FORTIETH SUPPLEMENTAL INDENTURE TO INDENTURE OF MORTGAGE AND DEED OF TRUST DATED AS OF MARCH 1, 1944

Exhibit 4-242

FORTIETH
SUPPLEMENTAL INDENTURE
TO
INDENTURE OF MORTGAGE AND
DEED OF TRUST
DATED AS OF MARCH 1, 1944

AS RESTATED IN
PART II OF THE TWENTY-NINTH
SUPPLEMENTAL INDENTURE DATED AS OF JULY 15, 1989
WHICH BECAME EFFECTIVE ON APRIL 1, 1994

MICHIGAN CONSOLIDATED GAS COMPANY
TO
CITIBANK, N.A.,
TRUSTEE
DATED AS OF JUNE 1, 2008

CREATING AN ISSUE OF FIRST MORTGAGE BONDS,
DESIGNATED AS
2008 SERIES F COLLATERAL BONDS

MICHIGAN CONSOLIDATED GAS COMPANY

FORTIETH SUPPLEMENTAL INDENTURE

TABLE OF CONTENTS

     THIS FORTIETH SUPPLEMENTAL INDENTURE, dated as of the 1 ^st day of June, 2008, between MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and existing under and by virtue of the laws of the State of Michigan (hereinafter called the “Company”), having its principal place of business at 2000 2 ^nd Avenue, Detroit, Michigan, and CITIBANK, N.A., a national banking association incorporated and existing under and by virtue of the laws of the United States of America, having an office at 388 Greenwich Street in the Borough of Manhattan, the City of New York, New York, as successor trustee (hereinafter with its predecessors as trustee called the “Mortgage Trustee” or the “Trustee”):

     WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture of Mortgage and Deed of Trust (the “Original Indenture”), dated as of March 1, 1944;

     WHEREAS, the Company has heretofore executed and delivered to the Trustee the Twenty-ninth Supplemental Indenture, which became effective April 1, 1994, to provide for the modification and restatement of the Original Indenture as previously amended (as so amended, supplemented and modified the “Indenture”), and to secure the Company’s First Mortgage Bonds, unlimited in aggregate principal amount except as therein otherwise provided, issued pursuant to the:

Thirtieth Supplemental Indenture, dated as of September 1, 1991;
Thirty-first Supplemental Indenture, dated as of December 15, 1991;
Thirty-second Supplemental Indenture, dated as of January 5, 1993;
Thirty-third Supplemental Indenture, dated as of May 1, 1995;
Thirty-fourth Supplemental Indenture, dated as of November 1, 1996;
Thirty-fifth Supplemental Indenture, dated as of June 18, 1998;
Thirty-sixth Supplemental Indenture, dated as of August 15, 2001;
Thirty-seventh Supplemental Indenture, dated as of February 15, 2003;
Thirty-eighth Supplemental Indenture, dated as of October 1, 2004;
Thirty-ninth Supplemental Indenture, dated as of April 1, 2008; and

     WHEREAS, at the date hereof there were outstanding First Mortgage Bonds of the Company issued under the Indenture, of 9 series in the principal amounts set forth below (including Collateral Bonds):

     WHEREAS, the Company desires in and by this Supplemental Indenture to establish an issue of bonds to be issued under the Indenture of the series established under the Thirty-fifth Supplemental Indenture, to designate the terms thereof, to specify the particulars necessary to describe and define the same and to specify such other provisions and agreements in respect thereof as are in the Indenture provided or permitted; and

     WHEREAS, all the conditions and requirements necessary to make this Supplemental Indenture, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Supplemental Indenture in the form and with the terms hereof have been in all respects duly authorized;

     NOW, THEREFORE, in consideration of the premises and in further consideration of the sum of One Dollar in lawful money of the United States of America paid to the Company by the Trustee at or before the execution and delivery of this Fortieth Supplemental Indenture, the receipt whereof is hereby acknowledged, and of other good and valuable consideration, it is agreed by and between the Company and the Trustee as follows:

ARTICLE I
ESTABLISHMENT OF AN ISSUE OF
FIRST MORTGAGE BONDS, OF THE SERIES
DESIGNATED AND DISTINGUISHED AS “COLLATERAL BONDS”

     SECTION 1. There is hereby established an issue of bonds to be issued under and secured by the Indenture, to be known as “First Mortgage Bonds,” designated and distinguished as “Collateral Bonds” of the Company (herein collectively sometimes called the “Collateral Bonds”) of the series established under the Thirty-fifth Supplemental Indenture. The Collateral Bonds may be issued without limitation as to aggregate principal amount except as provided in the Indenture (including the Thirty-fifth Supplemental Indenture) and in this Supplemental Indenture. The Collateral Bonds shall be registered bonds without coupons and shall be dated as of the date of the authentication thereof by the Mortgage Trustee.

