EX-4.23









EXHIBIT 4.23




EXECUTION COPY




SECOND SUPPLEMENTAL INDENTURE TO FIRST MORTGAGE AND DEED OF TRUST



ITC MIDWEST LLC



TO



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


BANK OF NEW YORK TRUST COMPANY, N.A.



Trustee



Dated as of December 15, 2008



Supplementing the First Mortgage and Deed of Trust and First Supplemental Indenture



Dated as of January 14, 2008



From ITC MIDWEST LLC to THE BANK OF NEW YORK TRUST COMPANY, N.A., 
Trustee



THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS



Establishing
a series of Securities designated 7.12% First Mortgage Bonds, Series B due 2017 

and a
series of Securities designated 7.27% First Mortgage Bonds, Series C due 2020



 




This is a mortgage amendment as defined in Minnesota Statutes, section 287.01, subdivision 2, and
as such it does not secure a new or increased amount of debt.



 






 









 








          SECOND SUPPLEMENTAL INDENTURE (this “SECOND SUPPLEMENTAL INDENTURE”), dated as of December 15,
2008, between ITC MIDWEST 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
The Bank of New York Trust Company, N.A.), a national banking association, as trustee (herein
called the “Trustee”), the office of the Trustee at which on the date hereof its corporate trust
business is principally 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 and
Deed of Trust dated as of January 14, 2008 (the “Mortgage Indenture”), encumbering the real
property interests as more particularly described on Exhibit A attached to the Mortgage Indenture
and providing for 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 “Securities”) to be
issued in one or more series and to provide security for the payment of the principal of and
premium, if any, and interest, if any, on the Securities; and




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




	 	 	 
	Instrument	 	Date
	First Supplemental Indenture

	 	January 14, 2008






          WHEREAS, the Mortgage Indenture and the First 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
	6.150% First Mortgage Bonds, Series
A, due 2038

	 	January 31, 2008
	 	$	175,000,000	 






          WHEREAS, The Bank of New York Trust Company, N.A., became The Bank of New York Mellon Trust
Company, N.A., a national banking association, pursuant to a name change, and approved by the
Comptroller of Currency, effective July 1, 2008; and




          WHEREAS, in addition to the property described in the Mortgage 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 appropriate resolutions of
the Board of Directors, has duly determined to make, execute and deliver to the Trustee this Second
Supplemental Indenture to the Mortgage Indenture as permitted by Sections 2.01, 3.01, 4.01, 4.02
and 14.01 of the Mortgage Indenture in order to establish the form and terms of, and to provide for
the creation and issuance of, two series of Securities under the Mortgage Indenture in an aggregate
principal amount of $75,000,000 and to amend and supplement the Mortgage Indenture as herein
provided; and




          WHEREAS, all things necessary to make the Bonds (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 Second
Supplemental Indenture a valid, binding and legal agreement of the Company, have been done;




GRANTING CLAUSES




          NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH that, in order to establish the
terms of two series of Securities, and for and in consideration of the premises and of the
covenants contained in the Mortgage Indenture and in this Second 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 has granted, bargained, sold, conveyed, assigned, transferred mortgaged,
pledged, set over and confirmed and hereby grants, bargains, sells, conveys, assigns, transfers,
mortgages, pledges, sets over and confirms to the Trustee, and has granted and hereby 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):




GRANTING CLAUSE FIRST




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          All right, title and interest of the Company, as of the date of the execution and delivery of
this Second Supplemental Indenture, as originally executed and delivered, in and to all property,
real, personal and mixed, located in the States of Illinois, Iowa, Minnesota and Missouri, or
wherever else situated (other than Excepted Property), including without limitation all right,
title and interest of the Company in and to the following property and interests so located (other
than Excepted Property):




          (a) all real property owned in fee, easements, easement estates and other interests in real
property which are specifically described or referred to in Exhibit A attached to the Mortgage
Indenture and Exhibit A attached hereto;




          (b) all licenses, permits to use the real property of others, franchises to use public roads,
streets and other public properties, rights of way and other rights or interests relating to the
occupancy or use of real property;




          (c) all facilities, machinery, equipment and fixtures for the transmission and distribution of
electric energy including, but not limited to, all plants, air and water pollution control and
sewage and solid waste disposal facilities, switchyards, towers, substations, transformers, poles,
lines, cables, conduits, ducts, conductors, meters, regulators and all other property used or to be
used for any or all of such purposes;




          (d) all buildings, offices, warehouses, structures or improvements in addition to those
referred to or otherwise included in clauses (a) and (c) above;




          (e) all computers, data processing, data storage, data transmission and/or telecommunications
facilities, equipment and apparatus necessary for the operation or maintenance of any facilities,
machinery, equipment or fixtures described or referred to in clause (c) above;




          (f) all of the foregoing property in the process of construction; and




          (g) (except as hereinbefore or hereinafter expressly excepted) all the right, title and
interest of the Company in and to all other property of any kind or nature appertaining to and/or
used and/or occupied and/or enjoyed in connection with any property hereinbefore described;




GRANTING CLAUSE SECOND




          Subject to the applicable exceptions permitted by Sections 8.10(d), 13.03 and 13.05 of the
Indenture, all right, title and interest of the Company in all property of every kind and
description and wheresoever situate, real, personal and mixed (other than Excepted Property) which
may be hereafter acquired by the Company, it being the intention of the Company that all such
property acquired by the Company after the date of the execution and delivery of this Second
Supplemental Indenture, as originally executed and delivered, shall be as fully embraced within and
subjected to the Lien of the Indenture as if such property were owned by the Company as of the date
of the execution and delivery of this Second Supplemental Indenture, as originally executed and
delivered;




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GRANTING CLAUSE THIRD




          Any Excepted Property, which may, from time to time after the date of the execution and
delivery of this Second Supplemental Indenture, as originally executed and delivered, by delivery
or by an instrument supplemental to the Indenture, be subjected to the Lien of the Indenture by the
Company, the Trustee being hereby authorized to receive the same at any time as additional security
hereunder; it being understood that any such subjection to the Lien of the Indenture of any
Excepted Property as additional security may be made subject to such reservations, limitations or
conditions respecting the use and disposition of such property or the proceeds thereof as shall be
set forth in such instrument; and




GRANTING CLAUSE FOURTH




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




EXCEPTED PROPERTY




          Expressly excepting and excluding, however, from the Lien of the Indenture all right, title
and interest of the Company in and to all Excepted Property, whether now owned or hereafter
acquired;




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




          SUBJECT, HOWEVER, to (a) Liens existing at the date of the execution and delivery of the
Mortgage Indenture, as originally executed and delivered, which Liens do not in the aggregate
materially and adversely impair the use of the Mortgaged Property in the operation of the business
of the Company, or materially and adversely affect the security afforded by the Indenture, (b) as
to property acquired by the Company after the date of the execution and delivery of the Mortgage
Indenture, as originally executed and delivered, Liens existing or placed thereon at the time of
the acquisition thereof (including, but not limited to, Purchase Money Liens), and (c) Permitted
Liens;




          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 IX of the 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 Company pursuant to Section 6.03 of the 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;




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          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 Second Supplemental
Indenture, unless otherwise expressly stated.




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




          “Bond” has the meaning assigned to that term in Section 2.01(b)(i).




          “Bondholders” means (a) the Initial Bondholders and (b) each subsequent holder of a Bond as
shown on the register maintained by the Company pursuant to Section 3.05 of the Indenture.




          “Capital Stock” means, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated, whether voting or non-voting) in the
equity of such Person, including, without limitation, all partnership interests, common stock and
preferred stock and any and all warrants, rights or options to purchase any of the foregoing.




          “Capital Lease” means a lease with respect to which the lessee is required concurrently to
recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.




