Exhibit 4.2


 


REGISTRATION RIGHTS AGREEMENT


 


REGISTRATION
RIGHTS AGREEMENT, dated as of February 28, 2003, among ITC HOLDINGS CORP.,
a Michigan corporation (the “Company”) and INTERNATIONAL TRANSMISSION
HOLDINGS LIMITED PARTNERSHIP, a Michigan limited partnership (
“Partnership”).


 


RECITALS


 


As of the date
hereof, the Partnership is the holder of 8,420,000 shares of common stock, no
par value (the “Common Stock”), of the Company.  The Company desires to provide to the
Partnership and to each other Holder (as defined below) rights to registration
under the Securities Act (as defined below) of Registrable Securities (as
defined below), on the terms and subject to the conditions set forth herein.


 


AGREEMENT


 


1.                                       Definitions.  As used in this Agreement, the following
capitalized terms shall have the following respective meanings:


 


“Demand
Party”:  (a) The Partnership or (b) any
other Holder or Holders, including, without limitation, any Person that may
become an assignee of the Partnership’s rights hereunder; provided that
to be a Demand Party under this clause (b), a Holder or Holders must either
individually or in aggregate with all other Holders with whom it is acting
together to demand registration own at least 10% of the total number of
Registrable Securities.


 


“Exchange
Act”:  The Securities Exchange Act of
1934, as amended, or any similar federal statute then in effect, and a
reference to a particular section thereof shall be deemed to include a
reference to the comparable section, if any, of any such similar federal
statute.


 


“Holder”:  The Partnership and any other holder of
Registrable Securities (including any direct or indirect transferee of the
Partnership who agrees in writing to be bound by the provisions of this
Agreement).


 


“Person”:  Any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization,
government or any department or agency thereof or any other entity.


 


“Registrable
Securities”:  Any Common Stock
acquired by the Partnership from the Company or any affiliate of the Company,
and any Common Stock which may be issued or distributed in respect thereof by
way of stock dividend or stock split or other distribution, recapitalization or
reclassification.  Any particular
Registrable Securities that are issued shall cease to be Registrable Securities
when (i) a registration statement with respect to the sale by the Holder
of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such
registration statement, (ii) such securities shall have been distributed
to the public


 





















 


pursuant to Rule 144
(or any successor provision) under the Securities Act, (iii) such
securities shall have been otherwise transferred, new certificates for such
securities not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of such securities shall
not require registration or qualification of such securities under the
Securities Act or any state securities or blue sky law then in force, or (iv) such
securities shall have ceased to be outstanding.


 


“Registration
Expenses”:  Any and all expenses
incident to performance of or compliance with this Agreement, including,
without limitation, (i) all SEC and stock exchange or National Association
of Securities Dealers, Inc. (the “NASD”) registration and filing
fees (including, if applicable, the fees and expenses of any “qualified
independent underwriter,” as such term is defined in Schedule E to the By-laws
of the NASD, and of its counsel), (ii) all fees and expenses of complying
with securities or blue sky laws (including fees and disbursements of counsel
for the underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery
expenses, (iv) all fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange pursuant to
clause (viii) of Section 4 and all rating agency fees, (v) the
fees and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits and/or “cold comfort”
letters required by or incident to such performance and compliance, (vi) the
reasonable fees and disbursements of counsel selected pursuant to Section 7
hereof by the Holders of the Registrable Securities being registered to
represent such Holders in connection with each such registration, (vii) any
fees and disbursements of underwriters customarily paid by the issuers or
sellers of securities, including liability insurance if the Company so desires
or if the underwriters so require, and the reasonable fees and expenses of any
special experts retained in connection with the requested registration, but
excluding underwriting discounts and commissions and transfer taxes, if any,
and (viii) other reasonable out-of-pocket expenses of Holders (provided
that such expenses shall not include expenses of counsel other than those
provided for in clause (vi) above).


 


“Securities
Act”:  The Securities Act of 1933, as
amended, or any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.


 


“SEC”:  The Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act.


