exv10w60



 



Exhibit
10.60


EXECUTION COUNTERPART




BRIDGE LOAN AGREEMENT,




dated as of September 26, 2007,




ITC HOLDINGS CORP.,

as the Borrower,




VARIOUS FINANCIAL INSTITUTIONS AND OTHER

PERSONS FROM TIME TO TIME PARTIES HERETO,

as the Lenders,




LEHMAN COMMERCIAL PAPER INC.

as the Administrative Agent,




LEHMAN BROTHERS INC.

as Sole Lead Arranger and Sole Bookrunner




 









 





	 	 	 	 	 
	ARTICLE 1 DEFINITIONS	 	5
	 
	 	 	 	 
	1.1
	 	Defined Terms.	 	5
	 
	 	 	 	 
	1.2
	 	Accounting Terms; GAAP.	 	17
	 
	 	 	 	 
	ARTICLE 2 AMOUNT AND TERMS OF CREDIT	 	18
	 
	 	 	 	 
	2.1
	 	Commitments.	 	18
	 
	 	 	 	 
	2.2
	 	Minimum Amount of Each Borrowing; Maximum Number of Borrowings.	 	18
	 
	 	 	 	 
	2.3
	 	Notice of Borrowing.	 	18
	 
	 	 	 	 
	2.4
	 	Disbursement of Funds.	 	19
	 
	 	 	 	 
	2.5
	 	Repayment of Loans; Evidence of Debt.	 	20
	 
	 	 	 	 
	2.6
	 	Changes in Type of Loan.	 	20
	 
	 	 	 	 
	2.7
	 	Pro Rata Borrowings.	 	21
	 
	 	 	 	 
	2.8
	 	Interest and Fees.	 	21
	 
	 	 	 	 
	2.9
	 	LIBOR Periods.	 	22
	 
	 	 	 	 
	2.10
	 	Increased Costs, Illegality, etc.	 	23
	 
	 	 	 	 
	2.11
	 	Compensation.	 	25
	 
	 	 	 	 
	2.12
	 	Change of Lending Office.	 	25
	 
	 	 	 	 
	2.13
	 	Notice of Certain Costs.	 	26
	 
	 	 	 	 
	ARTICLE 3 FEES	 	26
	 
	 	 	 	 
	3.1
	 	Administrative Agent Fees.	 	26
	 
	 	 	 	 
	3.2
	 	Other Agreed Fees.	 	26
	 
	 	 	 	 
	ARTICLE 4 COMMITMENTS	 	26
	 
	 	 	 	 
	4.1
	 	Voluntary Reduction of Commitments.	 	26
	 
	 	 	 	 
	4.2
	 	Mandatory Termination of Commitments.	 	26
	 
	 	 	 	 
	ARTICLE 5 PAYMENTS	 	27
	 
	 	 	 	 
	5.1
	 	Prepayments.	 	27
	 
	 	 	 	 
	5.2
	 	Method and Place of Payment.	 	28
	 
	 	 	 	 
	5.3
	 	Net Payments.	 	28
	 
	 	 	 	 
	5.4
	 	Computations of Interest and Fees.	 	31
	 
	 	 	 	 
	ARTICLE 6 CONDITIONS PRECEDENT	 	31
	 
	 	 	 	 
	ARTICLE 7 REPRESENTATIONS AND WARRANTIES	 	33
	 
	 	 	 	 
	7.1
	 	Organizational Status.	 	33
	 
	 	 	 	 
	7.2
	 	Capacity, Power and Authority.	 	33
	 
	 	 	 	 
	7.3
	 	No Violation.	 	33
	 
	 	 	 	 





i









 






	 	 	 	 	 
	7.4
	 	Litigation.	 	34
	 
	 	 	 	 
	7.5
	 	Governmental Approvals.	 	34
	 
	 	 	 	 
	7.6
	 	True and Complete Disclosure.	 	34
	 
	 	 	 	 
	7.7
	 	Financial Condition; Financial Statements.	 	34
	 
	 	 	 	 
	7.8
	 	Tax Returns and Payments.	 	35
	 
	 	 	 	 
	7.9
	 	Environmental Matters.	 	35
	 
	 	 	 	 
	7.10
	 	Properties.	 	35
	 
	 	 	 	 
	7.11
	 	Pension and Welfare Plans.	 	35
	 
	 	 	 	 
	7.12
	 	Regulations U and X.	 	36
	 
	 	 	 	 
	7.13
	 	Investment Company Act.	 	36
	 
	 	 	 	 
	7.14
	 	No Material Adverse Change.	 	36
	 
	 	 	 	 
	7.15
	 	Deemed Repetition of Representations and Warranties.	 	36
	 
	 	 	 	 
	ARTICLE 8 AFFIRMATIVE COVENANTS	 	36
	 
	 	 	 	 
	8.1
	 	Information Covenants.	 	36
	 
	 	 	 	 
	8.2
	 	Books, Record and Inspections.	 	39
	 
	 	 	 	 
	8.3
	 	Maintenance of Insurance.	 	39
	 
	 	 	 	 
	8.4
	 	Payment of Taxes.	 	39
	 
	 	 	 	 
	8.5
	 	Organizational Existence.	 	39
	 
	 	 	 	 
	8.6
	 	Compliance with Statutes, Obligations, etc.	 	40
	 
	 	 	 	 
	8.7
	 	Good Repair.	 	40
	 
	 	 	 	 
	8.8
	 	Transactions with Affiliates.	 	40
	 
	 	 	 	 
	8.9
	 	End of Fiscal Years; Fiscal Quarters.	 	40
	 
	 	 	 	 
	8.10
	 	Use of Proceeds.	 	40
	 
	 	 	 	 
	8.11
	 	Changes in Business.	 	41
	 
	 	 	 	 
	ARTICLE 9 NEGATIVE COVENANTS	 	41
	 
	 	 	 	 
	9.1
	 	Limitation on Liens.	 	41
	 
	 	 	 	 
	9.2
	 	Limitation on Fundamental Changes.	 	42
	 
	 	 	 	 
	9.3
	 	Limitation on Dividends.	 	43
	 
	 	 	 	 
	9.4
	 	Financial Covenants.	 	44
	 
	 	 	 	 
	9.5
	 	Limitation on Sale-Lease Back Transactions.	 	44
	 
	 	 	 	 
	ARTICLE 10 EVENTS OF DEFAULT	 	44
	 
	 	 	 	 
	10.1
	 	Payments.	 	44
	 
	 	 	 	 
	10.2
	 	Representations, etc.	 	44
	 
	 	 	 	 





ii 









 






	 	 	 	 	 
	10.3
	 	Covenants.	 	44
	 
	 	 	 	 
	10.4
	 	Default Under Other Agreements.	 	45
	 
	 	 	 	 
	10.5
	 	Bankruptcy, etc.	 	45
	 
	 	 	 	 
	10.6
	 	Non-ownership of Material Subsidiaries.	 	46
	 
	 	 	 	 
	10.7
	 	Judgments.	 	46
	 
	 	 	 	 
	10.8
	 	Change of Ownership.	 	46
	 
	 	 	 	 
	10.9
	 	Pension Plans.	 	46
	 
	 	 	 	 
	10.10
	 	Remedies.	 	46
	 
	 	 	 	 
	10.11
	 	Remedies Cumulative.	 	47
	 
	 	 	 	 
	ARTICLE 11 THE ADMINISTRATIVE AGENT	 	47
	 
	 	 	 	 
	ARTICLE 12 MISCELLANEOUS	 	49
	 
	 	 	 	 
	12.1
	 	Amendments and Waivers.	 	49
	 
	 	 	 	 
	12.2
	 	Notices.	 	50
	 
	 	 	 	 
	12.3
	 	No Waiver; Cumulative Remedies.	 	51
	 
	 	 	 	 
	12.4
	 	Survival of Representations and Warranties.	 	51
	 
	 	 	 	 
	12.5
	 	Payment of Expenses and Taxes.	 	51
	 
	 	 	 	 
	12.6
	 	Successors and Assigns; Participations and Assignments.	 	53
	 
	 	 	 	 
	12.7
	 	Replacements of Lenders under Certain Circumstances.	 	55
	 
	 	 	 	 
	12.8
	 	Set-off, Etc.	 	56
	 
	 	 	 	 
	12.9
	 	Marshalling; Payments Set Aside.	 	57
	 
	 	 	 	 
	12.10
	 	Counterparts.	 	57
	 
	 	 	 	 
	12.11
	 	Severability.	 	57
	 
	 	 	 	 
	12.12
	 	Integration.	 	57
	 
	 	 	 	 
	12.13
	 	Governing Law.	 	57
	 
	 	 	 	 
	12.14
	 	Submission to Jurisdiction; Waivers.	 	58
	 
	 	 	 	 
	12.15
	 	Acknowledgements.	 	58
	 
	 	 	 	 
	12.16
	 	Waivers of Jury Trial.	 	59
	 
	 	 	 	 
	12.17
	 	Confidentiality.	 	59
	 
	 	 	 	 
	12.18
	 	Treatment of Loans.	 	59
	 
	 	 	 	 





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	SCHEDULES:
	 	 	 	 
	 
	 	 	 	 
	Schedule I
	 	Commitments	 	 
	Schedule II
	 	Environmental Matters	 	 
	Schedule III
	 	Pension and Welfare Matters	 	 
	Schedule IV
	 	Outstanding Liens on Closing Date	 	 
	 
	 	 	 	 
	EXHIBITS:
	 	 	 	 
	 
	 	 	 	 
	Exhibit A
	 	Form of Notice of Borrowing	 	 
	Exhibit B
	 	Form of Notice of Continuation	 	 
	Exhibit C
	 	Form of Closing Certificate	 	 
	Exhibit D
	 	Form of Compliance Certificate	 	 






iv 









 





          BRIDGE LOAN AGREEMENT, dated as of September 26, 2007, among ITC HOLDINGS CORP., a Michigan
corporation (the “Borrower”), various financial institutions and other Persons from time to time
parties hereto as lenders (each a “Lender” and, collectively, the “Lenders”) and LEHMAN COMMERCIAL
PAPER INC., as administrative agent (in such capacity, the “Administrative Agent”).




          The Borrower has requested that the Lenders make senior term loans to it in an aggregate
principal amount not exceeding $765,000,000. The Lenders are prepared to make such loans upon the
terms and conditions hereof, and, accordingly, the parties hereto agree as follows:




ARTICLE 1

DEFINITIONS




          As used herein, the following terms shall have the meanings specified in this Article 1 unless
the context otherwise requires (it being understood that defined terms in this Agreement shall
include in the singular number the plural and in the plural the singular):




          1.1 Defined Terms.




          “ABR” shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.5%. For
purposes hereof, “Prime Rate” shall mean the prime lending rate as set forth on the British Banking
Association Reuters Page 5 (or such other comparable page as may, in the reasonable opinion of the
Administrative Agent, replace such page for the purpose of displaying such rate), as in effect from
time to time. Any change in the ABR due to a change in any of the foregoing rates shall be
effective as of the opening of business on the effective date of such change in such rate.




          “ABR Loan” shall mean each Loan bearing interest at the rate provided in Section 2.8(a).




          “Acquisition” shall mean Newco’s acquisition of the Purchased Assets in accordance with the
Asset Sale Agreement.




          “Administrative Agent” shall have the meaning provided in the preamble to this Agreement and
shall include such other financial institution as may be appointed as the successor administrative
agent in the manner and to the extent described in Article 11.




          “Administrative Questionnaire” shall mean an Administrative Questionnaire in a form supplied
by the Administrative Agent.




          “Affiliate” shall mean, with respect to any Person, (a) any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common control with such Person,
and (b) any other Person in which such Person directly or indirectly through Subsidiaries has a 10%
or greater equity interest. A Person shall be deemed to control a Person if such Person possesses,
directly or indirectly, the power (i) to vote 10% or more of the Voting Stock having ordinary
voting power for the election of directors (or the equivalent) of such other Person or (ii) to
direct or cause the direction of the management and policies of such other Person, whether through
the ownership of Capital Stock, by contract or otherwise.




5









 








          “Aggregate Available Commitment” shall mean the aggregate amount of the Commitments of all
Lenders minus the Alternative Financing Amount.




          “Agreement” shall mean this Bridge Loan Agreement, as the same may be amended, modified,
supplemented, restated or replaced from time to time.




          “Alternative Financing Amount” shall mean the Net Available Proceeds received by the Borrower,
Newco and Newco’s Subsidiaries from Debt Incurrences (other than under this Agreement) and Equity
Issuances on or prior to the Closing Date and applied to finance the Acquisition.




          “Applicable Margin” shall mean, for any day, the applicable rate per annum set forth below,
based upon the ratings by Moody’s and S&P applicable on such date to the Borrower’s
non-credit-enhanced long term senior unsecured debt:




	 	 	 	 	 	 	 	 	 
	Borrower's Debt	 	Applicable Margin
	Rating (S&P/Moody's)	 	LIBOR Loan	 	ABR Loan
	Category 1
A/A2
	 	 	0.35	%	 	 	0	%
	Category 2
A-/A3
	 	 	0.40	%	 	 	0	%
	Category 3
BBB+/Baa1
	 	 	0.45	%	 	 	0	%
	Category 4
BBB/Baa2
	 	 	0.50	%	 	 	0	%
	Category 5
BBB-/Baa3
	 	 	0.625	%	 	 	0	%
	Category 6
BB+/Ba1 or lower
	 	 	1.25	%	 	 	0.25	%






          For purposes of this definition, (i) if the ratings established by S&P and Moody’s shall fall
within different Categories, the Applicable Margin shall be based on the higher of the two ratings
unless one of the two ratings is two or more Categories lower than the other, in which case the
Applicable Margin shall be determined by reference to the Category next below the higher of the two
Categories (provided that if the rating established by S&P is BBB- and the rating established by
Moody’s is Ba1, or if the rating established by S&P is BB+ and the rating established by Moody’s is
Baa3, the Applicable Margin shall be (x) in respect of LIBOR Loans, 1.00% and (y) in respect of ABR
Loans, 0%), (ii) if only one rating is available from either S&P or Moody’s, then such rating shall
be used to determine the applicable Category, (iii) if neither S&P nor Moody’s shall have in effect
a rating for the Borrower’s non-credit-enhanced long term




6









 







senior unsecured debt, then Category 6 above shall apply, and (iv) if the ratings established or
deemed to have been established by S&P or Moody’s shall be changed (other than as a result of a
change in the rating system of S&P or Moody’s), such change shall be effective as of the date on
which it is first announced by the applicable rating agency. Each change in the Applicable Margin
shall apply during the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the rating system of
Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to
amend this definition to reflect such changed rating system or the unavailability of ratings from
such rating agency and, pending the effectiveness of any such amendment, the Applicable Margin
shall be determined by reference to the rating most recently in effect prior to such change or
cessation.




          “Approved Fund” shall mean any Person (other than a natural person) that is or will be engaged
in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business and that is administered or managed by a Lender, an
Affiliate of a Lender or an entity or an Affiliate of an entity that administers or manages a
Lender.