          “Capital Lease Obligation” means, with respect to any Person and a Capital Lease, the amount
of the obligation of such Person as the lessee under such Capital Lease which would, in accordance
with GAAP, appear as a liability on a balance sheet of such Person.




          “Cash Equivalents” means (i) obligations of or directly and fully guaranteed by the United
States, or of any agency or instrumentality thereof, maturing not later than three hundred
sixty-five (365) days from the date of acquisition thereof, (ii) commercial paper rated (on the
date of acquisition thereof) A-1 (or the equivalent thereof) or better by S&P and P-1 (or the
equivalent thereof) or better by Moody’s, maturing not later than two hundred seventy (270) days
from the date of acquisition thereof, (iii) guaranteed investment contracts maturing not later than
three hundred sixty-five (365) days from the date of acquisition thereof and entered into



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with (or fully guaranteed by) financial institutions whose long-term unsecured non-credit
enhanced indebtedness is rated A- or better by S&P and A3 or better by Moody’s, and (iv)
investments in money market funds having a rating from each of S&P and Moody’s in the highest
investment category granted thereby.




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




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




          “Debt” means, without duplication, with respect to any Person, the sum of (a) liabilities for
borrowed money, (b) liabilities (excluding accounts payable and other accrued liabilities arising
in the ordinary course of business) for the deferred purchase price of property and conditional
sale or title retention agreements, (c) Capital Lease Obligations, (d) liabilities for borrowed
money secured by a Lien on property, (e) reimbursement obligations (contingent or otherwise) in
respect of letters of credit, performance bonds or bankers’ acceptances, (f) obligations under any
Hedging Agreements, (g) liabilities for Synthetic Leases, (h) obligations evidenced by bonds,
debentures, notes or similar instruments and (i) any guarantee with respect to liabilities in
clauses (a) through (h) above. All references to the principal amount of Debt outstanding at any
time shall be understood to include not only the principal amount of any liabilities for borrowed
money or of any bonds, debentures, notes or similar instruments, but also obligations (including
those related to reimbursement obligations in respect of letters of credit, but excluding those in
respect of interest, fees and other similar amounts) under all other types of Debt described in
this definition.




          “Default” means the occurrence and continuance of an event, which, with the giving of notice
or lapse of time, or both, would constitute an Event of Default.




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




          “Environmental Laws” means any Law relating to the environment, natural resources, or safety
or health of humans or other living organisms, including the release, emission, discharge, deposit,
disposal, keeping, treatment, importation, exportation, production, transportation, handling,
processing, carrying, manufacture, collection, sorting or presence of any Hazardous Substance.




          “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.




          “ERISA Event” means:




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          (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 Second
Supplemental Indenture.




          “FERC” means the United States Federal Energy Regulatory Commission.




          “Financing Agreements” means the Indenture, this Second Supplemental Indenture, the Purchase
Agreement and the Bonds.




          “Good Utility Practice” means any of the practices, methods and acts engaged in or approved by
a significant portion of the electric transmission industry during the relevant time period, or any
of the practices, methods and acts which, in the exercise of reasonable judgment in light of the
facts known at the time the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices, reliability, safety and
expedition. Good Utility Practice is not intended to be limited to the optimum practice, method or
act to the exclusion of all others, but rather to be acceptable practices, methods or acts
generally accepted in the region.




          “Governmental Approval” means any authorization, consent, approval, license, franchise,
ruling, tariff, rate, permit, certificate, exemption of, or filing or registration with, any
Governmental Authority required in connection with:




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     (a) the execution, delivery or performance of any Transmission Document by any party
thereto;




     (b) the entry into or performance of any Financing Agreement by the Company (including
the actual issuance of the Bonds) or the grant and perfection of any Lien contemplated to be
granted by the Indenture; or




     (c) the ownership, development, expansion, operation or maintenance of the Transmission
System.



          “Hazardous Substance” means any substance, waste, pollutant, contaminant or material subject
to regulation under any Environmental Law.




          “Hedging Agreements” means all interest rate swaps, caps or collar agreements or similar
arrangements dealing with interest rates or currency exchange rates or the exchange of nominal
interest obligations, either generally or under specific contingencies.




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




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




          “Initial Bondholder” means each Bondholder listed on Schedule A to the Purchase Agreement
purchasing any Bonds on the Closing Date.




          “Institutional Investor” means (a) any Initial Bondholder, (b) any holder of more than
$5,000,000 of the aggregate principal amount of the Bonds 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.




          “Law” means any federal, state, local (including municipal) or other statute, law, rule,
regulation, ordinance, order, code, policy or rule of common law, now or hereafter in effect, and
any judicial or administrative interpretation thereof by a Governmental Authority or otherwise
(including any judicial or administrative order, consent decree or judgment to which the Company is
a party).




          “Make-Whole Amount” means, with respect to any Bond, 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 Bond 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:




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“Called Principal” means, with respect to any Bond, the principal of such
Bond 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 10.02
of the Indenture, as the context requires.




“Discounted Value” means, with respect to the Called Principal of any Bond,
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 Bonds is payable) equal
to the Reinvestment Yield with respect to such Called Principal.




“Reinvestment Yield” means, with respect to the Called Principal of any
Bond, 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 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 Bond.




“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



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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 Bond, 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 Bonds, 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 10.02 of the
Indenture.




“Settlement Date” means, with respect to the Called Principal of any Bond,
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 10.02 of the Indenture, as the context requires.



          “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 Bonds), (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 Bondholders
with respect thereto.




          “MISO” means the Midwest Independent Transmission System Operator, Inc.




          “Moody’s” means Moody’s Investors Service, Inc., or any successor 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)



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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).




          “NRSRO” means any credit rating agency that is recognized as a Nationally Recognized
Statistical Rating Organization by the Commission.




          “OATT” means, at any given time, the open access transmission tariff of MISO that is
applicable to the Company, approved by the FERC and then in effect.




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




          “Permitted Additional Senior Secured Debt” has the meaning assigned to that term in Section
3.02(d).




          “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.




          “Property” means any right or interest in or to assets or property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible.




          “Purchase Agreement” means that certain Bond Purchase Agreement, to be dated as of December
22, 2008, between the Company and the Initial Bondholders.




          “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.




          “S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc.,
or any successor thereto.




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




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




          “Senior Secured Debt” means (i) the Bonds, (ii) the 6.150% First Mortgage Bonds, Series A due
2038 issued pursuant to the Indenture, (iii) other Securities Outstanding issued pursuant to the
Indenture and (iv) Permitted Additional Senior Secured Debt.




          “Series B Bond” has the meaning assigned to that term in Section 2.01(a)(i).




          “Series C Bond” has the meaning assigned to that term in Section 2.01(b)(i).




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




          “Synthetic Leases” means any synthetic lease, tax retention operating lease, off-balance sheet
loan or similar off-balance sheet financing product, where such transaction is considered debt for
borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP.




          “Total Loss” means (a) a permanent, total loss of a substantial portion of the Transmission
System as a result of any event which causes all or a material portion of the Transmission System
to be damaged, destroyed or rendered unfit for normal use for any reason whatsoever or (b) a
substantial portion of the Transmission System is condemned, nationalized, seized, compulsorily
acquired or otherwise expropriated by any Governmental Authority under power of eminent domain or
otherwise.




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




          “Transmission System” means the transmission lines and towers; substations; switching stations
and substations; circuit breakers; and all such other necessary facilities used for providing
transmission service; in each case, owned by the Company.




ARTICLE TWO




TITLE, FORM AND TERMS AND CONDITIONS OF THE BONDS




                    Section 2.01. The Bonds.



          (a) The Series B Bonds.