 


2.                                       Incidental
Registrations.  (a)  Right to
Include Registrable Securities.  If
the Company at any time after the date hereof proposes to register its Common
Stock under the Securities Act (other than a registration on Form S-4
or S-8, or any successor or other forms promulgated for similar
purposes), whether or not for sale for its own account (but excluding in a
registration under Section 3 hereof), in a manner which would permit
registration of Registrable Securities for sale to the public under the
Securities Act, it will, at each such time, give prompt written notice to all
Holders of Registrable Securities of its intention to do so and of such Holders’
rights under this Section 2.  Upon
the written request of any such Holder made within 15 days after the receipt of
any such notice (which request shall specify the Registrable


 





















 


Securities intended to be disposed of by such Holder), the Company will
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Holders thereof, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered; provided that (i) if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any
reason not to proceed with the proposed registration of the securities to be
sold by it, the Company may, at its election, give written notice of such
determination to each Holder of Registrable Securities and, thereupon, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), and (ii) if such registration involves
an underwritten offering, all Holders of Registrable Securities requesting to
be included in the Company’s registration must sell their Registrable
Securities to the underwriters selected by the Company on the same terms and
conditions as apply to the Company, with such differences, including any with
respect to indemnification and liability insurance, as may be customary or
appropriate in combined primary and secondary offerings.  If a registration requested pursuant to this Section 2(a) involves
an underwritten public offering, any Holder of Registrable Securities
requesting to be included in such registration may elect, in writing prior to
the effective date of the registration statement filed in connection with such
registration, not to register such securities in connection with such
registration.


 


(b)                                 Expenses.  The Company will pay all Registration
Expenses in connection with each registration of Registrable Securities.


 


(c)                                  Priority in
Incidental Registrations.  If a
registration pursuant to this Section 2 involves an underwritten offering
and the managing underwriter advises the Company in writing that, in its
opinion, the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering, so as to be likely to
have an adverse effect on the price, timing or distribution of the securities
offered in such offering as contemplated by the Company (other than the
Registrable Securities), then the Company will include in such registration (i) first,
100% of the securities the Company proposes to sell and (ii) second, to
the extent of the number of Registrable Securities requested to be included in
such registration pursuant to this Section 2 which, in the opinion of such
managing underwriter, can be sold without having the adverse effect referred to
above, the number of Registrable Securities which the Holders have requested to
be included in such registration, such amount to be allocated pro rata among
all requesting Holders on the basis of the relative number of shares of
Registrable Securities then held by each such Holder (provided that any shares
thereby allocated to any such Holder that exceed such Holder’s request will be
reallocated among the remaining requesting Holders in like manner).


 





















 


3.                                       Registration
on Request.  (a)  Request by
the Demand Party.  At any time, upon
the written request of the Demand Party requesting that the Company effect the
registration under the Securities Act of all or part of such Demand Party’s
Registrable Securities and specifying the amount and intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration to all other Holders of such Registrable Securities, and
thereupon will, as expeditiously as possible, use its best efforts to effect
the registration under the Securities Act of:


 


(i)                                     such Registrable Securities which
the Company has been so requested to register by the Demand Party; and


 


(ii)                                  all other Registrable Securities
of the same class or series as are to be registered at the request of a Demand
Party and which the Company has been requested to register by any other Holder
thereof by written request given to the Company within 15 days after the giving
of such written notice by the Company (which request shall specify the amount
and intended method of disposition of such Registrable Securities),


 


all to the
extent necessary to permit the disposition (in accordance with the intended
method thereof as aforesaid) of the Registrable Securities so to be registered;
provided that, unless Holders of a majority of the shares of Registrable
Securities held by Holders consent thereto in writing, the Company shall not be
obligated to file a registration statement relating to any registration request
under this Section 3(a) (x) within a period of nine months after the
effective date of any other registration statement relating to any registration
request under this Section 3(a) which was not effected on Form S-3
(or any successor or similar short-form registration statement) or relating to
any registration effected under Section 2, or (y) if, with respect
thereto, the managing underwriter, the SEC, the Securities Act or the rules and
regulations thereunder, or the form on which the registration statement is to
be filed, would require the conduct of an audit other than the regular audit
conducted by the Company at the end of its fiscal year, in which case the
filing may be delayed until the completion of such regular audit (unless the
Holders of the Registrable Securities to be registered agree to pay the
expenses of the Company in connection with such an audit other than the regular
audit).


 


(b)                                 Registration
Statement Form.  If any registration
requested pursuant to this Section 3 which is proposed by the Company to
be effected by the filing of a registration statement on Form S-3
(or any successor or similar short-form registration statement) shall be in
connection with an underwritten public offering, and if the managing
underwriter shall advise the Company in writing that, in its opinion, the use
of another form of registration statement is of material importance to the
success of such proposed offering, then such registration shall be effected on
such other form.