          “Arranger” shall mean Lehman Brothers Inc.




          “Asset Sale Agreement” shall mean the Asset Sale Agreement dated as of January 18, 2007
between Interstate Power and Light Company, an Iowa corporation, and Newco.




          “Assignee” shall have the meaning provided in Section 12.6(b)(i).




          “Assignment and Acceptance” shall mean the assignment and acceptance agreement delivered by
each Assignee pursuant to Section 12.6(b)(ii).




          “Attributable Value” shall mean, with respect to any Sale and Leaseback Transaction, as of the
time of determination, the lesser of (i) the sale price of the property or assets so leased
multiplied by a fraction the numerator of which is the remaining portion of the base term of the
lease included in such Sale and Leaseback Transaction and the denominator of which is the base term
of such lease, and (ii) the total obligation (discounted to present value at the rate of interest
specified by the terms of such lease) of the lessee for rental payments (other than amounts
required to be paid on account of property taxes as well as maintenance, repairs, insurance, water
rates and other items which do not constitute payments for property rights) during the remaining
portion of the base term of the lease included in such Sale and Leaseback Transaction.




          “Authorized Officer” shall mean the Chief Executive Officer, the President, any Executive
Vice-President, any Senior Executive Vice President, any Senior Vice-President, the Chief Financial
Officer, the Treasurer or General Counsel of the Borrower or any other senior officer of the
Borrower designated as such in writing to the Administrative Agent by the Borrower.




          “Availability Period” shall mean the period from and including the date of this Agreement to
and including December 31, 2007.




7









 








          “Bankruptcy Code” shall have the meaning provided in Section 10.5.




          “Borrower” shall have the meaning provided in the recitals to this Agreement.




          “Borrowing” shall mean the incurrence of one Type of Loan on a given date (or resulting from
conversions or continuations on a given date) having, in the case of LIBOR Loans, the same LIBOR
Period (provided that ABR Loans incurred pursuant to Section 2.10(b) shall be considered part of
any related Borrowing of LIBOR Loans).




          “Business” shall have the meaning provided in Section 8.11.




          “Business Day” shall mean (a) for all purposes other than as covered by clause (b) below, any
day excluding Saturday, Sunday and any day that shall be in the City of New York a legal holiday or
a day on which banking institutions are authorized or required by law or other governmental actions
to close, and (b) with respect to all notices and determinations in connection with, and payments
of principal and interest on, LIBOR Loans, any day that is a Business Day described in clause (a)
excluding any day that shall be in the City of London a legal holiday or a day on which banking
institutions are authorized or required by law or other governmental actions to close.




          “Capital Lease”, as applied to any Person, shall mean any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, is, or is required to
be, accounted for as a finance lease obligation on the balance sheet of that Person.




          “Capital Stock” shall mean common shares, preferred shares or other equivalent equity
interests (howsoever designated) of capital stock of a corporation, equity preferred or common
interests or membership interests in a limited liability company, limited or general partnership
interests in a partnership or any other equivalent of such ownership interest.




          “Capitalized Lease Obligations” shall mean, as applied to any Person, all obligations under
Capital Leases of such Person and its Subsidiaries, in each case taken at the amount thereof
accounted for as liabilities in accordance with GAAP.




          “Change of Ownership” shall mean and be deemed to have occurred if (i) any person or group
(within the meaning of the Securities and Exchange Act of 1934, as amended, and the rules of the
Securities and Exchange Commission thereunder) shall become, directly or indirectly, the beneficial
owner of capital stock representing more than 35% of the ordinary voting power represented by the
issued and outstanding Voting Stock of the Borrower; and/or (ii) a majority of the incumbent
directors of the Borrower ceases to be persons who were either (x) directors of the Borrower on the
Closing Date or (y) new directors (such persons being called herein “New Members”)
appointed or nominated for election by one or more persons who were members of the board of
directors of the Borrower on the Closing Date or who were appointed or nominated by one or more
such New Members whether or not they were members on the Closing Date.




          “Closing Date” shall mean the date (which shall be a Business Day) on which the conditions
precedent set forth in Section 6.1 have been satisfied or waived.




8









 








          “Code” shall mean the Internal Revenue Code of 1986, and the regulations thereunder, in each
case as amended, reformed or otherwise modified from time to time.




          “Commitment” shall mean, as to each Lender, the obligation of such Lender (on and subject to
the terms and conditions hereof) to make a Loan to the Borrower pursuant to Section 2.1 in a
principal amount up to but not exceeding the amount set forth opposite the name of such Lender on
Schedule I or in any Assignment and Acceptance to which such Lender is a party (as such commitment
may be reduced or increased from time to time pursuant to assignments by or to such Lender in
accordance with Section 12.6).




          “Commitment Percentage” shall mean, at any time, for each Lender, the percentage obtained by
dividing (a) the aggregate outstanding principal amount of such Lender’s Loans by (b) the aggregate
outstanding principal amount of all Loans (or, if no Loans are outstanding, the percentage obtained
by dividing (x) such Lender’s Commitment by (y) the aggregate amount of the Commitments of all
Lenders).




          “Compliance Certificate” shall have the meaning provided in Section 8.1(c).




          “Confidential Information” shall have the meaning provided in Section 12.17.




          “Consolidated Capitalization” shall mean consolidated total assets less consolidated
non-interest bearing current liabilities, all as shown on the Borrower’s most recently delivered
audited consolidated balance sheet prepared in accordance with GAAP.




          “Control”, “Controls” and “Controlled”, when used with respect to any Person, shall mean the
power to direct the management and policies of such Person, directly or indirectly, whether through
ownership of Voting Stock, by contract or otherwise.




          “Controlled Group” shall mean all members of a controlled group of corporations and all
members of a controlled group of trades or businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a single employer under Section 414(b) or
414(c) of the Code or Section 4001 of ERISA.




          “Debt Incurrence” shall mean the incurrence by the Borrower, Newco or any of Newco’s
Subsidiaries of any Indebtedness.




          “Default” shall mean any event, act or condition that with notice or lapse of time, or both,
would constitute an Event of Default.




          “Defaulting Lender” shall mean any Lender with respect to which a Lender Default is in effect.




          “Dollars” and “$” shall mean lawful currency of the United States.




          “Environmental Claims” shall mean any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of non-compliance, investigations (other
than internal reports prepared by the Borrower or any of its Subsidiaries (a) in the ordinary
course of such Person’s business or (b) as required in connection with a financing transaction or




9









 




an acquisition or disposition of real estate) or proceedings relating in any way to any
Environmental Law or any permit issued, or any approval given, under any such Environmental Law
(hereinafter, “Claims”), including (i) any and all Claims by governmental or regulatory authorities
for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (ii) any and all Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to health, safety (with
respect to Hazardous Materials or conditions in the environment) or the environment.




          “Environmental Law” shall mean any applicable federal, provincial, state, foreign or local
statute, law, rule, regulation, ordinance, code and rule of common law now or hereafter in effect
and in each case as amended, and any binding judicial or administrative interpretation thereof,
including any binding judicial or administrative order, consent decree or judgment, relating to the
environment, human health or safety (with respect to Hazardous Materials or conditions in the
environment) or Hazardous Materials.




          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute thereto of similar import, together with the regulations thereunder, in each case
as in effect from time to time. References to Sections of ERISA also refer to any successor
Sections thereto.




          “Equity Issuance” shall mean (a) any issuance or sale (whether public or private) by the
Borrower, Newco or any of Newco’s Subsidiaries after the Closing Date of (i) any of its Capital
Stock, (ii) any warrants or options exercisable in respect of its Capital Stock (other than any
warrants or options issued to directors, officers or employees of the Borrower, Newco or any of
Newco’s Subsidiaries pursuant to employee benefit plans established in the ordinary course of
business and any Capital Stock of the Borrower issued upon the exercise of such warrants or
options) or (iii) any other security or instrument representing an equity interest (or the right to
obtain any equity interest) in the Borrower, Newco or any of Newco’s Subsidiaries or (b) the
receipt by the Borrower, Newco or any of Newco’s Subsidiaries of any capital contribution (whether
or not evidenced by any equity security issued by the recipient of such contribution);
provided that Equity Issuance shall not include (x) any such issuance or sale by any
Subsidiary of Newco to the Borrower, Newco or any wholly owned Subsidiary of Newco or (y) any
capital contribution by the Borrower to Newco or any wholly owned Subsidiary of Newco, or by Newco
to any wholly owned Subsidiary of Newco.




          “Event of Default” shall have the meaning provided in Article 10.




          “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the per annum
rates on overnight federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it.




          “Fees” shall mean all amounts payable pursuant to, or referred to in, Article 3.




10









 








          “Finance Parties” shall mean the Administrative Agent and the Lenders.




          “F.R.S. Board” shall mean the Board of Governors of the Federal Reserve System or any
successor thereto.




          “GAAP” shall mean generally accepted accounting principles in the United States as in effect
from time to time.




          “Governmental Authority” shall mean any nation or government, any state or other political
subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.




          “Guarantee Obligations” shall mean, as to any Person, any obligation of such Person
guaranteeing or intended to guarantee any Indebtedness of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly, including any obligation of such Person, whether or
not contingent, (a) to purchase any such Indebtedness or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any such Indebtedness of
the ability of the primary obligor to make payment of such Indebtedness or (d) otherwise to assure
or hold harmless the owner of such Indebtedness against loss in respect thereof; provided that, the
term “Guarantee Obligations” shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guarantee Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of
which such Guarantee Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to perform thereunder)
as determined by such Person in good faith or, if the Guarantee Obligation is expressly limited to
a specified amount, such specified amount.




          “Hazardous Material” shall mean (a) any petroleum or petroleum products, radioactive
materials, friable asbestos, urea formaldehyde foam insulation, transformers or other equipment
that contain dielectric fluid containing regulated levels of polychlorinated biphenyls, and radon
gas; (b) any chemicals, materials or substances defined as or included in the definition of
“hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous waste”,
“restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, or
“pollutants”, or words of similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or regulated by any
Governmental Authority.




          “including” and “include” shall mean including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement, the parties hereto agree that
the rule of ejusdem generis shall not be applicable to limit a general statement, which is followed
by or referable to an enumeration of specific matters, to matters similar to the matters
specifically mentioned.




11









 








          Indebtedness” of any Person shall mean (a) all indebtedness of such Person for borrowed
money, (b) the deferred purchase price of assets or services that in accordance with GAAP would be
classified as a liability on the balance sheet of such Person, (c) the face amount of all letters
of credit issued for the account of such Person and, without duplication, all drafts drawn
thereunder, (d) all Indebtedness of a second Person secured by any Lien on any property owned by
such first Person, whether or not such Indebtedness has been assumed, (e) all Capitalized Lease
Obligations of such Person, (f) all existing payment obligations of such Person under interest rate
swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements, (g) all existing payment
obligations of such Person under commodity future contracts and other similar agreements and (h)
without duplication, all Guarantee Obligations of such Person; provided that, Indebtedness shall
not include current payables and accrued expenses, in each case arising in the ordinary course of
business.




          “ITC” shall mean International Transmission Company, a Michigan corporation and Subsidiary of
the Borrower.




          “ITC First Mortgage Indenture” shall mean the First Mortgage and Deed of Trust, dated as of
July 15, 2003, between ITC and BNY Midwest Trust Company, as trustee thereunder, as the same may be
amended, supplemented or otherwise modified and in effect from time to time.




          “Lender” and “Lenders” shall have the respective meanings provided in the preamble to this
Agreement.




          “Lender Default” shall mean a Lender having notified the Administrative Agent and/or the
Borrower that it does not intend to comply with the obligations under Section 2.1(a) as a result of
the control of such Lender being assumed by any regulatory authority or the appointment of a
receiver or conservator with respect to such Lender at the direction or request of any regulatory
agency or authority.




          “LIBOR” shall mean, with respect to each LIBOR Period for each LIBOR Loan, a rate per annum,
expressed on the basis of a 360 day year, equal to the annual interest rate for deposits of Dollars
for a maturity most nearly comparable to such LIBOR Period which appears on Reuters Page LIBOR01
(or on any successor or substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on such page of such
service, as determined by the Administrative Agent from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the London interbank market) as of
11:00 a.m. (London time) on the second Business Day prior to the commencement of such LIBOR Period;
provided that if such service is not available on such day, then the interest rate at which the
Administrative Agent is offered deposits of Dollars by leading banks in the London interbank market
as of 11:00 a.m. (London time) on the second Business Day prior to the commencement of such LIBOR
Period, for delivery on the first day of such LIBOR Period for the number of days comprised in such
LIBOR Period and in an amount comparable to the amount of such LIBOR Loan.




12









 








          “LIBOR Loan” shall mean each Loan bearing interest at the rate provided in Section 2.8(b).




          “LIBOR Period” shall mean, with respect to a LIBOR Loan, the interest period selected by the
Borrower for such LIBOR Loan in accordance with Section 2.9.




          “Lien” shall mean any mortgage, pledge, security interest, hypothecation, assignment by way of
security, lien (statutory or other) or similar encumbrance (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any lease in the nature
thereof).




          “Material Adverse Effect” shall mean a circumstance or condition affecting the business,
assets, operations, properties or financial condition of the Borrower and its Subsidiaries taken as
a whole that would materially adversely affect the ability of the Borrower to perform its
obligations under this Agreement.




          “Material Subsidiary” shall mean, as at any date, a Subsidiary (the “Subject Subsidiary”),
including its subsidiaries, which meet any of the following conditions:





     (a) The Borrower’s and its other Subsidiaries’ investments in and advances to the Subject
Subsidiary and its Subsidiaries exceeds 10% of the total assets of the Borrower and its
Subsidiaries consolidated as of the end of the then most recently completed fiscal year; or




     (b) The Borrower’s and its other Subsidiaries’ proportionate share of the total assets
(after intercompany eliminations) of the Subsidiary exceeds 10% of the total assets of the
Borrower and its Subsidiaries consolidated as of the end of the then most recently completed
fiscal year; or




     (c) The Borrower’s and its other Subsidiaries’ equity in the income from continuing
operations before income taxes, extraordinary items and cumulative effect of a change in
accounting principles of the Subject Subsidiary and its Subsidiaries exceeds 10% of such income
of the Borrower and its Subsidiaries consolidated for the then most recently completed fiscal
year.



          “Maturity Date” shall mean the date falling 364 days after the Closing Date.




          “METC” shall mean Michigan Electric Transmission Company, LLC, a Michigan corporation.




          “METC First Mortgage Indenture” shall mean the First Mortgage Indenture, dated as of December
10, 2003, between METC and JPMorgan Chase Bank, N.A., as Trustee, as the same may be amended,
supplemented or otherwise modified from time to time.




          “Minimum Borrowing Amount” shall mean $500,000.




          “Moody’s” shall mean Moody’s Investors Service, Inc. or any successor by merger or
consolidation to its business.