     (i) The Securities of this series to be issued under the Mortgage Indenture pursuant to
this Second Supplemental Indenture shall be designated as “7.12% First



12









 







Mortgage Bonds, Series B due 2017” (the “Series B Bonds”) and shall be Securities
issued under the Mortgage Indenture.




     (ii) The Trustee shall authenticate and deliver the Series B Bonds for original issue
on the Closing Date in the aggregate principal amount of $40,000,000, upon a Company Order
for the authentication and delivery thereof pursuant to Section 4.01 of the Mortgage
Indenture.




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




     (iv) The Series B Bonds shall mature and the principal thereof shall be due and payable
together with all accrued and unpaid interest thereon on December 22, 2017.




     (v) The Series B Bonds shall bear interest at the rate of 7.12% 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 (x)
9.12% and (y) 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 Series B Bonds 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 Series B
Bonds shall be June 30 and December 30 in each year, commencing June 30, 2009, and the
Regular Record Dates with respect to the Interest Payment Dates for the Series B Bonds 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 Bondholder
to whom principal is payable.




     (vi) 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 Series B Bonds 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 Series B Bonds may be effected; and The Bank of New York, N.A. shall be the Security
Registrar and the Paying Agent for the Series B Bonds; 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 Series B Bonds.




     (vii) The Series B Bonds shall be issuable in registered form in denominations of at
least $250,000 or any integral multiple thereof.



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     (viii) All payments of the principal of and Make-Whole Amount, if any, and interest on
the Series B Bonds 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.




     (ix) The Series B Bonds shall not be defeasible pursuant to Sections 9.04(b) or (c) of
the Indenture and such Sections of the Indenture shall not apply to the Series B Bonds.




     (x) The Series B Bonds 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.




     (b) The Series C Bonds.




     (i) The Securities of this series to be issued under the Mortgage Indenture pursuant to
this Second Supplemental Indenture shall be designated as “7.27% First Mortgage Bonds,
Series C due 2020” (the “Series C Bonds” and, together with the Series B Bonds, the
“Bonds”) and shall be Securities issued under the Mortgage Indenture.




     (ii) The Trustee shall authenticate and deliver the Series C Bonds for original issue
on the Closing Date in the aggregate principal amount of $35,000,000, upon a Company Order
for the authentication and delivery thereof pursuant to Section 4.01 of the Mortgage
Indenture.




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




     (iv) The Series C Bonds shall mature and the principal thereof shall be due and payable
together with all accrued and unpaid interest thereon on December 22, 2020.




     (v) The Series C Bonds shall bear interest at the rate of 7.27% 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 (x)
9.27% and (y) 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 Series C Bonds 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 Series C
Bonds shall be June 30 and December 30 in each year, commencing June 30, 2009, and the
Regular Record Dates with respect to the Interest Payment Dates for the Series C Bonds 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 Bondholder
to whom principal is payable.



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     (vi) 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 Series C Bonds 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 Series C Bonds may be effected; and The Bank of New York, N.A. shall be the Security
Registrar and the Paying Agent for the Series C Bonds; 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 Series C Bonds.




     (vii) The Series C Bonds shall be issuable in registered form in denominations of at
least $250,000 or any integral multiple thereof.




     (viii) All payments of the principal of and Make-Whole Amount, if any, and interest on
the Series C Bonds 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.




     (ix) The Series C Bonds shall not be defeasible pursuant to Sections 9.04(b) or (c) of
the Indenture and such Sections of the Indenture shall not apply to the Series C Bonds.




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



                    Section 2.02. Payment on the Bonds.



          (a) Subject to Section 2.02(b), payments of principal, Make-Whole Amount, if any, and interest
becoming due and payable on the Bonds shall be made at the Place of Payment designated in Section
2.01(a)(vi) (in the case of the Series B Bonds) or Section 2.01(b)(vi) (in the case of the Series C
Bonds) or such place as the Company may at any time, by notice, specify to each Bondholder, 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 Bondholder or its nominee shall be a Bondholder, and
notwithstanding anything contained in the Indenture, Section 2.02(a) or in such Bond to the
contrary, the Company will pay all sums becoming due on such Bond for principal, Make-Whole Amount,
if any, and interest by the method and at the address specified for such purpose below such Initial
Bondholder’s name in Schedule A to the Purchase Agreement, or by such other method or at such other
address as such Initial Bondholder shall have from time to time specified to the Company and the
Trustee in writing for such purpose in accordance with the Purchase



15









 






Agreement, without the presentation or surrender of such Bond or the making of any notation
thereon, except that concurrently with or reasonably promptly after payment or redemption in full
of any Bond, such Initial Bondholder shall surrender such Bond 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 Bond held by such Initial
Bondholder or its nominee such Initial Bondholder 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 Bond to the Company in exchange for a new Bond or Bonds pursuant to Section 3.05 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 3.08 of the Indenture with respect to any Bond, 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 Bond purchased by
such Initial Bondholder under the Indenture. The Company agrees and acknowledges that the Trustee
shall not be liable for any Bondholder’s failure to perform its obligations under this Section
2.02(b). Each Initial Bondholder and any such Institutional Investor by its purchase of its Bond
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 Bondholder’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 Bonds
and the resignation or removal of the Trustee.




          (c) Notwithstanding anything to the contrary in Section 1.18 of the Mortgage Indenture, if the
Stated Maturity or any Redemption Date of the Bonds shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of the Mortgage Indenture or this Second
Supplemental Indenture) payment of interest on or principal (and premium, if any) of the Bonds 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 Bonds due at the Stated
Maturity or on any Redemption Date thereof at the rate set forth in the Bonds until the date of
actual payment.




                    Section 2.03. Mandatory Redemption of the Bonds.



          Pursuant to Section 5.01 of the Mortgage Indenture, 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% of the Fair Value of the Mortgaged Property
as of the last day of the fiscal quarter of the Company most recently ended, in the aggregate, the
Net Proceeds of such Disposition or Dispositions shall be used for the mandatory redemption of the
Bonds, 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



16









 






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 Bonds, 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 Bonds pursuant to this Section 2.03 shall be made (i) at a Redemption Price equal
to the principal amount of the Bonds being redeemed and shall be accompanied by payment of accrued
and unpaid interest on the principal amount of the Bonds 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 Bonds 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 5.01 of the Mortgage Indenture, the Bonds 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 Bonds plus the Make-Whole Amount plus accrued and unpaid
interest thereon to the redemption date; provided, however, that if the Bonds are redeemed in part,
the Bonds shall not be redeemed in an amount less than $5,000,000 of the aggregate principal amount
of the Bonds then Outstanding.




          (b) Notwithstanding anything to the contrary in Article V of the Mortgage Indenture, the
redemption of the Bonds 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 5.02 (which shall
for purposes of this Second Supplemental Indenture also be applicable to a redemption under Section
2.03) and Sections 5.05 and 5.06 of the Mortgage Indenture. The Company (or the Security
Registrar, if so requested pursuant to Section 5.04 of the Mortgage Indenture) shall give each
Bondholder 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



17









 






shall specify such date, the aggregate principal amount of the Bonds to be redeemed on such
date, the principal amount of each Bond held by such Bondholder 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 Bondholder 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. Each notice of redemption shall be irrevocable and
unconditional and the principal amount of each Bond to be redeemed shall mature and become due and
payable on the date fixed for such redemption (which shall be a Business Day), together with
interest on such principal amount accrued to such date and the applicable Make-Whole Amount. From
and after such date, unless the Company shall fail to pay such principal amount when so due and
payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such
principal amount shall cease to accrue. Any Bond redeemed in full shall be surrendered (as
contemplated by Section 2.02(b)) to the Company and cancelled and shall not be reissued, and no
Bond shall be issued in lieu of any redeemed principal amount of any Bond.