 


(c)                                  Expenses.  The Company will pay all Registration
Expenses in connection with the first six (6) registrations of each class
or series of Registrable Securities pursuant to this Section 3 upon the
written request of any of the Holders. 
All Registration Expenses for any subsequent registrations of
Registrable Securities pursuant to this Section 3 shall be paid pro rata
by the Company and all other Persons (including the Holders) participating in
such registration on the basis of the relative number of shares of Common Stock
of each such person whose Registrable Securities are
included in such registration.


 





















 


(d)                                 Effective
Registration Statement.  A
registration requested pursuant to this Section 3 will not be deemed to
have been effected unless it has become effective; provided that if,
within 180 days after it has become effective, the offering of Registrable
Securities pursuant to such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental
agency or court, such registration will be deemed not to have been effected.


 


(e)                                  Selection of
Underwriters.  If a requested
registration pursuant to this Section 3 involves an underwritten offering,
the Holders of a majority of the shares of Registrable Securities which are
held by Holders and which the Company has been requested to register shall have
the right to select the investment banker or bankers and managers to administer
the offering; provided, however, that such investment banker or
bankers and managers shall be reasonably satisfactory to the Company.


 


(f)                                    Priority in
Requested Registrations.  If a
requested registration pursuant to this Section 3 involves an underwritten
offering and the managing underwriter advises the Company in writing that, in
its opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Securities) exceeds the number which can be sold in such offering, the Company
will include in such registration only the Registrable Securities of the
Holders requested to be included in such registration.  In the event that the number of Registrable
Securities of the Holders requested to be included in such registration exceeds
the number which, in the opinion of such managing underwriter, can be sold, the
number of such Registrable Securities to be included in such registration shall
be allocated pro rata among all such requesting Holders on the basis of the
relative number of shares of Registrable Securities then held by each such
Holder (provided that any shares thereby allocated to any such Holder
that exceed such Holder’s request shall be reallocated among the remaining
requesting Holders in like manner).  In
the event that the number of Registrable Securities requested to be included in
such registration is less than the number which, in the opinion of the managing
underwriter, can be sold, the Company may include in such registration the
securities the Company proposes to sell up to the number of securities that, in
the opinion of the underwriter, can be sold.


 


(g)                                 Additional Rights.  If the Company at any time grants to any
other holders of Common Stock any rights to request the Company to effect the
registration under the Securities Act of any such shares of Common Stock on
terms more favorable to such holders than the terms set forth in this Section 3,
the terms of this Section 3 shall be deemed amended or supplemented to the
extent necessary to provide the Holders such more favorable rights and
benefits.


 


4.                                       Registration
Procedures.  If and whenever the
Company is required to use its best efforts to effect or cause the registration
of any Registrable Securities under the Securities Act as provided in this
Agreement, the Company will, as expeditiously as possible:


 


(i)                                     prepare and, in any event within
120 days after the end of the period within which a request for registration
may be given to the Company pursuant to Section 2 or 3, file with the SEC
a registration statement with respect to such Registrable Securities and use
its best efforts to cause such registration statement to become effective,


 





















 


provided, however, that the
Company may discontinue any registration of its securities which is being
effected pursuant to Section 2 at any time prior to the effective date of
the registration statement relating thereto;


 


(ii)                                  prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period not in excess of 270 days and to
comply with the provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC thereunder with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement; provided that before
filing a registration statement or prospectus, or any amendments or supplements
thereto, the Company will furnish to counsel selected pursuant to Section 7
hereof by the Holders of the Registrable Securities covered by such
registration statement to represent such Holders, copies of all documents
proposed to be filed, which documents will be subject to the review of such
counsel;


 


(iii)                               furnish to each seller of such
Registrable Securities such number of copies of such registration statement and
of each amendment and supplement thereto (in each case including all exhibits
filed therewith, including any documents incorporated by reference), such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and summary prospectus), in conformity
with the requirements of the Securities Act, and such other documents as such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities by such seller;


 


(iv)                              use its best efforts to register
or qualify such Registrable Securities covered by such registration in such
jurisdictions as each seller shall reasonably request, and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this clause
(iv), it would not be obligated to be so qualified, to subject itself to
taxation in any such jurisdiction or to consent to general service of process
in any such jurisdiction;


 


(v)                                 use its best efforts to cause
such Registrable Securities covered by such registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;


