exv4w27







	 	 	 	 	 



EXHIBIT 4.27




FIFTH SUPPLEMENTAL INDENTURE




between




MICHIGAN ELECTRIC TRANSMISSION COMPANY, LLC




and




THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.




Trustee




 






Dated as of April 20, 2010




 






Supplementing the First Mortgage Indenture




Dated as of December 10, 2003




THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS




Establishing a series of Securities designated 5.64% Senior Secured Notes due 2040




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	Page	 
	ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
	 	 	7	 
	 
	 	 	 	 
	ARTICLE TWO TITLE, FORM AND TERMS AND CONDITIONS OF THE NOTES
	 	 	12	 
	 
	 	 	 	 
	Section 2.01. The Notes
	 	 	12	 
	Section 2.02. Payment on the Notes
	 	 	13	 
	Section 2.03. Mandatory Redemption of the Notes
	 	 	15	 
	Section 2.04. Optional Redemption
	 	 	15	 
	Section 2.05. Purchase of Notes
	 	 	16	 
	Section 2.06. Payment upon Event of Default
	 	 	16	 
	Section 2.07. Transfers
	 	 	17	 
	 
	 	 	 	 
	ARTICLE THREE ADDITIONAL COVENANTS
	 	 	17	 
	 
	 	 	 	 
	Section 3.01. Affirmative Covenants of the Company
	 	 	17	 
	Section 3.02. Negative Covenants of the Company
	 	 	18	 
	 
	 	 	 	 
	ARTICLE FOUR ADDITIONAL EVENTS OF DEFAULT
	 	 	21	 
	 
	 	 	 	 
	Section 4.01. Events of Default
	 	 	21	 
	Section 4.02. Acceleration of Maturity
	 	 	22	 
	 
	 	 	 	 
	ARTICLE FIVE MISCELLANEOUS PROVISIONS
	 	 	23	 
	 
	 	 	 	 
	Section 5.01. Execution of Fifth Supplemental Indenture
	 	 	23	 
	Section 5.02. Effect of Headings
	 	 	23	 
	Section 5.03. Successors and Assigns
	 	 	23	 
	Section 5.04. Severability Clause
	 	 	23	 
	Section 5.05. Benefit of Fifth Supplemental Indenture
	 	 	23	 
	Section 5.06. Execution and Counterparts
	 	 	24	 
	Section 5.07. Conflict with Mortgage Indenture
	 	 	24	 
	Section 5.08. Recitals
	 	 	24	 
	Section 5.09. Governing Law
	 	 	24	 






	 	 	 	 	 

	Schedule 1
	 	Recording Information
	 
	 	 	 	 
	Exhibit A
	 	Description of Properties
	Exhibit B
	 	Subordination Terms
	Exhibit C
	 	Form of Note







 











 





          FIFTH SUPPLEMENTAL INDENTURE (this “FIFTH SUPPLEMENTAL INDENTURE”), dated as of April
20, 2010, between MICHIGAN ELECTRIC TRANSMISSION COMPANY, LLC, a limited liability company
organized and existing under the laws of the State of Michigan (herein called the
“Company”), having its principal office at 27175 Energy Way, Novi, Michigan 48377, and THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (as successor to JPMorgan Chase Bank, N.A.), a national
banking association organized under the laws of the United States, as trustee (herein called the
“Trustee”), the office of the Trustee at which on the date hereof its corporate trust
business is administered being 2 N. LaSalle, Suite 1020, Chicago, Illinois 60602.




RECITALS OF THE COMPANY




          WHEREAS, the Company has heretofore executed and delivered to the Trustee a First Mortgage
Indenture dated as of December 10, 2003 (the “Original Mortgage Indenture”), as amended and
supplemented by the Third Supplemental Indenture thereto, dated as of November 25, 2008, (together
with the Original Mortgage Indenture, the “Mortgage Indenture”) encumbering the real
property interests as more particularly described on Exhibit A and Exhibit B attached to the
Original Mortgage Indenture and on Exhibit A to the Fourth Supplemental Indenture thereto, and
providing for (i) the issuance by the Company from time to time of its bonds, notes or other
evidences of indebtedness (in the Mortgage Indenture and herein called the “Debt
Securities”) to be issued in one or more series and to provide security for the payment of the
principal of and premium (including any Make-Whole Amount), if any, and interest, if any, on the
Debt Securities and (ii) the issuance from time to time of Collateral Securities (as defined in the
Mortgage Indenture) (together with the Debt Securities, in the Mortgage Indenture and herein called
the “Securities”); and




          WHEREAS, the Company has heretofore executed and delivered the following supplemental
indentures, each dated as hereinafter set forth:




	 	 	 
	Instrument	 	Date
	First Supplemental Indenture

	 	December 10, 2003
	 
	 	 
	Second Supplemental Indenture

	 	December 10, 2003
	 
	 	 
	Third Supplemental Indenture

	 	November 25, 2008
	 
	 	 
	Fourth Supplemental Indenture

	 	December 11, 2008






          WHEREAS, the Original Mortgage Indenture, the First Supplemental Indenture, the Second
Supplemental Indenture and the Fourth Supplemental Indenture listed in the foregoing paragraph were
recorded in the offices set forth in Schedule 1 attached hereto; and




          WHEREAS, there have heretofore been issued under the Indenture the following Securities in the
principal amounts as follows:




 









 








	 	 	 	 	 	 	 	 	 
	Title	 	Issued	 	 	Principal Amount	 
	5.75% Senior Secured
Notes, due 2015
	 	December 10, 2003	 	$	175,000,000	 
	 
	 	 	 	 	 	 	 	 
	Senior Secured Bonds,
Collateral Series A
	 	December 10, 2003 (Discharged on March 29, 2007)	 	$	35,000,000
	 
	 		 	 	 	 
	 
	 	 			 	 
	6.63% Senior Secured
Notes due 2014
	 	December 11, 2008	 	$	50,000,000	 






          WHEREAS, in addition to the property described in the Original Mortgage Indenture and the
Fourth Supplemental Indenture, the Company has acquired certain other property, rights, and
interests in property; and




          WHEREAS, the Company, in the exercise of the power and authority conferred upon and reserved
to it under the provisions of the Mortgage Indenture and pursuant to a Company Resolution, has duly
determined to make, execute and deliver to the Trustee this Fifth Supplemental Indenture to the
Mortgage Indenture as permitted by Sections 201, 301 and 1201 of the Mortgage Indenture in order to
establish the form and terms of, and to provide for the creation and issuance of, a series of
Securities under the Mortgage Indenture in an aggregate principal amount of $50,000,000 and to
amend and supplement the Mortgage Indenture as herein provided; and




          WHEREAS, all things necessary to make the Notes (as defined herein), 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 Mortgage Indenture set forth against
payment therefor the valid, binding and legal obligations of the Company and to make this Fifth
Supplemental Indenture a valid, binding and legal agreement of the Company, have been done;




GRANTING CLAUSES




          NOW, THEREFORE, THIS FIFTH SUPPLEMENTAL INDENTURE WITNESSETH 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 Mortgage Indenture and in this Fifth Supplemental Indenture and for other good and
valuable consideration the receipt and sufficiency of which are hereby acknowledged, and in order
to secure the payment of the principal of and premium, if any, and interest, if any, on, and all
other amounts (including, without limitation, fees, expenses and indemnities) in connection with,
all Securities from time to time Outstanding and the performance of the covenants therein and
herein contained and to declare the terms and conditions on which such Securities are secured, the
Company hereby grants, bargains, sells, conveys, assigns, transfers, mortgages, pledges, sets over
and confirms to the Trustee, and grants to the Trustee, for itself and for the benefit of the
Holders, with power of sale, a lien upon and a security interest in, the following (subject,
however, to the terms and conditions set forth in the Mortgage Indenture and herein):





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GRANTING CLAUSE FIRST




          All right, title and interest of the Company, as of the date of the execution and delivery of
this Fifth Supplemental Indenture, as originally executed and delivered, in and to all of the
following property:




          (a) all real property owned in fee and other interests in real property located in the State
of Michigan or wherever else situated including, but not limited to, such property as described in
Exhibit A and Exhibit B attached to the Original Mortgage Indenture, Exhibit A attached to the
Fourth Supplemental Indenture and Exhibit A attached hereto;




          (b) the entire easement estate created under and by virtue of the Easement Agreement (as
defined in Section 101 of the Original Mortgage Indenture), including any interest in any fee, or
greater or lesser title to such easement estate, including, without limitation, the Company’s
interest in the parcels of real property described in Exhibit B attached to the Original Mortgage
Indenture for purposes of local recording of the Indenture (collectively, the “Easement
Land”) and the Improvements (as defined below) that the Company may own or hereafter acquire
(whether acquired pursuant to a right or option contained in the Easement Agreement or otherwise)
and all credits, deposits, options, privileges and rights of the Company under the Easement
Agreement (including all rights of use, occupancy and enjoyment) and under any amendments,
supplements, extensions, renewals, restatements, replacements and modifications thereof (including,
without limitation, (i) the right to give consents, (ii) the right to receive moneys payable to the
Company, (iii) the right to renew or extend the Easement Agreement for a succeeding term or terms,
(iv) the right, if any, to purchase the Real Estate (as defined below) and (v) the right to
terminate or modify the Easement Agreement); all of the Company’s claims and rights to the payment
of damages arising under the Bankruptcy Code (as defined in Section 101 of the Original Mortgage
Indenture) from any rejection of the Easement Agreement by the grantor thereunder or any other
party (such parcel(s) of real property (including the real property owned in fee and the Easement
Land and the Company’s easement estate), together with all of the buildings, improvements,
structures and fixtures now or subsequently located thereon (the “Improvements”) are
collectively referred to as the “Real Estate”);




          (c) the Improvements or any part thereof (whether owned in fee by the Company or held pursuant
to the Easement Agreement or otherwise) and all the estate, right, title, claim or demand
whatsoever of the Company, in possession or expectancy, in and to the Real Estate or any part
thereof;




          (d) all rights of way, gores of land, streets, ways, alleys, passages, sewer rights, waters,
water courses, water and riparian rights, development rights, air rights, mineral rights and all
estates, rights, titles, interests, privileges, licenses, tenements, hereditaments and
appurtenances belonging, relating or appertaining to the Real Estate, and any reversions,
remainders, rents, issues, profits and revenue thereof and all land lying in the bed of any street,
road or avenue, in front of or adjoining the Real Estate to the center line thereof (the assets
described in clauses (a), (b) and (c) above and this clause (d) are collectively referred to as the
“Real Property”);






3









 








          (e) all fixtures, towers, pole structures, poles, crossarms, wires, cables, conduits, guys,
anchors, transformers, insulators, substations, switching stations, chattels, business machines,
machinery, apparatus, equipment, furnishings, fittings and articles of personal property of every
kind and nature whatsoever, and all appurtenances and additions thereto and substitutions or
replacements thereof (together with, in each case, attachments, components, parts and accessories)
currently owned or subsequently acquired by the Company and now or subsequently attached to, or
contained in or used or usable in any way in connection with any operation or letting of the Real Estate, including but without limiting the
generality of the foregoing, all screens, awnings, shades, blinds, curtains, draperies, artwork,
carpets, rugs, storm doors and windows, furniture and furnishings, heating, electrical, and
mechanical equipment, lighting, switchboards, plumbing, ventilating, air conditioning and
air-cooling apparatus, refrigerating, and incinerating equipment, escalators, elevators, loading
and unloading equipment and systems, stoves, ranges, laundry equipment, cleaning systems (including
window cleaning apparatus), telephones, communication systems (including satellite dishes and
antennae), televisions, computers, sprinkler systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks,
conduits, appliances, fittings and fixtures of every kind and description and all other assets that
constitute “Equipment” as defined in the Uniform Commercial Code (all of the foregoing in this
clause (e), collectively being referred to as the “Equipment”);