          (c) Notwithstanding anything to the contrary in Article V of the Mortgage Indenture, in the
case of each partial redemption of the Bonds pursuant to Section 2.04(b), the Company shall redeem
the same percentage of the unpaid principal amount of the Bonds of each series, and the principal
amount of the Bonds of each series so to be redeemed shall be allocated by the Trustee among all of
the Bonds of such series 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 Bonds.



          Except as may be agreed to by a Bondholder or Bondholders in connection with an offer made to
all Bondholders 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
Bonds except upon the payment or redemption of the Bonds in accordance with the terms of the
Indenture. The Company will promptly cause the Trustee to cancel all Bonds acquired by it or any
Affiliate pursuant to any payment, redemption or purchase of Bonds pursuant to any provision of the
Indenture and no Bonds may be issued in substitution or exchange for any such Bonds.




                    Section 2.06. Payment upon Event of Default.



          Upon any Bonds becoming due and payable under Section 10.02 of the Indenture, whether
automatically or by declaration, such Bonds will forthwith mature and the entire unpaid principal
amount of such Bonds, 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 permitted by
applicable Law), shall all be immediately due and payable, in each and every case



18









 






without presentment, demand, protest or further notice, all of which are hereby waived. The
Company acknowledges that each holder of a Bond has the right to maintain its investment in the
Bonds 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 Bonds have become
due and payable under Section 10.02 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 Bond in accordance with Section 3.05 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 Bonds, pursuant to Section 3.01(u) of the Mortgage Indenture, Article VI
of the Mortgage Indenture is hereby supplemented by incorporating therein the following additional
affirmative covenants which the Company shall observe solely for the benefit of the Bondholders for
so long as any Bond is Outstanding:




          (a) Use of Proceeds. The Company shall apply the net proceeds from the issuance and
sale of the Bonds 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 Bonds.




          (b) 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.




          (c) 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.




          (d) 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



19









 






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.




          (e) 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
Purchase Agreement.




          (f) Continuance of Rating of the Bonds. The Company shall ensure that at all times at
least one NRSRO maintains a rating on the Company’s 6.150% First Mortgage Bonds, Series A due 2038
issued pursuant to the Indenture.




          (g) Maintenance and Renewal.




          (i) The Company will expend during each calendar year, and certify to the Trustee in an
Officer’s Certificate, an amount not less than 2.00% of the average amount of depreciable property
of the Company at the beginning and at the end of such calendar year for one or more of the
following purposes:





	 	(A)	 	capital expenditures for the maintenance and repair of the
utility properties of the Company subject to the Lien of the Indenture;
	 
	 	(B)	 	the construction or acquisition of Property Additions on which
the Indenture is a first Lien, subject only to Permitted Liens and Prepaid
Liens; or
	 
	 	(C)	 	the retirement, through purchase, payment or redemption, of
Securities issued under and secured by the Indenture (including any future
supplemental indenture pursuant to the Mortgage Indenture).





          (ii) The term “amount of depreciable property” shall mean as of any date the amount of
Property Additions included at such date on the books of the Company which is depreciable, as
determined in accordance with GAAP. The average of the amount of depreciable property shall mean
the arithmetical average of the amount of depreciable property at the beginning, and the amount
thereof at the end, of such calendar year. Partial years shall be prorated. If, in any calendar
year, the required expenditures for the foregoing purposes are not made, the Company shall deposit
with the Trustee on or before the first day of February next succeeding the close of such calendar
year a sum in cash to the extent of any deficiency, after deducting (subject to the terms of the
Indenture) any eligible credit for unused excess expenditures previously made for such purposes.
Such cash may be applied to the redemption at the applicable Redemption Price, or to the
repurchase, of Securities, or may be withdrawn to the extent of 100% of Property Additions.




          (iii) Excess expenditures in any calendar year may be used to comply with the requirements of
any subsequent year or years and Property Additions may be certified to comply



20









 






with the provisions of clause (i)(B) above; provided, that Property Additions so used, and
Securities retired through expenditures so used, cannot be used for other purposes under this
Second Supplemental Indenture; provided, further that, (i) no Retired Securities or expenditures
for Funded Property which shall have been made the basis for authentication of Securities or the
release of Mortgaged Property or the withdrawal of deposited cash or Securities or any other
amounts under any other provision of the Indenture, or which shall have been made out of any
insurance moneys or moneys received from the condemnation, sale or other disposition of any of the
Company’s property subject to the Lien of the Indenture, or which shall have previously been used
or applied or certified to the Trustee to comply with this Section 3.01(g) or any other provision
of the Indenture and (ii) no retirement of Securities which shall have been made with moneys
applied to such purpose pursuant to any provision of this Section 3.01(g) or of Section 4.04 or
8.06 of the Mortgage Indenture, shall be certified or used or applied for the purpose of complying
with this Section 3.01(g) or withdrawing any moneys paid to the Trustee pursuant to this Section
3.01(g). This Section 3.01(g) shall not require the annual retirement by the Company of any
specific amount of Outstanding Securities.




          (iv) On or before the first day of February of each year beginning February 1, 2009, the
Company shall deliver to the Trustee an Officer’s Certificate showing in reasonable detail: (1)
the Company’s expenditures pursuant to each of clause (i) above, or otherwise deposited with the
Trustee pursuant to this Section 3.01(g), (2) any eligible credit for excess expenditures from
prior periods and the extent to which the Company elects to have such excess applied to the period
next preceding delivery of such Officer’s Certificate, and (3) the amount of cash the Company is
depositing with the Trustee concurrently with the delivery of such Officer’s Certificate to comply
with the requirements of this Section 3.01(g). Such Officer’s Certificate shall also state that it
complies with the requirements of this Section 3.01(g).




          (v) At the option of the Company, any moneys paid to and held by the Trustee under the
provisions of subclause (ii) of this Section shall, upon the written request of the Company
pursuant to an Officer’s Certificate, (1) be applied by the Trustee to the purchase in the open
market of Securities of any series permitted to be so purchased, at prices not exceeding the then
applicable Redemption Price, if any, at which Securities of said series may then be redeemed or (2)
be paid to or upon the order of the Company to the extent of (A) the principal amount of Securities
of said series purchased or paid by the Company and delivered to the Trustee, cancelled or for
cancellation and (B) the accrued interest and the premium, if any, theretofore paid to the Trustee,
as hereinabove provided, on such principal amount of Securities. The Company hereby covenants and
agrees that it will pay to the Trustee from time to time in cash such additional sums, if any, as
shall be paid or required to be paid by the Trustee as or for accrued interest and premium, if any,
in respect of any Securities purchased or redeemed pursuant to the provisions of this Section.




          (vi) Any and all Securities, the retirement (through payment or purchase) of which shall be
certified to the Trustee in compliance with the provisions of this 3.01(g), shall be delivered to
the Trustee at or before the time the same shall be so certified and shall thereupon be cancelled
and destroyed by the Trustee, unless theretofore cancelled and destroyed. All other Securities
received by the Trustee pursuant to any provision of this 3.01(g) shall thereupon be cancelled and
destroyed by the Trustee.




21









 








                    Section 3.02. Negative Covenants of the Company.



          For purposes of the Bonds, pursuant to Section 3.01(u) of the Mortgage Indenture, Article VI
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 Bondholders for so long as
any Bond is Outstanding:




          (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 Article VIII 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 XIII of the Mortgage
Indenture; or




          (iii) Subject to compliance with Article VIII 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% of the Fair Value of the
Mortgaged Property as of the last day of the fiscal quarter of the Company most recently
ended, in the aggregate, such Net Proceeds shall be applied in accordance with the terms and
conditions of Section 2.03.



