day of the proposed 12 Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to the Agent, which shall give to each Lender prompt notice thereof by telecopier or telex. Each such notice of a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed immediately in writing, or telecopier or telex in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Revolving Credit Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Revolving Credit Advance. Each Lender shall, before 11:00 A.M. (Chicago time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Agent at the Agent's Account, in same day funds, such Lender's ratable portion of such Borrowing. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower at the Agent's address referred to in Section 8.02. (b) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.07 or 2.11 and (ii) the Eurodollar Rate Advances may not be outstanding as part of more than ten separate Borrowings. (c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, 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 for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any 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 to fund the Revolving Credit Advance to be made by such Lender as part of such Borrowing when such Revolving Credit Advance, as a result of such failure, is not made on such date. (d) Unless the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender's ratable portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Revolving Credit Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's Revolving Credit Advance as part of such Borrowing for purposes of this Agreement. 13 (e) The failure of any Lender to make the Revolving Credit Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Revolving Credit Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Advance to be made by such other Lender on the date of any Borrowing. SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay to the Agent for the account of each Lender a facility fee (the "Facility Fee") on the aggregate amount of such Lender's Commitment from the date hereof in the case of each Initial Lender and from effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until all of the Revolving Credit Advances have been paid in full and the Commitments under this Agreement have been terminated at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, and on the Revolving Loan Termination Date. (b) Agent's Fees. The Borrower shall pay to the Agent for its own account such fees as may from time to time be agreed between the Borrower and the Agent. (c) Utilization Fee. If the aggregate outstanding amount of all Revolving Credit Advances hereunder exceeds thirty-three percent (33%) of the aggregate amount of all Commitments then in effect on such date (or, if the Commitments have been terminated, the aggregate amount of all Commitments in effect immediately prior to such termination), the Borrower will pay to the Agent for the ratable benefit of the Lenders a utilization fee (the "Utilization Fee") at a per annum rate equal to the Applicable Utilization Fee Rate in effect from time to time payable on the aggregate outstanding amount of all Revolving Credit Advances on such date, payable in arrears quarterly on the last day of each March, June, September and December, and on the Revolving Loan Termination Date. SECTION 2.04. Termination or Reduction of the Commitments. (a) The Commitments shall be automatically terminated on the Revolver Termination Date. (b) The Borrower shall have the right, upon at least three Business Days' notice to the Agent, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. Once terminated, a Commitment or portion thereof may not be reinstated. SECTION 2.05. Repayment of Revolving Credit Advances. The Borrower shall repay to the Agent for the ratable account of the Lenders on the Revolver Termination Date the aggregate principal amount of the Revolving Credit Advances then outstanding. SECTION 2.06. Interest on Revolving Credit Advances. (a) Scheduled Interest. The Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance owing to each Lender from the date of such Revolving Credit Advance until such principal amount shall be paid in full, at the following rates per annum: (i) Base Rate Advances. During such periods as such Revolving Credit Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the 14 Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full. (ii) Eurodollar Rate Advances. During such periods as such Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Revolving Credit Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Revolving Credit Advance plus (y) the Applicable Margin in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full. (b) Default Interest. (i) Upon the occurrence and during the continuance of an Event of Default, the Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Revolving Credit Advance pursuant to clause (a)(i) or (a)(ii) above, and (ii) the Borrower shall pay, to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above. SECTION 2.07. Interest Rate Determination. (a) Each Reference Bank agrees to furnish to the Agent timely information for the purpose of determining each Eurodollar Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks. The Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.06(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.06(a)(ii). (b) If, with respect to any Eurodollar Rate Advances, the Required Lenders notify the Agent that the Eurodollar Rate for any Interest Period for such Eurodollar Rate Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrower and the Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. 15 (c) If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such Eurodollar Rate Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances. (d) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Eurodollar Rate Advances shall automatically Convert into Base Rate Advances. (e) Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended. (f) If fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances: (i) the Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances, (ii) with respect to Eurodollar Rate Advances, each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Eurodollar Rate Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and (iii) the obligation of the Lenders to make Eurodollar Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.08. Optional Conversion of Revolving Credit Advances. The Borrower may on any Business Day, upon notice given to the Agent not later than 10:00 A.M. (Chicago time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and 2.11, Convert all Revolving Credit Advances of one Type comprising the same Borrowing into Revolving Credit Advances of the other Type (it being understood that such Conversion of a Revolving Credit Advance or of its Interest Period does not constitute a repayment or prepayment of such Revolving Credit Advance); provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result in more separate Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Revolving Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each 16 such Eurodollar Rate Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower. SECTION 2.09. Prepayments of Revolving Credit Advances. (a) Optional Prepayment. The Borrower may on any Business Day, upon notice given to the Agent not later than 10:00 A.M. (Chicago time), (i) on the same day for Base Rate Advances and (ii) on the second Business Day prior to the prepayment in the case of Eurodollar Rate Advances stating the proposed date and aggregate principal amount of the prepayment (and if such notice is given the Borrower shall) prepay the outstanding principal amount of the Revolving Credit Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c). (b) Mandatory Prepayment. The Borrower shall, upon five Business Days notice from the Agent given at the request or with the consent of the Required Lenders, prepay the aggregate principal amount outstanding plus all interest thereon and all other amounts payable hereunder or under the Notes, in the event that: (i) any Person or two or more Persons acting in concert (other than DTE Energy or any of its Subsidiaries) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the Borrower (or other securities convertible into such Voting Stock) representing 20% or more of the combined voting power of all Voting Stock of the Borrower; or (ii) any Person or two or more Persons acting in concert (other than DTE Energy or any of its Subsidiaries) shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Borrower. SECTION 2.10. Increased Costs. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation 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), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances (excluding for purposes of this Section 2.10 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.13 shall govern) and (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender is organized or has its Applicable Lending Office or any political subdivision thereof), then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the 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, submitted to the Borrower and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not 17 having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type, then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrower shall pay to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder. A certificate as to such amounts submitted to the Borrower and the Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error. (c) In the event that a Lender demands payment from the Borrower for amounts owing pursuant to subsection (a) or (b) of this Section 2.10, the Borrower may, upon payment of such amounts and subject to the requirements of Sections 8.04 and 8.07, substitute for such Lender another financial institution, which financial institution shall be an Eligible Assignee and shall assume the Commitments of such Lender and purchase the Revolving Credit Advances held by such Lender in accordance with Section 8.07, provided, however, that (i) no Default shall have occurred and be continuing, (ii) the Borrower shall have satisfied all of its obligations in connection with the Loan Documents with respect to such Lender, and (iii) if such assignee is not a Lender, (A) such assignee is acceptable to the Agent and (B) the Borrower shall have paid the Agent a $3,000 administrative fee. SECTION 2.11. Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, (i) each Eurodollar Rate Advance will automatically, upon such demand, Convert into a Base Rate Advance or a Revolving Credit Advance that bears interest at the rate set forth in Section 2.06(a)(i), as the case may be, and (ii) the obligation of the Lenders to make Eurodollar Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.12. Payments and Computations. (a) The Borrower shall make each payment hereunder and under the Notes not later than 10:00 A.M. (Chicago time) on the day when due in U.S. dollars to the Agent at the Agent's Account in same day funds and without set off, deduction or counterclaim. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest, facility fees or the Utilization Fee ratably (other than amounts payable pursuant to Section 2.10, 2.13 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments 18 hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder or under the Note held by such Lender, to charge from time to time against any or all of the Borrower's accounts with such Lender any amount so due. (c) All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of facility fees and the Utilization Fee shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, facility fees or the Utilization Fee are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) Whenever any payment hereunder or under the Notes 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, facility fee or the Utilization Fee, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (e) Unless the 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 Agent may assume that the Borrower has made such payment in full to the Agent on such date and the 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 Agent, each Lender shall repay to the 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 Agent, at the Federal Funds Rate. SECTION 2.13. Taxes. (a) Any and all payments by the Borrower hereunder or under the Notes shall be made, in accordance with Section 2.12, free and clear of and without deduction for any and 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 the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction under the laws of which such Lender or the 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 in lieu of net income taxes, 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 19 liabilities in respect of payments hereunder or under the Notes 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 Note to any Lender or the 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 2.13) such Lender 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 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 the Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) The Borrower shall indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any taxes imposed by any jurisdiction on amounts payable under this Section 2.13) imposed on or paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrower shall furnish to the Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing payment thereof. In the case of any payment