          (f) all substitutes and replacements of, and all additions and improvements to, the Real
Estate and the Equipment, subsequently acquired by or released to the Company or constructed,
assembled or placed by the Company on the Real Estate, immediately upon such acquisition, release,
construction, assembling or placement, including, without limitation, any and all building
materials whether stored at the Real Estate or offsite, and, in each such case, without any further
mortgage, conveyance, assignment or other act by the Company;




          (g) all leases, subleases, underlettings, concession agreements, management agreements,
licenses and other agreements relating to the use or occupancy of the Real Estate or the Equipment
or any part thereof, now existing or subsequently entered into by the Company and whether written
or oral and all guarantees of any of the foregoing (collectively, as any of the foregoing may be
amended, restated, extended, renewed or modified from time to time, the “Leases”), and all
rights of the Company in respect of cash and securities deposited thereunder and the right to
receive and collect the revenues, income, rents, issues and profits thereof, together with all
other rents, royalties, issues, profits, revenue, income and other benefits arising from the use
and enjoyment of the Mortgaged Property (collectively, the “Rents”), including, but not
limited to, all rights conferred by Act No. 210 of the Michigan Public Acts of 1953 as amended by
Act No. 151 of the Michigan Public Acts of 1966 (MCLA 554.231 et seq.), and Act No.
228 of the Michigan Public Acts of 1925 as amended by Act No. 55 of the Michigan Public Acts of
1933 (MCLA 554.211 et seq.);




          (h) all trade names, trade marks, logos, copyrights, good will and books and records relating
to or used in connection with the operation of the Real Estate or the Equipment or any part
thereof, all rights, priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including copyrights, copyright
licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to sue at law or in equity for any infringement or other







4









 







impairment thereof, including the right to receive all proceeds and damages therefrom; all general intangibles
related to the operation of the Improvements now existing or hereafter arising and all other assets
that constitute “Intellectual Property” as defined in the Uniform Commercial Code (all of the
foregoing in this clause (h), collectively being referred to as “Intellectual Property”);




          (i) all unearned premiums under insurance policies now or subsequently obtained by the Company
relating to the Real Estate or Equipment and the Company’s interest in and to all proceeds of any
such insurance policies (including title insurance policies) including the right to collect and
receive such proceeds, subject to the provisions relating to insurance generally set forth below;
and all awards and other compensation, including the interest payable thereon and the right to
collect and receive the same, made to the present or any subsequent owner of the Real Estate or
Equipment for the taking by eminent domain, condemnation or otherwise, of all or any part of the
Real Estate or any easement or other right therein;




          (j) all contracts from time to time executed by the Company or any Manager or agent on its
behalf relating to the ownership, construction, maintenance, repair, operation, occupancy, sale or
financing of the Real Estate or Equipment or any part thereof and all agreements relating to the
purchase or lease of any portion of the Real Estate or any property which is adjacent or peripheral
to the Real Estate, together with the right to exercise such options and all leases of Equipment;
all consents, licenses, building permits, certificates of occupancy and other Governmental
Approvals relating to construction, completion, occupancy, use or operation of the Real Estate or
any part thereof; and all drawings, plans, specifications and similar or related items relating to
the Real Estate (all of the foregoing in this clause (j) being referred to as “Real Estate
Contracts”);




          (k) any and all moneys now or subsequently on deposit for the payment of real estate taxes or
special assessments against the Real Estate or for the payment of premiums on insurance policies
covering the foregoing property or otherwise on deposit with or held by the Company as provided in
the Indenture;




          (l) any right to payment of a monetary obligation, whether or not earned by performance, (i)
for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of,
(ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be
issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to
be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising
out of the use of a credit or charge card or information contained on or for use with the card, or
(viii) as winnings in a lottery or other game of chance operated or sponsored by a state,
governmental unit of a state, or person licensed or authorized to operate the game by a state or
governmental unit of the state;




          (m) all Accounts;




          (n) all Chattel Paper;




          (o) all Contracts;




          (p) all Deposit Accounts;





5









 








          (q) all Documents;




          (r) all General Intangibles;




          (s) all Instruments;




          (t) all Inventory;




          (u) all Investment Property;




          (v) all Letter of Credit Rights;




          (w) all other property not otherwise described above;




          (x) all books and records pertaining to the Mortgaged Property; and




          (y) to the extent not otherwise included, all Proceeds, Supporting Obligations and products of
any and all of the foregoing and all collateral security and guarantees given by any Person with
respect to any of the foregoing.




GRANTING CLAUSE SECOND




          All right, title and interest of the Company in all property described in the foregoing
Granting Clause First, which may be hereafter acquired by the Company, it being the intention of
the Company that all such property and all such rights, title and interests acquired by the Company
after the date of the execution and delivery of this Fifth Supplemental Indenture, as originally
executed and delivered, shall be as fully embraced within and subjected to the Lien hereof as if
such property were owned by the Company as of the date of the execution and delivery of this Fifth
Supplemental Indenture, as originally executed and delivered;




GRANTING CLAUSE THIRD




          All tenements, hereditaments, servitudes and appurtenances belonging or in any wise
appertaining to the aforesaid property, with the reversions and remainders thereof;




          TO HAVE AND TO HOLD all such property, unto the Trustee, its successors in trust and their
assigns forever;




          IN TRUST, for the equal and ratable benefit and security of the Holders from time to time of
all Outstanding Securities without any priority of any such Security over any other such Security;




          PROVIDED, HOWEVER, that the right, title and interest of the Trustee in and to the Mortgaged
Property shall cease, terminate and become void in accordance with, and subject to the conditions
set forth in, Article Seven or Article Twelve of the Original Mortgage Indenture, and if,
thereafter, the principal of and premium, if any, and interest, if any, on, and any other amounts
(including, without limitation, fees, expenses and indemnities) in connection with, the Securities
shall have been paid to the Holders thereof, or shall have been paid to the





6









 







Company pursuant to Section 603 of the Original Mortgage Indenture, then and in that case the Indenture shall
terminate, and the Trustee shall execute and deliver to the Company such instruments as the Company
shall require to evidence such termination; otherwise the Indenture, and the estate and rights
hereby granted, shall be and remain in full force and effect;




          IT IS HEREBY COVENANTED AND AGREED by and between the Company and the Trustee that all the
Securities are to be authenticated and delivered, and that the Mortgaged Property is to be held,
subject to the further covenants, conditions and trusts set forth in the Indenture; and




          THE PARTIES HEREBY COVENANT AND AGREE as follows:




ARTICLE ONE




DEFINITIONS AND OTHER PROVISIONS

OF GENERAL APPLICATION



          (a) Mortgage Indenture Definitions. Each capitalized term that is used herein and is
defined in the Mortgage Indenture shall have the meaning specified in the Mortgage Indenture unless
such term is otherwise defined herein; provided, however, that any reference to a “Section” or
“Article” refers to a Section or Article, as the case may be, of this Fifth Supplemental Indenture,
unless otherwise expressly stated.




          (b) Additional Definitions. For purposes of this Fifth Supplemental Indenture, except
as otherwise expressly provided or unless the context otherwise requires, the following capitalized
terms shall have the meanings set forth below:




          “Closing Date” has the meaning assigned to that term in Schedule B to the Note
Agreement.




          “Code” means the United States Internal Revenue Code of 1986, as amended.




          “Dispose” or “Disposition” means a sale, lease, transfer or other disposition
of any assets of the Company.




          “Environmental Laws” means any and all federal, state, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits, licenses or legally
enforceable governmental restrictions relating to pollution and the protection of the environment
or the release of any materials into the environment, including but not limited to those related to
Hazardous Materials.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time and the regulations promulgated thereunder.




          “ERISA Affiliate” means, with respect to any Person, any trade or business (whether or
not incorporated) which is a member of a group of which such Person is a member and which is
treated as a single employer with such Person under Section 414 of the Code.






7









 








          “ERISA Event” means:




          (a) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with
respect to any Plan unless the notice requirement with respect to such event has been waived;




          (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(c) of ERISA;




          (d) the withdrawal by the Company 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;




          (e) the conditions for the imposition of a lien under Section 302(f) of ERISA shall have been
met with respect to any Plan;




          (f) the adoption of an amendment to a Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA;




          (g) the institution by the PBGC of proceedings to terminate, or cause a trustee to be
appointed to administer, a Plan pursuant to Section 4042 of ERISA; or




          (h) the incurrence of withdrawal liability under Title IV of ERISA by the Company or any of
its ERISA Affiliates upon the withdrawal by the Company or any of its ERISA Affiliates from a
Multiemployer Plan or the incurrence of liability by the Company or any of its ERISA Affiliates
upon the termination of a Multiemployer Plan.




          “Event of Default” has the meaning assigned to that term in Article Four of this Fifth
Supplemental Indenture.




          “Fifth Supplemental Indenture” has the meaning assigned to that term in the
introductory paragraph hereof.




          “Financing Agreements” means the Mortgage Indenture, this Fifth Supplemental
Indenture, the Note Agreement and the Notes.




          “Hazardous Material” means any and all pollutants, toxic or hazardous wastes or other
substances that might pose a hazard to health and safety, the removal of which may be required or
the generation, manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of
which is restricted, prohibited or penalized by any applicable law including, but not limited to,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum
products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.




          “Holdco” means ITC Holdings Corp., a Michigan corporation.






8









 








          “Indenture” means the Original Mortgage Indenture, as supplemented and modified by any
and all indentures supplemental thereto, including this Fifth Supplemental Indenture.




          “Initial Noteholder” means each Noteholder listed on Schedule A to the Note Agreement
purchasing any Notes on the Closing Date.




          “Institutional Investor” means (a) any Initial Noteholder, (b) any holder of more than
$5,000,000 of the aggregate principal amount of the Notes and (c) any bank, trust company, other
financial institution, pension plan, investment company, insurance company, or similar financial
institution.




          “Investment” or “Invest” means (a) a purchase or acquisition of, or an
investment or reinvestment in, Rate Base Assets or (b) without duplication, the making of a firm,
good faith contractual commitment, in the ordinary course of business and not subject to any
conditions in the Company’s control, to purchase or acquire, or invest or reinvest in, Rate Base
Assets.




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





“Called Principal” means, with respect to any Note, the principal of
such Note that is to be redeemed pursuant to Section 2.03 or 2.04 or has
become or is declared to be immediately due and payable pursuant to Section
802 of the Indenture, as the context requires.




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




“Reinvestment Yield” means, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 a.m. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as “Page PX1” on the Bloomberg Financial Markets Services
Screen (or such other display as may replace Page PX1 on the Bloomberg
Financial Markets Services Screen) for the most recently issued actively
traded on the run U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as



9









 







of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields
reported as of such time are not ascertainable (including by way of
interpolation), the Treasury Constant Maturity Series Yields reported, for
the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (or any comparable
successor publication) for U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. In the case of each determination
under clause (i) or clause (ii), as the case may be, of the preceding
sentence, such implied yield will be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between (1) the applicable U.S. Treasury security with the maturity closest
to and greater than such Remaining Average Life and (2) the applicable
traded U.S. Treasury security with the maturity closest to and less than
such Remaining Average Life. The Reinvestment Yield shall be rounded to the
number of decimal places as appears in the interest rate of the applicable
Note.




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




“Remaining Scheduled Payments” means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date; provided that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 2.03 or 2.04
or Section 802 of the Indenture.




“Settlement Date” means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be redeemed pursuant to
Section 2.03 or 2.04 or has become or is declared to be immediately due and
payable pursuant to Section 802 of the Indenture, as the context requires.



10









 





          “Material” means material in relation to the business, operations, affairs, financial
condition, assets or properties of the Company.




          “Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company, (b) the ability of
the Company to perform its obligations under any Financing Agreement (including, the timely
payments of principal of, or Make-Whole Amount, if any, and interest on, the Notes), (c) the
legality, validity or enforceability of the Financing Agreements or (d) the perfection or priority
of the Liens purported to be created pursuant to the Indenture or the rights and remedies of
the Noteholders with respect thereto.




          “Mortgage Indenture” has the meaning assigned to that term in the first Recital.