          (c) Hedging Agreements. 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.




          (d) 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; provided that, the Company shall not create, incur, assume or suffer to exist
any Lien securing indebtedness under the Revolving Credit Agreement under clause (v) of the
definition of Permitted Liens unless the Securities are secured on a equal and ratable basis
pursuant to documentation reasonably satisfactory to the Trustee (and the Trustee shall be entitled
to receive an Opinion of Counsel to evidence the satisfaction of such condition) (any such secured
indebtedness, “Permitted Additional Senior Secured Debt”).




          (e) 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



22









 






substantially changed from the general nature of the business the Company is engaged in on the
Closing Date.




          (f) 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.




          (g) 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.




          (h) 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 Bondholders without the prior consent of the Bondholders of all the Outstanding Bonds.




ARTICLE FOUR




ADDITIONAL EVENTS OF DEFAULT; REMEDIES




                    Section 4.01. Events of Default.



          For purposes of the Bonds, pursuant to Section 3.01(u) of the Mortgage Indenture, Section
10.01 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 10.01 of the Mortgage Indenture, an “Event of Default”):




          (a) Interest Payments. The Company shall fail to pay interest, if any, on any
Security within five (5) days after the same becomes due and payable;




          (b) 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 Bondholders under Section 7.1(c)
of the Purchase Agreement and such failure is not cured within ten (10) days;




          (c) 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 Section 4.01(b)
or in Section 10.01(b) of the Mortgage Indenture) contained in any of the Financing Agreements,
including Section 7 of the Purchase 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 Bondholder in accordance with the terms of the Mortgage
Indenture or the Purchase Agreement;




23









 








          (d) 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 Bondholder
pursuant to the provisions of this Second 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;




          (e) 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(e)(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 such Debt into
equity interests), other than as provided in Section 2.03 or Section 2.04 or Section 5.01 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;



          (f) 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;




          (g) 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;




          (h) 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;




24









 








          (i) Security Interests. Subject to Section 3.01(d), 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;




          (j) Repudiation. Any provision (i) of any Financing Agreement shall be repudiated by
the Company or (ii) of any Financing Agreement 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;




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




          (l) 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




          (m) 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; Rescission and Annulment.



          For purposes of the Bonds, pursuant to Section 3.01(u) of the Mortgage Indenture, Section
10.02 of the Mortgage Indenture shall be supplemented as follows:




          (a) Acceleration of Maturity. In addition to the provisions set forth in Section
10.02 of the Mortgage Indenture, if an Event of Default arising from the failure to pay principal
of, or interest on, or any Make-Whole Amount relating to the Bonds shall have occurred and be
continuing, then in every such case each Holder of Bonds may declare the principal amount of the
Bonds 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.




          (b) Rescission and Annulment. In addition to the conditions for the rescission and
annulment of any Event of Default set forth in the second paragraph of Section 10.02 of the
Mortgage Indenture, no such Event of Default shall be deemed to have been rescinded and annulled
with respect to the Bonds unless the Holders of not less than a majority in aggregate principal
amount of the Bonds then Outstanding, by Act of said Holders delivered to the Company and the
Trustee, consent to such rescission and annulment.




25









 








ARTICLE FIVE




MISCELLANEOUS PROVISIONS




                    Section 5.01. Execution of Second 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 Second 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 Series B Bonds executed, authenticated and delivered under this Second
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, and the Series C Bonds executed,
authenticated and delivered under this Second 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 Second 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 Second Supplemental Indenture or in the Bonds 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 Second Supplemental Indenture.



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




                    Section 5.06. Execution and Counterparts.



          This Second 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.




26









 








                    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 Second Supplemental Indenture shall control, insofar as the
rights between the Company and the Bondholders 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 Second Supplemental Indenture.




                    Section 5.09. Governing Law.



          This Second Supplemental Indenture shall be governed by and construed in accordance with the
law of the State of New York, except that (i) if this Second Supplemental Indenture shall become
qualified and shall become subject to the Trust Indenture Act, to the extent that the Trust
Indenture Act shall be applicable, this Second 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 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
Second Supplemental Indenture shall be governed by and construed in accordance with the law of such
jurisdiction to the extent mandatory.





27









 








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





	 	 	 	 	 
	 	ITC MIDWEST LLC

 	 
	 	By:  	ITC Holdings Corp., as Sole Member
 	 
	 	 	 
	 	By:  	/s/
Edward M. Rahill 	 
	 		Name:  Edward M. Rahill
	 
	 	 	Title:  	  Senior Vice President – Finance and Chief

  Financial Officer 	 
	 



Drafted by:




David A. Stagliano

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




 









 





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

 	 
	 	By:  	/s/
Roxane Ellwanger 	 
	 	Name:  	Roxane Ellwanger 	 
	 	Title:  	Assistant Vice President 	 



 









 






	 	 	 	 	 



	 	 	 
	ACKNOWLEDGMENT
	 	 
	 
	 	 
	STATE OF MICHIGAN

	 	 )
	 

	 	 ) ss.
	COUNTY OF OAKLAND

	 	 )






          On
the 15th day of December 2008, before me, the undersigned notary public, personally came
Edward M. Rahill, the Senior Vice President — Finance and Chief Financial Officer of ITC Holdings
Corp., a corporation organized under the laws of the State of Michigan, the sole member of ITC
Midwest 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.




	 	 	 	 	 	 
	 

	 	 	/s/
Janet E. Reed 	 	 
	 
	 	 	 	 	 
	 

	 	By: 
	Notary Public, State of Michigan	 	 
	 

	 	 	County of Livingston	 	 
	 

	 	 	My Commission Expires Aug. 26,
2014	 	 
	 

	 	 	Acting in the County of Oakland
	 	 







 









 








	 	 	 
	ACKNOWLEDGMENT
	 	 
	 
	 	 
	STATE OF ILLINOIS
	 	 )
	 
	 	           ) ss.
	COUNTY OF COOK
	 	 )






          On
the 15th day of December 2008, before me, the undersigned notary public, personally came
Roxane Ellwanger, Assistant 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.




	 	 	 	 	 	 
	 

	 	 	/s/
Danita George 	 	 
	 
	 	 	 	 	 
	 

	 	By: 
	Danita George	 	 
	 

	 	 	No.                     	 	 
	 

	 	 	Notary Public State of Illinois	 	 
	 

	 	 	Qualified in Cook County	 	 
	 

	 	 	My Commission Expires May 12, 2009
	 	 






 









 






Schedule 1




     The recording information for the Mortgage Indenture and the First Supplemental Indenture is
as follows:




	 	 	 	 	 	 	 
	County	 	State	 	Mortgage Indenture	 	First Supplemental Indenture
	Appanoose

	 	IA
	 	Doc. 2008-124 in

Book 2008; Page 124
	 	Doc. 2008-125 in

Book 2008; Page 125
	Benton

	 	IA
	 	Book 8; Page 291
	 	Book 8; Page 292
	Boone

	 	IA
	 	Doc. 080262 in

Book 2008; Page 0262
	 	Doc. 080263 in

Book 2008; Page 0263
	Buchanan

	 	IA
	 	Doc. 2008R00212
	 	Doc. 2008R00213
	Buena Vista

	 	IA
	 	Doc. 080166
	 	Doc. 080167
	Cerro Gordo

	 	IA
	 	Doc. 2008-391
	 	Doc. 2008-392
	Clarke

	 	IA
	 	Doc. 2008-0164 in

Book 175A; Page 1
	 	Doc. 2008-0165 in

Book 175B; Page 1
	Clayton

	 	IA
	 	Doc. 2008R00197
	 	Doc. 2008R00198
	Clinton

	 	IA
	 	Doc. 2008-00537
	 	Doc. 2008-00538
	Dallas

	 	IA
	 	Doc. 823 in

Book 2008; Page 823
	 	Doc. 824 in

Book 2008; Page 824
	Des Moines

	 	IA
	 	Doc. 2008-000259
	 	Doc. 2008-000260
	Dickinson

	 	IA
	 	Inst. 08-00303 in

Book 358; Page 1
	 	Inst. 08-00304 in

Book 359; Page 1
	Dubuque

	 	IA
	 	Doc. 005881650969

File 2008-00000799
	 	Doc. 005881660839

File 2008-00000800
	Emmet

	 	IA
	 	Doc. 2008-00133
	 	Doc. 2008-00134
	Greene

	 	IA
	 	Doc. 2008-0120 in

Book 182; Page 1
	 	Doc. 2008-0121 in

Book 183; Page 1
	Grundy

	 	IA
	 	Book 2008; Page 0174
	 	Book 2008; Page 0175
	Hamilton

	 	IA
	 	Doc. 2008-151
	 	Doc. 2008-152
	Hancock

	 	IA
	 	Inst. 08-0141
	 	Inst. 08-0142
	Hardin

	 	IA
	 	Doc. 2008-0248
	 	Doc. 2008-0249
	Iowa

	 	IA
	 	Doc. 2008-2278 in

Book 840; Page 68
	 	Doc. 2008-2279 in

Book 841; Page 1
	Jackson

	 	IA
	 	Doc. 08-244 in

Book 2008; Page 244
	 	Doc. 08-245 in

Book 2008; Page 245
	Jasper

	 	IA
	 	Doc. 001695150969

	 	Doc. 001695160839

	 

	 	 	 	File 2008-00000315
	 	File 2008-00000316






 









 






	 	 	 	 	 	 	 
	County	 	State	 	Mortgage Indenture	 	First Supplemental Indenture
	Jefferson

	 	IA
	 	Doc. 2008-0157
	 	Doc. 2008-0158
	Johnson

	 	IA
	 	Doc. 021063550969 in

Book 4254; Page 1
	 	Doc. 021063560839 in

Book 4255; Page 1
	Jones

	 	IA
	 	Fee Book 2008-0178
	 	Fee Book 2008-0179
	Kossuth

	 	IA
	 	Doc. 2008-236 in

Book 2008; Page 236
	 	Doc. 2008-237 in

Book 2008; Page 237
	Lee (North)

	 	IA
	 	Doc. 2008-171 in 


Book 08N; Page 171
	 	Doc. 2008-172 in 


Book 08N; Page 172
	Lee (South)

	 	IA
	 	Doc. 2008-104 in 

Book 08S; Page 104
	 	Doc. 2008-105 in

Book 08S; Page 105
	Linn

	 	IA
	 	Doc. 012890130969

Inst. 200800039315 in

Book 6889; Page 1
	 	Doc. 012890140843

Inst. 200800039316 in

Book 6890; Page 1
	Lucas

	 	IA
	 	Doc. 2008-0091 in

Book 2008A; Page 1
	 	Doc. 2008-0092 in

Book 2008B; Page 1
	Marshall

	 	IA
	 	Doc. 002901080969

File 2008-00000387
	 	Doc. 002901090839

File 2008-00000388
	Monroe

	 	IA
	 	Doc. 86 in

Book 2008; Page 86
	 	Doc. 87 in

Book 2008; Page 87
	Muscatine

	 	IA
	 	Doc. 2008-00387
	 	Doc. 2008-00388
	Osceola

	 	IA
	 	Doc. 20080080 in

Book 2008; Page 80
	 	Doc. 20080081 in

Book 2008; Page 81
	Pocahontas

	 	IA
	 	Doc. 2008-107 in

Book 179; Page 1
	 	Doc. 2008-108 in

Book 180; Page 1
	Poweshiek

	 	IA
	 	Doc. 0230 in 

Book 823; Page 1
	 	Doc. 0231 in

Book 824; Page 1
	Ringgold

	 	IA
	 	Inst. 2008-00000091 in

Book 327; Page 1
	 	Inst. 2008-00000092 in

Book 328; Page 1
	Story

	 	IA
	 	Inst. 2008-00000615
	 	Inst. 2008-00000616
	Tama

	 	IA
	 	Doc. 2008-0238 in 

Book 817; Page 460
	 	Doc. 2008-0239 in

Book 820; Page 289
	Union

	 	IA
	 	Doc. 00000140 in

Book 911; Page 1
	 	Doc. 00000141 in

Book 914; Page 1
	Van Buren

	 	IA
	 	Doc. 2008-48 in

Book 142; Page 444
	 	Doc. 2008-49 in

Book 143; Page 343
	Wapello

	 	IA
	 	Doc. 2008-0275 in

	 	Doc. 2008-0276 in

	 

	 	 	 	Book 2008; Page 0275
	 	Book 2008; Page 0276






 









 






	 	 	 	 	 	 	 
	County	 	State	 	Mortgage Indenture	 	First Supplemental Indenture
	Wayne

	 	IA
	 	Inst. 08-0123 in

Book 119; Page 670
	 	Inst. 08-0124 in

Book 119; Page 1640
	Worth

	 	IA
	 	Fee Book 20080149
	 	Fee Book 20080150
	Adair

	 	IA
	 	File 08-0110 in

Book 586; Page 304
	 	File 08-0111 in

Book 589; Page 223
	Allamakee

	 	IA
	 	Doc. 2008-148
	 	Doc. 2008-149
	Audubon

	 	IA
	 	Doc. 08-0102
	 	Doc. 08-0103
	Black Hawk

	 	IA
	 	Doc. 2008014573
	 	Doc. 2008014576
	Bremer

	 	IA
	 	Doc. 20080230
	 	Doc. 20080231
	Butler

	 	IA
	 	Inst. 2008-0307
	 	Inst. 2008-0308
	Cass

	 	IA
	 	Doc. 2008 115 in

Book 2008; Page 115
	 	Doc. 2008 116 in

Book 2008; Page 116
	Cedar

	 	IA
	 	Doc. 2008-264 in

Book 881; Page 1
	 	Doc. 2008-265 in

Book 882; Page 1
	Chickasaw

	 	IA
	 	Fee Book 2008-0121
	 	Fee Book 2008-0122
	Clay

	 	IA
	 	Doc. 2008 190 in

Book 2008; Page 190
	 	Doc. 2008 191 in

Book 2008; Page 191
	Davis

	 	IA
	 	Doc. 2008-0069 in

Book 142; Page 001
	 	Doc. 2008-0070 in

Book 143; Page 001
	Decatur

	 	IA
	 	Book 2008; Page 0096
	 	Book 2008; Page 0097
	Delaware

	 	IA
	 	Doc. 2008 203 in 

Book 2008; Page 203
	 	Doc. 2008 204 in

Book 2008; Page 204
	Fayette

	 	IA
	 	Doc. 2008 192 in

Book 2008; Page 192
	 	Doc. 2008 193 in

Book 2008; Page 193
	Floyd

	 	IA
	 	Doc. 2008-0173 in

Book 2008; Page 0173
	 	Doc. 2008-0174 in

Book 2008; Page 0174
	Franklin

	 	IA
	 	Inst. 20080199
	 	Inst. 20080200
	Guthrie

	 	IA
	 	Book 2008; Page 0226
	 	Book 2008; Page 0227
	Henry

	 	IA
	 	Doc. 0160 in 

Book 2008; Page 0160
	 	Doc. 0161 in

Book 2008; Page 0161
	Howard

	 	IA
	 	Doc. 2008-1376 in

Book 358; Page 1 and

Book 359; Page 501
	 	Doc. 2008-1377 in

Book 360; Page 1 and

Book 361; Page 501
	Keokuk

	 	IA
	 	Fee Book 2008-0112
	 	Fee Book 2008-0113






 