     A separate issue of Collateral Bonds, designated “2008 Series F Collateral Bonds,” (the “Series F Bonds”) is being issued by the Company hereunder contemporaneously with the issuance of a separate series of senior debt securities of the Company designated as the Company’s “6.78% Senior Notes, 2008 Series F due 2028” (the “Series F Notes”) and is being issued and assigned and delivered to Citibank, N.A., as trustee (in such capacity, together with

any successor trustee(s), the “Senior Trustee”) under the Indenture, dated as of June 1, 1998, as amended, supplemented and modified, governing such senior debt securities (as so amended, supplemented and modified, the “Senior Indenture”), in such capacity, as collateral for the benefit of the holders of the Series F Notes. The series of such senior debt securities collateralized by the Series F Bonds issued hereunder shall be referred to as the “Series F Notes” with respect to such Series F Bonds.

     The issue of the Series F Bonds established hereby shall bear interest at such rate or rates and be payable on such date or dates, shall mature and be subject to mandatory or optional redemption on such date or dates and shall have such other terms and provisions not inconsistent with the Indenture as are set forth in the form of Series F Bonds, and the form of Trustee’s Certificate to be endorsed on such bonds, as are set forth substantially in the following forms respectively (herein sometimes called the “Series F Bond Form”):

MICHIGAN CONSOLIDATED GAS COMPANY
FIRST MORTGAGE BONDS, 2008 SERIES F COLLATERAL BONDS
being a series of
FIRST MORTGAGE BONDS

ORIGINAL ISSUE DATE: JUNE 26, 2008

MATURITY DATE: JUNE 15, 2028

THE FIRST MORTGAGE BONDS, 2008 SERIES F COLLATERAL BONDS (HEREINAFTER, “SERIES F BONDS”), REPRESENTED BY THIS CERTIFICATE ARE BEING ISSUED AND DELIVERED BY THE COMPANY TO CITIBANK, N.A., AS TRUSTEE (IN SUCH CAPACITY, THE “SENIOR TRUSTEE”) UNDER AN INDENTURE, DATED AS OF JUNE 1, 1998, BETWEEN THE COMPANY AND THE SENIOR TRUSTEE, AS AMENDED, SUPPLEMENTED AND MODIFIED FROM TIME TO TIME AND AS SUPPLEMENTED BY THE SUPPLEMENTAL INDENTURE THERETO DATED AS OF JUNE 1, 2008 (THE “NOTE INDENTURE”) (AS SO AMENDED, SUPPLEMENTED AND MODIFIED, THE “SENIOR INDENTURE”). THE SERIES F BONDS ARE TO BE HELD IN TRUST AS COLLATERAL FOR THE BENEFIT OF THE HOLDERS OF $75,000,000 AGGREGATE PRINCIPAL AMOUNT OF 6.78% SENIOR NOTES, 2008 SERIES F DUE 2028 (THE “SERIES F NOTES”) ISSUED PURSUANT TO THE SENIOR INDENTURE. THE SERIES F NOTES ARE THE “RELATED NOTES” WITH RESPECT TO THE SERIES F BONDS WITHIN THE MEANING OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

THE SERIES F BONDS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED (EXCEPT TO A SUCCESSOR TRUSTEE UNDER THE SENIOR INDENTURE OR, SUBJECT TO COMPLIANCE WITH APPLICABLE LAW, AS MAY BE INVOLVED IN THE COURSE OF THE EXERCISE OF RIGHTS AND REMEDIES CONSEQUENT UPON AN EVENT OF DEFAULT UNDER THE SENIOR INDENTURE) UNTIL THE EARLIER OF THE RELEASE DATE (AS

DEFINED BELOW) OR THE PRIOR RETIREMENT OF THE RELATED NOTES THROUGH REDEMPTION, REPURCHASE OR OTHERWISE.

THE INTEREST RATE ON THE SERIES F BONDS SHALL AT ALL TIMES BE IDENTICAL TO THAT OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN, THE SERIES F NOTES.