          “Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of
ERISA, to which the Company or any of its ERISA Affiliates 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, such plan being maintained pursuant to one or more collective
bargaining agreements.




          “Multiple Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, which (a) is maintained for employees of the Company or any of its ERISA
Affiliates and at least one Person other than the Company and its ERISA Affiliates or (b) was so
maintained and in respect of which the Company or any of its ERISA Affiliates could have liability
under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.




          “Net Proceeds” means, with respect to any Disposition of assets, the gross proceeds
thereof (including any such proceeds received by way of deferred payment, installment, price
adjustment or otherwise), whether in cash or otherwise, net of any taxes paid or reasonably
estimated to be paid as a result thereof (after taking into account any available tax credits or
deductions applicable thereto).




          “Note” has the meaning assigned to that term in Section 2.01(a).




          “Note Agreement” means that certain Note Purchase Agreement, dated as of May 6, 2010,
between the Company and the Initial Noteholders.




          “Noteholders” means (a) the Initial Noteholders and (b) each subsequent holder of a
Note as shown on the register maintained by the Company pursuant to Section 305 of the Mortgage
Indenture.




          “Original Mortgage Indenture” has the meaning assigned to that term in the first
Recital.




          “Payment Event of Default” means an Event of Default under subsections (a) or (b) of
Section 801 of the Mortgage Indenture, or, with respect to failures to make payment only, Section
4.01(d).




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          “PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle
A of Title IV of ERISA, or any successor.




          “Plan” means an “employee benefit plan” as defined in Section 3(3) of ERISA that is
subject to Title IV of ERISA or is subject to Section 412 of the Code, other than a Multiemployer
Plan, which is maintained, sponsored or contributed to, by the Company or any of its ERISA
Affiliates.




          “Rate Base Assets” means assets of the Company which are included in FERC’s
determination of the Company’s revenue requirement under the OATT.




          “Reputable Insurer” means any financially sound and responsible insurance provider
permitted to do business in the State of Michigan rated “A-” or better by A.M. Best Company (or if
such ratings cease to be published generally for the insurance industry, meeting comparable
financial standards then applicable to the insurance industry).




          “Responsible Officer”, when used with respect to the Company, means any Senior
Financial Officer or any vice president of the Company or Holdco and any other officer of the
Company or Holdco with responsibility for the administration of the relevant Financing Agreement,
or portion thereof.




          “Senior Financial Officer” means the chief financial officer, principal accounting
officer, treasurer, comptroller or any vice president of Holdco.




          “Subordinated Debt” means unsecured Debt of the Company fully subordinated in right of
payment to the Notes and other Senior Secured Debt substantially on the terms set forth in
Exhibit B attached hereto.




          “Subsidiary” means, as to any Person, any Corporation or other business entity in
which such Person beneficially owns, directly or indirectly, a majority of the outstanding voting
securities thereof.




          “Transmission Documents” shall have the meaning assigned to such term in the Note
Agreement.




ARTICLE TWO




TITLE, FORM AND TERMS AND CONDITIONS OF THE NOTES




Section 2.01. The Notes.



          (a) The Securities of this series to be issued under the Mortgage Indenture pursuant to this
Fifth Supplemental Indenture shall be designated as “5.64% Senior Secured Notes due 2040” (the
“Notes”) and shall be Debt Securities issued under the Indenture.




          (b) The Trustee shall authenticate and deliver the Notes for original issue on the Closing
Date in the aggregate principal amount of $50,000,000, upon a Company Order for the authentication
and delivery thereof pursuant to Section 401 of the Mortgage Indenture.





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          (c) Interest on the Notes shall be payable to the Persons in whose names such Notes are
registered at the close of business on the Regular Record Date for such interest (as specified in
subsection (e) below), except as otherwise expressly provided in the form of such Notes attached
hereto as Exhibit C.




          (d) The Notes shall mature and the principal thereof shall be due and payable together with
all accrued and unpaid interest thereon on May 6, 2040.




          (e) The Notes shall bear interest at the rate of 5.64% per annum; provided that, to the extent
permitted by law, any overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount shall bear interest at a rate
per annum from time to time equal to the greater of (i) 7.64% and (ii) 2.0% over the rate of
interest publicly announced by JPMorgan Chase Bank, N.A. from time to time in New York, New York as
its “base” or “prime” rate. Interest shall accrue on the Notes from the Closing Date, or the most
recent date to which interest has been paid or duly provided for. The Interest Payment Dates for
the Notes shall be June 30 and December 31 in each year, commencing June 30, 2010, and the Regular
Record Dates with respect to the Interest Payment Dates for the Notes shall be the 15th calendar
day preceding each Interest Payment Date (whether or not a Business Day); provided, however that
interest payable at Maturity will be payable to the Noteholder to whom principal is payable.




          (f) Subject to Section 2.02, the office or agency of the Trustee in New York, New York, which
as of the date hereof is located at c/o The Bank of New York Mellon, Trust Services Window, 101
Barclay Street, New York, New York 10286, shall be the place at which the principal of and
Make-Whole Amount, if any, and interest on the Notes shall be payable. The office or agency of the
Trustee in New York, New York, which as of the date hereof is located at c/o The Bank of New York
Mellon, Trust Services Window, 101 Barclay Street, New York, New York 10286, shall be the place at
which registration of transfer of the Notes may be effected; and The Bank of New York, N.A. shall
be the Security Registrar and the Paying Agent for the Notes; provided, however, that the Company
reserves the right to designate, by one or more Officer’s Certificates, its principal office in
Novi, Michigan as any such place or itself as the Security Registrar; provided, however, that there
shall be only a single Security Registrar for the Notes.




          (g) The Notes shall be issuable in registered form in denominations of at least $250,000 or
any integral multiple thereof.




          (h) The Notes shall not be defeasible pursuant to Sections 7.01 or 7.02 of the Indenture and
such Sections of the Indenture shall not apply to the Notes.




          (i) The Notes shall have such other terms and provisions as are provided in the form thereof
attached hereto as Exhibit C, and shall be issued in substantially such form.





Section 2.02. Payment on the Notes.



          (a) Subject to Section 2.02(b), payments of principal, Make-Whole Amount, if any, and interest
becoming due and payable on the Notes shall be made at the Place of Payment designated in Section
2.01(f) or such place as the Company may at any time, by notice,







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specify to each Noteholder, so long as such Place of Payment shall be either the principal office of the Company or the principal
office of a bank or trust company in New York, New York.




          (b) So long as any Initial Noteholder or its nominee shall be a Noteholder, and
notwithstanding anything contained in the Indenture, Section 2.02(a) or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount,
if any, and interest by the method and at the address specified for such purpose below
such Initial Noteholder’s name in Schedule A to the Note Agreement, or by such other method or
at such other address as such Initial Noteholder shall have from time to time specified to the
Company and the Trustee in writing for such purpose in accordance with the Note Agreement, without
the presentation or surrender of such Note or the making of any notation thereon, except that
concurrently with or reasonably promptly after payment or redemption in full of any Note, such
Initial Noteholder shall surrender such Note for cancellation to the Company at its principal
office or at the Place of Payment most recently designated by the Company pursuant to Section
2.02(a). Prior to any sale or other disposition of any Note held by such Initial Noteholder or its
nominee such Initial Noteholder will, at its election, either endorse thereon the amount of
principal paid thereon and the last date to which interest has been paid thereon or surrender such
Note to the Company in exchange for a new Note or Notes pursuant to Section 305 of the Indenture;
provided, that a transfer by endorsement shall not constitute a registration of transfer for
purposes of the Indenture and the Trustee and any agent of the Trustee shall be entitled to the
protections of Section 308 of the Indenture with respect to any Note, the transfer of which has not
been so registered. The Company will afford the benefits of this Section 2.02(b) to any
Institutional Investor that is the direct or indirect transferee of any Note purchased by such
Initial Noteholder under the Indenture. The Company agrees and acknowledges that the Trustee shall
not be liable for any Noteholder’s failure to perform its obligations under this Section 2.02(b).
Each Initial Noteholder and any such Institutional Investor by its purchase of its Note agrees to
indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred
without negligence, willful misconduct or bad faith on its part, arising out of or in connection
with such Noteholder’s or Institutional Investor’s failure to comply with the provisions of this
Section 2.02(b), including the costs and expenses of defending itself against any claim or
liability in connection therewith, such indemnity to survive the payment of such Notes and the
resignation or removal of the Trustee.




          (c) Notwithstanding anything to the contrary in Section 113 of the Mortgage Indenture, if the
Stated Maturity or any Redemption Date of the Notes shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of the Mortgage Indenture or this Fifth
Supplemental Indenture) payment of interest on or principal (and premium, if any) of the Notes due
at the Stated Maturity or on any Redemption Date thereof need not be made at such Place of Payment
on such date, but may be made on the next succeeding Business Day at such Place of Payment with the
same force and effect as if made on the Stated Maturity or on any Redemption Date thereof, provided
that interest shall accrue on the outstanding principal amount of the Notes due at the Stated
Maturity or on any Redemption Date thereof at the rate set forth in the Notes until the date of
actual payment.





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Section 2.03. Mandatory Redemption of the Notes.



          In addition to the mandatory redemption required by Section 501(a) of the Mortgage Indenture,
which Section 501(a) shall apply to the Notes, in the event that any one or more Dispositions
during any consecutive 12 month period (except Dispositions permitted under Section 3.02(b)(i) or
(ii)) yield Net Proceeds in excess of $10,000,000, in the aggregate, the Net Proceeds of such
Disposition or Dispositions shall be used for the mandatory redemption of the Notes, and/or the
redemption or prepayment of other Senior Secured Debt in accordance with its terms, on a date which
is no more than nine months following a Disposition that, when aggregated with any other
Dispositions, requires compliance with this Section 2.03 unless (x) during the nine month period immediately preceding the date of such Disposition, the Company
Invested in any Rate Base Assets in which case an amount of such Net Proceeds equal to the excess,
if any, of (A) the total aggregate amount of all such Investments made during such preceding nine
month period (excluding, however, the amount of any Investments made pursuant to clause (b) of the
definition of “Investment” that were not expended for Rate Base Assets during such nine month
period) over (B) the aggregate amount of Debt incurred by the Company (which, with respect to any
Debt incurred under any permitted credit facility of a revolving nature, shall be calculated on a
net basis after taking into account any borrowings, prepayments, repayments, reborrowings or other
extensions of credit made by or in favor of the Company thereunder), in each case, during such
preceding nine month period, need not be applied to such redemption or prepayment, as the case may
be, or (y) during the nine month period following the date of such Disposition, the Company shall
Invest in Rate Base Assets, in which case an amount of such Net Proceeds so Invested during such
following nine month period need not be applied to such redemption or prepayment, as the case may
be; provided, however, that in the event that any such amounts referred to in this clause (y)
Invested pursuant to clause (b) of the definition of “Investment” are not expended for Rate Base
Assets within a period of six months from the end of such following nine month period, any such
amounts not so expended shall be used for the mandatory redemption of the Notes, and/or the
redemption or prepayment of other Senior Secured Debt in accordance with its terms, on a date not
later than the last day of such six month period. Any redemption of the Notes pursuant to this
Section 2.03 shall be made (i) at a redemption price equal to the principal amount of the Notes
being redeemed and shall be accompanied by payment of accrued and unpaid interest on the principal
amount of the Notes so redeemed to the redemption date and a Make-Whole Amount and (ii) in
accordance with the procedures for optional redemption set forth in Section 2.04(b) below.
Notwithstanding anything to the contrary in this Section 2.03, any amounts utilized pursuant to
clauses (x) or (y) above to reduce the amount of Net Proceeds required to be applied to redemption
of the Notes and/or redemption or prepayment of other Senior Secured Debt in accordance with its
terms may be utilized no more than once with respect to the Net Proceeds of any one or more
Dispositions occurring in any consecutive twelve month period.





Section 2.04. Optional Redemption.