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          “Net Available Proceeds” shall mean, in the case of any Equity Issuance or Debt Incurrence,
the aggregate amount of all cash received by the Borrower, Newco or any of Newco’s Subsidiaries in
respect thereof, net of attorney’s fees, investment banking fees, accountant’s fees, underwriting
discounts and commissions and other customary fees and expenses incurred by Borrower, Newco or such
Subsidiary in connection therewith.




          “Net Tangible Assets” shall mean the amount shown as consolidated total assets on the
Borrower’s most recently delivered audited consolidated balance sheet prepared in accordance with
GAAP, less the following: (i) intangible assets including, without limitation, such items as
goodwill, trademarks, tradenames, patents and unamortized debt discount and expense and other
regulatory assets carried as an asset on such balance sheet; and (ii) appropriate adjustments, if
any, on account of minority interests.




          “Newco” shall mean ITC Midwest LLC, a Michigan limited liability company and a wholly-owned
Subsidiary of the Borrower.




          “Newco Debt to Capitalization Ratio” shall mean, as of any date of determination, the ratio of
(a) Newco Total Debt as of such date to (b) Newco Total Capitalization as of such date.




          “Newco Total Capitalization” shall mean, as of any date of determination, the sum, without
duplication, of (a) Newco Total Debt and (b) the total stockholder’s equity of Newco as determined
in accordance with GAAP; provided that the term “Newco Total Capitalization” shall exclude the
non-cash effects of the March 31, 2006 FAS Statement titled “Employers’ Accounting for Defined
Pension and Postretirement Plans”.




          “Newco Total Debt” shall mean, as of any date of determination, (a) the sum, without
duplication, of (i) all Indebtedness of Newco and its Subsidiaries for borrowed money outstanding
on such date, (ii) all Capitalized Lease Obligations of Newco and its Subsidiaries outstanding on
such date and (iii) all Indebtedness of Newco and its Subsidiaries of the types described in
clauses (b) and (d) of the definition of Indebtedness (but in the case of clause (d), only to the
extent such Indebtedness is assumed by Newco or any of its Subsidiaries), all calculated on a
consolidated basis in accordance with GAAP and to the extent reflected as Indebtedness on the
consolidated balance sheet of Newco in accordance with GAAP minus (b) the aggregate amount of cash
held by Newco and its Subsidiaries as at such date and included in the cash accounts listed on the
consolidated balance sheet of Newco and its Subsidiaries and deposited with the Administrative
Agent to the extent the use thereof for application to payment of Indebtedness of Newco and its
Subsidiaries is not prohibited by law or any contract to which Newco or any of its Subsidiaries is
a party (but in each case excluding equity securities that are mandatorily redeemable 91 or more
days after the Maturity Date and that are classified as hybrid securities by Moody’s and/or S&P).




          “Non-U.S. Lender” shall mean any Lender that is not a “United States person”, as defined under
Section 7701(a)(30) of the Code.




          “Notice of Borrowing” shall mean a Notice of Borrowing provided pursuant Section 2.3(a),
substantially in the form of Exhibit A.




          “Notice of Continuation” shall have the meaning provided in Section 2.6(a).




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          “Organic Document” shall mean, relative to any Person, its certificate of incorporation,
by-laws, certificate of partnership, partnership agreement, certificate of formation, limited
liability agreement, operating agreement and all shareholder agreements, voting trusts and similar
arrangements applicable to any of such Person’s Capital Stock.




          “Participant” shall have the meaning provided in Section 12.6(c).




          “Pension Plan” shall mean a “pension plan”, as such term is defined in Section 3(2) of ERISA,
which is subject to Title IV of ERISA (other than a multiemployer plan as defined in Section
4001(a)(3) of ERISA), and to which the Borrower or any corporation, trade or business that is,
along with the Borrower, a member of a Controlled Group, is a contributing employer or a sponsor.




          “Permitted Liens” shall mean (a) Liens for taxes, assessments, customs duties or governmental
charges or claims not yet due or which are being contested in good faith and by appropriate
proceedings for which appropriate provisions have been established in accordance with GAAP; (b)
Liens in respect of property or assets of the Borrower or any of its Subsidiaries imposed by law,
such as carriers’, warehousemen’s and or mechanics’ Liens, and other similar Liens arising in the
ordinary course of business and Liens arising under zoning laws and ordinances and municipal bylaws
and regulations, in each case so long as such Liens arise in the ordinary course of business and do
not individually or in the aggregate have a Material Adverse Effect; (c) Liens arising out of
pledges or deposits under workmen’s compensation laws or similar legislation and Liens of judgments
thereunder which are not currently dischargeable, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of money) or leases to which the Borrower or any
Subsidiary is a party, or deposits to secure public or statutory obligations of the Borrower or any
Subsidiary, or deposits in connection with obtaining or maintaining self-insurance or to obtain the
benefits of any law, regulation or arrangement pertaining to unemployment insurance, old age
pensions, social security or similar matters, or deposits of cash or obligations of the United
States of America to secure surety, appeal or customs bonds to which the Borrower or any Subsidiary
is a party, or deposits in litigation or other proceedings such as, but not limited to,
interpleader proceedings, and, to the extent not securing Indebtedness, other similar obligations
incurred in the ordinary course of business; (d) easements, rights-of-way, restrictive covenants or
agreements, minor defects or irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Borrower and its Subsidiaries taken as
a whole; and (e) to the extent not securing Indebtedness, (i) liens arising from judgments or
decrees in circumstances not constituting an Event of Default under Section 10.7; (ii) ground
leases in respect of real property on which facilities owned or leased by the Borrower or any of
its Subsidiaries are located; (iii) any interest or title of a lessor or secured by a lessor’s
interest under any lease not prohibited by this Agreement; (iv) liens incurred by the licensing of
trademarks by the Borrower or any of its Subsidiaries to others in the ordinary course of business;
and (v) leases or subleases granted to others, not interfering in any material respect with the
business of the Borrower and its Subsidiaries taken as a whole.




          “Person” shall mean any individual, partnership, joint venture, firm, corporation, limited
liability company, association, trust or other enterprise or any Governmental Authority.




15









 








          “Purchased Assets” shall have the meaning provided in the Asset Sale Agreement.




          “Real Estate” shall have the meaning provided in Section 8.1(e).




          “Register” shall have the meaning provided in Section 12.6(b)(iv).




          “Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates
and the respective directors, officers, employees, agents and advisors of such Person and such
Person’s Affiliates.




          “Required Lenders” shall mean, at any date, Lenders holding more than 50% of the aggregate
outstanding principal amount of the Loans or, if no Loans are outstanding, Lenders having more than
50% of the aggregate amount of the Commitments.




          “Requirement of Law” shall mean, as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule,
regulation, guideline, policy or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its property or assets
or to which such Person or any of its property or assets is subject and whether or not having the
force of law.




          “Sale and Leaseback Transaction” shall have the meaning provided in Section 9.5.




          “S&P” shall mean Standard & Poor’s Ratings Service or any successor by merger or consolidation
to its business.




          “Securities Act” shall mean the Securities Act of 1933, as amended.




          “Subsidiary” of any Person shall mean and include (a) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power to elect a majority
of the directors of such corporation (irrespective of whether or not at the time stock or issued
share capital of any class or classes of such corporation shall have or might have voting power by
reason of the happening of any, contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (b) any partnership, association, joint venture or other entity
in which such Person directly or indirectly through Subsidiaries has more than a 50% equity
interest and more than a 50% voting interest at the time and (c) any other corporation,
partnership, joint venture or other entity (i) the accounts of which would be consolidated with
those of such Person in such Person’s consolidated financial statements if such statements were
prepared in accordance with GAAP and (ii) that is controlled (as defined in clause (b) of the
definition of such term in the definition of the term “Affiliate”) by such Person. Unless
otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of
the Borrower.




          “Successor Borrower” shall have the meaning provided in Section 9.2(a).




          “Taxes” shall have the meaning provided in Section 5.3(a)(i).




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          “Total Capitalization” shall mean, as of any date of determination, the sum, without
duplication, of (a) Total Debt and (b) the total stockholder’s equity of the Borrower as determined
in accordance with GAAP; provided that the term “Total Capitalization” shall exclude the non-cash
effects of the March 31, 2006 FAS Statement titled “Employers’ Accounting for Defined Pension and
Postretirement Plans”.




          “Total Debt” shall mean, as of any date of determination, (a) the sum, without duplication, of
(i) all Indebtedness of the Borrower and its Subsidiaries for borrowed money outstanding on such
date, (ii) all Capitalized Lease Obligations of the Borrower and its Subsidiaries outstanding on
such date and (iii) all Indebtedness of the Borrower and its Subsidiaries of the types described in
clauses (b) and (d) of the definition of Indebtedness (but in the case of clause (d), only to the
extent such Indebtedness is assumed by the Borrower or any Subsidiary), all calculated on a
consolidated basis in accordance with GAAP and to the extent reflected as Indebtedness on the
consolidated balance sheet of the Borrower in accordance with GAAP minus (b) the aggregate amount
of cash held by the Borrower and its Subsidiaries as at such date and included in the cash accounts
listed on the consolidated balance sheet of the Borrower and its Subsidiaries and deposited with
the Administrative Agent to the extent the use thereof for application to payment of Indebtedness
of the Borrower and its Subsidiaries is not prohibited by law or any contract to which the Borrower
or any of its Subsidiaries is a party (but in each case excluding equity securities that are
mandatorily redeemable 91 or more days after the Maturity Date and that are classified as hybrid
securities by Moody’s and/or S&P).




          “Total Debt to Capitalization Ratio” shall mean, as of any date of determination, the ratio of
(a) Total Debt as of such date to (b) Total Capitalization as of such date.




          “Transactions” shall mean the execution, delivery and performance by the Borrower of this
Agreement, including the borrowing of the Loans and the use of the proceeds thereof.




          “Type” shall mean as to any Loan, its nature as an ABR Loan or a LIBOR Loan.




          “United States” and “US” shall mean the United States of America.




          “Voting Stock” shall mean Capital Stock of a Person which carries voting rights or the right
to Control such Person under any circumstances; provided that Capital Stock which carries the right
to vote or Control conditionally upon the happening of an event shall not be considered Voting
Stock until the occurrence of such event and then only during the continuance of such event.




          “Welfare Plan” shall mean a “welfare plan”, as such term is defined in Section 3(1) of ERISA.




          1.2 Accounting Terms; GAAP.




          Except as otherwise expressly provided herein, all terms of an accounting or financial nature
shall be construed in accordance with GAAP, as in effect from time to time; provided that,
if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or
in the application thereof on the operation of such provision (or if the Administrative




17









 







Agent notifies the Borrower that the Required Lenders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be interpreted on the basis
of GAAP as in effect and applied immediately before such change shall have become effective until
such notice shall have been withdrawn or such provision amended in accordance herewith.




ARTICLE 2

AMOUNT AND TERMS OF CREDIT




          2.1 Commitments.




          (a) Subject to and upon the terms and conditions herein set forth, each Lender severally
agrees to make a single loan (each a “Loan” and, collectively, the “Loans”) to the Borrower on a
Business Day during the Availability Period in Dollars in a principal amount up to but not
exceeding such Lender’s Commitment and, as to all Lenders, in an aggregate principal amount up to
but not exceeding the Aggregate Available Commitments. Loans may, at the option of the Borrower,
be incurred and maintained as, and/or converted into, ABR Loans or LIBOR Loans (provided that all
Loans made by each of the Lenders pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, consist entirely of Loans of the same Type).




          (b) The Borrower shall use the proceeds from the Loans to finance the Acquisition and to pay
related costs and expenses.




          2.2 Minimum Amount of Each Borrowing; Maximum Number of Borrowings.




          The aggregate principal amount of each Borrowing of Loans shall be in a multiple of $100,000
and shall not be less than the Minimum Borrowing Amount. At no time shall there be outstanding
more than 15 Borrowings of LIBOR Loans under this Agreement.




          2.3 Notice of Borrowing.




          (a) When the Borrower desires to borrow the initial Loans hereunder, it shall give the
Administrative Agent at the office of the Administrative Agent set forth in Section 12.2(a)(ii),
(i) a written Notice of Borrowing (or telephonic notice promptly confirmed in writing) prior to
12:00 noon (New York time) at least three Business Days prior to the proposed day of a Borrowing of
LIBOR Loans and (ii) a written Notice of Borrowing (or telephonic notice promptly confirmed in
writing) prior to 10:00 a.m. (New York time) on the proposed day of a Borrowing of ABR Loans. Each
such Notice of Borrowing, except as otherwise expressly provided in Section 2.10, shall be
irrevocable and shall specify (i) the aggregate principal amount of the Loans to be made pursuant
to such Borrowing, (ii) the date of Borrowing (which shall be a Business Day), (iii) whether the
Borrowing shall consist of ABR Loans or LIBOR Loans, (iv) if such Borrowing shall consist of LIBOR
Loans, the LIBOR Period to be initially applicable thereto and (v) the number and location of the
account to which funds are to be disbursed. The Administrative Agent shall promptly give each
Lender written notice (or telephonic notice




18









 







promptly confirmed in writing) of each proposed Borrowing of Loans, of such Lender’s
proportionate share thereof and of the other matters covered by the related Notice of Borrowing.




          (b) Without in any way limiting the obligation of the Borrower to confirm in writing any
notice it may give hereunder by telephone, the Administrative Agent may act prior to receipt of
written confirmation without liability upon the basis of such telephonic notice believed by the
Administrative Agent in good faith to be from an Authorized Officer of the Borrower. In each such
case the Borrower hereby waives the right to dispute the Administrative Agent’s record of the terms
of any such telephonic notice.




          2.4 Disbursement of Funds.




          (a) No later than 12:00 Noon (New York time) on the date specified in the Notice of Borrowing,
each Lender will make available its pro rata portion, if any, of each Borrowing requested to be
made on such date in the manner provided below.




          (b) Each Lender shall make available all amounts it is to fund under any Borrowing in
immediately available funds to the Administrative Agent at the office of the Administrative Agent
set forth in Section 12.2(a)(ii), and the Administrative Agent will make available to the Borrower
by depositing such funds as specified in the Notice of Borrowing, the aggregate of the amounts so
made available. Unless the Administrative Agent shall have been notified by any Lender prior to
the Closing Date that such Lender does not intend to make available to the Administrative Agent its
portion of the Borrowing or Borrowings to be made on the Closing Date, the Administrative Agent may
assume that such Lender has made such amount available to the Administrative Agent on the Closing
Date, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion
and without any obligation to do so) make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Administrative Agent by such Lender
and the Administrative Agent has made available same to the Borrower, the Administrative Agent
shall be entitled to recover such corresponding amount from such Lender. If such Lender does not
pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the
Administrative Agent shall promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Administrative Agent. The Administrative Agent shall also be
entitled to recover from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to (i) if paid by such Lender, at
the Federal Funds Effective Rate or (ii) if paid by the Borrower, the then-applicable rate of
interest, calculated in accordance with Section 2.8, for the respective Loans.




          (c) Nothing in this Section 2.4 shall be deemed to relieve any Lender from its obligation to
fulfill its commitments hereunder or to prejudice any rights that the Borrower may have against any
Lender as a result of any default by such Lender hereunder (it being understood, however, that no
Lender shall be responsible for the failure of any other Lender to fulfill its commitments
hereunder).