hereunder or under the Notes by or on behalf of the Borrower through an account or branch outside the United States or by or on behalf of the Borrower by a payor that is not a United States person, if the Borrower determines that no Taxes are payable in respect thereof, the Borrower shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel acceptable to the Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as requested in writing by the Borrower (but only so long as such Lender remains lawfully able to do so), shall provide each of the Agent and the Borrower with two original Internal Revenue Service Form W-8BEW or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes. If the forms provided by a Lender at the time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be 20 considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Lender assignee becomes a party to this Agreement, the Lender assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service Form W8BEW or W-8ECI, that the Lender reasonably considers to be confidential, the Lender shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information. (f) For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form described in Section 2.13(e) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided, or if such form otherwise is not required under the first sentence of subsection (e) above), such Lender shall not be entitled to indemnification under Section 2.13(a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender become subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes. (g) In the event that a Lender demands payment from the Borrower for amounts owing pursuant to subsection (a) or (b) of this Section 2.13, the Borrower may, upon payment of such amounts and subject to the requirements of Sections 8.04 and 8.07, substitute for such Lender another financial institution, which financial institution shall be an Eligible Assignee and shall assume the Commitments of such Lender and purchase the Revolving Credit Advances held by such Lender in accordance with Section 8.07, provided, however, that (i) no Default shall have occurred and be continuing, (ii) the Borrower shall have satisfied all of its obligations in connection with the Loan Documents with respect to such Lender, and (iii) if such assignee is not a Lender, (A) such assignee is acceptable to the Agent and (B) the Borrower shall have paid the Agent a $3,000 administrative fee. SECTION 2.14. 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 Revolving Credit Advances owing to it (other than pursuant to Section 2.10, 2.13 or 8.04(c)) in excess of its ratable share of payments on account of the Revolving Credit Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Revolving Credit Advances 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 21 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 2.14 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. SECTION 2.15. Use of Proceeds. The proceeds of the Revolving Credit Advances shall be available (and the Borrower agrees that it shall use such proceeds) solely for general corporate purposes, including commercial paper liquidity, of the Borrower and its Subsidiaries. SECTION 2.16. Extensions of Revolver Termination Date. No earlier than 45 days and no later than 30 days prior to the Revolver Termination Date in effect at any time, the Borrower may, by written notice to the Agent, request that such Revolver Termination Date be extended for a period of 364 days. Such request shall be irrevocable and binding upon the Borrower. The Agent shall promptly notify each Lender of such request. If a Lender agrees, in its individual and sole discretion, to so extend its Commitment (an "Extending Lender"), it shall deliver to the Agent a written notice of its agreement to do so no earlier than 30 days and no later than 20 days prior to such Revolver Termination Date and the Agent shall notify the Borrower of such Extending Lender's agreement to extend its Commitment no later than 15 days prior to such Revolver Termination Date. The Commitment of any Lender that fails to accept or respond to the Borrower's request for extension of the Revolver Termination Date (a "Declining Lender") shall be terminated on the Revolver Termination Date originally in effect (without regard to any extension by other Lenders) and on such Revolver Termination Date the Borrower shall pay in full the principal amount of all Revolving Credit Advances owing to such Declining Lender, together with accrued interest thereon to the date of such payment of principal and all other amounts payable to such Declining Lender under this Agreement. The Agent shall promptly notify each Extending Lender of the aggregate Commitments of the Declining Lenders. The Extending Lenders, or any of them, may offer to increase their respective Commitments by an aggregate amount up to the aggregate amount of the Declining Lenders' Commitments and any such Extending Lender shall deliver to the Agent a notice of its offer to so increase its Commitment no later than 15 days prior to such Revolver Termination Date. To the extent of any shortfall in the aggregate amount of extended Commitments, the Borrower shall have the right to require any Declining Lender to assign in full its rights and obligations under this Agreement to an Eligible Assignee designated by the Borrower and acceptable to the Agent, that agrees to accept all of such rights and obligations (a "Replacement Lender"), provided that (i) such increase and/or such assignment is otherwise in compliance with Section 8.07 (provided that the $3000 processing and recording fee in respect of such assignment shall be payable by the Borrower), (ii) such Declining Lender receives payment in full of the principal amount of all Revolving Credit Advances owing to such Declining Lender, together with accrued interest thereon to the date of such payment of principal and all other amounts payable to such Declining Lender under this Agreement, and (iii) any such increase shall be effective on the Revolver Termination Date in effect at the time the Borrower requests such extension and any such assignment shall be effective on the date specified by the Borrower and agreed to by the Replacement Lender and the Agent. If Extending Lenders and Replacement Lenders provide Commitments in an aggregate amount at least equal to 51% of the aggregate amount of the Commitments outstanding 30 days prior to the Revolver Termination Date in effect at the time 22 the Borrower requests such extension, the Revolver Termination Date shall be extended by 364 days for such Extending Lenders. SECTION 2.17. Noteless Agreement; Evidence of Indebtedness. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Revolving Credit Advance made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (b) The Agent shall also maintain accounts in which it will record (i) the date and the amount of each Revolving Credit Advance made hereunder and the Interest Period, if any, applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, (iii) the effective date and amount of each Assignment and Acceptance delivered to and accepted by it and the parties thereto pursuant to Section 8.07, (iv) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof, and (v) all other appropriate debits and credits as provided in this Agreement, including, without limitation, all fees, charges, expenses and interest. (c) The entries maintained in the accounts maintained pursuant to clauses (a) and (b) above shall be prima facie evidence of the existence and amounts of the obligations hereunder and under the Notes therein recorded; provided, however, that the failure of the Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay such obligations in accordance with their terms. (d) Any Lender may request that its Revolving Credit Advances be evidenced by a promissory note representing its Revolving Credit Advances substantially in the form of Exhibit A (each, a "Note"). In such event, the Borrower shall prepare, execute and deliver to such Lender such Note payable to the order of such Lender. Thereafter, the Revolving Credit Advances evidenced by each such Note and interest thereon shall at all times (including after any assignment pursuant to Section 8.07) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 8.07, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Revolving Credit Advances once again be evidenced as described in clauses (a) and (b) above. ARTICLE III: CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01. Section 2.01 of this Agreement shall become effective on and as of the date hereof (the "Effective Date"), provided that the following conditions precedent have been satisfied on such date: (a) There shall have occurred no Material Adverse Change since June 30, 2001. 23 (b) There shall exist no action, suit, investigation, litigation or proceeding affecting the Borrower or any of its Significant Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect other than the matters disclosed or contemplated in the SEC Reports (the "Disclosed Litigation") or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the transactions contemplated hereby and there shall have been no adverse change in the status, or financial effect on the Borrower or any of its Significant Subsidiaries of the Disclosed Litigation from that disclosed or contemplated in the SEC Reports. (c) The Lenders shall have been given such access, as such Lenders have reasonably requested, to the management, records, books of account, contracts and properties of the Borrower and its Significant Subsidiaries as they shall have requested. (d) All governmental and third party consents and approvals necessary in connection with the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lenders that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated by the Loan Documents. (e) The Borrower shall have notified each Lender and the Agent in writing as to the proposed Effective Date. (f) The Borrower shall have paid all accrued fees and reasonable expenses of the Agent and the Lenders with respect to this Agreement for which the Agent shall have made reasonable demand in accordance with Section 8.04 on or prior to the Effective Date. (g) On the Effective Date, the following statements shall be true and the Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated the Effective Date, stating that: (i) The representations and warranties contained in Section 4.01 are correct on and as of the Effective Date, and (ii) No event has occurred and is continuing that constitutes a Default. (iii) The Borrower shall have delivered a certificate, substantially in form of Exhibit D hereto, signed on behalf of the Borrower by a Financial Officer of the Borrower. (h) The Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for any Notes requested by the Lenders) in sufficient copies for each Lender: (i) Notes, if any, to the order of each Lender requesting the issuance of a Note as of the Closing Date pursuant to Section 2.17. 24 (ii) Certified copies of the resolutions of the Board of Directors of the Borrower approving each Loan Document to which it is a party, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to each Loan Document to which it is a party. (iii) A certificate of the Corporate Secretary or an Assistant Corporate Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign each Loan Document to which it is a party and the other documents to be delivered hereunder or thereunder. (iv) Copies of the SEC Reports. (v) A favorable opinion of T.A. Hughes, the General Counsel of the Borrower, substantially in the form of Exhibit E hereto and as to such other matters as any Lender through the Agent may reasonably request. (vi) Evidence satisfactory to the Agent that the Existing Credit Agreement shall have been or shall simultaneously with the initial Revolving Credit Advance hereunder be terminated (except for those provisions that expressly survive the termination thereof) and all loans outstanding and other amounts owed to the lenders or agents thereunder shall have been simultaneously with the initial Revolving Credit Advance hereunder be paid in full. SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation of each Lender to make a Revolving Credit Advance on the occasion of each Borrowing shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Borrowing (a) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing such statements are true): (i) the representations and warranties contained in Section 4.01 (other than the representations and warranties contained in the last sentence of Section 4.01(e) and in Section 4.01(f)) are correct on and as of the date of such Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, and (ii) no event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom, that constitutes a Default; and (b) the Agent shall have received such other approvals, opinions or documents as any Lender through the Agent may reasonably request. SECTION 3.03. Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by 25 this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto. The Agent shall promptly notify the Lenders of the occurrence of the Effective Date. ARTICLE IV: REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. (b) The execution, delivery and performance by the Borrower of the Loan Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's charter or by-laws or (ii) law or any contractual restriction binding on or affecting the Borrower. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the Borrower of this Agreement, the Notes or any other Loan Document to which it is a party. (d) This Agreement has been, and each of the Notes and each of the other Loan Documents to which it is a party when delivered hereunder will have been, duly executed and delivered by the Borrower. This Agreement is, and each of the Notes and each of the other Loan Documents to which it is a party when delivered hereunder will be, the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their respective terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors rights generally. (e) The Audited Statements of the Borrower and the Unaudited Statements of the Borrower, copies of each of which have been furnished to each Lender, fairly present, subject in the case of Unaudited Statements to normal year-end audit adjustments, the Consolidated financial condition, results of operations and cash flows of the relevant Persons and entities, as at the dates and for the periods therein indicated, all in accordance with generally accepted accounting principles consistently applied. Since June 30, 2001, there has been no Material Adverse Change, except as shall have been disclosed or contemplated in the SEC Reports. (f) There is no pending or threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Borrower or any of the Significant Subsidiaries before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of this Agreement, any Note or any other Loan Document or the consummation of the 26 transactions contemplated hereby and there has been no adverse change in the status of any Disclosed Litigation, or its financial effect on the Borrower or any of the Significant Subsidiaries from that disclosed or contemplated in the SEC Reports. (g) The operations and properties of the Borrower and each of the Significant Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental Permits has been resolved without ongoing obligations or costs, except as disclosed or contemplated in the SEC Reports, and no circumstances exist that could be reasonably likely to (i) form the basis of an Environmental Action against the Borrower or any of the Significant Subsidiaries or any of their properties that could have a Material Adverse Effect or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law that could have a Material Adverse Effect. (h) No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan. (i) Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan, copies of which have been filed with the Internal Revenue Service, is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no material adverse change in such funding status. (j) Neither the Borrower nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan. (k) Neither the Borrower nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA. (l) Except as set forth in the financial statements referred to in subsection (e) above, the Borrower and its Subsidiaries have no material liability with respect to "expected post retirement benefit obligations" within the meaning of Statement of Financial Accounting Standards No. 106. (m) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Revolving Credit Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock; and after applying the proceeds of each Revolving Credit Advance hereunder, margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System) constitutes less than twenty-five percent (25%) of the value of those 27 assets of the Borrower and its Subsidiaries which are subject to any limitation on sale or pledge, or any other restriction hereunder. (n) Neither the Borrower nor any of its Subsidiaries is, or after the making of any Revolving Credit Advance or the application of the proceeds or repayment thereof, or the consummation of any of the other transactions contemplated hereby, will be, an "investment company", or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company" (within the meaning of the Investment Company Act of 1940, as amended). (o) The Borrower is a "public utility company" and a "subsidiary company" of MichCon Holdings, Inc., which is a "holding company" and a "subsidiary company" of Enterprises, which is a "holding company" and "subsidiary company" of DTE Energy, which is a "holding company" as such terms are defined in the Public Utility Holding Company Act of 1935, as amended (the "1935 Act"), and such "holding companies" and the Borrower are currently exempt from the provisions of the 1935 Act (except Section 9 thereof). ARTICLE V: COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants. So long as any Revolving Credit Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will: (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and Environmental Laws. (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors. (c) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties (including customary self-insurance) in the same general areas in which the Borrower or such Subsidiary operates. (d) Preservation of Corporate Existence, Etc. Preserve and maintain its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Borrower shall not be required to preserve any right or franchise if the Board of 28 Directors of the Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower and that the loss thereof is not disadvantageous in any material respect to the Borrower or the Lenders. (e) Visitation Rights. At any reasonable time and from time to time, permit the Agent or any of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any of the Significant Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of the Significant Subsidiaries with any of their officers or directors and with their independent certified public accountants. (f) Keeping of Books. Keep, and cause each of its Significant Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time. (g) Maintenance of Properties, Etc. Subject to clause (d) above, maintain and preserve, and cause each of its Significant Subsidiaries to maintain and preserve, all of their respective properties that are used or useful in the conduct of their respective businesses in good working order and condition, ordinary wear and tear excepted. (h) Reporting Requirements. Furnish to the Lenders: (i) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower, Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter; (ii) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the Annual Report on Form 10-K for such year for the Borrower and its Consolidated Subsidiaries, as filed with or sent to the Securities and Exchange Commission, containing the Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, in each case accompanied by an opinion by Deloitte & Touche LLP or other independent public accountants acceptable to the Required Lenders; (iii) together with the financial statements required under clauses (i) or (ii) above, a compliance certificate in substantially the form of Exhibit F signed by a Financial Officer of the Borrower showing the then current information and calculations necessary to determine (i) the Applicable Margin, the Applicable Percentage and the Applicable Utilization Fee Rate and compliance with this 29 Agreement and stating that no Event of Default or Default exists, or if any Event of Default or Default exists, stating the nature and status thereof; (iv) as soon as possible and in any event within five days after the occurrence of each Default continuing on the date of such statement, a statement of a Financial Officer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto; (v) as soon as possible and in any event within five days after any change in the Borrower's Moody's Rating or S&P Rating, notice thereof; (vi) promptly after the sending or filing thereof copies of all reports and registration statements that the Borrower or any Subsidiary filed with the Securities and Exchange Commission or any national securities exchange; (vii) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Borrower or any of its Subsidiaries of the type described in Section 4.01(f); and (viii) such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. SECTION 5.02. Negative Covenants. At all times on and after the Effective Date so long as any Revolving Credit Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not: (a) Liens, Etc. Create, incur, or suffer to exist any Lien in, of or on the Property of the Borrower or any of its Subsidiaries, except: (i) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (ii) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than sixty (60) days past due or which are 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; (iii) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation; (iv) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to 30 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 its Subsidiaries; (v) Liens described in the SEC Reports; (vi) Liens pursuant to the Borrower's Indenture of Mortgage and Deed of Trust, dated as of March 1, 1944, as restated as of July 15, 1989, as supplemented, as described therein; (vii) Liens pursuant to the Borrower's Senior Indenture, dated as of June 1, 1998, as supplemented, as described therein, in connection with the issuance of debt securities secured by mortgage bonds; and (viii) Liens, including, without limitation, Liens arising in connection with a Receivables Purchase Facility, securing Debt of the Borrower (other than Debt of the Borrower owed to any Subsidiary) and/or securing Debt of the Borrower's Subsidiaries (other than Debt of any Subsidiary owed to the Borrower or any other Subsidiary), in an aggregate outstanding amount not to exceed ten percent (10%) of the consolidated assets of the Borrower and its Subsidiaries at any time. (b) Mergers, Etc. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, or permit any Significant Subsidiary to do so, except that (i) any Significant Subsidiary may merge or consolidate with or into any other Significant Subsidiary, (ii) any Significant Subsidiary may merge into or dispose of assets to the Borrower, and (iii) the Borrower may merge or consolidate with (a) DECO, so long as the Borrower shall be the surviving entity or DECO shall expressly assume the obligations under this Agreement or (b) any other Person so long as the Borrower shall be the surviving entity and has, after giving effect to such merger or consolidation, senior unsecured Debt outstanding rated at least BBB- by S&P and Baa3 by Moody's; provided, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom. (c) Change in Nature of Business. Make, or permit any of its Significant Subsidiaries to make, any material change in the nature of its business as carried on the date hereof, other than as disclosed or contemplated in the SEC Reports. (d) Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles. ARTICLE VI: EVENTS OF DEFAULT SECTION 6.01. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing: 31 (a) The Borrower shall fail to pay any principal of any Revolving Credit Advance when the same becomes due and payable; or the Borrower shall fail to pay any interest on any Revolving Credit Advance or make any other payment of fees or other amounts payable under this Agreement or any Note within three Business Days after the same becomes due and payable; or (b) Any representation or warranty made by the Borrower herein, by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or (c) (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 2.09(b), 5.01(d), (e) or (h) or 5.02, or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such failure shall remain unremedied for 10 days after written notice thereof shall have been given to the Borrower by the Agent or any Lender; or (d) The Borrower or any of its Significant Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal or notional amount of at least $25,000,000 in the aggregate (but excluding Debt outstanding hereunder and Nonrecourse Debt) of the Borrower or such Significant Subsidiary (as the case may be), when the same becomes due and payable (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 agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is 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 or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (e) The Borrower or any of its Significant Subsidiaries 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 a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any of its Significant Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or 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, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the 32 Borrower or any of its Significant Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or (f) Any judgment or order for the payment of money, individually or in the aggregate, in excess of $25,000,000 shall be rendered against the Borrower or any of its Significant Subsidiaries 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 10 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 (g) Any non-monetary judgment or order shall be rendered against the Borrower or any of its Significant Subsidiaries that could be reasonably expected to have a Material Adverse Effect, and there shall be any period of 10 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) (i) any Person or "group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) shall either (A) acquire beneficial ownership of more than 25% of any outstanding class of common stock of DTE Energy having ordinary voting power in the election of directors of DTE Energy, or (B) obtain the power (whether or not exercised) to elect a majority of DTE Energy's directors, or (ii) DTE Energy shall at any time cease to hold 100% of the Voting