          (a) Pursuant to Section 501(b) of the Mortgage Indenture, the Notes may be redeemed at the
option of Company, in whole or in part, at any time or from time to time at a redemption price
equal to the principal amount of such Notes plus the Make-Whole Amount plus accrued and unpaid
interest thereon to the redemption date; provided, however, that if the Notes




15









 







are redeemed in part, the Notes shall not be redeemed in an amount less than $5,000,000 of the aggregate principal amount
of the Notes then Outstanding.




          (b) Notwithstanding anything to the contrary in Article Five of the Mortgage Indenture, the
redemption of the Notes shall take place in accordance with the procedures and requirements set
forth in this Section 2.04(b), without prejudice to the requirements of Section 502 (which shall
for purposes of this Fifth Supplemental Indenture also be applicable to a redemption under Section
2.03) and Sections 505 through 507 of the Mortgage Indenture. The Company (or the Trustee, if so
requested pursuant to Section 504 of the Mortgage Indenture) shall give each Noteholder written
notice of each optional redemption under this Section 2.04, or a mandatory redemption under Section
2.03, as the case may be, not less than 30 days and not
more than 60 days prior to the date fixed for such redemption. Each such notice shall specify
such date, the aggregate principal amount of the Notes to be redeemed on such date, the principal
amount of each Note held by such Noteholder to be redeemed (determined in accordance with Section
2.04(c)) and the interest to be paid on the redemption date with respect to such principal amount
being redeemed, and shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such redemption (calculated as if the date of
such notice were the date of the redemption), setting forth the details of such computation. Two
Business Days prior to such redemption, the Company shall deliver to each Noteholder and the
Trustee a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole
Amount as of the specified redemption date. The Trustee shall have no responsibility for such
calculation.




          (c) Notwithstanding anything to the contrary in Article Five of the Mortgage Indenture, in the
case of each partial redemption of the Notes pursuant to Section 2.04(b), the principal amount of
the Notes to be redeemed shall be allocated by the Trustee among all of the Notes at the time
Outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts
thereof not theretofor called for redemption.





Section 2.05. Purchase of Notes.



          Except as may be agreed to by a Noteholder or Noteholders in connection with an offer made to
all Noteholders on the same terms and conditions, the Company shall not and shall not permit any
Affiliate to purchase, redeem or otherwise acquire, directly or indirectly, any of the Outstanding
Notes except upon the payment or redemption of the Notes in accordance with the terms of the
Indenture. The Company will promptly cause the Trustee to cancel all Notes acquired by it or any
Affiliate pursuant to any payment, redemption or purchase of Notes pursuant to any provision of the
Indenture and no Notes may be issued in substitution or exchange for any such Notes.





Section 2.06. Payment upon Event of Default.



          Upon any Notes becoming due and payable under Section 802 of the Indenture, whether
automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal
amount of such Notes, plus (x) all accrued and unpaid interest thereon (including, without
limitation, interest accrued thereon at the applicable rate for overdue payments) and (y) the
Make-Whole Amount determined in respect of such principal amount (to the full extent





16









 







permitted by applicable Law), shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby waived. The Company
acknowledges that each holder of a Note has the right to maintain its investment in the Notes free
from repayment by the Company (except as herein specifically provided for) and that the provision
for payment of a Make-Whole Amount by the Company in the event that the Notes have become due and
payable under Section 802 of the Indenture, whether automatically or by declaration, as a result of
an Event of Default, is intended to provide compensation for the deprivation of such right under
such circumstances.





Section 2.07. Transfers.



          In registering the transfer of any Note in accordance with Section 305 of the Mortgage
Indenture, the Security Registrar and the Trustee shall have no responsibility to monitor
securities law compliance in connection with any such transfer.




ARTICLE THREE




ADDITIONAL COVENANTS




Section 3.01. Affirmative Covenants of the Company.



          For purposes of the Notes, pursuant to Section 301(20) of the Mortgage Indenture, Article Six
of the Mortgage Indenture is hereby supplemented by (i) deeming each reference to the phrase
“Material Adverse Effect” in Article Six of the Mortgage Indenture to be a reference to the phrase
“Material Adverse Effect” as defined in this Fifth Supplemental Indenture and (ii) incorporating
therein the following additional affirmative covenants which the Company shall observe solely for
the benefit of the Noteholders for so long as any Note is Outstanding:




          (a) Maintenance and Operation of Properties. The Company shall maintain and preserve,
develop, and operate in substantial conformity with all Transmission Documents, applicable Law,
Good Utility Practices, and all material Governmental Approvals, all elements of the Transmission
System which are used or necessary in the conduct of its businesses in good working order and
condition, ordinary wear and tear excepted, except where the failure to so maintain and preserve,
develop and operate the Transmission System would not reasonably be expected to have a Material
Adverse Effect.




          (b) Maintenance of Insurance. At any time and from time to time, the Company shall
provide or cause to be provided, for itself and its assets (including the Transmission System and
related equipment), insurance with Reputable Insurers (or self-insurance, if adequate reserves are
maintained with respect thereto) in amounts and within the limits and coverages (including
deductibles and co-insurance) customarily obtained for comparable businesses under similar
circumstances.




          (c) Use of Proceeds. The Company shall apply the net proceeds from the issuance and
sale of the Notes to (i) refinance existing indebtedness, partially fund capital expenditures and
for general corporate purposes, and (ii) pay reasonable fees and expenses associated with the sale
of the Notes.





17









 








          (d) Compliance with Laws and Regulations. The Company shall comply with all Laws
(including Environmental Laws) to which its Property or assets may be subject, except where failure
to comply would not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect. In addition, the Company shall immediately pay or cause to be paid when
due all costs and expenses incurred in such compliance, except to the extent that the same is being
contested in good faith by the Company through appropriate means under circumstances where none of
the Mortgaged Property or the Liens thereon will be endangered.




          (e) Permits; Approvals. The Company shall obtain in a timely manner and maintain all
Governmental Approvals which are necessary or desirable for the ownership or operation of its
Property or the conduct of its business as so conducted, except where failure to obtain or maintain
such Governmental Approvals would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.




          (f) Real Estate Filings. To the extent that any filing required to perfect any
security interest in real property or fixtures constituting Mortgaged Property is not made on or
prior to the Closing Date, the Company shall undertake to present all such documents for filing
with the appropriate registers of deeds as soon as practicable after the Closing Date, but in no
event shall any such presentation for filing take place more than five (5) Business Days after the
Closing Date; provided that the Company shall confirm by an Officer’s Certificate delivered to the
Trustee within six (6) weeks after the Closing Date that each such document has been recorded with
the applicable registers of deeds and the security interests created or purported to be created in
real property or fixtures by such documents have been fully perfected by recording in the land
records, except for documents to be recorded in the registers of deeds in the Counties of Oakland,
Kent and Genesee in the State of Michigan, in which case the Company shall confirm by an Officer’s
Certificate delivered to the Trustee no more than three (3) months after the Closing Date with
respect to the Counties of Kent and Genesee, and no more than five (5) months after the Closing
Date with respect to the County of Oakland, that such documents have been so recorded.




          (g) Compliance with ERISA. With respect to each Plan, the Company shall comply with
ERISA and the Code, except where such failure would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.




          (h) Delivery of Opinions of Counsel. The Company shall deliver, or cause to be
delivered, to the Trustee the opinions of counsel required pursuant to Section 4.4(a) of the Note
Agreement.





Section 3.02. Negative Covenants of the Company.



          For purposes of the Notes, pursuant to Section 301(20) of the Mortgage Indenture, Article Six
of the Mortgage Indenture is hereby supplemented by incorporating therein the following negative
covenants which the Company shall observe solely for the benefit of the Noteholders for so long as
any Note is Outstanding:





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          (a) Restrictions on the Establishment of Subsidiaries. The Company shall not create,
acquire or suffer to exist, directly or indirectly, any Subsidiaries or acquire or invest in any
other Capital Stock in any Person.




          (b) Limitations on Asset Sales. The Company shall not Dispose of all or any
substantial part of its assets during any fiscal year, other than:





          (i) Subject to compliance with Section 610 of the Mortgage Indenture, Dispositions in
the ordinary course of business of obsolete or worn out Property and real estate interests
not needed for the Company for its Transmission System or for the conduct of its business;




          (ii) Dispositions of assets that would be permitted under Article Eleven of the
Mortgage Indenture; or




          (iii) Subject to compliance with Section 610 of the Mortgage Indenture, any other
Disposition of assets; provided, that in the event the Net Proceeds of all such Dispositions
during any consecutive 12-month period are in excess of $10,000,000, in the aggregate, such
Net Proceeds shall be applied in accordance with the terms and conditions of Section 2.03.



          (c) [Reserved].




          (d) Limitation on Debt. The Company shall not incur any additional Debt (other than
Subordinated Debt) unless no Default or Event of Default has occurred and is continuing, or would
exist immediately after giving effect to, the incurrence of such Debt; provided that (A) if a
Default or an Event of Default shall have occurred and is continuing at the time of the incurrence
of any Subordinated Debt, the net proceeds from the incurrence of such Subordinated Debt shall be
applied to cure such Default or Event of Default to the extent such Default or Event of Default,
after giving pro forma effect to the incurrence of such Subordinated Debt, can be so cured, and (B)
if a Payment Event of Default shall have occurred and be continuing, no such Subordinated Debt
shall be incurred. Any such additional Debt permitted by the preceding sentence (other than (i)
any bank or other credit facilities (whether of a revolving nature or not) between the Company and
any lenders under which facilities the borrowings outstanding, the face amount of any letters of
credit outstanding and any unfunded commitments to extend credit exceed, in the aggregate,
$70,000,000 or (ii) any Subordinated Debt, each of which in case of clause (i) and (ii) shall be
unsecured) may be secured on a pari passu basis with the Notes pursuant to the terms and conditions
of the Mortgage Indenture (any such secured Debt, “Permitted Additional Senior Secured
Debt”). Further, the Company shall not, at any time, enter into (i) any Hedging Agreement for
speculative purposes or (ii) any Hedging Agreement if the obligations of the Company relating
thereto would not be reflected in the calculation of the Company’s revenue requirement to be
collected under the OATT.




          (e) Limitations on Liens. The Company shall not create, incur, assume or suffer to
exist any Lien upon any of the Company’s Property, whether now owned or hereafter acquired, other
than Permitted Liens.






19









 








          (f) Restrictions on Investments. Unless permitted by Article Eleven of the Mortgage
Indenture, the Company shall not make any advance, loan, extension of credit (by way of guarantee
or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures
or other debt securities of, or any assets constituting a business unit of, or make any other
investment in, any Person, except:





          (i) extensions of trade credit in the ordinary course of business;




          (ii) investments in Cash Equivalents;




          (iii) loans and advances to employees of the Company in the ordinary course of business
(including for travel, entertainment and relocation expenses) in an aggregate amount not to
exceed $300,000 at any one time outstanding;




          (iv) loans to Holdco to pay corporate overhead and administrative expenses incurred by
Holdco in the ordinary course of business not to exceed $2,000,000 at any one time
outstanding; and




          (v) investments in Rate Base Assets.



          (g) Limitation on Lines of Business. As of the Closing Date, the Company is in the
business of owning transmission facilities and providing transmission service over such facilities.
From the Closing Date onward, the Company shall not engage in any business, if as a result, the
general nature of the business engaged in by the Company taken as a whole would be substantially
changed from the general nature of the business the Company is engaged in on the Closing Date.




          (h) Limitation on Transactions with Affiliates. The Company shall not enter into any
Material transaction with any Affiliate, except (i) in the ordinary course of business and (ii) on
terms and conditions (A) no less favorable than would be obtainable in a comparable arms-length
transaction negotiated in good faith with a Person that is not an Affiliate and (B) consistent with
applicable FERC policy regarding Affiliate transactions.




          (i) Limitation on Sale-Lease and Lease-Lease Back Transactions. The Company shall not
enter into any sale-leaseback or lease-leaseback transaction involving any of its Properties
whether now owned or hereafter acquired, whereby the Company sells, otherwise transfers or leases
such Properties and then or thereafter leases or subleases such Properties or any part thereof or
any other Properties which the Company intends to use for substantially the same purpose or
purposes as the Properties sold, otherwise transferred or leased.