19









 








          2.5 Repayment of Loans; Evidence of Debt.




          (a) The Borrower shall, for the benefit of the Lenders, on the Maturity Date, repay to the
Administrative Agent the then-unpaid Loans.




          (b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the Indebtedness of the Borrower to the appropriate lending office of such Lender
resulting from each Loan made by such lending office of such Lender from time to time, including
the amounts and currency of principal and interest payable and paid to such lending office of such
Lender from time to time under this Agreement.




          (c) The Administrative Agent shall maintain the Register pursuant to Section 12.6, and a
sub-account for each Lender, in which Register and sub-accounts (taken together) shall be recorded
(i) the amount of each Loan made hereunder, the Type of each Loan made and the LIBOR Period
applicable thereto, (ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.




          (d) The entries made in the Register and accounts and subaccounts maintained pursuant to
paragraphs (b) and (c) of this Section shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations of the Borrower therein recorded;
provided that the failure of any Lender or the Administrative Agent to maintain such account, such
Register or such subaccount, as applicable, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower
by such Lender in accordance with the terms of this Agreement. In the event that there is an
inconsistency between the accounts maintained by a Lender pursuant to Section 2.5(b) and the
Register maintained by the Administrative Agent pursuant to Section 12.6, the said Register shall
prevail.




          (e) All payments to be made by the Administrative Agent to any Lender hereunder shall be made
in accordance with the payment instructions of such Lender set forth on the signature page of such
Lender hereunder or, if such Lender is an Assignee, set forth in the Assignment and Acceptance of
such Lender.




          2.6 Changes in Type of Loan.




          (a) The Borrower shall have the option on any Business Day to convert all or a portion equal
to at least the Minimum Borrowing Amount of the outstanding principal amount of Loans of one Type
into a Borrowing or Borrowings of another permitted Type or to continue the outstanding principal
amount of any LIBOR Loans as LIBOR Loans for an additional LIBOR Period; provided that (i) no
partial continuation of LIBOR Loans shall reduce the outstanding principal amount of LIBOR Loans
made pursuant to a single Borrowing to less than the Minimum Borrowing Amount, (ii) ABR Loans may
not be converted into LIBOR Loans, if a Default or Event of Default is in existence on the date of
the proposed conversion and the Administrative Agent has or the Required Lenders have determined in
its or their sole discretion not to permit such conversion, (iii) LIBOR Loans may not be continued
as LIBOR Loans for an




20









 







additional LIBOR Period if a Default or Event of Default is in existence on the date of the
proposed continuation and the Administrative Agent has or the Required Lenders have determined in
its or their sole discretion not to permit such continuation, (iv) no LIBOR Period in excess of one
month may be selected for any LIBOR Loan if a Default or Event of Default is in existence on the
date of the proposed continuation and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such longer LIBOR Period, (v) Borrowings
resulting from continuations or conversions pursuant to this Section 2.6 shall be limited in number
as provided in Section 2.2 and (vi) the outstanding principal amount of a Loan of one Type may not
be converted into a Borrowing of another permitted Type until the end of the current LIBOR Period
for such Loan. Each such continuation or conversion shall be effected by the Borrower by giving
the Administrative Agent at the location set forth in Section 12.2 prior to 12:00 Noon (New York
time) at least three Business Days’ prior written notice substantially in the form of Exhibit B (or
telephonic notice promptly confirmed in writing) (each a “Notice of Continuation”) specifying the
Loans to be so continued or converted, the Type of Loans to be continued or converted into and, if
such Loans are to be converted or continued as LIBOR Loans, the LIBOR Period to be initially
applicable thereto. The Administrative Agent shall give each Lender notice as promptly as
practicable of any such proposed continuation or conversion affecting any of its Loans. This
Section shall not be construed to permit the Borrower to change the currency of any Borrowing.




          (b) If any Default or Event of Default is in existence at the time of any proposed
continuation of any LIBOR Loans and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such continuation, such LIBOR Loans shall
be automatically converted on the last day of the current LIBOR Period into ABR Loans.




          (c) If upon the expiration of any LIBOR Period in respect of LIBOR Loans, the Borrower has
failed to elect a new LIBOR Period to be applicable thereto as provided in paragraph (a) above, the
Borrower shall be deemed to have elected to convert such Borrowing of LIBOR Loans into a Borrowing
of ABR Loans effective as of the expiration date of such current LIBOR Period.




          2.7 Pro Rata Borrowings.




          Each Borrowing of Loans under this Agreement shall be made by the Lenders pro rata on the
basis of their then-applicable Commitment Percentage. It is understood that no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans hereunder and that
each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfill its commitments hereunder.




          2.8 Interest and Fees.




          (a) The unpaid principal amount of each ABR Loan shall bear interest from the date of the
Borrowing thereof until maturity (whether by acceleration or otherwise and both before and after
default and judgment) at a rate per annum that shall at all times be equal to the Applicable Margin
for ABR Loans plus the ABR in effect from time to time.




21









 








          (b) The unpaid principal amount of each LIBOR Loan shall bear interest from the date of the
Borrowing thereof until maturity (whether by acceleration or otherwise and both before and after
default and judgment) at a rate per annum that shall at all times be equal to the Applicable Margin
for LIBOR Loans plus the relevant LIBOR.




          (c) If all or a portion of (i) the principal amount of any Loan or (ii) any interest thereon
or fees payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate per annum that is (x)
in the case of overdue principal, equal to the rate that would otherwise be applicable thereto
plus, to the extent permitted by applicable law, 2.00% (after as well as before maturity and
judgment), (y) in the case of any overdue interest with respect to any Loan, equal to the rate of
interest applicable to such Loan plus, to the extent permitted by applicable law, 2.00%, or (z) in
the case of any overdue fees or other amounts owing hereunder, equal to the rate of interest then
applicable to Loans maintained as ABR Loans plus 2.00%, in each case from and including the date of
such non-payment to but excluding the date on which such amount is paid in full (after as well as
before maturity and judgment). All interest payable pursuant to this Section 2.8(c) shall be
payable upon demand.




          (d) Interest on each Loan shall accrue from and including the date of any Borrowing to but
excluding the date of any repayment thereof and shall, except as otherwise provided pursuant to
Section 2.8(c), be payable (i) in respect of each ABR Loan, quarterly in arrears on the last
Business Day of each of March, June, September and December, (ii) in respect of each LIBOR Loan, on
the last day of each LIBOR Period applicable thereto and, in the case of an LIBOR Period in excess
of three months, on each date occurring at three-month intervals after the first day of such LIBOR
Period, (iii) in respect of each Loan on any prepayment (on the amount prepaid), at maturity
(whether by acceleration or otherwise) and, after such maturity, on demand.




          (e) All computations of interest hereunder shall be made in accordance with Section 5.4.




          (f) The Administrative Agent, upon determining the interest rate for any Borrowing of LIBOR
Loans, shall promptly notify the Borrower and the relevant Lenders thereof. Each such
determination shall, absent clearly demonstrable error, be final and conclusive and binding on all
parties hereto.




          2.9 LIBOR Periods.




          At the time the Borrower gives a Notice of Borrowing or Notice of Continuation in respect of
the making of, or conversion into or continuation as, a Borrowing of LIBOR Loans prior to 10:00
a.m. (New York time) on the third Business Day prior to the applicable date of making or conversion
or continuation of such LIBOR Loans, the Borrower shall have the right to elect by giving the
Administrative Agent written notice of (or telephonic notice promptly confirmed in writing) the
LIBOR Period applicable to such Borrowing, which LIBOR Period shall, at the option of the Borrower,
be one, two, three or six months (or, with the consent of each Lender, nine or twelve months).
Notwithstanding anything to the contrary contained above:




22









 






          (a) the initial LIBOR Period for any Borrowing of LIBOR Loans shall commence on the
date of such Borrowing (including the date of any conversion from a Borrowing of ABR Loans)
and each LIBOR Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding LIBOR Period expires;




          (b) if any LIBOR Period relating to a Borrowing of LIBOR Loans begins on the last
Business Day of a calendar month or begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR Period, such LIBOR Period
shall end on the last Business Day of the calendar month at the end of such LIBOR Period;




          (c) if any LIBOR Period would otherwise expire on a day that is not a Business Day,
such LIBOR Period shall expire on the next succeeding Business Day; provided that if any
LIBOR Period in respect of a LIBOR Loan would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further Business Day occurs in such
month, such LIBOR Period shall expire on the next preceding Business Day; and




          (d) the Borrower shall not be entitled to elect any LIBOR Period in respect of any
LIBOR Loan if such LIBOR Period would extend beyond the Maturity Date.



          2.10 Increased Costs, Illegality, etc.




          (a) In the event that any Lender shall have reasonably determined (which determination shall,
absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto):





          (i) on any date for determining LIBOR for a Borrowing of LIBOR Loans for any LIBOR
Period that by reason of any changes arising on or after the date hereof affecting the
London interbank market (x) deposits in Dollars in the principal amounts of the Loans
comprising such Borrowing are not readily available to such Lender in the London interbank
market or (y) adequate and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of LIBOR; or




          (ii) at any time, that such Lender shall incur increased costs or reductions in the
amounts received or receivable hereunder with respect to any LIBOR Loans (other than any
such increase or reduction attributable to taxes) because of (x) any change since the date
hereof in any applicable law, governmental rule, regulation, guideline or order (or in the
interpretation or administration thereof and including the introduction of any new law or
governmental rule, regulation, guideline or order), such as, for example, but not limited
to, a change in official reserve requirements (including any reserve requirements specified
under regulations issued from time to time by the F.R.S. Board and then applicable to assets
or liabilities consisting of and including “Eurocurrency Liabilities” as therein defined),
and/or (y) other circumstances affecting the London interbank market; or



23









 






          (iii) at any time, that the making or continuance of any LIBOR Loan has become unlawful
by compliance by such Lender in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule, regulation, guideline
or order not having the force of law even though the failure to comply therewith would not
be unlawful), or has become impracticable as a result of a contingency occurring after the
date hereof that materially and adversely affects the London interbank market;


then, and in any such event, such Lender shall within a reasonable time thereafter give notice (if
by telephone confirmed in writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to each of the other
Lenders). Thereafter (x) in the case of clause (i) above, LIBOR Loans shall no longer be available
from such Lender (and such Lender’s obligation to make such Loans shall be suspended) until such
time as such Lender notifies the Administrative Agent, the Borrower and the Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer exist (which notice
such Lender agrees to give at such time when such circumstances no longer exist), and any Notice of
Borrowing or Notice of Continuation given by the Borrower with respect to LIBOR Loans that have not
yet been incurred shall be deemed, with respect to such Lender only, to be a Notice of Borrowing or
Notice of Continuation for ABR Loans, (y) in the case of clause (ii) above, the Borrower shall pay
to such Lender, promptly after receipt of written demand therefor, such additional amounts (in the
form of an increased rate of, or a different method of calculating, interest or otherwise as such
Lender in its reasonable discretion shall determine) as shall be required to compensate such Lender
for such increased costs or reductions in amounts receivable hereunder (it being agreed that a
written notice as to the additional amounts owed to such Lender, showing in reasonable detail the
basis for the calculation thereof, submitted to the Borrower by such Lender shall, absent clearly
demonstrable error, be final and conclusive and binding upon all parties hereto) other than any
such increase or reduction attributable to taxes and (z) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 2.10(b) as promptly as possible and, in
any event, within the time period required by law.




          (b) At any time that any LIBOR Loan is affected by the circumstances described in Section
2.10(a)(ii) or 2.10(a)(iii), the Borrower may (and in the case of a LIBOR Loan affected pursuant to
Section 2.10(a)(iii) shall) either (i) if the affected LIBOR Loan is then being made pursuant to a
Borrowing by way of conversion into a LIBOR Loan, cancel said Borrowing by giving the
Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date
that the Borrower was notified by a Lender pursuant to Section 2.10(a)(ii) or 2.10(a)(iii), or (ii)
if the affected LIBOR Loan is then outstanding, upon at least three Business Days notice to the
Administrative Agent, require the affected Lender to convert each such LIBOR Loan into an ABR Loan;
provided that if more than one Lender is affected at any time, then all affected Lenders must be
treated in the same manner pursuant to this Section 2.10(b).




          (c) If, after the date hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, or compliance by a Lender or its parent with
any request or directive made or adopted after the date hereof regarding capital adequacy (whether
or not having the force of law) of any such Governmental Authority, has or would have




24









 







the effect of reducing the rate of return on such Lender’s or its parent’s capital or assets
as a consequence of such Lender’s commitments or obligations hereunder to a level below that which
such Lender or its parent could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender’s or its parent’s policies with respect to
capital adequacy), then from time to time, promptly after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as
will compensate such Lender or its parent for such reduction, it being understood and agreed,
however, that a Lender shall not be entitled to such compensation as a result of such Lender’s
compliance with, or pursuant to any request or directive to comply with, any such law, rule or
regulation as in effect on the date hereof. Each Lender, upon determining in good faith that any
additional amounts will be payable pursuant to this Section 2.10(c), will give prompt written
notice thereof to the Borrower, which notice shall set forth in reasonable detail the basis of the
calculation of such additional amounts, although the failure to give any such notice shall not,
subject to Section 2.13, release or diminish any of the Borrower’s obligations to pay additional
amounts pursuant to this Section 2.10(c) upon receipt of such notice.




          2.11 Compensation.




          If (a) any payment of principal of any LIBOR Loan, or any continuation of any LIBOR Loan, is
made by the Borrower (or a replacement Lender in the case of Section 12.7) to or for the account of
a Lender other than on the last day of the LIBOR Period for such LIBOR Loan pursuant to Section
2.5, 2.6, 2.10, 5.1 or 12.7, as a result of acceleration of the maturity of the Loans pursuant to
Article 10 or for any other reason, (b) any Borrowing of LIBOR Loans is not made as a result of a
withdrawn Notice of Borrowing, (c) any ABR Loan is not converted into a LIBOR Loan as a result of a
withdrawn Notice of Continuation, (d) any LIBOR Loan is not continued as a LIBOR Loan as a result
of a withdrawn Notice of Continuation or (e) any prepayment of principal of any LIBOR Loan is not
made as a result of a withdrawn notice of prepayment pursuant to Section 5.1, the Borrower shall,
after receipt of a written request by such Lender (which request shall set forth in reasonable
detail the basis for requesting such amount), pay to the Administrative Agent for the account of
such Lender any amounts required to compensate such Lender for any additional losses, costs or
expenses that such Lender may reasonably incur as a result of such payment, failure to convert,
failure to continue or failure to prepay, including any loss, cost or expense (excluding loss of
anticipated profits) actually incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such LIBOR Loan.




          2.12 Change of Lending Office.




          Each Lender agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.10(a)(ii), 2.10(a)(iii), 2.10(b) or 5.3 with respect to such Lender, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such
Lender) to designate another lending office for any Loans affected by such event; provided that
such designation is made on such terms that such Lender and its lending office suffer no economic,
legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 2.12 shall affect or postpone
any of the obligations of the Borrower or the right of any Lender provided in Section 2.10 or 5.3.