Stock of the Borrower; or (i) The Borrower or any of its ERISA Affiliates shall incur, or, in the reasonable opinion of the Required Lenders, shall be reasonably likely to incur liability in excess of $25,000,000 individually or in the aggregate as a result of one or more of the following: (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan; or (j) The Borrower and its Subsidiaries, on a Consolidated basis, shall at any time cease to: (i) Maintain a ratio of Consolidated EBITDA to cash interest payable on all Debt (excluding (A) all Nonrecourse Debt of the Borrower and its Subsidiaries, and (B) Excluded Hedging Debt) of not less than 2:1 for each twelve-month period ending on the last day of September, December, March and June of each year, or (ii) Maintain a ratio of Consolidated Debt (excluding (A) Debt outstanding pursuant to the issuance of Debt with maturities of no more than 365 days, (B) all Nonrecourse Debt of the Borrower and its Subsidiaries, and (C) Excluded Hedging Debt) to Capitalization of not greater than .55:1; or (k) any provision of any of the Loan Documents after delivery thereof pursuant to Section 3.01 shall for any reason cease to be valid and binding on or enforceable against the Borrower, or the Borrower shall so state in writing; 33 then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Revolving Credit Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Revolving Credit Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Revolving Credit Advances, 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; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Revolving Credit Advances shall automatically be terminated and (B) the Revolving Credit Advances, 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 VII: THE AGENT SECTION 7.01. Authorization and Action. Each Lender hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Revolving Credit Advances), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders (or all of the Lenders to the extent required by the terms of this Agreement), and such instructions shall be binding upon all Lenders and all holders of Revolving Credit Advances; provided, however, that the Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to this Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may treat the payee in respect of any Revolving Credit Advance as the owner thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee in respect of such Revolving Credit Advance, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the 34 terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. Bank One and Affiliates. With respect to its Commitment, the Revolving Credit Advances made by it and any Note issued to it, Bank One shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include Bank One in its individual capacity. Bank One and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Borrower, any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or any such Subsidiary, all as if Bank One were not the Agent and without any duty to account therefor to the Lenders. SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other 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 the Agent or any other Lender 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. SECTION 7.05. Indemnification. The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principal amounts of their respective Revolving Credit Advances (or if no Revolving Credit Advances are at the time outstanding or if any Revolving Credit Advances are owing to Persons that are not Lenders, ratably according to the respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of any Loan Document or any action taken or omitted by the Agent under any Loan Document, 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 the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, 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, any Loan Document, to the extent that the Agent is not reimbursed for such expenses by the Borrower. 35 SECTION 7.06. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. 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, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. ARTICLE VIII: MISCELLANEOUS SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes, nor consent to any departure by the Borrower therefrom, shall in any event be 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: (a) waive any of the conditions specified in Section 3.01, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, (d) except as provided in Section 2.16, postpone any date fixed for any payment of principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Revolving Credit Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder or (f) amend this Section 8.01; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement or any Note. SECTION 8.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed or delivered, if to the Borrower, at its address at 2000 2nd Avenue, Detroit, MI 48226, Attention: Treasurer; if to any Initial Lender, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, at its address at One Bank One Plaza, Chicago Illinois, 60670, Attention: Dawn Lawler; or, as to the Borrower or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Agent. All such notices and communications shall, when mailed, telecopied, 36 telegraphed or telexed, be effective when deposited in the mails, telecopied, delivered to the telegraph company or confirmed by telex answerback, respectively, except that notices and communications to the Agent pursuant to Article II, III or VII shall not be effective until received by the Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof. SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder or under any Note 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 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand, upon presentation of a statement of account and absent manifest error, all reasonable costs and reasonable expenses of the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes, each other Loan Document and the other documents to be delivered hereunder and thereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable fees and reasonable expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under the Loan Documents. The Borrower further agrees to pay on demand all reasonable costs and reasonable expenses of the Agent and the Lenders, if any (including, without limitation, reasonable internal and external counsel fees and expenses, provided such fees and expenses are not duplicative), in connection with the "workout", restructuring or enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 8.04(a). (b) The Borrower agrees to indemnify, to the extent legally permissible, and hold harmless the Agent and each Lender and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of, or in connection with the preparation for a defense of, any investigation, litigation or proceeding arising out of, related to or in connection with (i) the Notes, this Agreement, the other Loan Documents any of the transactions contemplated herein or therein or the actual or proposed use of the proceeds of the Revolving Credit Advances or (ii) the actual or alleged presence of Hazardous Materials on any property of the Borrower or any of its Subsidiaries or any Environmental Action relating in any way to the Borrower or any of its Subsidiaries, in each case whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court 37 of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. The Borrower also agrees not to assert any claim against the Agent, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Notes, this Agreement, the other Loan Documents any of the transactions contemplated herein or therein or the actual or proposed use of the proceeds of the Revolving Credit Advances. (c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Revolving Credit Advance, as a result of a payment or Conversion pursuant to Section 2.07(d) or (e), 2.09 or 2.11, acceleration of the maturity of the Revolving Credit Advances pursuant to Section 6.01, or for any other reason, the Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Revolving Credit Advance. (d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.10, 2.13 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes. SECTION 8.05. Right of Set-off. 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 6.01 to authorize the Agent to declare the Revolving Credit Advances due and payable pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates 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 or such Affiliate 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 the Loan Documents and any Note held by such Lender, whether or not such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have. SECTION 8.06. Binding Effect. This Agreement shall become effective (other than Section 2.01, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Borrower and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the 38 Borrower, the Agent 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 to any Person. SECTION 8.07. Assignments, Designations and Participations. (a) Each Lender may, with the prior consent of the Agent (which consent shall not be unreasonably withheld) and (for so long as no Default has occurred and is continuing) the Borrower (which consent shall not be unreasonably withheld) assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Revolving Credit Advances owed to it and any Note or Notes held by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note subject to such assignment and a processing and recordation fee of $3,000. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender 39 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; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender. (c) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any Note or Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. Within five Business Days after the Borrower's receipt of such notice, if requested by the applicable Lender, the Borrower, at its own expense, shall execute and deliver to the Agent in exchange for the surrendered Note a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder, if requested by such assigning Lender, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A hereto. (d) The Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses and Commitment of, and principal amount of Revolving Credit Advances 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 Agent 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. (e) Each Lender may sell participations to one or more banks or other entities (other than the Borrower or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Revolving Credit Advances owing to it and any Note or Notes held by it); provided, however, 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 owner of such Revolving Credit Advances for all purposes of this Agreement, (iv) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement or any Note, or any consent to any 40 departure by the Borrower therefrom, except to the extent that such amendment, waiver or consent would (A) reduce the principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, or (B) increase the Commitments, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, in each case to the extent subject to such participation. Each participant shall be entitled to the benefits of Sections 2.10, 2.11 and 2.13 to the same extent as if it were a Lender and had acquired its interest under this Agreement by an assignment made pursuant to this Section 8.07, provided, however, that in no event shall the Borrower be obligated to make any payment with respect to such Sections that is greater than the amount that the Borrower would have otherwise made had no participations been sold under this Section 8.07(e). (f) Any Lender may, in connection with any assignment, designation or participation or proposed assignment, designation or participation pursuant to this Section 8.07, disclose to the assignee, designee or participant or proposed assignee, designee 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, the assignee, designee or participant or proposed assignee, designee or participant shall agree to preserve the confidentiality of any Confidential Information relating to the Borrower received by it from such Lender. (g) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time (i) create a security interest in all or a portion of its rights under this Agreement (including, without limitation, the Revolving Credit Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System or (ii) with notice to the Agent and the Borrower, assign all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Revolving Credit Advances owed to it and the Note or Notes held by it) to any of its Affiliates. (h) Notwithstanding anything to the contrary contained herein, any Lender (a "DESIGNATING LENDER") may grant to one or more special purpose funding vehicles (each an "SPV"), identified as such in writing from time to time by the Designating Lender to the Agent and the Borrower, the option to provide to the Borrower all or any part of any Revolving Credit Advance that such Designating Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to make any Revolving Credit Advance, (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Revolving Credit Advance, the Designating Lender shall be obligated to make such Revolving Credit Advance pursuant to the terms hereof, (iii) the Designating Lender shall remain liable for any indemnity or other payment obligation with respect to its Commitment hereunder and (iv) no SPV or Designating Lender shall be entitled to receive any greater amount under this Agreement than the Designating Lender would have been entitled to receive had the Designating Lender not otherwise granted such SPV the option to provide any Revolving Credit Advance to the Borrower. The making of a Revolving Credit Advance by an SPV hereunder shall utilize the Commitment of the Designating Lender to the same extent, and as if, such Revolving Credit Advance were made by such Designating Lender. 