THE INTEREST PAYMENT DATES IN RESPECT OF THE SERIES F BONDS SHALL AT ALL TIMES BE IDENTICAL TO THOSE OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN, THE SERIES F NOTES.

THE COMPANY SHALL MAKE PAYMENTS OF THE PRINCIPAL OF, AND MAKE-WHOLE AMOUNT (AS DEFINED IN THE SENIOR INDENTURE), IF ANY, AND INTEREST ON, THE SERIES F BONDS, TO THE SENIOR TRUSTEE, WHICH PAYMENTS SHALL BE APPLIED BY THE SENIOR TRUSTEE TO THE SATISFACTION OF OBLIGATIONS ON THE SERIES F NOTES.

IN ADDITION TO THE PAYMENT OF PRINCIPAL AND INTEREST ON THE SERIES F BONDS IN THE EVENT ANY MAKE-WHOLE AMOUNT (AS DEFINED IN THE SENIOR INDENTURE) SHALL BE REQUIRED TO BE PAID BY THE COMPANY ON THE SERIES F NOTES, THERE SHALL BE DUE AND PAYABLE ON THE SERIES F BONDS AN ADDITIONAL AMOUNT EQUAL TO SUCH MAKE-WHOLE AMOUNT WHICH SHALL BE PAID BY THE COMPANY IN THE AMOUNTS AND ON THE DATES REQUIRED FOR THE PAYMENT OF ANY SUCH AMOUNTS UNDER THE SENIOR INDENTURE.

THE MATURITY DATE SPECIFIED ABOVE IS ALSO THE MATURITY DATE OF THE SERIES F NOTES.

     MICHIGAN CONSOLIDATED GAS COMPANY (hereinafter called the “Company”), a corporation of the State of Michigan, for value received, hereby promises to pay to CITIBANK, N.A., as trustee for the benefit of the holders of the Series F Notes, or registered assigns (in such capacity, the “Senior Trustee”), the sum of Seventy-five Million Dollars ($75,000,000) on the Maturity Date specified above, at the corporate trust office of the Mortgage Trustee hereinafter named in the Borough of Manhattan, the City of New York, New York, or at the principal office of any successor in trust, in lawful money of the United States of America, and to pay interest thereon at the Interest Rate(s) from time to time specified in or determined pursuant to the Series F Notes, in like lawful money payable at the office or agency of the Company in the Borough of Manhattan, the City of New York, New York on such interest payment date(s) and on the Maturity Date (each an “Interest Payment Date”) as provided in the Series F Notes, from the Original Issue Date specified above or from the most recent Interest Payment Date to which interest has been paid, commencing on December 15, 2008, until the Company’s obligation with respect to the payment of such principal sum shall be discharged as provided in the Indenture hereinafter mentioned and the Senior Indenture. If the date of the Series F Bonds represented by this certificate is after a Record Date (as defined below) with respect to any Interest Payment Date and prior to such Interest Payment Date, then payment of interest shall commence on the second Interest Payment Date succeeding such date. If the Company shall default in the payment of interest due on any Interest Payment Date, then interest shall be payable from the next preceding Interest Payment Date to which interest has been paid, or, if no such interest has been paid on the Series F Bonds represented by this certificate, from the Original Issue Date. So long as there is no existing default in the payment of interest, the person in whose name the Series F Bonds

represented by this certificate were registered at the close of business on the relevant Record Date with respect to an Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date, except that if the Company shall default in the payment of interest due on such Interest Payment Date, such defaulted interest shall be paid to the person in whose name the Series F Bonds represented by this Certificate are registered on the Record Date for the Interest Payment Date fixed by the Company for the payment of such defaulted interest, provided that in no case shall such Record Date be less than ten days after notice thereof shall have been mailed to all registered holders of Series F Bonds. The term “Record Date” as used herein with respect to any Interest Payment Date otherwise shall mean the fifteenth calendar day (whether or not a Business Day) prior to such Interest Payment Date.

     “Business Day” means any day other than a day on which banking institutions in the State of New York or the State of Michigan are authorized or obligated pursuant to law or executive order to close. In the event that any Interest Payment Date, redemption date or maturity date is not a Business Day, then the required payment of principal, Make-Whole Amount, if any, and interest will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay).

     The bonds represented by this certificate, of the series hereinafter specified, are bonds of the Company (herein called the “bonds”) known as its “First Mortgage Bonds,” issued and to be issued in one or more series under, and all equally and ratably secured by, an Indenture of Mortgage and Deed of Trust dated as of March 1, 1944, duly e