          (j) Amendments to Exhibit B Hereto. The Company shall not make any amendments or
changes to the subordination terms and conditions set forth in Exhibit B hereto that adversely
affect the Noteholders without the prior consent of the Noteholders of all the Outstanding Notes.





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ARTICLE FOUR




ADDITIONAL EVENTS OF DEFAULT




Section 4.01. Events of Default.



          For purposes of the Notes, pursuant to Section 301(21) of the Mortgage Indenture, Section 801
of the Mortgage Indenture shall be supplemented to include as “Events of Default” thereunder the
occurrence of any of the following events (each such event, together with those “Events of Default”
in Section 801 of the Mortgage Indenture, an “Event of Default”):




          (a) Material Covenants. The Company shall fail to perform or observe any covenant set
forth in Section 3.02 or its obligation to provide notice to the Noteholders under Section 7.1(c)
of the Note Agreement and such failure is not cured within ten (10) days;




          (b) Other Covenants. The Company shall fail to perform or observe any of its
obligations or covenants (other than the covenants described in Section 4.01(a) or in Section
801(a), 801(b) or 801(e) of the Mortgage Indenture) contained in any of the Financing
Agreements, including Section 7 of the Note Agreement (or in any modification or supplement
thereto), and such failure is not cured within 30 days after the earlier to occur of (i) a
Responsible Officer of the Company obtaining actual knowledge of such failure and (ii) the Company
receiving notice of such failure from the Trustee or any Noteholder in accordance with the terms of
the Mortgage Indenture or the Note Agreement;




          (c) Representations. Any representation, warranty or certification by the Company in
any of the Financing Agreements or in any certificate furnished to the Trustee or any Noteholder
pursuant to the provisions of this Fifth Supplemental Indenture or any other Financing Agreement
shall prove to have been false in any Material respect as of the time made or furnished, as the
case may be;




          (d) Debt.





          (i) The Company shall be in default in the payment of any principal, premium, including
any make-whole amount, if any, or interest on any Debt (other than Subordinated Debt) in the
aggregate principal amount of $10,000,000 or more beyond the expiration of any applicable
grace or cure period relating thereto;




          (ii) The Company shall be in default in the performance or compliance with any term
(other than those referred to in Section 4.01(d)(i)) of any agreement or instrument
evidencing any Debt (other than Subordinated Debt) in the aggregate principal amount of
$10,000,000 or more or any other document relating thereto or any condition exists and, as a
consequence, such Debt has become or has been declared (or the holder or beneficiary of such
Debt or a trustee or agent on behalf of such holder or beneficiary is entitled to declare
such Debt to be) due and payable before its stated maturity or before its regularly
scheduled dates of payment; or




          (iii) As a consequence of the occurrence or continuation of any event or condition
(other than the passage of time or the right of the holder of Debt to convert



21









 






such Debt into equity interests), other than as provided in Section 2.03 or Section 2.04 or Section 501(a)
or (b) of the Mortgage Indenture, (x) the Company shall have become obligated to purchase or
repay any Debt before its regularly scheduled maturity date in the aggregate principal
amount of $10,000,000 or more or (y) one or more Persons have the right to require such Debt
to be purchased or repaid;



          (e) Judgments. Any judgment or judgments for the payment of money in excess of
$10,000,000 (or its equivalent in any other currency) in the aggregate by the Company, which is, or
are, not covered by insurance, shall be rendered by one or more courts, administrative tribunals or
other bodies having jurisdiction over the Company and the same shall not be discharged (or
provision shall not be made for such discharge), bonded or a stay of execution thereof shall not be
procured, within 60 days from the date of entry thereof and the Company shall not, within said
period of 60 days, or such longer period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during such appeal;




          (f) Transmission System. The Company shall directly or indirectly terminate
transmission service over all or a significant portion of the Transmission System or cease to
pursue the operation of the Transmission System for a period in excess of 30 days;




          (g) Transmission Documents. Any Material Transmission Document shall have been
terminated prior to its stated termination date and such termination has, or would reasonably be
expected to have, a Material Adverse Effect;




          (h) Security Interests. Subject to Section 611(2) of the Mortgage Indenture and
Section 3.01(f), the Company shall fail to perfect and maintain a valid and perfected first
priority Lien in any part of the Mortgaged Property, to the extent such perfection can be
accomplished by filing;




          (i) Repudiation. Any provision (i) of any Financing Agreement shall be repudiated by
the Company or (ii) of any Financing Agreement or the Consumers Consent for any reason other than
the express terms thereof cease to be enforceable and such repudiation or unenforceability shall
not be remedied within 30 days;




          (j) Total Loss. There shall occur a Total Loss;




          (k) ERISA. Any ERISA Event shall have occurred and the liability of the Company and
the ERISA Affiliates related to such ERISA Event, when aggregated with all other ERISA Events
(determined as of the date of occurrence of such ERISA Event), has resulted in or would reasonably
be expected to result in a Material Adverse Effect; or




          (l) Holdco Ownership. Holdco either directly or indirectly shall cease to own 100% of
the Capital Stock of the Company.





Section 4.02. Acceleration of Maturity.



          Pursuant to Section 802 of the Mortgage Indenture, in addition to the provisions set forth in
Section 802 of the Mortgage Indenture, if an Event of Default arising from the failure





22









 







to pay principal of, or interest on, or any Make-Whole Amount relating to the Notes shall have occurred
and be continuing, then in every such case each Holder of Notes may declare the principal amount of
the Notes held by it to be due and payable immediately, by a notice in writing to the Company and
to the Trustee, and upon receipt by the Company or the Trustee of such notice of such declaration,
such principal amount, together with Make-Whole Amount and accrued interest, if any, thereon
(including, without limitation, interest accrued thereon at the applicable rate for overdue
payments), shall become immediately due and payable (subject to Section 821 of the Indenture).




ARTICLE FIVE




MISCELLANEOUS PROVISIONS




Section 5.01. Execution of Fifth Supplemental Indenture.



          Except as expressly amended and supplemented hereby, the Mortgage Indenture shall continue in
full force and effect in accordance with the provisions thereof and the Mortgage Indenture is in
all respects hereby ratified and confirmed. This Fifth Supplemental Indenture and all of its
provisions shall be deemed a part of the Mortgage Indenture in the manner and to the extent herein
and therein provided. The Notes executed, authenticated and delivered under this Fifth
Supplemental Indenture constitute a series of Securities and shall not be considered to be a part
of a series of securities executed, authenticated and delivered under any other supplemental
indenture entered into pursuant to the Mortgage Indenture.





Section 5.02. Effect of Headings.



          The Article and Section headings herein are for convenience only and shall not affect the
construction hereof.





Section 5.03. Successors and Assigns.



          All covenants and agreements in this Fifth Supplemental Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.





Section 5.04. Severability Clause.



          In case any provision in this Fifth Supplemental Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.





Section 5.05. Benefit of Fifth Supplemental Indenture.



          Except as otherwise provided in the Mortgage Indenture, nothing in this Fifth Supplemental
Indenture or in the Notes, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder and the Noteholders, any benefit or any legal or equitable
right, remedy or claim under this Fifth Supplemental Indenture.





23









 









Section 5.06. Execution and Counterparts.



          This Fifth Supplemental Indenture may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together constitute but one and
the same instrument. Any such counterpart, as recorded or filed in any jurisdiction, may omit such
portions of Exhibit A hereto as shall not describe or refer to properties located in such
jurisdiction.





Section 5.07. Conflict with Mortgage Indenture.



          If any provision hereof limits, qualifies or conflicts with another provision of the Mortgage
Indenture, such provision of this Fifth Supplemental Indenture shall control, insofar as the rights
between the Company and the Noteholders are concerned.





Section 5.08. Recitals.



          The recitals contained herein shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for their correctness and makes no representations as to the validity or
sufficiency of this Fifth Supplemental Indenture.





Section 5.09. Governing Law.



          This Fifth Supplemental Indenture shall be governed by and construed in accordance with the
law of the State of New York (including, without limitation, Section 5-1401 of the New York General
Obligations Law or any successor to such statute), except that (i) to the extent that the Trust
Indenture Act shall be applicable, this Fifth Supplemental Indenture shall be governed by and
construed in accordance with the Trust Indenture Act and (ii) if the law of any jurisdiction
wherein any portion of the Mortgaged Property that is Real Property is located shall govern the
creation of a mortgage lien on and security interest in, or perfection, priority or enforcement of
the Lien of the Indenture or exercise of remedies with respect to, such portion of the Mortgaged
Property, this Fifth Supplemental Indenture shall be governed by and construed in accordance with
the law of such jurisdiction to the extent mandatory.





24









 








          IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be
duly executed as of the day and year first above written.




	 	 	 

	 

	 	MICHIGAN ELECTRIC TRANSMISSION COMPANY, LLC, a Michigan limited liability

company
	 
	 	 
	 

	 	By: Michigan Transco Holdings, L.P., sole member
	 
	 	 
	 

	 	     By: METC GP Holdings II, LLC, General Partner
	 
	 	 
	 

	 	          By: METC GP Holdings, Inc.,
sole member and sole manager
	 
	 	 
	 

	 	               By: ITC Holdings Corp., its sole owner






	 	 	 	 	 
	 	 	 
	 	By:  	                              /s/ Cameron M. Bready
 	 
	 	 	Cameron M. Bready, Senior Vice President, Treasurer and Chief Financial Officer 	 
	 


Drafted by:




Elizabeth B. Hardin

Milbank, Tweed, Hadley & McCloy LLP

1 Chase Manhattan Plaza

New York, NY 10005



After Recorded, Return to:




The Bank of New York Mellon Trust Company, N.A.

2 N. LaSalle, Suite 1020

Chicago, Illinois 60602

Attention: Global Corporate Trust




 









 





	 	 	 	 	 	 	 

	ACKNOWLEDGMENT
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	STATE OF MICHIGAN

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss.
	COUNTY OF OAKLAND

	 	 	)	 	 	 






          On the 20th day of April, 2010, before me, the undersigned notary public,
personally came Cameron M. Bready, to me known to be Senior Vice President, Treasurer and Chief
Financial Officer of ITC Holdings Corp., a corporation organized under the laws of the State of
Michigan, the sole owner of METC GP Holdings, Inc., a corporation organized under the laws of the
State of Michigan, which in turn is the sole member and sole manager of METC GP Holdings II, LLC, a
limited liability company organized under the laws of the State of Michigan, which in turn is the
General Partner of Michigan Transco Holdings, L.P., a limited partnership organized under the laws
of the State of Michigan, which in turn is the sole member of Michigan Electric Transmission
Company, LLC, a limited liability company organized under the laws of the State of Michigan, and
acknowledged that he executed the foregoing instrument in his authorized capacity, and that by his
signature on the instrument he, or the entity upon behalf of which he acted, executed the
instrument.




	 	 	 	 	 
	 	 	 
	 	By:  	                    /s/ Denise M. Juras
 	 
	 	 	Denise M. Juras, Notary Public	 
	 	 	Oakland County, Michigan 	 
	 	 	My Commission Expires October 29, 2014 Acting in the County of Oakland 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee

 	 
	 	By:  	/s/ Mary Callahan
 	 
	 	 	Name:  	Mary Callahan 	 
	 	 	Title:  	Vice President 	 



 









 







	 	 	 	 	 	 	 

	ACKNOWLEDGMENT
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	STATE OF ILLINOIS

	 	 	)	 	 	 
	 

	 	 	 	 	 	) ss.
	COUNTY OF COOK

	 	 	)	 	 	 






          On the 20th day of April, 2010, before me, the undersigned notary public,
personally came Mary Callahan, Vice President of The Bank of New York Mellon Trust Company, N.A., a
national banking association organized under the laws of the United States, and acknowledged to me
that she executed the foregoing instrument in her authorized capacity, and that by her signature on
the instrument she, or the entity upon behalf of which she acted, executed the instrument.