41 (i) Each party hereto hereby acknowledges and agrees that no SPV shall have the rights of a Lender hereunder, such rights being retained by the applicable Designating Lender. Accordingly, and without limiting the foregoing, each party hereby further acknowledges and agrees that no SPV shall have any voting rights hereunder and that the voting rights attributable to any Revolving Credit Advance made by an SPV shall be exercised only by the relevant Designating Lender and that each Designating Lender shall serve as the administrative agent and attorney-in-fact for its SPV and shall on behalf of its SPV receive any and all payments made for the benefit of such SPV and take all actions hereunder to the extent, if any, such SPV shall have any rights hereunder. No additional Note shall be required to evidence the Revolving Credit Advances or portion thereof made by an SPV; and the related Designating Lender shall be deemed to hold its Note or Notes, if any, as administrative agent for such SPV to the extent of the Revolving Credit Advances or portion thereof funded by such SPV. In addition, any payments for the account of any SPV shall be paid to its Designating Lender as administrative agent for such SPV. (j) Each party hereto hereby agrees that no SPV shall be liable for any indemnity or payment under this Agreement for which a Lender would otherwise be liable so long as, and to the extent that, the related Designating Lender provides such indemnity or makes such payment; provided, with respect to such agreement by the Borrower that the related Designating Lender shall not be in breach of its obligation to make Revolving Credit Advances to the Borrower hereunder. In furtherance of the foregoing, each party hereto hereby agrees (which agreements shall survive the termination of this Agreement) that prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it will not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof; provided, with respect to such agreement by the Borrower that the related Designating Lender shall not be in breach of its obligation to make Revolving Credit Advances to the Borrower hereunder. Notwithstanding the foregoing, the Designating Lender unconditionally agrees to indemnify the Borrower, the Agent and each Lender against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be incurred by or asserted against the Borrower, the Agent or such Lender, as the case may be, in any way relating to or arising as a consequence of any such forbearance or delay in the initiation of any such proceeding against its SPV. (k) In addition, notwithstanding anything to the contrary contained in subsection 8.07(h), (i), (j) or (k) or otherwise in this Agreement, any SPV may (i) at any time and without paying any processing fee therefor, assign or participate all or a portion of its interest in any Revolving Credit Advances to the Designating Lender or to any financial institutions providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Revolving Credit Advances and (ii) disclose on a confidential basis any non- public information relating to its Revolving Credit Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancements to such SPV. Subsection 8.07(h), (i), (j) or (k) may not be amended without the written consent of any Designating Lender affected thereby. 42 SECTION 8.08. Confidentiality. Neither the Agent nor any Lender shall disclose any Confidential Information to any other Person without the consent of the Borrower, other than (a) to the Agent's or such Lender's Affiliates and their officers, directors, employees, agents and advisors and, as contemplated by Section 8.07(f), to actual or prospective assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) to any rating agency when required by it, provided that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Confidential Information relating to the Borrower received by it from such Lender and (d) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking. SECTION 8.09. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 8.10. 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. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the Notes, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or the Notes in the courts of any jurisdiction. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the Notes in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. 43 SECTION 8.12. Waiver of Jury Trial. Each of the Borrower, the Agent and the Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the Notes or the actions of the Agent or any Lender in the negotiation, administration, performance or enforcement thereof. REMAINDER OF PAGE INTENTIONALLY BLANK 44 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. MICHIGAN CONSOLIDATED GAS COMPANY By: /s/ N.A. KHOURI ---------------------------- Name: N.A. Khouri Title: Vice President and Treasurer Lenders BANK ONE, NA (MAIN OFFICE-CHICAGO), Individually and as Administrative Agent By: /s/ DAWN M. LAWLER ---------------------------- Name: DAWN M. LAWLER Title: Vice President BARCLAYS BANK PLC, as Co-Syndication Agent and as a Lender By: /s/ SYDNEY G. DENNIS ---------------------------- Name: Sydney G. Dennis Title: Director SALOMON SMITH BARNEY INC., as Co-Syndication Agent By: /s/ ANITA J. BRICKELL ---------------------------- Name: Anita J. Brickell Title: Attorney-in-Fact CITIBANK, N.A., as a Lender By: /s/ DHAYA RANGANATHAN ---------------------------- Name: Dhaya Ranganathan Title: Vice President THE BANK OF NOVA SCOTIA, as a Lender By: /s/ N. BELL ---------------------------- Name: N. BELL Title: ASSISTANT AGENT KEY BANK NATIONAL ASSOCIATION, as a Lender By: /s/ SHERRIE I. MANSON --------------------------- Name: Sherrie I. Manson Title: Vice President THE BANK OF NEW YORK, as a Lender By: /s/ CYNTHIA D. HOWELLS --------------------------- Name: Cynthia D. Howells Title: Assistant Vice President COMERICA BANK, as a Lender By: /s/ DAVID C. BIRD --------------------------- Name: David C. Bird Title: Vice President CREDIT SUISSE FIRST BOSTON, as a Lender By: /s/ JAY CHALL --------------------------- Name: Jay Chall Title: Director By: /s/ JEFFREY BERNSTEIN --------------------------- Name: JEFFREY BERNSTEIN Title: VICE PRESIDENT THE CHASE MANHATTAN BANK, as a Lender By: /s/ PETER M. LING --------------------------- Name: Peter M. Ling Title: Vice President THE INDUSTRIAL BANK OF JAPAN, LIMITED, as a Lender By: /s/ MASASHI SAKAI --------------------------- Name: Masashi Sakai Title: General Manager THE FUJI BANK, LIMITED, as a Lender By: /s/ PETER L. CHINNICI --------------------------- Name: Peter L. Chinnici Title: Senior Vice President & Group Head THE DAI-ICHI KANGYO BANK, LTD., as a Lender By: /s/ NOVUYASU FUKATSU --------------------------- Name: Novuyasu Fukatsu Title: General Manager UNION BANK OF CALIFORNIA, N.A., as a Lender By: /s/ ROBERT J. OLSON --------------------------- Name: Robert J. Olson Title: Vice President UBS AG, STAMFORD BRANCH, as a Lender By: /s/ WILFRED V. SAINT --------------------------- Name: Wilfred V. Saint Title: Associate Director Banking Products Services, US By: /s/ SUSAN BRUNNER --------------------------- Name: Susan Brunner Title: Associate Director Banking Products Services, US BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH, as a Lender By: /s/ PAUL SZCZEPANSKI --------------------------- Name: Paul Szczepanski Title: Vice President By: /s/ HAREWARD DRUMMOND --------------------------- Name: Hareward Drummond Title: Senior Vice President MELLON BANK, N.A., as a Lender By: /s/ RICHARD A. MATTHEWS --------------------------- Name: Richard A. Matthews Title: First Vice President SOCIETE GENERALE, as a Lender By: /s/ MICHAEL O. LINCOLN --------------------------- Name: MICHAEL O. LINCOLN Title: DIRECTOR COBANK, ACB, as a Lender By: /s/ TERESA L. FOUNTAIN --------------------------- Name: Teresa L. Fountain Title: Assistant Corporate Secretary CREDIT LYONNAIS NEW YORK BRANCH, as a Lender By: /s/ BERNARD WEYMULLER --------------------------- Name: Bernard Weymuller Title: Senior Vice President BANK HAPOALIM B.M., as a Lender By: /s/ MARC BOSC --------------------------- Name: MARC BOSC Title: VICE PRESIDENT By: /s/ CONRAD WAGNER --------------------------- Name: Conrad Wagner Title: First Vice President FIFTH THIRD BANK, EASTERN MICHIGAN, as a Lender By: /s/ MICHAEL E. DOLSON --------------------------- Name: Michael E. Dolson Title: Vice President ARAB BANKING CORPORATION, as a Lender By: /s/ GRANT E. McDONALD --------------------------- Name: GRANT E. McDONALD Title: VICE PRESIDENT STANDARD FEDERAL BANK, N.A., as a Lender By: /s/ RICHARD C. NORTHRUP, III ---------------------------- Name: Richard C. Northrup, III Title: Vice President THE NORTHERN TRUST COMPANY, as a Lender By: /s/ ROGER McDOUGAL --------------------------- Name: Roger McDougal Title: Second Vice President FIRST INDEPENDENCE NATIONAL BANK OF DETROIT, as a Lender By: /s/ BARBARA W. WORDEN --------------------------- Name: Barbara W. Worden Title: Senior Vice President SCHEDULE I MICHIGAN CONSOLIDATED GAS COMPANY APPLICABLE LENDING OFFICES
- ------------------------------------------------------------------------------------------------------------------------ NAME OF INITIAL LENDER DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE COMMITMENT - ------------------------------------------------------------------------------------------------------------------------ Citibank, N.A. 388 Greenwich Street Same as Domestic Lending $24,642,857.12 21st Floor Office New York, NY 10003 Attention: Dhaya Ransanathan Telecopier: (212) 816-8098 - ------------------------------------------------------------------------------------------------------------------------ Bank One, NA One Bank One Plaza Same as Domestic Lending $24,642,857.14 Suite 0634 Office Chicago, IL 60670 Attention: Gloria Steinbrenner Telecopier: (312) 732-4840 - ------------------------------------------------------------------------------------------------------------------------ Barclays Bank PLC 222 Broadway 222 Broadway $24,642,857.12 New York, NY 10038 New York, NY 10038 Attention: Jeff Pannullo Attention: Jeff Pannullo Telecopier: (212) 412-5306 Telecopier: (212) 412-5306 - ------------------------------------------------------------------------------------------------------------------------ The Bank of Nova Scotia 600 Peachtree Street NE Same as Domestic Lending $17,357,142.86 Suite 2700 Office Atlanta, GA 30308 Attention: Mystro Whatley Telecopier: (404) 888-8998 - ------------------------------------------------------------------------------------------------------------------------ Key Bank National 127 Public Square Same as Domestic Lending $17,357,142.86 Association Cleveland, OH 44114 Office Attention: Laura Binkley Telecopier: (216)689-4981 - ------------------------------------------------------------------------------------------------------------------------ The Bank of New York One Wall Street Same as Domestic Lending $17,357,142.86 New York, NY 10286 Office Attention: Kathy D'Elena Telecopier: (212) 635-7923 - ------------------------------------------------------------------------------------------------------------------------ Comerica Bank 500 Woodward Avenue Same as Domestic Lending $17,357,142.86 MC 3268 Office Detroit, MI 48226 Attention: David C. Bird Telecopier: (313) 222-9514 - ------------------------------------------------------------------------------------------------------------------------ Credit Suisse First Boston 11 Madison Avenue Same as Domestic Lending $17,357,142.86 New York, NY 10010 Office Attention: Andrea Shkane Telecopier: (212) 325-8309 - ------------------------------------------------------------------------------------------------------------------------ The Chase Manhattan 270 Park Avenue Same as Domestic Lending $17,357,142.86 Bank 23rd Floor Office New York, NY 10017 Attention: Lynette Lang Telecopier: (212) 552-5777 - ------------------------------------------------------------------------------------------------------------------------ The Fuji Bank, Limited c/o Fuji Bank NJ Data Center Same as Domestic Lending $ 5,554,285.72 95 Christopher Columbus Dr. Office Jersey City, NJ 07302 Attention: Tina Catapeno Telecopier: (201) 432-6803 - ------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------ NAME OF INITIAL LENDER DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE COMMITMENT - ------------------------------------------------------------------------------------------------------------------------ The Dai-Ichi Kangyo 95 Christopher Columbus Dr. Same as Domestic Lending $5,554,285.71 Bank, Ltd. Jersey City, NJ 07302 Office Attention: Lending Desk Telecopier: (201) 432-6803 - ------------------------------------------------------------------------------------------------------------------------ The Industrial Bank of The Industrial Bank of Japan, Same as Domestic Lending $6,248,571.43 Japan, Limited Limited Office New York Branch 1251 Avenue of the Americas New York, NY 10020-1104 Attention: Lydia Mistretta Telecopier: (212) 282-4480 - ------------------------------------------------------------------------------------------------------------------------ Union Bank of California, Energy Capital Services Same as Domestic Lending $17,357,142.86 N.A. 445 S. Figueroa Street, 15th Office Floor Los Angeles, CA 90017 Attention: Dennis Blank Telecopier: (213) 236-4096 - ------------------------------------------------------------------------------------------------------------------------ UBS AG, Stamford 577 Washington Boulevard Same as Domestic Lending $15,107,142.86 Branch Stamford, CT 06901 Office Attention: Denise Conzo Telecopier: (203) 719-3853 - ------------------------------------------------------------------------------------------------------------------------ Bayerische Landesbank 560 Lexington Avenue Same as Domestic Lending $11,785,714.29 Girozentrale, Cayman 17th Floor Office Islands Branch New York, NY 10022 Attention: Sean O'Sullivan Telecopier: (212) 310-9868 - ------------------------------------------------------------------------------------------------------------------------ Mellon Bank, N.A. 3 Mellon Center - Room 1203 Same as Domestic Lending $11,785,714.29 Pittsburgh, PA 15259 Office Attention: Brenda Leiersapf Telecopier: (412) 209-6146 - ------------------------------------------------------------------------------------------------------------------------ Societe Generale 1221 Avenue of the Americas Same as Domestic Lending $ 8,571,428.57 New York, NY 10020 Office Attention: Gede Antara and/or Soo Lee Telecopier: (212) 278-7343 - ------------------------------------------------------------------------------------------------------------------------ CoBank, ACB 5500 South Quebec Street Same as Domestic Lending $ 8,571,428.57 Greenwood Village, CO 80111 Office Attention: Darla Moran Telecopier: (303) 740-4021 - ------------------------------------------------------------------------------------------------------------------------ Credit Lyonnais New 1301 Avenue of the Americas Same as Domestic Lending $ 8,571,428.57 York Branch New York, NY 10019 Office Attention: Bindu Menon Telecopier: (917) 849-5540 - ------------------------------------------------------------------------------------------------------------------------ Bank Hapoalim B.M. 1177 Avenue of the Americas Same as Domestic Lending $ 5,357,142.86 New York, NY 10036 Office Attention: Marc Bosc Telecopier: (212) 782-2382 - ------------------------------------------------------------------------------------------------------------------------ Fifth Third Bank, Eastern c/o Madisonville Operations Same as Domestic Lending $ 4,285,714.29 Michigan Center Office MD 1M0C2B Cincinnati, OH 45263-5300 Attention: Gina Schmidt Telecopier: (513) 358-0221 - ------------------------------------------------------------------------------------------------------------------------
2
- ------------------------------------------------------------------------------------------------------------------------ NAME OF INITIAL LENDER DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE COMMITMENT - ------------------------------------------------------------------------------------------------------------------------ Arab Banking Corporation 277 Park Avenue Same as Domestic Lending $ 4,285,714.29 32nd Floor Office New York, NY 10172 Attention: R. Hassan Telecopier: (212) 583-0932 - ------------------------------------------------------------------------------------------------------------------------ Standard Federal Bank, 2600 W. Big Beaver Same as Domestic Lending $ 4,285,714.29 N.A. Troy, MI 48084 Office Attention: Yvonne Hicks Telecopier: (248) 637-5003 - ------------------------------------------------------------------------------------------------------------------------ The Northern Trust 50 S. LaSalle Street Same as Domestic Lending $ 4,285,714.29 Company Chicago, IL 60675 Office Attention: Funding Contact Telecopier: (312) 444-5055 - ------------------------------------------------------------------------------------------------------------------------ First Independence Bank 44 Michigan Avenue Same as Domestic Lending $ 321,428.57 of Detroit Detroit, MI 48226 Office Attention: Barbara W. Worden Telecopier: (313) 256-8444 - ------------------------------------------------------------------------------------------------------------------------ Total: $ 300,000,000 - ------------------------------------------------------------------------------------------------------------------------
3 PRICING SCHEDULE
======================================================================================= LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V STATUS STATUS STATUS STATUS STATUS - --------------------------------------------------------------------------------------- Applicable 0.125% 0.150% 0.175% 0.250% 0.400% Percentage - --------------------------------------------------------------------------------------- Applicable Margin 0.425% 0.600% 0.700% 0.800% 1.200% (Eurodollar Rate) - --------------------------------------------------------------------------------------- Applicable 0.125% 0.125% 0.125% 0.125% 0.250% Utilization Fee - --------------------------------------------------------------------------------------- Applicable 0.0% 0.0% 0.0% 0.0% 0.0% Margin (Base Rate) =======================================================================================
For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule: "Level I Status" exists at any date if, on such date, the Borrower's Moody's Rating is A3 or better or the Borrower's S&P Rating is A- or better. "Level II Status" exists at any date if, on such date, (i) the Borrower has not qualified for Level I Status and (ii) the Borrower's Moody's Rating is Baa1 or better or the Borrower's S&P Rating is BBB+ or better. "Level III Status" exists at any date if, on such date, (i) the Borrower has not qualified for Level I Status or Level II Status and (ii) the Borrower's Moody's Rating is Baa2 or better or the Borrower's S&P Rating is BBB or better. "Level IV Status" exists at any date if, on such date, (i) the Borrower has not qualified for Level I Status, Level II Status or Level III Status and (ii) the Borrower's Moody's Rating is Baa3 or better or the Borrower's S&P Rating is BBB- or better. "Level V Status" exists at any date if, on such date, the Borrower has not qualified for Level I Status, Level II Status, Level III or Level IV Status. "Moody's Rating" means, at any time, the rating that is one level below the rating issued by Moody's and then in effect with respect to the Borrower's senior secured long-term debt securities without third-party credit enhancement. "S&P Rating" means, at any time, the rating that is one level below the rating issued by S&P and then in effect with respect to the Borrower's senior secured long-term debt securities without third-party credit enhancement. 4 "Status" means Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status. The Applicable Margin, Applicable Utilization Fee and Applicable Percentage shall be determined in accordance with the foregoing table based on the Borrower's Status as determined from its then-current Moody's Rating and S&P Rating. The credit rating in effect on any date for the purposes of this Schedule is that in effect at the close of business on such date. If at any time the Borrower does not have both a Moody's Rating and an S&P Rating, Level V Status shall exist. In the event that a split occurs between the two ratings, then the Status corresponding to the lower of the two ratings shall apply. However, if the split is greater than one level, then the pricing shall be based upon the Status one level above the Status corresponding to the lower of the two ratings. 5 EXHIBIT A - FORM OF REVOLVING CREDIT PROMISSORY NOTE U.S.$___________ Dated: ______________, 2001 FOR VALUE RECEIVED, the undersigned, MICHIGAN CONSOLIDATED GAS COMPANY, a Michigan corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of _______________ (the "Lender") for the account of its Applicable Lending Office on the Revolver Termination Date (each as defined in the Credit Agreement referred to below), the principal sum of U.S.$ [amount of the Lender's Commitment in figures] or, if less, the aggregate principal amount of the Revolving Credit Advances made by the Lender to the Borrower pursuant to the Credit Agreement dated as of November 7, 2001 (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined) among the Borrower, the Lender and certain other lenders parties thereto, and Bank One, NA (Main Office - Chicago), as Agent for the Lender and such other lenders outstanding on the Revolver Termination Date. The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Advance from the date of such Revolving Credit Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in lawful money of the United States of America to Bank One, NA (Main Office - Chicago), as Agent, at One Bank One Plaza, Chicago Illinois, 60670, Account No.4811-5286-0000, Attention: Gloria Steinbrenner, in same day funds. Each Revolving Credit Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note. 6 This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i) provides for the making of Revolving Credit Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Revolving Credit Advance being evidenced by this Promissory Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. MICHIGAN CONSOLIDATED GAS COMPANY By ----------------------- Title: 7 ADVANCES AND PAYMENTS OF PRINCIPAL
=========================================================================== DATE AMOUNT OF AMOUNT OF PRINCIPAL UNPAID NOTATION ADVANCE PAID OR PREPAID PRINCIPAL MADE BY BALANCE - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- ===========================================================================
8 EXHIBIT B - FORM OF NOTICE OF REVOLVING CREDIT BORROWING Bank One, NA (Main Office - Chicago), as Agent for the Lenders parties to the Credit Agreement referred to below One Bank One Plaza Chicago, Illinois 60670 [Date] Attention: Dawn Lawler Ladies and Gentlemen: The undersigned, MICHIGAN CONSOLIDATED GAS COMPANY, refers to the Credit Agreement, dated as of November 7, 2001 (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto and Bank One, NA (Main Office - Chicago), as Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i) The Business Day of the Proposed Borrowing is ___________, ___. (ii) The Type of Advances comprising the Proposed Borrowing is [Base Rate Advances] [Eurodollar Rate Advances]. (iii) The aggregate amount of the Proposed Borrowing is $___________. [(iv) The initial Interest Period for each Eurodollar Rate Advance made as part of the Proposed Borrowing is _____ month[s].] The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing: (A) the representations and warranties contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and (B) no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default. Very truly yours, 9 MICHIGAN CONSOLIDATED GAS COMPANY By --------------------------- Title: 10 EXHIBIT C - FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to the Credit Agreement dated as of November 7, 2001 (as amended or modified from time to time, the "Credit Agreement") among Michigan Consolidated Gas Company, a Michigan corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement) and Bank One, NA (Main Office - Chicago), as agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. The "Assignor" and the "Assignee" referred to on Schedule I hereto agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement as of the date hereof equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement. After giving effect to such sale and assignment, the Assignee's Commitment and the amount of the Revolving Credit Advances owing to the Assignee will be as set forth on Schedule 1 hereto. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iv) attaches the Note held by the Assignor, if any, and requests that the Agent exchange such Note for a new Note payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto or new Notes payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto and the Assignor in an amount equal to the Commitment retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1 hereto. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof 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 Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender 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 Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are 11 reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service forms required under Section 2.13 of the Credit Agreement. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assignment and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Agent, unless otherwise specified on Schedule 1 hereto. 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest, facility fees and the Utilization Fee with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Notes for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. 8. This Assignment and Acceptance 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. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. 12 Schedule 1 to Assignment and Acceptance Percentage interest assigned: ____% Assignee's Commitment: $________ Aggregate outstanding principal amount of Revolving Credit Advances assigned: $__________ Principal amount of Revolving Credit Advances payable to Assignee: $________ Principal amount of Revolving Credit Advances payable to Assignor: $________ Effective Date(1): _______________, _____