25









 








          2.13 Notice of Certain Costs.




          Notwithstanding anything in this Agreement to the contrary, to the extent any notice required
by Section 2.10, 2.11 or 5.3 is given by any Lender more than 180 days after such Lender has
knowledge (or should have had knowledge) of the occurrence of the event giving rise to the
additional cost, reduction in amounts, loss, tax or other additional amounts described in such
Sections, such Lender shall not be entitled to compensation under Section 2.10, 2.11 or 5.3, as the
case may be, for any such amounts incurred or accruing prior to the giving of such notice to the
Borrower.




ARTICLE 3

FEES




          3.1 Administrative Agent Fees.




          The Borrower agrees to pay to the Administrative Agent, for the benefit of the Administrative
Agent, the fees for acting as administrative agent in the amounts and on the dates previously
agreed to in writing by the Borrower and the Administrative Agent, as amended from time to time by
agreement between the Administrative Agent and the Borrower.




          3.2 Other Agreed Fees.




          The Borrower agrees to pay to the Arranger, for the benefit of the Lenders, the fees in the
amounts and on the dates previously agreed to in writing by the Borrower and the Arranger.




ARTICLE 4

COMMITMENTS




          4.1 Voluntary Reduction of Commitments.




          Upon at least two Business Days’ prior written notice (or telephonic notice promptly confirmed
in writing) to the Administrative Agent (which notice the Administrative Agent shall promptly
transmit to each of the Lenders), the Borrower shall have the right, without premium or penalty, on
any day, to permanently terminate or reduce the Commitments in whole or in part; provided that (a)
any such reduction shall apply proportionately and permanently to reduce the Commitment of each of
the Lenders and (b) any partial reduction pursuant to this Section 4.1 shall be in the amount of at
least $1,000,000.




          4.2 Mandatory Termination of Commitments.




          Except to the extent previously terminated, the Commitments shall terminate at 5:00 p.m. (New
York time) on the earliest to occur of (a) the last day of the Availability Period, (b) the date on
which the Borrower notifies the Administrative Agent in writing that it has abandoned the
Acquisition and (c) the Closing Date.




26









 





ARTICLE 5

PAYMENTS




          5.1 Prepayments.




          (a) Optional Prepayments. The Borrower shall have the right to prepay any Borrowing, without
premium or penalty, in whole or in part at any time and from time to time. Prepayments of Loans
under this Section 5.1(a) or under Section 5.1(b) shall be subject to the following conditions: (a)
the Borrower shall give the Administrative Agent written notice (or telephonic notice promptly
confirmed in writing) of its intent to make such prepayment, the amount of such prepayment and (in
the case of LIBOR Loans) the specific Borrowing(s) to be prepaid, which notice shall be given by
the Borrower no later than 10:00 a.m. (New York time) three Business Days prior to the date of such
prepayment and shall promptly be transmitted by the Administrative Agent to each of the Lenders;
(b) each partial prepayment made in accordance with this Section 5.1(a) shall be in an amount that
is a multiple of $100,000 and in an aggregate principal amount of at least $5,000,000; provided
that no such partial prepayment of LIBOR Loans made pursuant to a single Borrowing shall reduce the
outstanding LIBOR Loans made pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount for LIBOR Loans; and (c) any prepayment of LIBOR Loans pursuant to this Section
5.1(a) or Section 5.1(b) on any day other than the last day of an LIBOR Period applicable thereto
shall be subject to compliance by the Borrower with the applicable provisions of Section 2.11;
provided further that at the Borrower’s election in connection with any prepayment pursuant to this
Section 5.1(a), such prepayment shall not be applied to any Loan of a Defaulting Lender.




          (b) Mandatory Prepayments.





          (i) Equity Issuance. Upon the receipt by the Borrower, Newco or any of Newco’s
Subsidiaries after the Closing Date of the Net Available Proceeds of any Equity Issuance,
the Borrower shall prepay such portion (if any) of the aggregate outstanding principal
amount of the Loans as exceeds $540,000,000, in an aggregate principal amount equal to 100%
of the Net Available Proceeds of such Equity Issuance, with each such prepayment to be
applied as provided in Section 5.1(c); provided that, with respect to any Equity
Issuance by Newco to a Person who is not an Affiliate, the Borrower shall prepay the Loans
in an aggregate principal amount equal to 100% of the Net Available Proceeds of such Equity
Issuance.




          (ii) Debt Incurrence. Upon the receipt by the Borrower, Newco or any of
Newco’s Subsidiaries after the Closing Date of the Net Available Proceeds of any Debt
Incurrence the Borrower shall prepay the outstanding Loans in an aggregate principal amount
equal to 100% of the Net Available Proceeds of such Debt Incurrence, with each such
prepayment to be applied as provided in Section 5.1(c).



          (c) Application. Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing.




27









 








          5.2 Method and Place of Payment.




          (a) Except as otherwise specifically provided herein, all payments to be made by the Borrower
under this Agreement shall be made, without set-off, counterclaim or deduction of any kind, to the
Administrative Agent for the ratable account of all the Lenders, not later than 12:00 Noon (New
York time) on the date when due. Such payments shall be made in immediately available funds at the
office of the Administrative Agent from time to time notified by the Administrative Agent to the
Borrower (but initially the office set forth for the Administrative Agent in Section 12.2(a)(ii)),
it being understood that written or facsimile notice by the Borrower to the Administrative Agent to
make a payment from the funds in the Borrower’s account at an office of the Administrative Agent
shall constitute the making of such payment to the extent of such funds held in such account. The
Administrative Agent will thereafter cause to be distributed on the same day (if payment was
actually received by the Administrative Agent prior to 2:00 p.m. (New York time) on such day,
otherwise the next Business Day) like funds relating to the payment of principal or interest or
Fees ratably to the Lenders entitled thereto. A payment shall be deemed to have been made by the
Administrative Agent on the date on which it is required to be made under this Agreement if the
Administrative Agent has, on or before such date, taken steps to make such payment in accordance
with the regulations or operating procedures of the clearing or settlement system used by the
Administrative Agent in order to make such payment.




          (b) Any payments under this Agreement that are made later than 2:00 p.m. (New York time) shall
be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the due date thereof shall
be extended to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect immediately prior
to such extension.




          5.3 Net Payments.




          (a) (i) All payments made by the Borrower under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any current or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding
(i) net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender and (ii) any taxes imposed on the Administrative Agent or any
Lender as a result of a current or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such connection arising solely
from the Administrative Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement) (“Taxes”) except to the
extent that such deduction or withholding is required by any applicable law, as modified by the
administrative practice of any relevant Governmental Authority then in effect. If any such Taxes
are required to be withheld from any amounts payable to the Administrative Agent or any Lender
hereunder, the Borrower shall:





          (A) promptly notify the Administrative Agent of such requirement;



28









 






          (B) promptly pay to the relevant Governmental Authority when due the full
amount required to be deducted or withheld (including the full amount of Taxes
required to be deducted or withheld from any additional amount paid by such Borrower
to the Administrative Agent or such Lender under this Section 5.3(a);




          (C) as promptly as possible thereafter, forward to the Administrative Agent and
such Lender an official receipt (or a certified copy), or other documentation
reasonably acceptable to the Administrative Agent and such Lender, evidencing such
payment to such Governmental Authority; and




          (D) pay to the Administrative Agent or such Lender, in addition to the payment
to which the Administrative Agent or such Lender is otherwise entitled under this
Agreement, such additional amount as is necessary to ensure that the net amount
actually received by the Administrative Agent or such Lender (free and clear of any
such Taxes, whether assessed against the Borrower, the Administrative Agent or such
Lender) will equal the full amount the Administrative Agent or such Lender would
have received had no such deduction or withholding been required.




          (ii) If the Borrower fails to pay to the relevant Governmental Authority when due any
Taxes that it was required to deduct or withhold under this Section 5.3(a) in respect of any
payment to or for the benefit of the Administrative Agent or any Lender under this Agreement
or fails to furnish the Administrative Agent or such Lender, as applicable, with the
documentation referred to in Section 5.3(a) when required to do so, the Borrower shall
forthwith on demand fully indemnify the Administrative Agent or such Lender for any
incremental taxes, interest, costs or penalties that may become payable by the
Administrative Agent or such Lender as a result of such failure.




          (iii) The Borrower’s obligations under this Section 5.3(a) shall survive the
termination of this Agreement and the payment of the Loans and all other amounts payable
hereunder.



          (b) Notwithstanding Section 5.3(a), the Borrower shall not be required to indemnify or pay any
additional amounts in respect of withholding tax applicable to any amount payable under this
Agreement pursuant to Section 5.3(a) above to any Non-U.S. Lender, except if any such Loans were
assigned, participated or transferred to such Non-U.S. Lender at the request of the Borrower or
were assigned, participated or transferred to such Non-U.S. Lender following the occurrence of and
during the continuance of an Event of Default pursuant to Section 10.1 or 10.5.




          (c) Each Non-U.S. Lender shall:





          (i) deliver to the Borrower and the Administrative Agent two copies of either (x) in
the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”,
United States Internal Revenue Service Form W-8BEN, (together with a



29









 




certificate representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign corporation
related to the Borrower (within the meaning of Section 864(d)(4) of the Code)), or (y)
Internal Revenue Service Form W-8BEN or W-8ECI, in each case properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement;





          (ii) deliver to the Borrower and the Administrative Agent two further copies of any
such form or certification (or any applicable successor form) on or before the date that any
such form or certification expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the Borrower; and




          (iii) obtain such extensions of time for filing and complete such forms or
certifications as may reasonably be requested in writing by the Borrower or the
Administrative Agent;


unless, in any such case, any change in treaty, law or regulation, has occurred prior to the date
on which any such delivery would otherwise be required that renders any such form inapplicable or
would prevent such Lender from duly completing and delivering any such form with respect to it and
such Lender so advises the Borrower and the Administrative Agent. Each Person that shall become a
Participant pursuant to Section 12.6 or a Lender pursuant to Section 12.6 shall, upon the
effectiveness of the related transfer, be required to provide all the forms and statements required
pursuant to this Section 5.3(c), provided that in the case of a Participant such Participant shall
furnish all such required forms and statements to the Lender from which the related participation
shall have been purchased.




          (d) If the Borrower determines in good faith that a reasonable basis exists for contesting any
taxes for which indemnification has been demanded hereunder, the relevant Lender or the
Administrative Agent, as applicable, shall cooperate with the Borrower in challenging such taxes at
the Borrower’s expense if so requested by the Borrower. If any Lender or the Administrative Agent,
as applicable, receives a refund of, or credit for, a Tax for which a payment has been made by the
Borrower pursuant to this Agreement, which refund or credit in the good faith judgment of such
Lender or the Administrative Agent, as the case may be, is attributable to such payment made by the
Borrower, then the Lender or the Administrative Agent, as the case may be, shall reimburse the
Borrower for such amount as the Lender or the Administrative Agent, as the case may be, determines
to be the proportion of the refund or credit as will leave it, after such reimbursement, in no
better or worse position than it would have been in if the payment had not been required. A Lender
or Administrative Agent shall claim any refund or credit that it determines is available to it,
unless it concludes in its reasonable discretion that it would be adversely affected by making such
a claim. Neither such Lender nor the Administrative Agent shall be obliged to disclose any
information regarding its tax affairs or computations to the Borrower in connection with this
paragraph (d) or any other provision of this Section 5.3.




30









 








          5.4 Computations of Interest and Fees.




          (a) All interest and fees hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the ABR at times when the ABR is based on the prime
rate of the Administrative Agent shall be computed on the basis of a year of 365 days (or 366 days
in a leap year), and in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable ABR or LIBOR rate shall be determined by
the Administrative Agent, and such determination shall be conclusive absent manifest error.




          (b) All interest payments to be made under this Agreement shall be paid without allowance or
deduction for deemed re-investment or otherwise, both before and after maturity and before and
after default and/or judgment, if any, until payment of the amount on which such interest is
accruing, and interest will accrue on overdue interest, if any.




          (c) The amount of costs and expenses required to be paid or reimbursed by the Borrower
pursuant to Section 12.5 or any other provision of this Agreement shall bear interest until paid,
as well after as before demand, default, maturity and judgment, at the highest rate provided for in
Section 2.8(c).




          (d) If interest is not paid on the indebtedness of the Borrower to the Lenders hereunder, or
any part thereof, as and when interest is due and payable hereunder, unpaid interest shall bear
interest until paid, as well after as before demand, default, maturity and judgment, at the rates
provided for in Section 2.8(c).




ARTICLE 6

CONDITIONS PRECEDENT




          The effectiveness of Section 2.1(a) shall be subject to satisfaction of the following
conditions precedent on or before December 31, 2007:





          (a) Credit Agreement. The Administrative Agent shall have received this Agreement,
executed and delivered by a duly authorized officer of each of the parties hereto.




          (b) Closing Certificate. The Administrative Agent shall have received a certificate of
the Borrower, dated the Closing Date, substantially in the form of Exhibit C, with
appropriate insertions, executed by the President or any Vice President and the Secretary or
any Assistant Secretary of the Borrower.




          (c) Proceedings of the Borrower. The Administrative Agent shall have received a copy
of the resolutions, in form and substance satisfactory to the Administrative Agent, of the
Board of Directors of the Borrower (or a duly authorized committee thereof) authorizing (a)
the execution, delivery and performance of this Agreement (and any agreements relating
thereto) and (b) the extensions of credit contemplated hereunder.



31









 






          (d) Organic Documents. The Administrative Agent shall have received true and complete
copies of the articles of incorporation and by-laws of the Borrower and a certificate of
good standing with respect to the Borrower issued by its jurisdiction of incorporation or
organization.




          (e) Fees. The Administrative Agent shall have received the fees referred to in Section
3.1 to be received on the Closing Date.




          (f) Consummation of Acquisition. The Acquisition shall have been consummated
substantially in accordance with the Asset Sale Agreement, subject to such amendments
thereto or waivers thereof as are not adverse to the interests of the Lenders in any
material respect or which have been reasonably agreed to by the Arranger.




          (g) Legal Opinions. The Administrative Agent shall have received in form and substance
reasonably satisfactory to it the executed legal opinions, each dated the Closing Date, of
(i) special New York counsel to the Borrower with respect to the status and capacity of the
Borrower, the due authorization, execution and delivery of this Agreement by the Borrower,
the validity, binding effect, legality and enforceability of this Agreement, compliance with
the Organic Documents of the Borrower and with applicable law and such other matters as the
Arranger may reasonably request in form and substance satisfactory to the Arranger (and the
Borrower hereby requests such counsel to deliver such opinion), (ii) special Michigan
counsel to the Borrower with respect to the status and capacity of the Borrower, the due
authorization, execution and delivery of this Agreement by the Borrower, the validity,
binding effect, legality and enforceability of this Agreement, compliance with the Organic
Documents of the Borrower and with applicable law and such other matters as the Arranger may
reasonably request in form and substance satisfactory to the Arranger (and the Borrower
hereby requests such counsel to deliver such opinion) and (iii) Milbank, Tweed, Hadley &
McCloy LLP, special New York counsel to the Arranger (and the Arranger hereby instructs such
counsel to deliver such opinion to the Lenders).