	 	 	 	 	 
	 	 	 
	 	By:  	                                                   /s/ T. Mosterd
 	 
	 	 	T. Mosterd
	 
	 	 	Notary Public State of Illinois 	 
	 	 	Qualified in Cook County 
My Commission Expires January 22, 2013
	 
	 




 











 





Schedule 1




          The recording information for the Original Mortgage Indenture, the First Supplemental
Indenture, the Second Supplemental Indenture and the Fourth Supplemental Indenture, each recorded
in the Offices of the Register of Deeds in the Michigan counties as indicated, is as follows:




	 	 	 	 	 	 	 	 	 
	 	 	 	 	First	 	Second	 	Fourth
	 	 	Original Mortgage	 	Supplemental	 	Supplemental	 	Supplemental
	County	 	Indenture	 	Indenture	 	Indenture	 	Indenture
	Alcona

	 	Instrument No.

200300006636; 

L395, P141
	 	Instrument No.

200300006637;

L395, P270
	 	Instrument No.

200300006638; 

L395, P336
	 	Instrument No.

200800003865;

L457, P1036
	 
	 	 	 	 	 	 	 	 
	Allegan

	 	L2609, P654
	 	L2610, P1
	 	L2610, P194
	 	Instrument No. 

2008023175 

L3281, P602
	 
	 	 	 	 	 	 	 	 
	Alpena

	 	L431, P340
	 	L431, P341
	 	L431, P342
	 	Instrument No. 

03078018 

L468, P684
	 
	 	 	 	 	 	 	 	 
	Antrim

	 	L00697, P0280
	 	L00697, P0404
	 	L00697, P0465
	 	Instrument No.

200800010254 

L786, P2867
	 
	 	 	 	 	 	 	 	 
	Arenac

	 	L423, P301
	 	L423, P444
	 	L423, P524
	 	L541, P212
	 
	 	 	 	 	 	 	 	 
	Barry

	 	Instrument No.

1120018
	 	Instrument No. 

1120019
	 	Instrument No.

1120020
	 	Instrument No.

20081215-

0011782
	 
	 	 	 	 	 	 	 	 
	Bay

	 	L2156, P585
	 	L2157, P249
	 	L2157, P004
	 	L2647, P508
	 
	 	 	 	 	 	 	 	 
	Branch

	 	L01000, P0600
	 	L01000, P0737
	 	L01000, P0811
	 	Instrument No.

2008-08600
	 
	 	 	 	 	 	 	 	 
	Calhoun

	 	L2765, P587
	 	L2765, P829
	 	L2766, P1
	 	L3421, P892
	 
	 	 	 	 	 	 	 	 
	Charlevoix

	 	L591, P042
	 	L591, P156
	 	L591, P207
	 	L0869, P0414
	 
	 	 	 	 	 	 	 	 
	Cheboygan

	 	L925, P483
	 	L925, P637
	 	L925, P727
	 	L1112, P918
	 
	 	 	 	 	 	 	 	 
	Clare

	 	L890, P333
	 	L890, P443
	 	L890, P490
	 	Instrument No.

200800009719 

L1098, P156
	 
	 	 	 	 	 	 	 	 
	Clinton

	 	Instrument No.

5048529
	 	Instrument No. 

5048530
	 	Instrument No.

5048531
	 	Instrument No.

5138207






I-1









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	First	 	Second	 	Fourth
	 	 	Original Mortgage	 	Supplemental	 	Supplemental	 	Supplemental
	County	 	Indenture	 	Indenture	 	Indenture	 	Indenture
	Crawford

	 	L663, P4
	 	L663, P115
	 	L663, P163
	 	L694, P129
	 
	 	 	 	 	 	 	 	 
	Eaton

	 	L1775, P271
	 	L1775, P449
	 	L1775, P564
	 	L2207, P0903
	 
	 	 	 	 	 	 	 	 
	Emmet

	 	L1032, P537
	 	L1032, P669
	 	L1032, P738
	 	Instrument No.

5060620 

B1108, P168
	 
	 	 	 	 	 	 	 	 
	Genesee

	 	Instrument No. 

200312160161714
	 	Instrument No.

200312160161715
	 	Instrument No.

200312160161716
	 	Instrument No. 

200812160082181
	 
	 	 	 	 	 	 	 	 
	Gladwin

	 	L709, P27
	 	L709, P151
	 	L709, P212
	 	L883, P873
	 
	 	 	 	 	 	 	 	 
	Grand Traverse

	 	L2049, P508
	 	L2049, P652
	 	L2049, P733
	 	Instrument No.

2008R-20555
	 
	 	 	 	 	 	 	 	 
	Gratiot

	 	L740, P595
	 	L740, P752
	 	L740, P846
	 	L858, P1452
	 
	 	 	 	 	 	 	 	 
	Hillsdale

	 	L1125, P517
	 	L1125, P643
	 	L1125, P706
	 	L1373, P218
	 
	 	 	 	 	 	 	 	 
	Ingham

	 	L3084, P73
	 	L3084, P74
	 	L3084, P75
	 	Instrument No.

2008-047041 

B3327, P1040
	 
	 	 	 	 	 	 	 	 
	Ionia

	 	L577, P7152
	 	L577, P7299
	 	L577, P7383
	 	L610, P4348
	 
	 	 	 	 	 	 	 	 
	Iosco

	 	L781, P793
	 	L782, P1
	 	L782, P79
	 	L964, P582
	 
	 	 	 	 	 	 	 	 
	Isabella

	 	L1216, P4
	 	L1216, P122
	 	L1216, P177
	 	L1458, P591
	 
	 	 	 	 	 	 	 	 
	Jackson

	 	L1767, P119
	 	L1767, P117
	 	L1767, P118
	 	Instrument No.

2524184 

L1911, P696
	 
	 	 	 	 	 	 	 	 
	Kalamazoo

	 	Instrument No.

2003-087140
	 	Instrument No.

2003-087142
	 	Instrument No.

2003-087141
	 	Instrument No.

2008-039292
	 
	 	 	 	 	 	 	 	 
	Kalkaska

	 	Instrument No.

3053445
	 	Instrument No. 

3053446
	 	Instrument No. 

3053447
	 	Instrument No. 

3088499
	 
	 	 	 	 	 	 	 	 
	Kent

	 	Instrument No. 

20040105- 

0000653
	 	Instrument No. 

20040105- 

0000654
	 	Instrument No. 

20040105- 

0000655
	 	Instrument No.

20081216- 

0106138
	 
	 	 	 	 	 	 	 	 
	Lake

	 	L281, P477
	 	L281, P598
	 	L281, P656
	 	L330, P319






I-2









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	First	 	Second	 	Fourth
	 	 	Original Mortgage	 	Supplemental	 	Supplemental	 	Supplemental
	County	 	Indenture	 	Indenture	 	Indenture	 	Indenture
	Leelanau

	 	L1045, P258
	 	L1045, P258
	 	L1045, P258
	 	L1045, P258
	 
	 	 	 	 	 	 	 	 
	Lenawee

	 	L2258, P769
	 	L2258, P770
	 	L2258, P771
	 	L2375, P632
	 
	 	 	 	 	 	 	 	 
	Livingston

	 	L4282, P0464
	 	L4282, P0602
	 	L4282, P0677
	 	Instrument No.

2008R-033965
	 
	 	 	 	 	 	 	 	 
	Manistee

	 	L890, P415
	 	L890, P578
	 	L890, P678
	 	Instrument No. 

2008R007239
	 
	 	 	 	 	 	 	 	 
	Mason

	 	L555, P2265
	 	L555, P2419
	 	L555, P2510
	 	Instrument No. 

2008R06641
	 
	 	 	 	 	 	 	 	 
	Mecosta

	 	L705, P2593
	 	L705, P2707
	 	L705, P2758
	 	Instrument No.

200800009891 

L0782, P2850
	 
	 	 	 	 	 	 	 	 
	Midland

	 	L1206, P4
	 	L1206, P160
	 	L1206, P253
	 	L1451, P208
	 
	 	 	 	 	 	 	 	 
	Missaukee

	 	Instrument No.

2003-06377
	 	Instrument No.

2003-06378
	 	Instrument No.

2003-06379
	 	Instrument No. 

2008-04378
	 
	 	 	 	 	 	 	 	 
	Monroe

	 	L2647, P657
	 	L2647, P833
	 	L2647, P935
	 	Instrument No.

2008R22325
	 
	 	 	 	 	 	 	 	 
	Montcalm

	 	L1149, P293
	 	L1149, P442
	 	L1149, P528
	 	L1426, P510
	 
	 	 	 	 	 	 	 	 
	Montmorency

	 	L244, P679
	 	L244, P804
	 	L244, P866
	 	Instrument No.

200800037674

L305, P573
	 
	 	 	 	 	 	 	 	 
	Muskegon

	 	L3581, P921
	 	L3581, P922
	 	L3581, P923
	 	L3797, P757
	 
	 	 	 	 	 	 	 	 
	Newaygo

	 	L404, P5495
	 	L404, P5687
	 	L404, P5816
	 	L433, P3422
	 
	 	 	 	 	 	 	 	 
	Oakland

	 	L31677, P1
	 	L31677, P128
	 	L31677, P196
	 	Instrument No.

215217 

L40774, P814
	 
	 	 	 	 	 	 	 	 
	Oceana

	 	GR 2004/822
	 	GR 2004/976
	 	GR 2004/1067
	 	GR2008/24361
	 
	 	 	 	 	 	 	 	 
	Ogemaw

	 	Instrument No.

3044799
	 	Instrument No.

3044800
	 	Instrument No. 

3044801
	 	Instrument No. 

3083352
	 
	 	 	 	 	 	 	 	 
	Oscoda

	 	L204, P332
	 	L204, P479
	 	L204, P563
	 	L208, P03034
	 
	 	 	 	 	 	 	 	 
	Otsego

	 	L0976, P078
	 	L0976, P222
	 	L0976, P303
	 	L1187, P72
	 
	 	 	 	 	 	 	 	 
	Ottawa

	 	L4372, P557
	 	L4373, P001
	 	L4373, P221
	 	Instrument No.

0044941






I-3









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	First	 	Second	 	Fourth
	 	 	Original Mortgage	 	Supplemental	 	Supplemental	 	Supplemental
	County	 	Indenture	 	Indenture	 	Indenture	 	Indenture
	 

	 	 	 	 	 	 	 	L5754, P426
	 
	 	 	 	 	 	 	 	 
	Presque Isle

	 	L383, P100
	 	L383, P232
	 	L383, P301
	 	Instrument No. 

200800008708

L469, P933
	 
	 	 	 	 	 	 	 	 
	Roscommon

	 	L997, P1285
	 	L997, P1404
	 	L997, P1460
	 	Instrument No. 

200800008515 

L1079, P21
	 
	 	 	 	 	 	 	 	 
	Saginaw

	 	L2269, P1263
	 	L2269, P1264
	 	L2269, P1265
	 	Instrument No.

2008035230 

L2516, P2158
	 
	 	 	 	 	 	 	 	 
	St. Joseph

	 	L1205, P86
	 	L1205, P196
	 	L1205, P243
	 	L1510, P1
	 
	 	 	 	 	 	 	 	 
	Shiawassee

	 	L1052, P721
	 	L1052, P722
	 	L1052, P723
	 	L1130, P0333
	 
	 	 	 	 	 	 	 	 
	Tuscola

	 	Instrument No.

200400846443, 

L980, P619
	 	Instrument No.

200400846444, 

L980, P772
	 	Instrument No.

200400846445,

L980, P862
	 	Instrument No. 

200800914506 

L1163, P891
	 
	 	 	 	 	 	 	 	 
	Van Buren

	 	L1403, P256
	 	L1403, P257
	 	L1403, P258
	 	Instrument No.

LR-3191975

L1511, P5
	 
	 	 	 	 	 	 	 	 
	Washtenaw

	 	L4352, P238
	 	L4352, P239
	 	L4352, P240
	 	Instrument No. 