 


(vi)                              notify each seller of any such
Registrable Securities covered by such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act within the appropriate period mentioned in clause (ii) of this Section 4,
of the Company’s becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the


 





















 


statements therein not misleading in the
light of the circumstances then existing, and at the request of any such
seller, prepare and furnish to such seller a reasonable number of copies of an
amended or supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;


 


(vii)                           use its best efforts to comply
with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the registration statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder;


 


(viii)                        (A) use its best efforts to
list such Registrable Securities on any securities exchange on which the Common
Stock is then listed if such Registrable Securities are not already so listed
and if such listing is then permitted under the rules of such exchange;
and (B) use its best efforts to provide a transfer agent and registrar for
such Registrable Securities covered by such registration statement not later
than the effective date of such registration statement;


 


(ix)                                enter into such customary
agreements (including an underwriting agreement in customary form), which may
include indemnification provisions in favor of underwriters and other persons
in addition to, or in substitution for the provisions of Section 5 hereof,
and take such other actions as sellers of a majority of shares of such
Registrable Securities or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities;


 


(x)                                   obtain a “cold comfort” letter
or letters from the Company’s independent public accounts in customary form and
covering matters of the type customarily covered by “cold comfort” letters as
the seller or sellers of a majority of shares of such Registrable Securities
shall reasonably request;


 


(xi)                                make available for inspection by
any seller of such Registrable Securities covered by such registration
statement, by any underwriter participating in any disposition to be effected
pursuant to such registration statement and by any attorney, accountant or
other agent retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company, and cause all of the Company’s officers, directors and employees
to supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;


 


(xii)                             notify counsel (selected
pursuant to Section 7 hereof) for the Holders of Registrable Securities
included in such registration statement and the managing underwriter or agent,
immediately, and confirm the notice in writing (A) when the registration
statement, or any post-effective amendment to the registration statement, shall
have become effective, or any supplement to the prospectus or any amendment


 





















 


prospectus shall have been filed, (B) of
the receipt of any comments from the SEC, (C) of any request of the SEC to
amend the registration statement or amend or supplement the prospectus or for
additional information, and (D) of the issuance by the SEC of any stop
order suspending the effectiveness of the registration statement or of any
order preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the registration statement for offering or
sale in any jurisdiction, or of the institution or threatening of any
proceedings for any of such purposes;


 


(xiii)                          make every reasonable effort to
prevent the issuance of any stop order suspending the effectiveness of the
registration statement or of any order preventing or suspending the use of any
preliminary prospectus and, if any such order is issued, to obtain the
withdrawal of any such order at the earliest possible moment;


 


(xiv)                         if requested by the managing
underwriter or agent or any Holder of Registrable Securities covered by the
registration statement, promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or agent or such Holder
reasonably requests to be included therein, including, without limitation, with
respect to the number of Registrable Securities being sold by such Holder to
such underwriter or agent, the purchase price being paid therefor by such
underwriter or agent and with respect to any other terms of the underwritten
offering of the Registrable Securities to be sold in such offering; and make
all required filings of such prospectus supplement or post-effective amendment
as soon as practicable after being notified of the matters incorporated in such
prospectus supplement or post-effective amendment;


 


(xv)                            cooperate with the Holders of
Registrable Securities covered by the registration statement and the managing
underwriter or agent, if any, to facilitate the timely preparation and delivery
of certificates (not bearing any restrictive legends) representing securities
to be sold under the registration statement, and enable such securities to be
in such denominations and registered in such names as the managing underwriter
or agent, if any, or such Holders may request;


 


(xvi)                         obtain for delivery to the
Holders of Registrable Securities being registered and to the underwriter or
agent an opinion or opinions from counsel for the Company in customary form and
in form, substance and scope reasonably satisfactory to such Holders,
underwriters or agents and their counsel; and


 


(xvii)                      cooperate with each seller of Registrable
Securities and each underwriter or agent participating in the disposition of
such Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD.


 


The Company
may require each seller of Registrable Securities as to which any registration
is being effected to furnish the Company with such
information regarding such seller and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.


 





















 


Each Holder of
Registrable Securities agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in clause (vi) of this
Section 4, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by clause (vi) of this Section 4,
and, if so directed by the Company, such Holder will deliver to the Company (at
the Company’s expense) all copies, other than permanent file copies then in
such Holder’s possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.  In the event the Company shall give any such
notice, the period mentioned in clause (ii) of this Section 4 shall
be extended by the number of days during the period from and including the date
of the giving of such notice pursuant to clause (vi) of this Section 4
and including the date when each seller of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by clause (vi) of this Section 4.