          (h) No Default; Representations and Warranties. At the time of making the Loans on the
Closing Date and also after giving effect thereto (i) there shall exist no Default or Event
of Default and (ii) all representations and warranties made by the Borrower contained in
Sections 7.2, 7.12 and 7.13 shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of the Closing
Date (except where such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall have been true and correct in all
material respects as of such earlier date).




          (i) Notice of Borrowing. The Administrative Agent shall have received a Notice of
Borrowing (whether in writing or by telephone) meeting the requirements of Section 2.3.



               The obligation of any Lender to make its initial extension of credit hereunder is also subject
to the payment by the Borrower of such fees as the Borrower shall have agreed to pay to any Lender
or the Administrative Agent in connection herewith.



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ARTICLE 7

REPRESENTATIONS AND WARRANTIES




          In order to induce the Lenders to enter into this Agreement and to make the Loans as provided
for herein, the Borrower (as to itself and each of its Subsidiaries) makes the following
representations and warranties to, and agreements with, the Lenders, all of which shall survive the
execution and delivery of this Agreement and the making of the Loans.




          7.1 Organizational Status.




          The Borrower is validly organized and existing and in good standing under the laws of the
state or jurisdiction of its incorporation or organization, is duly qualified to do business and is
in good standing as a foreign entity in each jurisdiction where the nature of its business requires
such qualification (except where the failure to be so qualified could not reasonably be expected to
result in a Material Adverse Effect), and has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and perform its obligations under
this Agreement, to own and hold under lease its property and to conduct its business substantially
as currently conducted by it.




          7.2 Capacity, Power and Authority.




          The Borrower has the capacity, power and authority to execute, deliver and carry out the terms
and provisions of this Agreement and has taken all necessary action, partnership, corporate or
otherwise, to authorize the execution, delivery and performance of this Agreement. The Borrower
has duly executed and delivered this Agreement and this Agreement constitutes the legal, valid and
binding obligation of the Borrower enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors’ rights generally and subject to general principles of equity.




          7.3 No Violation.




          Neither the execution, delivery nor performance by the Borrower of this Agreement nor
compliance with the terms and provisions thereof and the other transactions contemplated therein
will (a) contravene any applicable provision of any material law, statute, rule, regulation, order,
writ, injunction or decree of any court or Governmental Authority, (b) result in any breach of any
of the terms, covenants, conditions or provisions of, or constitute a default under, or result in
the creation or imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of the Borrower or any of its Subsidiaries pursuant to, the terms of any
material indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other
material instrument to which the Borrower or any of its Subsidiaries is a party or by which it or
any of its property or assets is bound or (c) violate any provision of the Borrower’s Organic
Documents.




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          7.4 Litigation.




          There are no actions, suits or proceedings pending or, to the knowledge of the Borrower or any
Subsidiary (after due internal inquiry), threatened with respect to the Business, the Borrower or
any of its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect.




          7.5 Governmental Approvals.




          No order, consent, approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or notice to, any Governmental Authority (other than those that
have been, or on the Closing Date will be, obtained and in full force and effect) is required to
authorize or is required in connection with (a) the execution, delivery and performance of this
Agreement and (b) the legality, validity, binding effect or enforceability of this Agreement.




          7.6 True and Complete Disclosure.




          To the knowledge of the Borrower, after due inquiry:





          (a) All factual information and data (taken as a whole) heretofore or contemporaneously
furnished (other than any projections and pro forma financial information), by or on behalf
of the Borrower or any of its Subsidiaries or any of their respective authorized
consultants, agents or representatives in writing to the Administrative Agent and/or any
Lender on or before the Closing Date (including all information contained in this Agreement)
for purposes of or in connection with this Agreement or any transaction contemplated herein
was true and complete in all material respects on the date as of which such information or
data is dated or certified and did not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements contained therein,
taken as a whole, not materially misleading at such time in light of the circumstances under
which such statements were made.




          (b) The projections and pro forma financial information contained in the information
and data referred to in paragraph (a) above were prepared in good faith based upon
assumptions believed by such Persons to be reasonable at the time made, it being recognized
by the Lenders that such projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any such projections may differ
from the projected results.



          7.7 Financial Condition; Financial Statements.




          The Borrower has heretofore furnished to the Lenders the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of the fiscal years ended December 31, 2005 and
December 31, 2006 and the related consolidated statement of operations for such fiscal years, and
the related consolidated statement of cash flows for such fiscal years. Such financial statements
present fairly in all material respects the consolidated financial position and results of
operations and cash flows of the Borrower and its Subsidiaries as of such dates and for such



34









 






periods in accordance with GAAP consistently applied, subject to year-end audit adjustments
and the absence of footnotes.




          7.8 Tax Returns and Payments.




          Each of the Borrower and its Subsidiaries has filed all material tax returns, domestic and
foreign, required to be filed by it and has paid all material taxes and assessments payable by it
that have become due, other than those not yet delinquent or contested in good faith. The Borrower
and each of its respective Subsidiaries have paid, or have provided adequate reserves (in the good
faith judgment of the management of the Borrower) in accordance with GAAP for the payment of, all
material income taxes applicable for all prior fiscal years and for the current fiscal year to the
Closing Date.




          7.9 Environmental Matters.




          Except as set forth in Schedule II:





          (a) Other than instances of noncompliance that could not reasonably be expected to have
a Material Adverse Effect: (i) the Borrower and each of its Subsidiaries are in compliance
with all Environmental Laws in all jurisdictions in which the Borrower and each of its
Subsidiaries are currently doing business (including having obtained all material permits
required under Environmental Laws) and (ii) the Borrower will comply and cause each of its
Subsidiaries to comply with all such Environmental Laws (including all permits required
under Environmental Laws); and




          (b) Neither the Borrower nor any of its Subsidiaries has treated, stored, transported
or disposed of Hazardous Materials at or from any currently or formerly owned Real Estate or
facility relating to its business in a manner that could reasonably be expected to have a
Material Adverse Effect.



          7.10 Properties.




          The Borrower and each of its Subsidiaries has good title to or a leasehold or easement
interest in all of its properties that are necessary for the operation of its respective business
as currently conducted and as proposed to be conducted, free and clear in each case of all Liens
(other than any Liens permitted by this Agreement) except where the failure to have such good title
could not reasonably be expected to have a Material Adverse Effect.




          7.11 Pension and Welfare Plans.




          During the twelve-consecutive-month period prior to the Closing Date, except as could not
reasonably be expected have a Material Adverse Effect, (a) no steps have been taken to terminate
any Pension Plan, (b) no contribution failure has occurred with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA, (c) no condition exists or event
or transaction has occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower or any member of the Controlled Group of any liability, fine or penalty and (d)
except as disclosed in Schedule III, neither the Borrower nor any member of the Controlled Group
has any contingent liability with respect to any post-retirement benefit under a




35









 







Welfare Plan, other than liability for continuation coverage described in Part 6 of Title I of
ERISA.




          7.12 Regulations U and X.




          Neither the making of any Loan hereunder nor the use of the proceeds thereof will violate the
provisions of F.R.S. Board Regulation U or Regulation X.




          7.13 Investment Company Act.




          Neither the Borrower nor any of its Subsidiaries is an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.




          7.14 No Material Adverse Change.




          There has been no material adverse change in the business, assets, operations, property or
financial condition of the Borrower and its Subsidiaries taken as a whole since December 31, 2006.




          7.15 Deemed Repetition of Representations and Warranties.




          The representations and warranties set out in Sections 7.1 to 7.13 (and, in the case of
Closing Date, section 7.14) inclusive will be deemed to be repeated by the Borrower on the Closing
Date and on the date of each request by the Borrower for a conversion or continuation of Borrowings
and as of the date on which a Successor Borrower assumes all of the obligations of the Borrower
under the Credit Documents pursuant to Section 9.2(a) (but after giving effect to such assumption)
except to the extent that on or prior to such date (a) the Borrower has advised the Administrative
Agent in writing of a variation in any such representation or warranty, and (b) the Required
Lenders have approved such variation, and except where such representations and warranties
expressly relate to an earlier date, in which case such representations and warranties shall have
been true and correct in all material respects as of such earlier date.




ARTICLE 8

AFFIRMATIVE COVENANTS




          The Borrower (on its own behalf and on behalf of each of its Subsidiaries) hereby covenants
and agrees that on the Closing Date and thereafter, for so long as this Agreement is in effect and
until the Maturity Date:




          8.1 Information Covenants.




          The Borrower will furnish to each Lender and the Administrative Agent:





          (a) Annual Financial Statements. As soon as available and in any event on or before
the date that is 90 days after the end of each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and its Subsidiaries and Newco and its Subsidiaries as at the
end of such fiscal year and the related consolidated statement of operations and cash flows
for such fiscal year prepared in accordance with GAAP, setting



36









 






forth comparative consolidated figures for the preceding fiscal year, and certified by
independent chartered accountants of recognized national standing whose opinion shall not be
qualified as to the scope of audit or as to the status of the Borrower or any of its
Subsidiaries as a going concern, together in any event with a certificate of such accounting
firm stating that in the course of its regular audit of the business of the Borrower and its
Subsidiaries, which audit was conducted in accordance with generally accepted auditing
standards, such accounting firm has obtained no knowledge of any Default or Event of Default
relating to Section 9.4 that has occurred and is continuing or, if in the opinion of such
accounting firm such a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.




          (b) Quarterly Financial Statements. As soon as available and in any event on or before
the date that is 45 days after the end of each of the first three fiscal quarters in each
fiscal year of the Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries and Newco and its Subsidiaries as at the end of such fiscal quarter and the
related consolidated statement of operations for such fiscal quarter and for the elapsed
portion of the fiscal year ended with the last day of such fiscal quarter, and the related
consolidated statement of cash flows for such fiscal quarter and for the elapsed portion of
the fiscal year ended with the last day of such fiscal quarter, and setting forth
comparative consolidated figures for the related periods in the prior fiscal year or, in the
case of such consolidated balance sheet, for the last day of the prior fiscal year, and
prepared in accordance with GAAP, all of which shall be certified by an Authorized Officer
of the Borrower, subject to changes resulting from audit and normal year-end audit
adjustments.




          (c) Officer’s Certificates. At the time of the delivery of the financial statements
provided for in Sections 8.1(a) and (b), a certificate of an Authorized Officer of the
Borrower in substantially the form of Exhibit C (a “Compliance Certificate”) to the effect
that no Default or Event of Default exists or, if any Default or Event of Default does
exist, specifying the nature and extent thereof, which certificate shall be in form and
detail satisfactory to the Administrative Agent, acting reasonably, and setting forth the
calculations required to establish whether the Borrower was in compliance with the
provisions of Section 9.4 as at the end of such fiscal year or period, as the case may be.




          (d) Notice of Default or Litigation. Promptly after an Authorized Officer of the
Borrower or any of its Subsidiaries obtains knowledge thereof, notice of (i) the occurrence
of any event that constitutes a Default or Event of Default, which notice shall specify the
nature thereof, the period of existence thereof and what action the Borrower proposes to
take with respect thereto and (ii) any litigation or governmental proceeding pending or
threatened against the Borrower or any of its Subsidiaries that could reasonably be expected
to result in a Material Adverse Effect, together with a certificate of the Chief Financial
Officer of the Borrower (in detail reasonably satisfactory to the Administrative Agent)
setting forth the calculations required to establish whether the Borrower and its
Subsidiaries are in pro forma compliance with Section 9.4 of this Agreement.




          (e) Environmental Matters. Promptly after an Authorized Officer of the Borrower or any
of its Subsidiaries obtains knowledge or notice of any one or more of the



37









 






following environmental matters, unless such environmental matters would not,
individually or when aggregated with all other such matters, be reasonably expected to
result in a Material Adverse Effect:




          (i) Any pending or threatened Environmental Claim against the Borrower or any
of its Subsidiaries or any Real Estate (as defined below);




          (ii) Any condition or occurrence that (x) results in non-compliance by the
Borrower or any of its Subsidiaries with any applicable Environmental Law or (y)
could reasonably be anticipated to form the basis of an Environmental Claim against
the Borrower or any of its Subsidiaries or any Real Estate;




          (iii) Any condition or occurrence on any Real Estate that could reasonably be
anticipated to cause such Real Estate to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Real Estate under any
Environmental Law; and




          (iv) The taking of any removal or remedial action in response to the actual or
alleged presence of any Hazardous Material on any Real Estate.




          All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and Borrower’s response
thereto. The term “Real Estate” shall mean land, buildings and improvements owned or leased
by the Borrower or any of its Subsidiaries, but excluding all operating fixtures and
equipment, whether or not incorporated into improvements.




          (f) Pension Plans. Promptly after an Authorized Officer of the Borrower or any of its
Subsidiaries obtains knowledge thereof where the liability, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect, notice of
and copies of all documentation relating to (i) the institution of any steps by any Person
to terminate any Pension Plan, (ii) the failure to make a required contribution to any
Pension Plan if such failure is sufficient to give rise to a Lien under Section 302(f) of
ERISA, (iii) the taking of any action with respect to a Pension Plan which could result in
the requirement that the Borrower or any of its Subsidiaries furnish a bond or other
security to such Pension Plan, or (iv) the occurrence of any event with respect to any
Pension Plan which could result in the incurrence by the Borrower or any of its Subsidiaries
of any material liability, fine or penalty.




          (g) Other Information. Promptly upon filing thereof, copies of any filings or
registration statements with, and reports to, any Governmental Authority in any relevant
jurisdiction by the Borrower or any of its Subsidiaries pursuant to applicable securities
laws (other than amendments to any registration statement (to the extent such registration
statement, in the form it becomes effective, is delivered to the Lenders), exhibits to any
registration statement) and copies of all financial statements, proxy statements, notices
and reports that the Borrower or any of its Subsidiaries shall send to the holders of any
publicly issued securities of the Borrower and/or any of its Subsidiaries in their capacity
as such holders (in each case to the extent not theretofore delivered to the Lenders



38









 




pursuant to this Agreement) and, with reasonable promptness, such other information
(financial or otherwise) as the Administrative Agent on its own behalf or on behalf of any
Lender may reasonably request in writing from time to time.




          8.2 Books, Record and Inspections.




          The Borrower will, and will cause each of its Subsidiaries to, (i) permit officers and
designated representatives of the Administrative Agent or the Required Lenders to visit and inspect
any of the properties or assets of the Borrower and its Subsidiaries in whomever’s possession to
the extent that it is within the Borrower’s or such Subsidiary’s control to permit such inspection,
and to examine the books of account of the Borrower and any such Subsidiary and discuss the
affairs, finances and accounts of the Borrower and of any such Subsidiary with, and be advised as
to the same by, its and their officers and independent accountants, and (ii) permit officers and
designated representatives of Lenders to view copies of contracts of the Borrower and its
Subsidiaries (subject to reasonable confidentiality arrangements established by the Borrower), all
at such reasonable times during normal business hours and intervals and to such reasonable extent
as the Administrative Agent, the Required Lenders or the Lenders, as the case may be, may desire.




