There is hereby granted to ITC Midwest LLC, a wholly owned subsidiary of ITC Holdings Corp., its successors and assigns (the “Company”), the right and franchise to acquire, construct, erect, maintain, and operate in the City of Toledo, Tama County, Iowa (the “City”), a transmission system for electric power and the right to erect and maintain the necessary poles, lines, wires, conduits, and other appliances or equipment and substations for the transmission of electric current (collectively, the “Facilities”) along, under, and upon the streets, avenues, alleys, and public places in the City; also the right to erect and maintain upon the streets, avenues, alleys, and public places, transmission lines through the City for the period of 25 years;† 8 also the right of eminent domain as provided in Section 364.2 of the Code of Iowa. City agrees to not permit or grant approval for any development or construction that would result in the Company’s facilities violating the National Electric Safety Code, as it exists at the time of the permit or approval.

The Facilities shall be placed and maintained so as not to unnecessarily interfere with the travel on the streets, alleys, and public places in the City nor unnecessarily interfere with the proper use of the same, including ordinary drainage, or with the sewers, underground pipe, and other property of the City, and the Company shall hold the City free and harmless from all damages arising from the negligent acts or omissions of the Company in the erection or maintenance of the transmission system.

Except as provided herein below, the Company shall, at its cost and expense, locate and relocate its Facilities in, on, over, or under any public street or alley in the City in such a manner as the City may at any time reasonably require for the purposes of facilitating the construction, reconstruction, maintenance, or repair of the street or alley or any public improvement of, in or about any such street or alley or reasonably promoting the efficient operation of any such improvement. If the City orders or requests the Company to relocate its Facilities for the primary benefit of a commercial or private project, or as the result of the initial request of a commercial or private developer or other non-public entity, the Company shall receive payment for the cost of such relocation as a precondition to relocating its Facilities. The City shall consider reasonable alternatives in designing its public works projects so as not arbitrarily to cause the Company unreasonable additional expense in exercising its authority under this section. The City shall also provide a reasonable alternate location for the Company’s Facilities. The City shall give the Company reasonable advance written notice to vacate a public right-of-way. Vacating a public right-of-way shall not deprive the Company of its right to operate and maintain existing Facilities until the reasonable cost of relocating the same are paid to the Company.

The system authorized by this chapter shall be modern and up-to-date and shall be kept in a modern and up-to-date condition.

To promote public safety in proximity to its Facilities, and to maintain electric reliability, the Company is authorized and empowered to remove, cut, trim, destroy, or otherwise control any tree, shrub, brush, or parts thereto located within or extending into any street, alley, right-of-way, or public grounds. In addition, the Company is authorized to remove, cut, trim, destroy, or otherwise control any tree, shrub, or brush located adjacent to any street, alley, right-of-way, or public grounds that, in the sole and absolute judgment of the Company may interfere with the safe maintenance, operation, or use of its Facilities or which in falling might touch the Facilities. The foregoing vegetation management shall be completed in accordance with the most current nationally accepted safety and utility industry standards, as revised and updated from time to time.

Service to be rendered by the Company under this franchise shall be continuous unless prevented from doing so by fire, acts of God, unavoidable accidents or casualties, or reasonable interruptions necessary to properly service the Company’s equipment, and, in such event, service shall be resumed as quickly as is reasonably possible.

The franchise granted by the ordinance codified in this chapter shall not be exclusive.

The City may request estimates for the undergrounding of replacement lines, upgrades, or new lines, including lines to be adjusted for road moves or for other specific projects. When requested, the Company will provide to the City two estimates: i) an estimate for the cost of the project with overhead construction; and ii) an estimate for the cost of the project with underground construction. The City will have no more than 60 days from the estimate date to determine if it wants the line built overhead or placed underground. If the City chooses underground construction for such project, the City will be responsible for the incremental cost of undergrounding, if, and to the extent, such costs are not already part of or included in a precondition payment for relocation pursuant to Section 113.03. The incremental cost of undergrounding is defined as the differential between the estimate for underground construction and the estimate for overhead construction. Upon receipt of the City’s payment for the incremental cost of undergrounding, the Company will install the underground facilities. The Company reserves the right to bill City for the amount that the incremental cost associated with installation exceeds its estimate. The City reserves the right to a refund of overpayment if the incremental costs are less than the amount billed in the estimate. If the City wishes to have a line not scheduled for replacement or upgrade placed underground, the City shall contact the Company to make such a request. The City shall cover all costs related to this work. If undergrounding of transmission lines requires entities interconnecting with the Company to make adjustments to their electrical systems, the City bears the responsibility of communication with those entities and, if it chooses, the cost of converting their facilities from overhead to underground. The Company reserves the right to review all of the City’s communications with the affected entities.

The term of the franchise granted by the ordinance codified in this chapter, and the rights granted thereunder, shall continue for the period of 25 years from and after its acceptance by the Company, as herein provided. The anniversary date shall be the date this franchise is filed with the City Clerk or otherwise becomes effective by operation of law.

The City agrees it will not permit any real estate developments or land uses in the City that would cause the Company’s Facilities to violate the setback or safety requirements of the National Electric Safety Code or any law, regulation, or ordinance of the State of Iowa, Tama County, or the City.

The ordinance codified in this chapter sets forth and constitutes the entire agreement between the Company and the City with respect to the rights contained herein, and may not be superseded, modified, or otherwise amended without the approval and acceptance of the Company. Upon acceptance by the Company, the ordinance codified in this chapter shall supersede, abrogate, and repeal any prior electric system ordinance between the Company and the City as of the date the ordinance codified in this chapter is accepted by the Company. Notwithstanding the foregoing, in no event shall the City enact any ordinance or place any limitations, either operationally or through the assessment of fees, that create additional burdens upon the Company, or that delay utility operations.