 


5.                                       Indemnification.  (a)  Indemnification by the Company.  In the event of any registration of any
securities of the Company under the Securities Act pursuant to Section 2
or 3, the Company will, and it hereby does, indemnify and hold harmless, to the
extent permitted by law, the seller of any Registrable Securities covered by
such registration statement, each affiliate of such seller and their respective
directors and officers, members or general and limited partners (including any
director, officer, affiliate, employee, agent and controlling Person of any of
the foregoing), each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who controls
such seller or any such underwriter within the meaning of the Securities Act
(collectively, the “Indemnified Parties”), against any and all losses,
claims, damages or liabilities, joint or several, and expenses (including
reasonable attorney’s fees and reasonable expenses of investigation) to which
such Indemnified Party may become subject under the Securities Act, common law
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof, whether or not such Indemnified
Party is a party thereto) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereto, or (b) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in light
of the circumstances under which they were made) not misleading, and the
Company will reimburse such Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or
defending against any such loss, claim, liability, action or proceeding; provided
that the Company shall not be liable to any Indemnified Party in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in
any such preliminary, final or summary prospectus in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such seller specifically stating that it is for use
in the preparation thereof; and provided, further, that the
Company will not be liable to any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, under the
indemnity agreement in this Section 5(a) with


 





















 


respect to any preliminary prospectus or the final prospectus or the
final prospectus as amended or supplemented, as the case may be, to the extent
that any such loss, claim, damage or liability of such underwriter or
controlling Person results from the fact that such underwriter sold Registrable
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus or of the
final prospectus as then amended or supplemented, whichever is most recent, if
the Company has previously furnished copies thereof to such underwriter.  For purposes of the last proviso to the
immediately preceding sentence, the term “prospectus” shall not be deemed to
include the documents, if any, incorporated therein by reference, and no Person
who participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within
the meaning of the Securities Act, shall be obligated to send or give any
supplement or amendment to any document incorporated by reference in any
preliminary prospectus or the final prospectus to any person other than a
person to whom such underwriter had delivered such incorporated document or
documents in response to a written request therefor.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such seller or
any Indemnified Party and shall survive the transfer of such securities by such
seller.


 


(b)                                 Indemnification by
the Seller.  The Company may require,
as a condition to including any Registrable Securities in any registration
statement filed in accordance with Section 4 herein, that the Company
shall have received an undertaking reasonably satisfactory to it from the
prospective seller of such Registrable Securities or any underwriter to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 5(a)) the Company and all other prospective sellers with
respect to any untrue statement or alleged untrue statement in or omission or
alleged omission from such registration statement, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement, if such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by such seller or
underwriter specifically stating that it is for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment
or supplement, or a document incorporated by reference into any of the
foregoing.  Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of the Company or any of the prospective sellers, or any of their respective
affiliates, directors, officers or controlling Persons and shall survive the
transfer of such securities by such seller. 
In no event shall the liability of any selling Holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.


 


(c)                                  Notices of Claims,
Etc.  Promptly after receipt by an
Indemnified Party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such Indemnified Party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action; provided that
the failure of the Indemnified Party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under this Section 5,
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice.  In case any such
action is brought against an Indemnified Party, unless in such Indemnified
Party’s reasonable judgment a conflict of interest


 





















 


between such Indemnified Party and indemnifying parties may exist in
respect of such claim, the indemnifying party will be entitled to participate
in and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such Indemnified Party, and after notice from the indemnifying
party to such Indemnified Party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such Indemnified Party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation.  No indemnifying party
will consent to entry of any judgment or enter into any settlement which does
not include, as an unconditional term thereof, the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.


 


(d)                                 Contribution.  If the indemnification provided for in this Section 5
from the indemnifying party is unavailable to an Indemnified Party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and such Indemnified Party in connection with the actions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations.  The
relative fault of such indemnifying party and such Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or Indemnified Parties, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such action.  The
amount paid or payable by a party under this Section 5(d) as a result
of the losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.


 


The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.


 


(e)                                  Other
Indemnification.  Indemnification
similar to that specified in the preceding provisions of this Section 5
(with appropriate modifications) shall be given by the Company and each seller
of Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation or
governmental authority other than the Securities Act.