5876781 

L4710, P182
	 
	 	 	 	 	 	 	 	 
	Wexford

	 	L530, P704
	 	L530, P834
	 	L531, P001
	 	Instrument No.

200800007690 

L616, P1393







I-4












 





Exhibit A




DESCRIPTION OF PROPERTIES




          The following properties of the Company, owned as of the date hereof, have been acquired by
the Company subsequent to the date of the Fourth Supplemental Indenture:



See Attached.






 









 








Exhibit B




SUBORDINATION TERMS



The unsecured permitted indebtedness evidenced by this instrument is subordinated and subject in
right of payment to the prior payment in full of all Senior Debt Obligations (as hereinafter
defined) of Michigan Electric Transmission Company, LLC, a limited liability company formed under
the laws of the State of Michigan (the “Company”). Each holder of this instrument, by its
acceptance hereof, agrees to and shall be bound by all the provisions hereof.



All capitalized terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Fifth Supplemental Indenture, dated as of April 20, 2010 (as in effect on
the date hereof, the “Supplemental Indenture”), between the Company and The Bank of New
York Mellon Trust Company, N.A. (as successor to JPMorgan Chase Bank, N.A.), as trustee (the
“Trustee”).



The term “Senior Debt Obligations”, as used herein, shall include all, loans, advances,
debts, liabilities and obligations, howsoever arising (whether or not evidenced by any note or
instrument and whether or not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising (collectively, as used herein,
“Obligations”) of the Company now or hereafter existing in respect of Senior Debt (as
defined herein) and any amendments, modifications, deferrals, renewals or extensions of any such
Senior Debt, or of any notes or evidences of indebtedness heretofore or hereafter issued in
evidence of or in exchange for any such Obligation, whether for principal, interest (including
interest payable in respect of any such Obligations subsequent to the commencement of any
proceeding against or with respect to the Company under any chapter of the Bankruptcy Code, 11
U.S.C. § 101 et seq. (the “Bankruptcy Code”), or any provision of corresponding bankruptcy,
insolvency or commercial reorganization legislation of any other jurisdiction, whether or not such
interest is an allowed claim enforceable against the debtor, and whether or not the holder of such
obligation would be otherwise entitled to receive dividends or payments with respect to any such
interest or any such proceeding), premium (including Make-Whole Amount), if any, fees, expenses or
otherwise.



The term “Senior Debt”, as used herein, shall mean (i) all Senior Secured Debt and (ii) all
unsecured Debt of the Company permitted to be incurred by the Company pursuant to the Mortgage
Indenture or the Supplemental Indenture which is not subject to any subordination terms whether or
not similar to those set forth in this instrument.



The term “Subordinated Debt”, as used herein, shall mean all Obligations of the Company
evidenced by this instrument owing to any Person now or hereafter existing hereunder (whether
created directly or acquired by assignment or otherwise), whether for principal, interest
(including, without limitation, interest accruing after the filing of a petition initiating any
bankruptcy proceeding described in the definition of Senior Debt Obligations, whether or not such
interest accrues after the filing of such petition for purposes of the Bankruptcy Code or is an
allowed claim in such proceeding), fees, expenses or otherwise.






 









 







On and after the Closing Date, no payment on account of principal, interest, fees, premium,
expenses or otherwise on this Subordinated Debt shall be made by the Company in cash or otherwise
unless (a) full payment of all amounts then due and payable on all Senior Debt Obligations has been
made, (b) such payment would be permitted by the Indenture and any Senior Debt Document (as defined
below) and (c) immediately after giving effect to such payment, there shall not exist any Default
or Event of Default. Any such payment permitted pursuant to this paragraph is hereinafter referred
to as a “Permitted Payment”. For the purposes of these provisions, no Senior Debt Obligations
shall be deemed to have been paid in full until the obligee of such Senior Debt Obligations shall
have received payment in full in cash.



Upon any payment or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, to creditors upon any dissolution or winding up or total or partial
liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, then and in any such event all principal, premium
and interest and all other amounts due or to become due upon all Senior Debt Obligations shall
first be paid in full before the holders of the Subordinated Debt shall be entitled to retain any
assets so paid or distributed in respect of the Subordinated Debt (whether for principal, premium,
interest or otherwise), and upon any such dissolution or winding up or liquidation or
reorganization, any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holders of the Subordinated Debt would be
entitled, except as otherwise provided herein, shall be paid pro rata among the holders of Senior
Debt Obligations by the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the holders of the Subordinated
Debt if received by them. So long as any Senior Debt Obligations are outstanding, the holder of
this instrument shall not commence, or join with any creditor other than the Trustee or the Senior
Debt Parties (as hereinafter defined) in commencing, or directly or indirectly causing the Company
to commence, or assist the Company in commencing, any proceeding referred to in the preceding
sentence.



The holder of this instrument hereby irrevocably authorizes and empowers (without imposing any
obligation on) each Person (each such Person a “Senior Debt Party” and collectively, the
“Senior Debt Parties”) that has entered into an agreement, instrument, or other document
evidencing or relating to any Senior Debt Obligation (each such agreement, instrument or other
document, a “Senior Debt Document”) as a lender or creditor and such Senior Debt Party’s
representatives, under the circumstances set forth in the immediately preceding paragraph, to
demand, sue for, collect and receive every such payment or distribution described therein and give
acquittance therefor, to file claims and proofs of claims in any statutory or nonstatutory
proceeding, to vote such Senior Debt Party’s ratable share of the full amount of the Subordinated
Debt evidenced by this instrument in its sole discretion in connection with any resolution,
arrangement, plan of reorganization, compromise, settlement or extension and to take all such other
action (including, without limitation, the right to participate in any composition of creditors and
the right to vote such Senior Debt Party’s ratable share of the full amount of the Subordinated
Debt at creditors’ meetings for the election of trustees, acceptances of plans and otherwise), in
the name of the holder of the Subordinated Debt evidenced by this instrument or otherwise, as such
Senior Debt Party’s representatives may deem necessary or desirable for the enforcement of the
subordination provisions of this instrument. The holder of this instrument shall execute and
deliver to each Senior Debt Party and such holder’s representatives all such






2









 







further instruments confirming the foregoing authorization, and all such powers of attorney, proofs
of claim, assignments of claim and other instruments, and shall take all such other action as may
be reasonably requested by such holder or such holder’s representatives in order to enable such
holder to enforce all claims upon or in respect of such holder’s ratable share of the Subordinated
Debt evidenced by this instrument.



The holder of this instrument shall not, without the prior written consent of the Senior Debt
Parties, have any right to accelerate payment of, or institute any proceeding to enforce, the
Subordinated Debt so long as any Senior Debt Obligations are outstanding, unless and until all
Senior Debt Parties have accelerated payment thereof and commenced proceedings to enforce such
Senior Debt Obligations.



After the payment in full of all amounts due in respect of Senior Debt Obligations, the holder or
holders of the Subordinated Debt shall be subrogated to the rights of the Senior Debt Parties to
receive payments or distributions of cash, property or securities of the Company applicable to
Senior Debt Obligations until the principal of, premium on, interest on and all other amounts due
or to become due with respect to the Subordinated Debt shall be paid in full subject to the terms
and conditions of the Subordinated Debt or of any agreement among the holders of the Subordinated
Debt and other Subordinated Debt of the Company.



If any payment (other than a Permitted Payment) or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, shall be received by the holder of the
Subordinated Debt in such capacity before all Senior Debt Obligations are paid in full, such
payment or distribution will be held in trust for the benefit of, and shall be immediately paid
over pro rata among the Senior Debt Parties, for application to the payment in full of Senior Debt
Obligations, until all Senior Debt Obligations shall have been paid in full.



Nothing contained in this instrument is intended to or shall impair as between the Company, its
creditors (other than the Senior Debt Parties) and the holders of the Subordinated Debt, the
obligations of the Company to pay to the holders of the Subordinated Debt, as and when the same
shall become due and payable in accordance with their terms, or to affect the relative rights of
the holders of the Subordinated Debt and creditors of the Company (other than the Senior Debt
Parties).



The Senior Debt Parties shall not be prejudiced in their rights to enforce the subordination
contained herein in accordance with the terms hereof by any act or failure to act on the part of
the Company.



The holder of this instrument agrees to execute and deliver such further documents and to do such
other acts and things as the Senior Debt Parties may reasonably request in order fully to effect
the purposes of these subordination provisions. Each holder of this instrument by its acceptance
hereof authorizes and directs the trustee or other representative, if any, of the Subordinated Debt
represented by this instrument on its behalf to take such further action as may be necessary to
effectuate the subordination as provided herein and appoints such trustee or other representative,
if any, as its attorney-in-fact for any and all such purposes.







3









 







The subordination effected by these provisions, and the rights of the Senior Debt Parties, shall
not be affected by (i) any amendment of, or addition or supplement to, the Financing Agreements,
any other Senior Debt Document, or any other document evidencing or securing Senior Debt
Obligations, (ii) any exercise or non-exercise of any right, power or remedy under or in respect to
the Financing Agreements, any other Senior Debt Document, or any other document evidencing or
securing Senior Debt Obligations or (iii) any waiver, consent, release, indulgence, extension,
renewal, modification, delay, or other action, inaction or omission, in respect of the Financing
Agreements, any other Senior Debt Document, or any other document evidencing or securing Senior
Debt Obligations; whether or not any holder of any Subordinated Debt shall have had notice or
knowledge of any of the foregoing.



No failure on the part of any Senior Debt Party to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor all any single or partial exercise of any right
hereunder 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.



The holder of this instrument and the Company each hereby waive promptness, diligence, notice of
acceptance and any other notice with respect to any of the Senior Debt Obligations and these terms
of subordination and any requirement that the Trustee or any Senior Debt Party protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right to take any action
against the Company or any other Person or any Mortgaged Property.



These terms of subordination shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Senior Debt Obligations is rescinded or must otherwise be
returned by the Trustee or any Senior Debt Party upon the insolvency, bankruptcy or reorganization
of the Company or otherwise, all as though such payment had not been made.



The provisions of these terms of subordination constitute a continuing agreement and shall (i)
remain in full force and effect until the indefeasible payment in full of the Senior Debt
Obligations and the termination or expiration of all obligations to extend credit under the Senior
Debt Documents, (ii) be binding upon the holder of this instrument, the Company and its successors,
transferees and assignees and (iii) inure to the benefit of, and be enforceable by, the Trustee and
each Senior Debt Party. Without limiting the generality of the foregoing clause (iii), each Senior
Debt Party may assign or otherwise transfer all or any portion of its rights and obligations under
all or any of the Senior Debt Documents to any other Person (to the extent permitted by the Senior
Debt Documents), and such other Person shall thereupon become vested with all the rights in respect
thereof granted to such Senior Debt Party herein or otherwise.



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









4









 








Exhibit C



This Note has not been registered pursuant to the Securities Act of 1933, as amended (the
“Securities Act”), or pursuant to the securities laws of any state. Accordingly, this Note
may not be offered, sold or otherwise transferred (1) except in accordance with an applicable
exemption from the registration requirements of the Securities Act and any applicable state
securities laws or (2) unless this Note is registered under the Securities Act and any applicable
state securities laws.




MICHIGAN ELECTRIC TRANSMISSION COMPANY, LLC

5.64% Senior Secured Note due 2040




Original Interest Accrual Date: May 6, 2010

Stated Maturity: May 6, 2040

Interest Rate: 5.64% per annum

Interest Payment Dates: June 30 and December 31

Regular Record Dates: June 15 and December 15




This Note is not an Original Issue Discount Security

within the meaning of the within-mentioned Indenture.

This Note is a Debt Security within the

meaning of the within-mentioned Indenture.