[NAME OF ASSIGNOR], as Assignor By ------------------------------ Title: Dated: ---------------, ----- [NAME OF ASSIGNEE], as Assignee By ------------------------------ Title: Dated: ---------------, ----- Domestic Lending Office: [Address] Eurodollar Lending Office: [Address] Accepted [and Approved](2) this _________ day of ____________, ____ ____________________, as Agent By_____________________________ Title: - ---------- (1) This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance to the Agent. (2) Required if the Assignee is an Eligible Assignee solely by reason of clause (viii) of the definition of "Eligible Assignee". 13 [Approved this ________ day of _____________, ____.] MICHIGAN CONSOLIDATED GAS COMPANY By __________________________] ** Title: 14 EXHIBIT D - FORM OF CERTIFICATE DTE ENERGY COMPANY THE DETROIT EDISON COMPANY MICHIGAN CONSOLIDATED GAS COMPANY OFFICER'S CERTIFICATE I, N.A. Khouri, Vice President and Treasurer of DTE ENERGY COMPANY ("DTE"), THE DETROIT EDISON COMPANY ("DECO") and MICHIGAN CONSOLIDATED GAS COMPANY ("MichCon"), each a Michigan corporation (each a "Borrower" and collectively the "Borrowers"), DO HEREBY CERTIFY, pursuant to Section 3.01 of each of (i) the Credit Agreement, dated as of November 7, 2001, among DTE, the financial institutions from time to time parties thereto (the "DTE Lenders"), and Citibank, N.A., as agent for said DTE Lenders (the "DTE Credit Agreement"), (ii) the Credit Agreement, dated as of November 7, 2001, among DECO, the financial institutions from time to time parties thereto (the "DECO Lenders") and Barclays Bank PLC, as agent for said DECO Lenders (the "DECO Credit Agreement"), and (iii) the Credit Agreement, dated as of November 7, 2001, among MichCon, the financial institutions from time to time parties thereto (the "MichCon Lenders", and, together with the DTE Lenders and the DECO Lenders, the "Lenders") and Bank One, NA, as agent for said Lenders (the "MichCon Credit Agreement", and together with the DTE Credit Agreement and the DECO Credit Agreement, the "Credit Agreements"), that the terms defined in the Credit Agreements are used herein as herein defined and, further, that: 1. The Effective Date shall be November 7, 2001. 2. The representation and warranties contained in Section 4.01 of each of the Credit Agreements are true and current on and as of the date hereof. 3. No event has occurred and is continuing that constitutes a Default. 4. Each Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan. 5. The execution, delivery and performance by each Borrower of the Loan Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, are within each Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) each Borrower's charter or by-laws or (ii) law or any contractual restriction binding on or affecting each Borrower. 6. All governmental and third party consents and approvals necessary in connection with the transactions contemplated by the Loan Documents to which each Borrower is a party have been obtained, including in the case of DECO, the order of the Federal Energy Regulatory Commission (without the imposition of any conditions that are not acceptable to the Lenders), and remain in effect, and no law or regulation is applicable that restrains, prevents or imposes materially adverse conditions upon each Borrower with respect to the transactions contemplated by the Loan Documents to which it is a party. 15 7. Each of the Loan Documents to which each of the Borrowers is a party when delivered pursuant to each of the Credit Agreements has been duly executed and delivered by each Borrower. Each of the other Loan Documents to which each Borrower is a party when delivered hereunder will be, the legal, valid and binding obligation of each Borrower enforceable against each Borrower in accordance with their respective terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally. 8. The Consolidated balance sheets of each of DTE, DECO, MCN Energy Group Inc. ("MCN"), MichCon and their respective Subsidiaries as at December 31, 2000, and the related Consolidated statements of income and cash flows of each of DTE, DECO, MCN, MichCon, and their respective Subsidiaries for the fiscal year then ended, accompanied by an opinion of Deloitte & Touche LLP, independent public accountants, and the condensed Consolidated balance sheets of each of DTE, DECO, MichCon, and their respective Subsidiaries as at June 30, 2001 and the related condensed Consolidated statements of income and cash flows of each of DTE, DECO, MichCon and their respective Subsidiaries for the six months then ended, copies of which have been furnished to each Lender, attached hereto as Annex A-1 through A-6 are hereby duly certified by the undersigned, as fairly presenting, subject in the case of said balance sheet as at June 30, 2001, and said statements of income and cash flows for the six months then ended, to year-end audit adjustments, the Consolidated financial condition of each of DTE, DECO, MCN, MichCon and their respective Subsidiaries, as applicable, as at such dates and the Consolidated results of the operations of each of DTE, DECO, MCN, MichCon and their respective Subsidiaries, as applicable, for the periods ended on such dates, all in accordance with generally accepted accounting principles consistently applied, and the respective reports in which such financial statements are contained are hereby designated as the "SEC Reports" for purposes of the Credit Agreements. Since June 30, 2001 there has been no Material Adverse Change with respect to any of the Borrowers. 9. None of the Borrowers is a party to an indenture, loan or credit agreement, lease, guarantee, mortgage, security agreement, bond, note or other agreement or instrument, and there are no orders, writs, judgments, awards, injunctions or decrees, that affect or purport to affect each Borrower's right to borrow money or each Borrower's obligations under the Loan Documents to which it is a party. 10. The Existing Credit Agreements are terminated (except for those provisions that expressly survive the termination thereof) upon effectiveness of the Credit Agreements on the Effective Date; as of the date hereof, there are no loans outstanding under the Existing Credit Agreements and all amounts owed to the lender or agents thereunder have been paid in full. 16 IN WITNESS WHEREOF, I have signed this certificate this [____] day of November, 2001. ----------------------------------- N.A. Khouri Vice President and Treasurer 17 EXHIBIT E - FORM OF OPINION OF COUNSEL TO THE BORROWER [Date] To each of the Lenders set forth in Schedule A hereto DTE Energy Company The Detroit Edison Company Michigan Consolidated Gas Company Ladies and Gentlemen: This opinion is furnished to you pursuant to (i) Section 3.01(h)(v) of the Credit Agreement, dated as of November 7, 2001, among DTE Energy Company ("DTE"), the financial institutions from time to time parties thereto (the "DTE Lenders"), and Citibank, N.A., as agent for said DTE Lenders, Barclays Bank PLC and Banc One Capital Markets, Inc., as Co-Syndication Agents, and with Salomon Smith Barney Inc., as Lead Arranger and Sole Book Runner (the "DTE Credit Agreement"), (ii) Section 3.01(h)(v) of the Credit Agreement, dated as of November 7, 2001, among The Detroit Edison Company ("DECO"), the financial institutions parties thereto (the "DECO Lenders") and Barclays Bank PLC, as agent for said DECO Lenders, Salomon Smith Barney Inc. and Banc One Capital Markets, Inc., as Co-Syndication Agents, and with Barclays Capital and Banc One Capital Markets, Inc., as Co-Lead Arrangers and Joint Book Runners (the "DECO Credit Agreement"), and (iii) Section 3.01(h)(v) of the Credit Agreement, dated as of November 7, 2001, among Michigan Consolidated Gas Company ("MichCon"), the financial institutions parties thereto (the "MichCon Lenders", and together with the DTE Lenders and the DECO Lenders, the "Lenders") and Bank One, NA, as agent for said Lenders, Barclays Bank PLC and Salomon Smith Barney Inc., as Co-Syndication Agents, and with Banc One Capital Markets, Inc. and Barclays Capital, as Co-Lead Arrangers and Joint Book Runners (the "MichCon Credit Agreement", and together with the DTE Credit Agreement and the DECO Credit Agreement, the "Credit Agreements"). Terms defined in each Credit Agreement are used herein as therein defined. I am the Associate General Counsel of DTE, and the Vice President and General Counsel of both DECO and MichCon, and have acted as counsel for each of the Borrowers in connection with the preparation, execution and delivery of the Loan Documents. In that connection, I, in conjunction with the members of my staff, have examined: (1) Each Loan Document, executed by each of the parties thereto. (2) The other documents furnished by each of the Borrowers pursuant to Article III of each of the Credit Agreements. 18 (3) The Restated Articles of Incorporation of DTE, the Restated Articles of Incorporation of DECO, and the Restated Articles of Incorporation of MichCon and all amendments thereto (the "Charters"). (4) The By-Laws of each of the Borrowers and all amendments thereto (the "By-Laws"). (5) Certificates from the State of Michigan attesting to the continued corporate existence and good standing of each of the Borrowers. I have also examined the originals, or copies certified to my satisfaction, of the documents listed in a certificate of a Financial Officer of each of the Borrowers, dated the date hereof (the "Certificate"), certifying that the documents listed in such certificate are all of the indentures, loan or credit agreements, leases, guarantees, mortgages, security agreements, bonds, notes and other agreements or instruments, and all of the orders, writs, judgments, awards, injunctions and decrees, that affect or purport to affect each Borrower's right to borrow money or each Borrower's obligations under the Loan Documents to which it is party. In addition, I have examined the originals, copies certified to my satisfaction, of such other corporate records of each Borrower, certificates of public officials and of officers of each Borrower, and agreements, instruments and other documents, as we have deemed necessary as a basis for the opinions expressed below. As to questions of fact material to such opinions, I have, when relevant facts were not independently established by me, relied upon certificates of public officials. I have assumed the due execution and delivery, pursuant to due authorization, of each of the Credit Agreements by the Lenders and the applicable Agent. My opinions expressed below are limited to the law of the State of Michigan and the federal law of the United States. Based upon the foregoing and upon such investigation as I have deemed necessary, I am of the following opinion: 1. Each of the Borrowers is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan. 2. The execution, delivery and performance by each of the Borrowers of the Loan Documents to which it is party, and the consummation of the transactions contemplated thereby, are within each Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Charters or the By-Laws of each Borrower or (ii) any law, rule or regulation applicable to each of the Borrowers (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System) or (iii) any contractual or legal restriction contained in any document listed in the Certificate or, to the best of my knowledge (after due inquiry), contained in any other similar document. 3. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery, recordation, filing or performance by each Borrower of the Loan Documents to which each is a party, except such as have been obtained, including, in the case of DECO, the order of the Federal Energy Regulatory Commission dated May 31, 2001. 19 4. Each Loan Document has been duly executed and delivered on behalf of the Borrower thereto. 5. Except as may have been disclosed to you in the SEC Reports designated in the Certificate, to the best of my knowledge (after due inquiry) there are no pending or overtly threatened actions or proceedings affecting each Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect or (ii) purport to affect the legality, validity, binding effect or enforceability of any Loan Documents or the consummation of the transactions contemplated thereby. In a properly presented case, a Michigan court or a federal court sitting in the State of Michigan applying Michigan choice of law rules should give effect to the choice of law provisions of the Loan Documents and should hold that such Loan Documents are to be governed by the laws of the State of New York rather than the laws of the State of Michigan. In rendering the foregoing opinion, I note that by their terms the Loan Documents expressly select New York law as the laws governing their interpretation and that the Loan Documents governed by New York law were delivered by the parties thereto to the Agent in New York. The choice of law provisions of the Loan Documents are not voidable under the laws of the State of Michigan. If, despite the provisions of Section 8.09 of each of the Credit Agreements wherein the parties thereto agree that the Loan Documents shall be governed by, and construed in accordance with, the laws of the State of New York, a court of the State of Michigan or a federal court sitting in the State of Michigan were to hold that the Loan Documents are governed by, and to be construed in accordance with the laws of the State of Michigan, the respective Loan Documents would be, under the laws of the State of Michigan, legal, valid and binding obligations of the applicable Borrower, enforceable against such Borrower in accordance with their respective terms. Neither the Borrowers nor any of their Subsidiaries is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended; DECO is a "public utility company" and a "subsidiary company" of DTE, which is a "holding company" as such terms are defined in the Public Utility Holding Company Act of 1935, as amended (the "1935 Act"), and such "holding company" and DECO are currently exempt from the provisions of the 1935 Act (except Section 9 thereof); and MichCon is a "public utility company" and a "subsidiary company" of MichCon Holdings, Inc., which is a "holding company" and a "subsidiary company" of DTE Enterprises, Inc., which is a "holding company" and a "subsidiary company" of DTE, as such terms are defined in the 1935 Act, and such "holding companies" and MichCon are currently exempt from the provisions of the 1935 Act (except Section 9 thereof); The opinions set forth above are subject to the following qualifications: (a) My opinion in paragraph 7 above as to enforceability is subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar law affecting creditors' rights generally. 20 (b) My opinion in paragraph 7 above as to enforceability is subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law). (c) I express no opinion as to participation and the effect of the law of any jurisdiction other than the State of Michigan wherein any Lender may be located or wherein enforcement of the Loan Documents may be sought that limits the rates of interest legally chargeable or collectible. Very truly yours, 21 Schedule A Each of the Lenders party to the Credit Agreement, dated as of November 7, 2001, among DTE, Citibank, N.A., as Lender and Agent, and Banc One Capital Markets, Inc. and Barclays Bank PLC, as Co-Syndication Agents, and with Salomon Smith Barney Inc., as Lead Arranger and Sole Book Runner. Each of the Lenders party to the Credit Agreement, dated as of November 7, 2001, among DECO, Barclays Bank PLC, as Lender and Agent, and Salomon Smith Barney Inc. and Banc One Capital Markets, Inc., as Co- Syndication Agents, and with Barclays Capital and Banc One Capital Markets, Inc., as Co- Lead Arrangers and Joint Book Runners. Each of the Lenders party to the Credit Agreement, dated as of November 7, 2001, among MichCon, Bank One, NA, as Lender and Agent, and Barclays Bank PLC and Salomon Smith Barney Inc., as Co- Syndication Agents, and with Banc One Capital Markets, Inc. and Barclays Capital, as Co-Lead Arrangers and Joint Book Runners. 22 EXHIBIT F - FORM OF COMPLIANCE CERTIFICATE COMPLIANCE CERTIFICATE To: The Lenders parties to the Credit Agreement Described Below This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of November 7, 2001 (as amended or modified from time to time, the "Agreement"; the terms defined therein being used herein as therein defined) among Michigan Consolidated Gas Company, a Michigan corporation (the "Borrower"), the lenders parties thereto, and Bank One, NA (Main Office Chicago), as Agent for the lenders. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected ___________ of the Borrower; 2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and 4. Schedule I attached hereto sets forth financial data and computations evidencing the Borrower's compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct. Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event: The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this __ day of _____,___. By: ------------------------- Name: Title: 23 SCHEDULE 1 TO COMPLIANCE CERTIFICATE Compliance as of ________,___ with Provisions of Section 5.01(h) of the Agreement FINANCIAL COVENANTS Ratio of Consolidated EBITDA to Cash Interest Payable on Debt (Section 6.01(j)(i)). (A) Numerator: Consolidated EBITDA: $_____ (B) Denominator: (i) Cash Interest Payable on Debt: $_____ (ii) Minus: Cash Interest Payable on all Nonrecourse Debt of the Borrower and its Subsidiaries: -$_____ (iii) Minus: Cash Interest Payable on Excluded Hedging Debt: -$_____ (iv) Denominator: (B)(i) minus (B)(ii) through (B)(iii): $_____ (C) State whether the ratio of (A) to (B)(iv) was not less than 2:1 for the twelve- month period ending on the last day of _________: YES/NO Ratio of Consolidated Debt to Capitalization (Section 6.01(j)(ii)). ------------------------------------------------------------------- (A) Numerator: (i) Consolidated Debt: $_____ (ii) Minus: Nonrecourse Debt of the Borrower and its Subsidiaries: -$_____ (iii) Minus: Excluded Hedging Debt: -$_____ (iv) Minus: Debt outstanding pursuant to the issuance of Debt with maturities of not more than 365 days: -$_____ (v) Numerator: (A)(i) minus (A)(ii) through (A)(iv): $_____ (B) Denominator: (i) Total Net Worth: $_____ (ii) Plus: Consolidated Debt (other than Debt outstanding pursuant to the issuance of Debt with maturities of not more than 365 days): $_____