 


(f)                                    Non-Exclusivity.  The obligations of the parties under this Section 5
shall be in addition to any liability which any party may otherwise have to any
other party.


 


6.                                       Rule 144.  The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations


 





















 


adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any Demand Party, make publicly
available such information), and it will take such further action as any Holder
of Registrable Securities (or, if the Company is not required to file reports
as provided above, any Demand Party) may reasonably request, all to the extent
required from time to time to enable such Holder to sell shares of Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. 
Upon the request of any Holder of Registrable Securities, the Company
will deliver to such Holder a written statement as to whether it has complied
with such requirements.  Notwithstanding
anything contained in this Section 6, the Company may deregister under Section 12
of the Exchange Act if it then is permitted to do so pursuant to the Exchange Act
and the rules and regulations thereunder.


 


7.                                       Selection of
Counsel.  In connection with any
registration of Registrable Securities pursuant to Section 2 or 3 hereof,
the Holders of a majority of the Registrable Securities covered by any such
registration may select one counsel to represent all Holders of Registrable
Securities covered by such registration; provided, however, that
in the event that the counsel selected as provided above is also acting as
counsel to the Company in connection with such registration, the remaining
Holders shall be entitled to select one additional counsel to represent all
such remaining Holders.


 


8.                                       Miscellaneous.  (a)  Other Investors.  The Company may enter into agreements with
other purchasers or holders of Common Stock making them parties hereto (and
thereby giving them all, or a portion, of the rights, preferences and
privileges of an original party hereto) with respect to additional shares of
Common Stock (the “Supplemental Agreements”); provided, however,
that pursuant to any such Supplemental Agreement, such purchaser expressly
agrees to be bound by all of the terms, conditions and obligations of this
Agreement as if such purchaser were an original party hereto.  All shares of Common Stock issued or issuable
pursuant to, or otherwise covered by, such Supplemental Agreements shall be
deemed to be Registrable Securities to the extent provided therein.


 


(b)                                 Holdback Agreement.  If any such registration shall be in
connection with an underwritten public offering, each Holder of Registrable
Securities agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, of any equity
securities of the Company, or of any security convertible into or exchangeable
or exercisable for any equity security of the Company (in each case, other than
as part of such underwritten public offering), within seven days before or such
period not to exceed 180 days as the underwriting agreement may require (or
such lesser period as the managing underwriters may permit) after the effective
date of such registration, and the Company hereby also so agrees and agrees to
cause each other holder of any equity security, or of any security convertible
into or exchangeable or exercisable for any equity security, of the Company
purchased from the Company (at any time other than in a public offering) to so
agree.


 


(c)                                  Amendments and
Waivers.  This Agreement may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission
to act, of the Holders of a majority of the Registrable Securities


 





















 


then outstanding; provided, however, that no amendment,
waiver or consent to the departure from the terms and provisions of this
Agreement that is adverse to the Partnership or any of its successors and
assigns shall be effective as against such Person for so long as such Person
holds any Registrable Securities unless consented to in writing by such
Person.  Each Holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 8(c), whether or not such Registrable
Securities shall have been marked to indicate such consent.


 


(d)                                 Successors, Assigns
and Transferees.  This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. 
In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the
benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent Holder of any Registrable
Securities, subject to the provisions contained herein.  Without limitation to the foregoing, in the
event that the Partnership or any of its successors or assigns or any other
subsequent Holder of any Registrable Securities distributes or otherwise
transfers any shares of the Registrable Securities to any of its present or
future shareholders, members, or general or limited partners, the Company
hereby acknowledges that the registration rights granted pursuant to this
Agreement shall be transferred to such shareholders, members or general or
limited partners on a pro rata basis, and that at or after the time of any such
distribution or transfer, any such shareholder, member, general or limited
partner or group of shareholders, members or general or limited partners may
designate a Person to act on its behalf in delivering any notices or making any
requests hereunder.