          8.3 Maintenance of Insurance.




          The Borrower will, and will cause each of its Subsidiaries to, at all times maintain in full
force and effect, with insurance companies that the Borrower believes (in the good faith judgment
of the management of the Borrower) are financially sound and responsible at the time the relevant
coverage is placed or renewed, insurance in at least such amounts and against at least such risks
(and with such risk retentions) as are usually insured against in the same general area by
companies engaged in the same or a similar business.




          8.4 Payment of Taxes.




          The Borrower will pay and discharge, and will cause each of its Subsidiaries to pay and
discharge, all material taxes, assessments and governmental charges or levies imposed upon it or
upon its capital, income or profits, or upon any properties belonging to it, prior to the date on
which material penalties attach thereto, and all lawful material claims that, if unpaid, could
reasonably be expected to become a material Lien upon any properties of the Borrower or any of its
Subsidiaries; provided that neither the Borrower nor any of its Subsidiaries shall be required to
pay any such tax, assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings if it has maintained adequate reserves (in the good faith judgment of the
management of the Borrower) with respect thereto in accordance with GAAP.




          8.5 Organizational Existence.




          The Borrower will do, and will cause each of its Subsidiaries to do, or cause to be done, all
things necessary to preserve and keep in full force and effect its existence and its corporate or
other organizational rights and authority, except to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect; provided that the Borrower and its
Subsidiaries may consummate any transaction permitted under Section 9.2.




39









 








          8.6 Compliance with Statutes, Obligations, etc.




          The Borrower will, and will cause each of its Subsidiaries to, comply with all applicable
laws, rules, regulations and orders (including Environmental Laws), except to the extent the
failure to do so could not reasonably be expected to have a Material Adverse Effect.




          8.7 Good Repair.




          The Borrower will, and will cause each of its Subsidiaries to, ensure that its properties and
equipment used or useful in its business in whomever’s possession they may be to the extent that it
is within the Borrower’s or its Subsidiary’s control to cause the same, are kept in good repair,
working order and condition, normal wear and tear excepted, and that from time to time there are
made in such properties and equipment all needful and proper repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto, to the extent and in the manner
customary for companies in similar businesses and consistent with third party leases, except in
each case to the extent the failure to do so could not be reasonably expected to have a Material
Adverse Effect.




          8.8 Transactions with Affiliates.




          The Borrower will conduct, and will cause each of its Subsidiaries to conduct, all
transactions with any of its Affiliates on terms that are substantially as favorable to the
Borrower or such Subsidiary as it would obtain in a comparable arm’s-length transaction with a
Person that is not an Affiliate; provided that the foregoing restrictions shall not apply to (a)
transactions in the ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower or such Subsidiary than could be obtained on an arm’s length basis from
unrelated third parties, (b) transactions between and among the Borrower and its wholly owned
Subsidiaries that do not involve any other Affiliate and (c) transactions permitted by Section 9.2.




          8.9 End of Fiscal Years; Fiscal Quarters.




          The Borrower will, for financial reporting purposes, cause (a) each of its, and each of its
Subsidiaries’, fiscal years to be comprised of twelve calendar months ending on December 31 of each
year and (b) each of its, and each of its Subsidiaries’, fiscal quarters to end on dates consistent
with such fiscal year-end; provided that the Borrower may, upon written notice to the
Administrative Agent, change the financial reporting convention specified above to any other
financial reporting convention reasonably acceptable to the Administrative Agent, in which case the
Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any
adjustments to this Agreement that are necessary in order to reflect such change in financial
reporting.




          8.10 Use of Proceeds.




          The Borrower will use the proceeds of all the Loans only for the purposes set forth in Section
2.1(b).




40









 








          8.11 Changes in Business.




          From the Closing Date, the Borrower and its Subsidiaries taken as a whole will not
fundamentally and substantively alter the character of their business taken as a whole from the
business conducted by the Borrower and its Subsidiaries taken as a whole on the Closing Date
following the consummation of the Transactions and other business activities incidental or related
to any of the foregoing (the “Business”).




ARTICLE 9

NEGATIVE COVENANTS




          The Borrower (on its own behalf and on behalf of each of its Subsidiaries) hereby covenants
and agrees that on the Closing Date and thereafter until the Maturity Date:




          9.1 Limitation on Liens.




          The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume
or suffer to exist any Lien upon any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any of its Subsidiaries, whether now owned or hereafter acquired,
except:





          (a) Permitted Liens;




          (b) Liens (i) on assets of ITC (of the same type as constitute collateral under the ITC
First Mortgage Indenture on the date hereof) to secure Indebtedness of ITC under the ITC
First Mortgage Indenture, (ii) on assets of METC (of the same type as constitute collateral
under the METC First Mortgage Indenture on the date hereof) to secure Indebtedness of METC
under the METC First Mortgage Indenture and (iii) on assets of any other Subsidiary (of the
same type that constitute collateral under the ITC First Mortgage Indenture and/or the METC
First Mortgage Indenture on the date hereof) to secure Indebtedness of any Subsidiary under
any similar mortgage bond indenture;




          (c) Liens existing on the Closing Date and as set out on Schedule IV;




          (d) Liens existing on the assets or Capital Stock of any Person that becomes a
Subsidiary, or existing on assets acquired; provided that such Liens attach at all times
only to the same assets that such Liens attached to and secure only the same Indebtedness
that such Liens secured, immediately prior to such acquisition;




          (e) Liens in favor of the Borrower or any Subsidiary;




          (f) Liens in favor of the United States of America or any State thereof, or any
department, agency or instrumentality or political subdivision of the United States of
America or any State thereof or political entity affiliated therewith, to secure partial,
progress, advance or other payments, or other obligations, pursuant to any contract or
statute to secure any Indebtedness incurred for the purpose of financing all or any part of



41









 






the cost of acquiring, constructing or improving property subject to such Liens
(including Liens incurred in connection with pollution control, industrial revenue or
similar financings);




          (g) Liens on any property created, assumed or otherwise brought into existence in
contemplation of the sale or other disposition of the underlying property, whether directly
or indirectly, by way of share disposition or otherwise; provided that 180 days from the
creation of such Liens the Borrower or the relevant Subsidiary shall have disposed of such
property and any Indebtedness secured by such Liens shall be without recourse to the
Borrower or any Subsidiary;




          (h) Rights of other Persons to take minerals, timber, gas, water or other products
produced by the Borrower or by other Persons on the property of the Borrower;




          (i) Liens created by or resulting from any litigation or other proceeding which is
being contested in good faith by appropriate proceedings, including Liens arising out of
judgments or awards against the Borrower or any Subsidiary with respect to which the
Borrower or such Subsidiary is in good faith prosecuting an appeal or proceedings for
review; or Liens that the Borrower or any Subsidiary incurs for the purpose of obtaining a
stay or discharge in the course of any litigation or other proceeding to which the Borrower
or such Subsidiary is a party;




          (j) Liens which have been bonded for the full amount in dispute;




          (k) additional Liens so long as the aggregate outstanding principal amount of the
obligations so secured does not exceed the greater of (x) 10% of Net Tangible Assets and (y)
10% of Consolidated Capitalization at any time;




          (l) Liens on any property acquired, constructed or improved by the Borrower or any
Subsidiary after the date hereof which are created or assumed contemporaneously with such
acquisition, construction or improvement, or within 270 days after the completion thereof,
to secure or provide for the payment of all or any part of the cost of such acquisition,
construction or improvement (including related expenditures capitalized for Federal income
tax purposes in connection therewith) incurred after the date hereof; and




          (m) the replacement, extension or renewal of any Lien permitted by clauses (a) through
(l) above upon or in the same assets theretofore subject to such Lien or the replacement,
extension or renewal (without increase in the amount or change in any direct or contingent
obligor except to the extent otherwise permitted hereunder) of the Indebtedness secured
thereby.



          9.2 Limitation on Fundamental Changes.




          The Borrower will not enter into any merger or consolidation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all its business units, assets or other
properties, except that:




42









 






          (a) any Subsidiary of the Borrower or any other Person may be merged or consolidated
(including by way of liquidation or winding up) with or into the Borrower; provided that (i)
the Borrower shall be the continuing or surviving entity or, so long as after giving effect
to such merger or consolidation such Person’s debt rating shall be in “Category 5” or
higher, as determined pursuant to the definition of “Applicable Margin”, the Person formed
by or surviving any such merger or consolidation (if other than the Borrower) shall be an
entity organized or existing under the laws of the United States or any State thereof, (the
Borrower or such Person, as the case may be, being herein referred to as the “Successor
Borrower”), (ii) the Successor Borrower shall expressly assume all the obligations of the
Borrower under this Agreement pursuant to a supplement hereto in form and substance
reasonably satisfactory to the Administrative Agent, (iii) no Default or Event of Default is
then existing and no Default or Event of Default would result from the consummation of such
merger or consolidation, (iv) the Borrower shall be in compliance, on a pro forma basis
after giving effect to such merger or consolidation, with the covenants set forth in Section
9.4 as such covenants are recomputed as at the last day of the most recently ended fiscal
quarter as if such merger or consolidation had occurred on such day, and (v) the Borrower
shall have delivered to the Administrative Agent an officer’s certificate, in form and
substance reasonably satisfactory to the Administrative Agent, certifying the compliance
referred to in clause (iv) above and stating that such merger or consolidation and such
supplement to this Agreement comply with this Agreement and a legal opinion (in form and
substance reasonably satisfactory to the Administrative Agent) with respect to this
Agreement to be delivered, if any, pursuant to clause (ii) above; provided further that if
the foregoing are satisfied, the Successor Borrower (if other than the Borrower) will
succeed to, and be substituted for, the Borrower under this Agreement; and




          (b) the Borrower may enter into any merger or consolidation for the purpose of changing
its organizational form from a corporation to a limited liability company or from a limited
liability company to a corporation; provided that such change has no adverse affect on the
rights of the Finance Parties.



          9.3 Limitation on Dividends.




          If any Default or Event of Default then exists or would result therefrom, the Borrower will
not declare or pay any distributions (other than dividends payable solely in its capital stock) or
return any capital to its shareholders or make any other distribution, payment or delivery of
property or cash to its shareholders as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for consideration, any of its Capital Stock or the Capital Stock of any
direct or indirect shareholder of the Borrower now or hereafter outstanding (or any warrants for or
options or stock appreciation rights in respect of any of its Capital Stock), or set aside any
funds for any of the foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any Capital Stock of the Borrower, now or hereafter outstanding (or any
options or warrants or stock appreciation rights issued by such Person with respect to its Capital
Stock), provided that the Borrower may take any of the actions in this Section 9.3 so long as after
giving effect to such action the Borrower’s debt rating shall be in “Category 5” or higher, as
determined pursuant to the definition of “Applicable Margin”.




43









 








          9.4 Financial Covenants.




          (a) Total Debt to Capitalization Ratio. The Borrower will not permit the Total Debt to
Capitalization Ratio to be greater than 85% at any time on or after the Closing Date.




          (b) Newco Debt to Capitalization Ratio. The Borrower will not permit the Newco Debt to
Capitalization Ratio to be greater than 60% at any time on or after the Closing Date.




          9.5 Limitation on Sale-Lease Back Transactions.




          The Borrower will not enter into any sale-leaseback transaction (a “Sale and Leaseback
Transaction”) involving any of its property or assets whether now owned or hereafter acquired,
whereby the Borrower sells or otherwise transfers such property or assets and thereafter leases or
subleases such property or assets or any part thereof or any other property or assets that the
Borrower intends to use for substantially the same purpose or purposes as the property or assets
sold or otherwise transferred unless (a) the Borrower would be entitled to incur Indebtedness
secured by a Lien on such property or assets pursuant to Section 9.1 or (b) the Attributable Value
of all Sale and Leaseback Transactions entered into pursuant to this Section 9.5 does not exceed
$20,000,000. A Sale and Leaseback Transaction shall not be deemed to result in the creation of a
Lien.




ARTICLE 10

EVENTS OF DEFAULT




          Each of the following specified events or occurrences described in Sections 10.1 through 10.9
below shall constitute an “Event of Default”:




          10.1 Payments.




          The Borrower shall (a) default in the payment when due of any principal of the Loans or (b)
default, and such default shall continue for five or more days, in the payment when due of any
interest on the Loans or any Fees or of any other amounts owing hereunder.




          10.2 Representations, etc.




          Any representation, warranty or statement made or deemed made by the Borrower herein or any
certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed made (it being understood
that, for purposes of the foregoing, the truth of the representations and warranties set forth in
Section 7.6 shall be determined without reference to the knowledge of the Borrower).




          10.3 Covenants.




          The Borrower shall (a) default in the due performance or observance by it of any term,
covenant or agreement contained in Section 8.1(d), Section 8.11 or Article 9, or (b) default in the
due performance or observance by it of any term, covenant or agreement (other than those referred
to in Section 10.1 or 10.2 or clause (a) of this Section 10.3) contained in this Agreement




44









 







and such default shall continue unremedied for a period of at least 30 days after the receipt
of written notice by the Borrower from the Administrative Agent or the Required Lenders.




          10.4 Default Under Other Agreements.




          (a) The Borrower or any of its Subsidiaries shall (i) default in any payment with respect to
any Indebtedness, in excess of $15,000,000 in the aggregate, beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was created or (ii) default
in the observance or performance of any agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating thereto beyond the period
of grace, if any, provided in the instrument or agreement under which such Indebtedness was
created, or any other event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due
prior to its stated maturity; or




          (b) without limiting the provisions of clause (a) above, any such Indebtedness shall be
declared to be due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment or as a mandatory prepayment, prior to the stated maturity thereof.




          10.5 Bankruptcy, etc.




          The Borrower or any Material Subsidiary shall commence a voluntary case concerning itself
under the Bankruptcy Code as now or hereafter in effect, or any successor thereto or any similar
legislation in any other applicable jurisdiction (collectively, the “Bankruptcy Code”); or an
involuntary case is commenced against the Borrower or any Material Subsidiary and the petition or
application is not contested within 10 days after commencement of the case; or an involuntary case
is commenced against the Borrower or any Material Subsidiary and the petition or application is not
dismissed within 45 days after commencement of the case; or a receiver, trustee, liquidator,
custodian or similar official is appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any Material Subsidiary or the Borrower or any Material Subsidiary
commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Borrower or any Material Subsidiary itself; or there is
commenced against the Borrower or any Material Subsidiary any such proceeding that remains
undismissed for a period of 45 days; or the Borrower or any Material Subsidiary is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding
is entered; or the Borrower or any Material Subsidiary makes a general assignment for the benefit
of creditors, files under the Bankruptcy Act or takes a similar action under the Bankruptcy Act; or
any corporate or similar action is taken by the Borrower or any Material Subsidiary for the purpose
of effecting any of the foregoing; or the Borrower or any Material Subsidiary is unable to pay its
debts as they fall due, or makes a general assignment for the benefit of or a composition with its
creditors generally; or the Borrower or any Material Subsidiary takes any corporate or similar
action or other steps are taken or legal proceedings are started for its winding-up, dissolution,
administration or insolvent re-organization or for the appointment of a liquidator, administrator
or administrative receiver of it.