 






	 	 	 	 	 	 	 
	County	 	State	 	Mortgage Indenture	 	First Supplemental Indenture
	Louisa

	 	IA
	 	Fee Book 2008-1338
	 	Fee Book 2008-1339
	Lyon

	 	IA
	 	Doc. 2008 212 in 

Book 2008; Page 212
	 	Doc. 2008 213 in

Book 2008; Page 213
	Mahaska

	 	IA
	 	Doc. 2008-198 in

Book 2008; Page 198
	 	Doc. 2008-199 in

Book 2008; Page 199
	Mitchell

	 	IA
	 	Doc. 2008-112 in

Book 2008; Page 112
	 	Doc. 2008-113 in

Book 2008; Page 113
	Palo Alto

	 	IA
	 	Doc. 2008-121 in

Book 2008; Page 121
	 	Doc. 2008-122 in

Book 2008; Page 122
	Polk

	 	IA
	 	Doc. 020740580969

File 2008-00054845 in

Book 12513; Page 1
	 	Doc. 020740590839

File 2008-00054846 in

Book 12514; Page 1
	Scott

	 	IA
	 	Doc. 016584770969

File 2008-00001602
	 	Doc. 016584780839

File 2008-00001603
	Sioux

	 	IA
	 	File 2008; Card 437
	 	File 2008; Card 438
	Taylor

	 	IA
	 	Doc. 2008786 in

Book 161; Page 8
	 	Doc. 2008787 in

Book 161; Page 9
	Washington

	 	IA
	 	Doc. 08-0211 in

Book 2008; Page 0211
	 	Doc. 08-0212 in

Book 2008; Page 0212
	Webster

	 	IA
	 	Inst. 2008-335
	 	Inst. 2008-336
	Winneshiek

	 	IA
	 	Doc. 2008 197 in

Book 2008; Page 197
	 	Doc. 2008 198 in

Book 2008; Page 198
	Winnebago

	 	IA
	 	Fee Book 08-0076 in

Book 2008; Page 0076
	 	Fee Book 08-0077 in

Book 2008; Page 0077
	Wright

	 	IA
	 	Doc. 08-140 in

Book 08; Page 140
	 	Doc. 08-141 in

Book 08; Page 141
	Carroll

	 	IL
	 	Doc. 2008R-0150 in

Book 924; Page 1
	 	Doc. 2008R-0151 in

Book 925; Page 1
	Whiteside

	 	IL
	 	Doc. 410-2008
	 	Doc. 411-2008
	Jo Daviess

	 	IL
	 	Doc. 339743
	 	Doc. 339744
	Rock Island

	 	IL
	 	Doc. 2008-01374
	 	Doc. 2008-01375
	Cottonwood

	 	MN
	 	Doc. 255292

office of the
Cottonwood County
Recorder
	 	Doc. 255293

office of the Cottonwood
County Recorder
	Faribault

	 	MN
	 	Doc. 342918 

office of the
Faribault County
Recorder
	 	Doc. 342919

office of the Faribault
County Recorder






 









 






	 	 	 	 	 	 	 
	County	 	State	 	Mortgage Indenture	 	First Supplemental Indenture
	Fillmore

	 	MN
	 	Doc. 362678 

office of the
Fillmore County
Recorder
	 	Doc. 362679

office of the Fillmore
County Recorder
	Freeborn

Easement — Torrens

	 	MN
	 	Doc. 474468

office of the
Freeborn County
Recorder


Doc. 109689

office of the
Freeborn County
Registrar of Titles
	 	Doc. 474469

office of the Freeborn
County Recorder


Doc. 109690

office of the Freeborn
County Registrar of Titles
	Jackson

	 	MN
	 	Doc. A251774 

office of the Jackson
County Recorder
	 	Doc. A251775

office of the Jackson
County Recorder
	Le Sueur

	 	MN
	 	Doc. 353162

office of the Le
Sueur County Recorder
	 	Doc. 353163

office of the Le Sueur
County Recorder
	Mower

	 	MN
	 	Doc. A000565139

office of the Mower
County Recorder
	 	Doc. A000565140

office of the Mower County
Recorder
	Nobles

	 	MN
	 	Doc. A317292

office of the Nobles
County Recorder
	 	Doc. A317293

office of the Nobles County
Recorder
	Rock

	 	MN
	 	Doc. 168189

office of the Rock
County Recorder
	 	Doc. 168190

office of the Rock County
Recorder
	Steele

	 	MN
	 	Doc. A000354767

office of the Steele
County Recorder
	 	Doc. A000354768

office of the Steele County
Recorder
	Watonwan

	 	MN
	 	Doc. 207915

office of the
Watonwan County
Recorder
	 	Doc. 207916

office of the Watonwan
County Recorder
	Blue Earth

	 	MN
	 	Doc. 481CR565

office of the Blue
Earth County Recorder
	 	Doc. 481CR566

office of the Blue Earth
County Recorder
	Brown

	 	MN
	 	Doc. 364356

office of the Brown
County Recorder
	 	Doc. 364357

office of the Brown County
Recorder
	Martin

	 	MN
	 	Doc. 2008R-392714 

office of the Martin
County Recorder
	 	Doc. 2008R-392715

office of the Martin County
Recorder
	Olmsted

	 	MN
	 	Doc. A1157194

	 	Doc. A1157195

	 

	 	 	 	office of the Olmsted
County Recorder
	 	office of the Olmsted
County Recorder






 









 






	 	 	 	 	 	 	 
	County	 	State	 	Mortgage Indenture	 	First Supplemental Indenture
	Murray

	 	MN
	 	Doc. 230354

office of the Murray
County Recorder
	 	Doc. 230355

office of the Murray County
Recorder
	Redwood

	 	MN
	 	Doc. A326435

office of the Redwood
County Recorder
	 	Doc. A326436

office of the Redwood
County Recorder
	Wabasha

	 	MN
	 	Doc. A286205

office of the Wabasha
County Recorder
	 	Doc. A286206

office of the Wabasha
County Recorder
	Winona

	 	MN
	 	Doc. 525959

office of the Winona
County Recorder
	 	Doc. 525960

office of the Winona County
Recorder
	Clark

	 	MO
	 	Doc. 28353 in

Book 72; Page 37
	 	Doc. 28354 in

Book 72; Page 38







 











 





Exhibit A




REAL PROPERTY

State of Illinois

State of Iowa

State of Minnesota

State of Missouri




 









 








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 ITC Midwest 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 Second Supplemental Indenture, dated as of December 15, 2008 (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 The Bank of New York Trust Company, 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




 









 







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.




 









 







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.





 









 








Exhibit C



This Bond 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 Bond 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 Bond is registered under the Securities Act and any applicable state securities
laws.




ITC MIDWEST LLC

7.12% First Mortgage Bonds, Series B due 2017




Original Interest Accrual Date: December 22, 2008

Stated Maturity: December 22, 2017

Interest Rate: 7.12% per annum

Interest Payment Dates: June 30 and December 30

Regular Record Dates: June 15 and December 15




This Bond is a Security within the

meaning of the within-mentioned Indenture.

 






	 	 	 
	Registered No. [RB - ]

	 	[DATE]
	$[                    ]1

	 	PPN 450319 A*9





ITC MIDWEST 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, 2009 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)
9.12% 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 Bond (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 Bondholder on such Regular Record Date and may either be
paid to the Person in whose name this Bond (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 Bondholders 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:                     




	 	 	 
	 

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


     as Trustee








 




			
	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.