 


(e)                                  Notices.  All notices and other communications provided
for hereunder shall be in writing and shall be sent by first class mail, telex,
telecopier or hand delivery:


 


	
  If to the Company:

  	
   

  	
  ITC Holdings
  Corp.

  c/o Ironhill Transmission, LLC

  c/o Dykema Gossett

  124 W. Allegan, Suite 800

  Lansing, Michigan 48933

  
	
   

  	
   

  	
  Attention:

  	
  Lewis M.
  Eisenberg

  
	
   

  	
   

  	
  Telecopy:

  	
  (517) 374-9191

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  (which shall not

  constitute notice)

  	
   

  	
  Greenbaum Rowe
  Smith Ravin Davis & Himmel LLP

  99 Wood Avenue South

  Woodbridge, New Jersey 07095

  
	
   

  	
   

  	
  Attention:

  	
  Alan Davis, Esq.

  
	
   

  	
   

  	
   

  	
  Ray Felton, Esq.

  
	
   

  	
   

  	
  Telecopy:

  	
  (732) 549-1881

  
					



 





















 


	
  If to the Partnership:

  	
   

  	
  International
  Transmission Holdings Limited Partnership

  c/o Ironhill Transmission, LLC

  c/o Dykema Gossett

  124 W. Allegan, Suite 800

  Lansing, Michigan 48933

  
	
   

  	
   

  	
  Attention:

  	
  Lewis M.
  Eisenberg

  
	
   

  	
   

  	
  Telecopy:

  	
  (517) 374-9191

  
	
   

  	
   

  	
   

  
	
  with copies to:

  (which shall not

  constitute notice)

  	
   

  	
  Greenbaum Rowe
  Smith Ravin Davis & Himmel LLP

  99 Wood Avenue South

  Woodbridge, New Jersey 07095

  
	
   

  	
   

  	
  Attention:

  	
  Alan Davis, Esq.

  
	
   

  	
   

  	
   

  	
  Ray Felton, Esq.

  
	
   

  	
   

  	
  Telecopy:

  	
  (732) 549-1881

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Kohlberg Kravis &
  Roberts & Co.

  9 West 57th Street

  New York, New York 10019

  
	
   

  	
   

  	
  Attention:

  	
  Scott M. Stuart

  
	
   

  	
   

  	
  Telecopy:

  	
  (212) 750-0003

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Trimaran Capital
  Partners

  425 Lexington Avenue

  3rd Floor

  New York, New York 10017

  
	
   

  	
   

  	
  Attention:

  	
  Dean Kehler 

  
	
   

  	
   

  	
  Telecopy:

  	
  (212) 885-4300

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Milbank, Tweed,
  Hadley & McCloy LLP

  1 Chase Manhattan Plaza

  New York, New York 10005

  
	
   

  	
   

  	
  Attention:

  	
  M. Douglas Dunn 

  
	
   

  	
   

  	
  Telecopy:

  	
  (212) 530-5219

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
						



 





















 


	
   

  	
   

  	
  Simpson Thacher &
  Bartlett

  425 Lexington Avenue

  New York, New York 10017

  
	
   

  	
   

  	
  Attention:

  	
  David J. Sorkin

  
	
   

  	
   

  	
   

  	
  Brian M. Stadler

  
	
   

  	
   

  	
  Telecopy:

  	
  (212) 455-2502

  



 


If to any other holder of Registrable
Securities, to the address of such other holder as shown in the stock record
book of the Company, or to such other address as any of the above shall have
designated in writing to all of the other above.


 


All such
notices and communications shall be deemed to have been given or made (A) when
delivered by hand, (B) five business days after being deposited in the
mail, postage prepaid or (C) when telecopied, receipt acknowledged.


 


(f)                                    Descriptive
Headings.  The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of terms contained herein.


 


(g)                                 Severability.  In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired,
it being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.


 


(h)                                 Counterparts.  This Agreement may be executed in
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.


 


(i)                                     Governing Law;
Submission to Jurisdiction.  This
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of New York.  The
parties to this Agreement hereby agree to submit to the jurisdiction of the
courts of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof in any
action or proceeding arising out of or relating to this Agreement.


 


(j)                                     Specific
Performance.  The parties hereto
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. 
Accordingly, it is agreed that they shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction in the United States or any state thereof, in addition to any
other remedy to which they may be entitled at law or in equity.


 





















 


IN WITNESS
WHEREOF, each of the undersigned has executed this Agreement or caused this
Agreement to be duly executed on its behalf as of the date first written above.


 


	
   

  	
  ITC HOLDINGS
  CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INTERNATIONAL
  TRANSMISSION HOLDINGS

  
	
   

  	
   

  	
  LIMITED
  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Ironhill
  Transmission, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Lewis M.
  Eisenberg

  
	
   

  	
   

  	
  Managing
  Member