1 (iii) Plus: Restructuring Charges Relating to the Merger of MCN Energy Group Inc. with and into DTE Enterprises, Inc.: $_____ (iv) Denominator: Sum of (B)(i) through (B)(iii): $_____ (A) State whether the ratio of (A)(v) to (B)(iv) was not greater than .55:1: YES/NO

2 ~~-----END PRIVACY-ENHANCED MESSAGE-----~~


Table of Contents
Definitions
Management’s Narrative Analysis of the Results of Operations
Consolidated Statement of Operations (Unaudited)
Consolidated Statement of Retained Earnings (Unaudited)
Consolidated Statement of Financial Position (Unaudited)
Consolidated Statement of Cash Flows (Unaudited)
Notes to the Consolidated Financial Statements (Unaudited)
Independent Accountants’ Report
Other Information
Signature
Quarterly Report
Third Supplemental Indenture
Mortgage Supplemental Indenture
Awareness Letter of Deloitte & Touche LLP
$300 Million Credit Agreement


Michigan (State or other jurisdiction of incorporation or organization)		38-0478040 (I.R.S. Employer Identification No.)

500 Griswold Street, Detroit, Michigan (Address of principal executive offices)		48226-1279 (Zip Code)


			PAGE
			NUMBER

DEFINITIONS				1

PART I – FINANCIAL INFORMATION
	Item 1. Financial Statements
		Consolidated Statement of Operations		7
		Consolidated Statement of Retained Earnings		7
		Consolidated Statement of Financial Position		8
		Consolidated Statement of Cash Flows		9
		Notes to Consolidated Financial Statements		10
		Independent Accountants’ Report		14
	Item 2. Management’s Narrative Analysis of Results of Operations			3

PART II – OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K			15

SIGNATURE				16


Customer Choice Program		A three-year program that began in April 1999 which allows a limited number of customers to purchase gas from suppliers other than MichCon.

DTE		DTE Energy Company and subsidiaries. Indirectly, the parent company for MichCon.

DTEE		DTE Enterprises, Inc. and subsidiaries, a wholly owned subsidiary of DTE.

End User Transportation		A gas delivery service historically provided to large-volume commercial and industrial customers who purchase natural gas directly from producers or brokerage companies. Under MichCon’s Customer Choice Program that began in 1999, this service is also provided to residential customers and small-volume commercial and industrial customers.

FASB		Financial Accounting Standards Board.

Gas Sales Program		A three-year program that began in January 1999 under which MichCon’s gas sales rate includes a gas commodity component that is fixed at $2.95 per Mcf.

Gas Storage		For MichCon, the process of injecting, storing and withdrawing natural gas from a depleted underground natural gas field.

GCR		Gas Cost Recovery; a process by which MichCon, through annual gas cost proceedings before the Michigan Public Service Commission, is allowed to recover its reasonable and prudent cost of gas sold. The GCR was suspended under the Regulatory Reform Plan for the three-year period ending on December 31, 2001.

Intermediate Transportation		A gas delivery service provided to producers, brokers and other gas companies that own the natural gas, but are not the ultimate consumers.

MCN		MCN Energy Group Inc. and its subsidiaries.

MichCon		Michigan Consolidated Gas Company; an indirect, wholly owned natural gas distribution and intrastate transmission subsidiary of DTE.

MPSC		Michigan Public Service Commission; a state agency that regulates, among other things, the intrastate aspects of the natural gas industry within Michigan.


Normal Weather		The average annual degree days in MichCon’s service area during a recent 30-year period.

Regulatory Reform Plan		The plan approved by the MPSC in April 1998 that provided for: (i) the Gas Sales Program, (ii) the Customer Choice Program; and (iii) an income sharing provision that allows customers to share in profits when actual returns on equity from utility operations exceed predetermined thresholds.

SFAS		Statement of Financial Accounting Standards.



	Quarter						9 Months

	Dollar			Percent			Dollar			Percent
Earnings Components (Dollars in Millions)	Change			Change			Change			Change
Increases (Decreases) Comparing 2001 to 2000
Operating Revenues	$	(10.4	)		(7.9	)%	$	17.8			2.3	%
Cost of Gas		21.6			62.8			88.0			27.4
Operation and Maintenance		15.9			27.5			24.0			13.3
Property and Other Taxes		5.9			44.1			(.1	)		(.2	)
Merger & Restructuring Charges		(.3	)		(18.1	)		100.2			N/M
Interest Income		2.1			N/M			5.4			N/M
Loss on Joint Venture		(2.6	)		N/M			(9.3	)		N/M
Income Tax Provision		(18.8	)		N/M			(68.7	)		N/M



	Quarter				9 Months

	2001		2000		2001		2000

Gas Markets (in Millions)
Gas Sales	$	81.5	$	85.5	$	624.5	$	590.3
End User Transportation		18.3		21.0		77.3		85.4

		99.8		106.5		701.8		675.7
Intermediate Transportation		10.2		12.2		34.0		39.4
Other		11.9		13.6		44.5		47.4

	$	121.9	$	132.3	$	780.3	$	762.5

Gas Markets (in Bcf)
Gas Sales		11.9		12.8		120.6		113.8
End User Transportation		32.1		31.3		110.6		120.2

		44.0		44.1		231.2		234.0
Intermediate Transportation		153.7		132.1		473.9		426.7

		197.7		176.2		705.1		660.7



			Three Months Ended						Nine Months Ended
			September 30						September 30

			2001			2000			2001			2000
(in Thousands)

Operating Revenues			$	121,876		$	132,269		$	780,266		$	762,504

Operating Expenses
	Cost of gas (Note 4)			55,894			34,332			408,996			320,960
	Operation and maintenance			73,648			57,778			204,227			180,253
	Depreciation and depletion			26,146			25,995			79,017			78,002
	Property and other taxes			19,142			13,281			45,759			45,862
	Merger and restructuring charges (Notes 2 and 3)			1,412			1,725			103,376			3,151

		Total operating expenses		176,242			133,111			841,375			628,228

Operating Income (Loss)				(54,366	)		(842	)		(61,109	)		134,276

Other Income and (Deductions)
	Interest income			2,426			371			7,360			1,943
	Interest on long-term debt			(12,129	)		(11,896	)		(33,294	)		(36,280	)
	Other interest expense			(2,460	)		(2,194	)		(8,915	)		(7,063	)
	Loss on joint venture (Note 6)			(2,640	)		–			(9,342	)		–
	Equity in earnings of joint ventures			566			503			1,894			1,689
	Other			2,291			961			2,261			1,155

		Total other income and (deductions)		(11,946	)		(12,255	)		(40,036	)		(38,556	)

Income (Loss) Before Income Taxes				(66,312	)		(13,097	)		(101,145	)		95,720
Income Tax Provision (Benefit)				(23,057	)		(4,286	)		(35,096	)		33,604

Net Income (Loss)			$	(43,255	)	$	(8,811	)	$	(66,049	)	$	62,116


		September 30		December 31
		2001		2000
(in Thousands)
ASSETS
Current Assets
	Cash and cash equivalents	$	7,005	$	12,673
	Accounts receivable, less allowance for doubtful accounts of $12,240 and $18,912, respectively		99,733		157,793
	Accrued unbilled revenues		26,126		135,465
	Gas in inventory (Note 4)		121,723		13,586
	Materials and supplies		16,991		14,173
	Property taxes assessed applicable to future periods		30,159		54,767
	Income taxes receivable		27,165		–
	Other		10,068		21,295

			338,970		409,752

Deferred Charges and Other Assets
	Investment in and advances to joint ventures		8,640		20,068
	Long-term investments		68,452		70,643
	Investment in capital lease		83,965		76,395
	Deferred environmental costs		26,783		26,372
	Prepaid benefit costs		215,023		214,068
	Other		49,330		52,324

			452,193		459,870

Property, Plant and Equipment, at cost			3,039,163		2,980,627
	Less – Accumulated depreciation and depletion		1,597,634		1,538,311

			1,441,529		1,442,316

		$	2,232,692	$	2,311,938

LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
	Accounts payable	$	123,306	$	98,357
	Notes payable		199,307		278,762
	Current portion of long-term debt and capital lease obligations		21,157		24,652
	Federal income, property and other taxes payable		22,609		67,636
	Customer deposits		16,708		17,696
	Other		54,333		59,366

			437,420		546,469

Deferred Credits and Other Liabilities
	Deferred income taxes		136,370		141,552
	Unamortized investment tax credit		24,603		25,867
	Tax benefits amortizable to customers		137,510		138,161
	Accrued environmental costs		22,296		25,608
	Minority interest		648		635
	Other		97,813		55,380

			419,240		387,203

Long-Term Debt, including capital lease obligations			780,773		641,369


Contingencies (Notes 5a and 9)

Common Shareholder’s Equity
	Common stock		10,300		10,300
	Additional paid-in capital		231,728		231,949
	Retained earnings		353,231		494,648

			595,259		736,897

		$	2,232,692	$	2,311,938


Exhibit
Number		Description

	4-2	Third Supplemental Indenture, dated as of August 15, 2001, establishing 6 1/8% Senior Notes due 2008.

	4-3	Mortgage Supplemental Indenture, dated as of August 15, 2001, establishing the 6 1/8% collateral bonds due 2008.

	15-2	Awareness Letter of Deloitte & Touche LLP regarding their report dated November 13, 2001.

	99-1	$300 million Credit Agreement dated as of November 7, 2001.