 









 










	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Authorized Officer 	 
	 	 	 	 


Capitalized terms used in this Bond 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
Bond and interest hereon at Maturity shall be made upon presentation of this Bond 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 Bond (other than interest at Maturity) shall be made as set
forth in Section 3.07 of the Original Indenture (as defined below). Payment of the principal of
and Make-Whole Amount, if any, and interest on this Bond, 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 Bond 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 and Deed of Trust dated as of January 14, 2008 (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 Second Supplemental Indenture, dated as of December 15, 2008 (the “Supplemental
Indenture”), each of the Original Indenture and the Second Supplemental Indenture being between the
Company and The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York
Trust Company, 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
Bond, 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 Bond shall be
deemed to constitute the consent and agreement by the Holder hereof to all of the terms and
provisions of the Indenture. This Bond is one of the series of Securities designated above.



Notwithstanding anything to the contrary in Section 1.18 of the Original Indenture, in the
Supplemental Indenture or in this Bond, if the Stated Maturity or any Redemption Date of this Bond
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 Bond) payment of interest on or
principal (and premium, if any) of this Bond 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




44









 







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 Bond 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 Bond is subject to mandatory redemption under the circumstances set forth in Section 5.01 of
the Original Indenture and as set forth in Section 2.03 of the Supplemental Indenture. This Bond
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 Bond 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 one class,
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 Bond shall be conclusive and binding upon such
Holder and upon all future Holders of this Bond and of any Bond 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 Bond.



No reference herein to the Indenture and no provision of this Bond 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 Bond at the times, place and rate, and in the coin
or currency, herein prescribed.



As provided in the Indenture and subject to certain limitations therein set forth, the transfer of
this Bond is registrable in the Security Register, upon surrender of this Bond for registration of




45









 







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 Bond or Bonds 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 Bond is registered as the absolute owner hereof for all purposes, whether or not this
Bond 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 Bond, except upon the payment
or redemption of this Bond in accordance with the terms of the Indenture. The Company will
promptly cause the Trustee to cancel this Bond once acquired by it or any Affiliate of the Company
pursuant to any payment, redemption or purchase of this Bond pursuant to any provision of the
Indenture and no Bonds may be issued in substitution or exchange for this Bond.



As provided in Section 16.01 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, organizer,
member, manager, stockholder, officer, director or employee, as such, past, present or future of
the Company or of any predecessor or successor corporation (either directly or through the




46









 







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
Bonds) 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 Bonds).



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



This Bond shall be governed by and construed in accordance with the law of the State of New York,
except that (i) if this Bond shall become qualified and shall become subject to the Trust Indenture
Act, to the extent that the Trust Indenture Act shall be applicable, this Bond 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 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
Bond 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 Bond 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.]




47









 









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



	 	 	 	 	 	 	 	 	 
	 	 	ITC MIDWEST LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By: ITC Holdings Corp., as Sole Member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Edward M. Rahill	 	 
	 

	 	 	 	Title:  
	 	Senior Vice President – Finance and Chief
Financial Officer	 	 






Date:                     





48









 








SCHEDULE A




SCHEDULE OF NOTATIONS




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



	 	 	 	 	 	 	 
	 	 	Amount of principal paid	 	Last date to which interest has	 	 
	Date of Notation	 	on the within Bond	 	been paid on the within Bond	 	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 Bond and all rights thereunder, hereby irrevocably constituting and appointing



     
             
              
              
               
                   
attorney
to transfer said Bond on the Security Register, upon surrender of said Bond at 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 Bond 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.




 









 








Exhibit D



This Bond 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 Bond 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 Bond is registered under the Securities Act and any applicable state securities
laws.




ITC MIDWEST LLC

7.27% First Mortgage Bonds, Series C due 2020




Original Interest Accrual Date: December 22, 2008

Stated Maturity: December 22, 2020

Interest Rate: 7.27% per annum

Interest Payment Dates: June 30 and December 30

Regular Record Dates: June 15 and December 15




This Bond is a Security within the

meaning of the within-mentioned Indenture.

 






	 	 	 
	Registered No. [RC - ]

	 	[DATE]
	$[                    ]2

	 	PPN 450319 A@7





ITC MIDWEST 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, 2009 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)
9.27% 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 Bond (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 Bondholder on such Regular Record Date and may either be
paid to the Person in whose name this Bond (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 Bondholders 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:                                         




	 	 	 
	 

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

     as Trustee








 




			
	2	 	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.




 









 










	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 


Capitalized terms used in this Bond 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
Bond and interest hereon at Maturity shall be made upon presentation of this Bond 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 Bond (other than interest at Maturity) shall be made as set
forth in Section 3.07 of the Original Indenture (as defined below). Payment of the principal of
and Make-Whole Amount, if any, and interest on this Bond, 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 Bond 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 and Deed of Trust dated as of January 14, 2008 (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 Second Supplemental Indenture, dated as of December 15, 2008 (the “Supplemental
Indenture”), each of the Original Indenture and the Second Supplemental Indenture being between the
Company and The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York
Trust Company, 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
Bond, 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 Bond shall be
deemed to constitute the consent and agreement by the Holder hereof to all of the terms and
provisions of the Indenture. This Bond is one of the series of Securities designated above.



Notwithstanding anything to the contrary in Section 1.18 of the Original Indenture, in the
Supplemental Indenture or in this Bond, if the Stated Maturity or any Redemption Date of this Bond
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 Bond) payment of interest on or
principal (and premium, if any) of this Bond 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




52









 







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 Bond 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 Bond is subject to mandatory redemption under the circumstances set forth in Section 5.01 of
the Original Indenture and as set forth in Section 2.03 of the Supplemental Indenture. This Bond
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 Bond 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 one class,
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 Bond shall be conclusive and binding upon such
Holder and upon all future Holders of this Bond and of any Bond 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 Bond.



No reference herein to the Indenture and no provision of this Bond 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 Bond at the times, place and rate, and in the coin
or currency, herein prescribed.



As provided in the Indenture and subject to certain limitations therein set forth, the transfer of
this Bond is registrable in the Security Register, upon surrender of this Bond for registration of




53









 







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 Bond or Bonds 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 Bond is registered as the absolute owner hereof for all purposes, whether or not this
Bond 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 Bond, except upon the payment
or redemption of this Bond in accordance with the terms of the Indenture. The Company will
promptly cause the Trustee to cancel this Bond once acquired by it or any Affiliate of the Company
pursuant to any payment, redemption or purchase of this Bond pursuant to any provision of the
Indenture and no Bonds may be issued in substitution or exchange for this Bond.



As provided in Section 16.01 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, organizer,
member, manager, stockholder, officer, director or employee, as such, past, present or future of
the Company or of any predecessor or successor corporation (either directly or through the




54









 







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
Bonds) 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 Bonds).



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



This Bond shall be governed by and construed in accordance with the law of the State of New York,
except that (i) if this Bond shall become qualified and shall become subject to the Trust Indenture
Act, to the extent that the Trust Indenture Act shall be applicable, this Bond 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 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
Bond 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 Bond 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.]




55









 







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




	 	 	 	 	 	 	 	 	 
	 	 	ITC MIDWEST LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By: ITC Holdings Corp., as Sole Member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Edward M. Rahill	 	 
	 

	 	 	 	Title:  
	 	Senior Vice President – Finance and Chief
Financial Officer	 	 






Date:                                         





56









 








SCHEDULE A




SCHEDULE OF NOTATIONS




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




	 	 	 	 	 	 	 
	 	 	Amount of principal paid	 	Last date to which interest has	 	 
	Date of Notation	 	on the within Bond	 	been paid on the within Bond	 	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 Bond and all rights thereunder, hereby irrevocably constituting and appointing



    
              
              
              
               
                   
attorney
to transfer said Bond on the Security Register, upon surrender of said Bond at 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 Bond 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.