 






	 	 	 

	Registered No. [RA - ]

	 	[DATE]
	$[               ]1

	 	PPN 59447# AD5





MICHIGAN ELECTRIC TRANSMISSION COMPANY, LLC, a limited liability company duly organized and
existing under the laws of the State of Michigan (herein called the “Company”, which term
includes any successor Corporation under the Indenture referred to below), for value received,
hereby promises to pay to [               ], or its registered assigns, the principal sum of
[                              ]
DOLLARS ($ ___) on the Stated Maturity specified above,
and to pay interest (a) thereon from the Original Interest Accrual Date specified above or from the
most recent Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears on the Interest Payment Dates specified above in each year, commencing on
June 30, 2010 and at Maturity, at the Interest Rate per annum specified above, until the principal
hereof is paid or duly provided for and (b) to the extent permitted by law, on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount, at a rate per annum from time to time equal to the greater of (i)
7.64% and (ii) 2.0% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from
time to time in New York, New York as its “base” or “prime” rate. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date shall, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date specified above (whether or not a
Business Day) next preceding such Interest Payment Date. Notwithstanding the foregoing, interest
payable at Maturity shall be paid to the Person to whom principal shall be paid. Except as
otherwise provided in said Indenture, any such interest not so timely paid or duly provided for
shall forthwith cease to be payable to the Noteholder on such Regular Record Date and may either be
paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at
the close of business on a Special Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice of which shall be given to the Noteholders 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 or automated quotation system on which the
Securities of this series may be listed, and upon such notice as may be required by such exchange
or automated quotation system, all as more fully provided in said Indenture.




CERTIFICATE OF AUTHENTICATION



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



Date of Authentication: May 6, 2010






 




			
	1	 	Reference is made to Schedule A attached hereto
with respect to the amount of principal paid hereon and the last date to which
interest has been paid hereon.




 









 










	 	 	 	 	 
	 	The Bank of New York Mellon Trust Company, N.A.

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 


Capitalized terms used in this Note and not otherwise defined herein shall have the meaning
assigned to such term in the Indenture.



Subject to the home office payment obligation set forth in Section 2.02(b) of the Supplemental
Indenture (referred to below), payment of the principal of and Make-Whole Amount, if any, on this
Note and interest hereon at Maturity shall be made upon presentation of this Note at the office or
agency of the Trustee in New York, New York at c/o The Bank of New York Mellon, Trust Services
Window, 101 Barclay Street, New York, New York 10286, or at such other office or agency as may be
designated for such purpose by the Company from time to time in accordance with the Indenture.
Subject to the home office payment obligation set forth in Section 2.02(b) of the Supplemental
Indenture, payment of interest on this Note (other than interest at Maturity) shall be made as set
forth in Section 307 of the Original Indenture (as defined below). Payment of the principal of and
Make-Whole Amount, if any, and interest on this Note, as aforesaid, shall be made in such coin or
currency of the United States of America as at the time of payment shall be legal tender for the
payment of public and private debts.



This Note is one of a duly authorized issue of securities of the Company (all such series of
securities herein called the “Securities”) issued and issuable in one or more series under and
equally secured by a First Mortgage Indenture, dated as of December 10, 2003 (such indenture as
originally executed and delivered herein called the “Original Indenture” and as
supplemented and modified by any and all indentures supplemental thereto, including the
Supplemental Indenture referred to below, being herein called the “Indenture”), and has
been issued pursuant to that certain Fifth Supplemental Indenture, dated as of April 20, 2010 (the
“Supplemental Indenture”), each of the Indenture and the Fifth Supplemental Indenture being
between the Company and The Bank of New York Mellon Trust Company, N.A. (as successor to JPMorgan
Chase Bank, N.A.), as trustee (herein called the “Trustee,” which term includes any
successor trustee under the Indenture), to which Indenture reference is hereby made for a
description of the property mortgaged, pledged and held in trust as security for payment of all
amounts due under this Note, the nature and extent of the security and the respective rights,
limitations of rights, duties and immunities of the Company, the Trustee and the Holders of the
Securities thereunder and of the terms and conditions upon which the Securities (including the
Securities of this series) are, and are to be, authenticated and delivered and secured. The
acceptance of this Note shall be deemed to constitute the consent and agreement by the Holder
hereof to all of the terms and provisions of the Indenture. This Note is one of the series of
Securities designated above.



Notwithstanding anything to the contrary in Section 113 of the Original Indenture, in the
Supplemental Indenture or in this Note, if the Stated Maturity or any Redemption Date of this Note
shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of
the Original Indenture or the Supplemental Indenture or this Note) payment of interest on or
principal (and premium, if any) of this Note due at the Stated Maturity or on any






2









 







Redemption Date thereof need not be made at such Place of Payment on such date, but may be made on
the next succeeding Business Day at such Place of Payment with the same force and effect as if made
on the Stated Maturity or on any Redemption Date thereof, provided that interest shall accrue on
the Outstanding principal amount of this Note due at the Stated Maturity or on any Redemption Date
thereof until the date of actual payment. Interest hereon will be computed on the basis of a
360-day year of twelve 30-day months.



This Note is subject to mandatory redemption under the circumstances set forth in Section 501(a) of
the Original Indenture and as set forth in Section 2.03 of the Supplemental Indenture. This Note
is subject to redemption at the option of the Company, in whole or in part, as set forth in Section
2.04 of the Supplemental Indenture.



If an Event of Default, as defined in the Indenture, occurs and is continuing, the principal of
this Note may be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the Indenture.



The Original Indenture permits, with certain exceptions as therein provided, the Trustee to enter
into one or more supplemental indentures for the purpose of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, the Indenture with the consent of the
Holders of a majority in aggregate principal amount of the Securities of all series then
Outstanding under the Indenture, considered as one class; provided, however, that if there shall be
Securities of more than one series Outstanding under the Indenture and if a proposed supplemental
indenture shall directly affect the rights of the Holders of Securities of one or more, but less
than all, of such series, then the consent only of the Holders of a majority in aggregate principal
amount of the Outstanding Securities of each series so directly affected, considered as separate
classes, shall be required; and provided, further, that if the Securities of any series shall have
been issued in more than one Tranche and if a proposed supplemental indenture shall directly affect
the rights of the Holders of Securities of one or more, but less than all, of such Tranches, then
the consent only of the Holders of a majority in aggregate principal amount of the Outstanding
Securities of all Tranches so directly affected, considered as one class, shall be required; and
provided, further, that the Original Indenture permits the Trustee to enter into one or more
supplemental indentures for limited purposes without the consent of any Holders of Securities and
for certain other purposes with the consent of all Holders of affected Securities. The Original
Indenture also contains provisions permitting the Holders of specified percentages in principal
amount of the Securities then Outstanding, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.



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







3









 







As provided in the Indenture and subject to certain limitations therein set forth, the transfer of
this Note is registrable in the Security Register, upon surrender of this Note for registration of
transfer at the office or agency of the Trustee in New York, New York, which as of the date hereof
is located at c/o The Bank of New York Mellon, Trust Services Window, 101 Barclay Street, New York,
New York 10286, or such other office or agency as may be designated by the Company from time to
time in accordance with the Indenture, duly endorsed by, or accompanied by a written instrument of
transfer in the form attached hereto as Annex A duly executed by the Holder hereof, or his attorney
duly authorized in writing, and thereupon one or more new Securities of this series of authorized
denominations and of like tenor and aggregate principal amount, will be issued to the designated
transferee or transferees.



The Securities of this series are issuable only as registered Securities, without coupons, and in
denominations of $250,000 or any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of the same series and Tranche, of any authorized
denominations, as requested by the Holder surrendering the same, and of like tenor upon surrender
of the Note or Notes to be exchanged at the office or agency of the Trustee in New York, New York
at c/o The Bank of New York Mellon, Trust Services Window, 101 Barclay Street, New York, New York
10286, or such other office or agency as may be designated by the Company from time to time in
accordance with the Indenture.



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 in accordance with the Indenture.



The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose
name this Note is registered as the absolute owner hereof for all purposes, whether or not this
Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.



The Securities of this series are not entitled to the benefit of any sinking fund.



As provided in Section 2.05 of the Supplemental Indenture, except as may be agreed to by the Holder
hereof in connection with an offer made to all Holders of the Securities of this series on the same
terms and conditions, the Company shall not and shall not permit any Affiliate of the Company to
purchase, redeem or otherwise acquire, directly or indirectly, this Note, except upon the payment
or redemption of this Note in accordance with the terms of the Indenture. The Company will
promptly cause the Trustee to cancel this Note once acquired by it or any Affiliate of the Company
pursuant to any payment, redemption or purchase of this Note pursuant to any provision of the
Indenture and no Notes may be issued in substitution or exchange for this Note.



As provided in Section 1401 of the Original Indenture, no recourse shall be had for the payment of
the principal of or Make-Whole Amount, if any, or interest on any Securities, or any part thereof,
or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented
thereby, or upon any obligation, covenant or agreement under the Indenture, against, and no
personal liability whatsoever shall attach to, or be incurred by, any incorporator, member,
manager, stockholder, officer, director or employee, as such, past, present or future of the






4









 







Company or of any predecessor or successor corporation (either directly or through the Company or a
predecessor or successor corporation), whether by virtue of any constitutional provision, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly
agreed and understood that the Indenture and all the Securities (including the Notes) are solely
corporate obligations and that any such personal liability is hereby expressly waived and released
as a condition of, and as part of the consideration for, the execution of the Indenture and the
issuance of the Securities (including the Notes).



Demand, presentment, protest and notice of non-payment and protest are hereby waived by the
Company.



This Note shall be governed by and construed in accordance with the law of the State of New York
(including, without limitation, Section 5-1401 of the New York General Obligations Law or any
successor to such statute), except that (i) to the extent that the Trust Indenture Act shall be
applicable, this Note shall be governed by and construed in accordance with the Trust Indenture Act
and (ii) if the law of any jurisdiction wherein any portion of the Mortgaged Property that is Real
Property is located shall govern the creation of a mortgage lien on and security interest in, or
perfection, priority or enforcement of the Lien of the Indenture or exercise of remedies with
respect to, such portion of the Mortgaged Property, this Note shall be governed by and construed in
accordance with the law of such jurisdiction to the extent mandatory.



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




[The remainder of this page is intentionally left blank.]






5









 







IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.




	 	 	 	 	 
	 	MICHIGAN ELECTRIC TRANSMISSION COMPANY, LLC, a Michigan limited

liability company

 	 
	 	By:  	Michigan Transco Holdings, L.P., sole member
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                        METC GP Holdings II, LLC, General Partner
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                                   METC GP Holdings, Inc., sole member and sole manager
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                                              ITC Holdings Corp., its sole owner
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Cameron M. Bready, 	 
	 	 	Senior Vice President, Treasurer and

Chief Financial Officer 	 
	 


Date:






 









 








SCHEDULE A




SCHEDULE OF NOTATIONS





          The notations on the following table have been made by the holder of the within Note in
connection with the transfer thereof in accordance with Section 2.02(b) of the Supplemental
Indenture.



	 	 	 	 	 	 	 

	Date of Notation

	 	Amount of principal
paid on the within
Note
	 	Last date to which
interest has been
paid on the within
Note
	 	Notation by Holder
	 

	 	 
	 	 
	 	 





 









 






ANNEX A




FORM OF ASSIGNMENT



FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto



PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER




  




Please print or typewrite name and address, including postal zip code of assignee




  




the within Note and all rights thereunder, hereby irrevocably constituting and appointing



                                                            
                                                                                                    attorney
to transfer said Note on the Security Register, upon surrender of said Note at the office or agency
of the Trustee in New York, New York, or such other office or agency as may be designated by the
Company from time to time in accordance with the Indenture, with full power of substitution in the
premises.



Dated:                                         




	 	 	 	 	 
	 	[NAME OF TRANSFEROR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	 	 
	 




	 	 	 	 	 
	 	NOTICE: The signature to this assignment must

correspond with the name as written upon the face of

the within Note in every particular, without

alteration or enlargement or any change whatever.

 	 
	 	Signature Guarantee:  	 	 
	 	 	 	 
	 	 	 	 
	 



SIGNATURE GUARANTEE



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