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          10.6 Non-ownership of Material Subsidiaries.




          The Borrower on any date is not the direct owner of 100% (or, if by reason of any Equity
Issuance by Newco, 95%) of the capital stock of Newco, or is not the direct or (through its
Subsidiaries) indirect owner of 100% of the capital stock of ITC or METC or at least 51% of the
capital stock of any of its other Material Subsidiaries or Newco is not the direct owner of 100% of
the capital stock of Interstate Power & Light.




          10.7 Judgments.




          One or more judgments or decrees shall be entered against the Borrower or any of its
Subsidiaries involving a liability of $15,000,000 or more in the aggregate for all such judgments
and decrees for the Borrower and its Subsidiaries (to the extent not paid or fully covered by
insurance provided by a carrier not disputing coverage) and any such judgments or decrees shall not
have been satisfied, vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof.




          10.8 Change of Ownership.




          A Change of Ownership shall occur.




          10.9 Pension Plans.




          Any of the following events shall occur with respect to any Pension Plan: (a) the institution
of any steps by the Borrower or any other Person to terminate a Pension Plan if, as a result of
such termination, the Borrower or any such member could be required to make a contribution to such
Pension Plan, or could reasonably expect to incur a liability or obligation to such Pension Plan in
respect of such termination; or (b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA, where in each case under clauses
(a) or (b) such contribution, liability, obligation or Lien would reasonably be expected to have a
Material Adverse Effect.




          10.10 Remedies.




          Upon the occurrence of any Event of Default described above, and in any such event, and at any
time thereafter, if any Event of Default shall then be continuing, the Administrative Agent shall,
upon the written request of the Required Lenders, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the Administrative Agent to
enforce its claims against the Borrower, except as otherwise specifically provided for in this
Agreement (provided that, if an Event of Default specified in Section 10.5 shall occur with respect
to the Borrower, the result that would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur automatically without
the giving of any such notice): (i) declare all of the Commitments terminated, whereupon the
Commitment of each Lender shall forthwith terminate immediately; (ii) declare the principal of and
any accrued interest in respect of all Loans and all obligations owing hereunder to be, whereupon
the same shall become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; and/or (iii) exercise any other
remedies that may be available under this Agreement or applicable law.





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     10.11 Remedies Cumulative.



     The rights and remedies of the Administrative Agent and the Lenders under this Agreement are
cumulative and are in addition to and not in substitution for any rights or remedies provided by
law or by equity, and any single or partial exercise by the Lenders of any right or remedy for a
default or breach of any term, covenant, condition or agreement herein contained shall not be
deemed to be a waiver of or to alter, affect, or prejudice any other right or remedy or other
rights or remedies to which the Lenders may be lawfully entitled for the same default or breach,
and any waiver by the Administrative Agent or the Lenders of the strict observance, performance or
compliance with any term, covenant, condition or agreement herein contained, and any indulgence
granted by the Administrative Agent or the Lenders shall be deemed not to be a waiver of any
subsequent default. In the event that the Administrative Agent or the Lenders shall have proceeded
to enforce any such right, remedy or power contained herein and such proceedings shall have been
discontinued or abandoned for any reason, by written agreement between the Lenders and the
Borrower, then in each such event the Borrower and the Lenders shall be restored to their former
positions and the rights, remedies and powers of the Lenders shall continue as if no such
proceedings had been taken.



ARTICLE 11

THE ADMINISTRATIVE AGENT




          Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers
as are delegated to the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.




          The bank serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.




          The Administrative Agent shall not have any duties or obligations except those expressly set
forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall
not be subject to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby that the Administrative Agent is required to exercise in writing as
directed by the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 12.1), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as provided in Section
12.1) or in the absence of its



47









 






own gross negligence or wilful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article 6 or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.




          The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any liability for relying
thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall not be liable for
any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.




          The Administrative Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding paragraphs
shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any
such sub-agent, and shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as Administrative Agent.




          Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent
of the Borrower (not to be unreasonably withheld), to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such appointment within 30
days after the retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 12.5



48









 






shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to be taken by any of
them while it was acting as Administrative Agent.




          Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any related agreement or any document furnished hereunder or thereunder.




          Notwithstanding anything herein to the contrary the Sole Bookrunner and the Sole Lead Arranger
named on the cover page of this Agreement shall not have any duties or liabilities under this
Agreement, except in its capacity, if any, as a Lender.




ARTICLE 12

MISCELLANEOUS




     12.1 Amendments and Waivers.



     Neither this Agreement, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 12.1. The Required Lenders may
from time to time (a) enter into with the Borrower and Administrative Agent, as applicable, written
amendments, supplements or modifications hereto for the purpose of adding or amending any
provisions to this Agreement or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder, (b) waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of the requirements
of this Agreement or any Default or Event of Default and its consequences; provided that no such
waiver and no such amendment, supplement or modification shall directly (i) forgive any portion of,
or extend or waive the final scheduled maturity date of, any Loan, or reduce the stated rate of,
forgive any portion of or extend the date for the payment of any interest payable hereunder (other
than as a result of waiving the applicability of any post-default increase in interest rates) or
extend the final expiration date of any Lender’s Commitment or increase the amount of any of the
Commitments of any Lender, in each case without the written consent of each Lender whose Loan,
interest or Commitment is changed as set forth above thereby, or (ii) amend, modify or waive any
provision of this Section 12.1 or reduce the percentages specified in the definitions of the terms
“Required Lenders” or consent to the assignment or transfer by the Borrower of its rights and
obligations under this Agreement (except as permitted pursuant to Section 9.2), in each case
without the written consent of each Lender, or (iii) amend, modify or waive any provision of
Article 11 without the written consent of the then-current Administrative Agent, or (iv) amend
Section 5.2(a) to the extent that it relates to payments for the ratable account of Lenders without
the written consent of each Lender directly and adversely affected thereby, in each case without
the written consent of all the Lenders except as otherwise specifically provided in this Section
12.1.



49









 





     Any such waiver and any such amendment, supplement or modification shall apply equally to each
of the affected Lenders and shall be binding upon the Borrower, such Lenders, the Administrative
Agent and all future holders of the affected Loans. In the case of any waiver, the Borrower, the
Lenders and the Administrative Agent shall be restored to their former positions and rights
hereunder, and any Default or Event of Default waived shall be deemed to be cured and not
continuing, it being understood that no such waiver shall extend to any subsequent or other Default
or Event of Default or impair any right consequent thereon.



     12.2 Notices.



     (a) Notices generally. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by facsimile transmission) and, unless
otherwise expressly provided herein, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given when received and,
if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is
received by the transmitter, in each case addressed as follows in the case of the Borrower, the
Administrative Agent and as set forth on Schedule I in the case of each Lender (or as set forth in
the Assignment and Acceptance of any Lender which is an Assignee) or to such other address as may
be hereafter notified by the respective parties hereto:




	 	(i)	 	The Borrower:




ITC Holdings Corp.

39500 Orchard Hill Place,

Suite 200

Novi, MI 48375



Attention: Edward Rahill

Facsimile No.: (248) 374-7129





	 	(ii)	 	The Administrative Agent:




Lehman Commercial Paper Inc.

745 Seventh Avenue

New York, New York 10019

Attention: Maritza Ospina

Facsimile No.: (646) 758-4648

Telephone: (212) 526-6590



provided that any notice, request or demand to or upon the Administrative Agent or the Lenders
pursuant to Sections 2.3, 2.6, 2.10, 4.1 and 5.1 shall not be effective until received.




     (b) Electronic Communications. The Borrower agrees that the Administrative Agent may make
communications available to the Lenders by posting such communications on Intralinks or a
substantially similar electronic transmission system (the “Platform”). THE PLATFORM IS
PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE
ACCURACY OR COMPLETENESS OF



50









 




THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF
THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN
CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR
ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS
OR REPRESENTATIVES (COLLECTIVELY, THE “AGENT PARTIES”) HAVE ANY LIABILITY TO THE BORROWER,
ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR
OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF
COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND
IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY
FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.




     12.3 No Waiver; Cumulative Remedies.



     No failure to exercise and no delay in exercising, on the part of the Administrative Agent or
any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.



     12.4 Survival of Representations and Warranties.



     All representations and warranties made hereunder and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.



     12.5 Payment of Expenses and Taxes.



     The Borrower agrees (a) to pay or reimburse the Arranger and the Administrative Agent for all
their reasonable and documented out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or modification to, this
Agreement and any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and thereby (including the
syndication of the Commitments), including the reasonable fees, disbursements and other charges of
one counsel to the Administrative Agent, (b) to pay or reimburse each Lender and the Administrative
Agent for all its reasonable and documented costs and expenses incurred in connection with the
enforcement or preservation of any rights under, or “workout” or restructuring of, this Agreement
and any such other documents, including the



51









 




reasonable fees, disbursements and other charges of counsel to each Lender and of counsel to
the Administrative Agent, (c) to pay, indemnify, defend and hold harmless each Lender and the
Administrative Agent from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any,
that may be payable or determined to be payable in connection with the execution and delivery of,
or consummation or administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of, this Agreement and
any such other documents, and (d) to pay, indemnify, defend and hold harmless each Lender, the
Arranger and the Administrative Agent and their respective directors, officers, employees, trustee,
agents and Affiliates (collectively, the “Indemnitees”) from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including reasonable and documented fees,
disbursements and other charges of counsel incurred in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person, whether or not any
such Indemnitee shall be designated as a party or potential party thereto, and any fees or expenses
incurred by any Indemnitee in enforcing this indemnity), whether direct, indirect or consequential,
whether based on strict liability or negligence, and whether based on any federal, provincial or
foreign laws, statutes, rules, regulations or guidelines (including Environmental Laws), common
law, equity, contract or otherwise that may be imposed on, incurred by or asserted against any
Indemnitee, in any manner arising out of or relating to (i) this Agreement and any other agreements
or documents contemplated hereby or thereby, the other transactions contemplated hereby (including
the execution, delivery, enforcement, performance and administration of this Agreement and the
breach by the Borrower of, or default by the Borrower under, any of the provisions of this
Agreement, (ii) the violation of, non-compliance with or liability under, any Environmental Law
applicable to the operations of the Borrower or any of its Subsidiaries or applicable to any of the
Real Estate, or (iii) any Environmental Claim or any Hazardous Materials relating to or arising
from, directly or indirectly, any past or present activity, operation, land ownership, possession
or control, or practice of, the Borrower or any of its Subsidiaries from time to time (all the
foregoing in this clause (d), collectively, the “indemnified liabilities”); provided that the
Borrower shall have no obligation hereunder to any Indemnitee with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of such Indemnitee as
determined by a final judgment of a court of competent jurisdiction of which no appeal (or further
appeal) is available and provided further that the Borrower shall have no obligation hereunder to
any Indemnitee with respect to claims to the extent relating to disputes among the Lenders, any of
the Arranger and/or the Administrative Agent. The agreements in this Section 12.5 shall survive
repayment of the Loans and all other amounts payable hereunder.




     Each of the Lenders, the Arranger and the Administrative Agent agree that any and all of their
respective rights under this Agreement and any other agreements contemplated hereby and thereby,
including recourse for any obligation or claim for any indemnification thereunder, is limited to
recourse to the Borrower and its assets as contemplated hereby, and none of the direct or indirect
limited partners, partners, shareholders, members of the Borrower or any of their respective
employees, directors or officers shall have any obligations or liability, or be subject to any
recourse, in respect of any such obligations or claims hereunder or thereunder.



52









 





     12.6 Successors and Assigns; Participations and Assignments.



          (a) Assignments Generally. The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns permitted hereby,
except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign
or otherwise transfer its rights or obligations hereunder except in accordance with this Section.
Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns permitted hereby,
Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.




          (b) Assignments by Lenders.




          (i) Assignments Generally. Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its
rights and obligations under this Agreement (including all or a portion of its Commitment and the
Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably
withheld) of:





     (A) the Borrower, provided that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of
Default under Section 10.1 or 10.5 has occurred and is continuing, any other Assignee; and




     (B) the Administrative Agent.



          (ii) Certain Conditions to Assignments. Assignments shall be subject to the following
additional conditions:





     (A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the
amount of the Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred and is
continuing;




     (B) each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement;



53









 






     (C) the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance, together with a processing and recordation fee of
$3,500; and




     (D) the Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.



          (iii) Effectiveness of Assignments. Subject to acceptance and recording thereof
pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each
Assignment and Acceptance the Assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.10, 2.11 and 12.5). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with this Section shall
be treated for purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this Section.




          (iv) Maintenance of Register. The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and addresses of the
Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to
the terms hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.




          (v) Acceptance of Assignments by Administrative Agent. Upon its receipt of a duly
completed Assignment and Acceptance executed by an assigning Lender and an Assignee, the Assignee’s
completed Administrative Questionnaire (unless the Assignee shall already be a Lender hereunder),
the processing and recordation fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained therein in the
Register; provided that if either the assigning Lender or the Assignee shall have failed to
make any payment required to be made by it pursuant to Section 2.4(b), the Administrative Agent
shall have no obligation to accept such Assignment and Acceptance and record the information
therein in the Register unless and until such payment shall have been made in full, together with
all accrued interest thereon. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this paragraph.




54









 








          (c) Participations.




          (i) Participations Generally. Any Lender may, without the consent of the Borrower or
the Administrative Agent, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver described in the
second sentence of Section 12.1 that affects such Participant. Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.10 and 2.11 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 12.8 as though it were a Lender.




          (ii) Limitations on Rights of Participants. A Participant shall not be entitled to
receive any greater payment under Section 2.10 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written consent. Any
Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 5.3 unless
such Participant complies with Section 5.3(c).




          (d) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such Lender, including
without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as
a party hereto.




     12.7 Replacements of Lenders under Certain Circumstances.



     The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for
amounts owing pursuant to Section 2.10 or 5.3, (b) is affected in the manner described in Section
2.10(a)(iii) and as a result thereof any of the actions described in such Section is required to be
taken or (c) becomes a Defaulting Lender, with a replacement bank or other financial institution;
provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement, (iii) the
replacement bank or institution shall purchase, at par, all Loans and other amounts (other than any
disputed amount) pursuant to Section 2.10, 2.11 or 5.3, as the case may be, owing to



55









 




such replaced Lender prior to the date of replacement or as a result of such replacement, (iv)
the replacement bank or institution, if not already a Lender, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent, (v) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions of Section 12.6
(provided that the Borrower shall be obligated to pay the registration and processing fee referred
to therein) and (vi) any such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.




     12.8 Set-off, Etc.



     (a) After the occurrence and during the continuance of an Event of Default, in addition to any
rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder
(whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any currency, in each
case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the account of the
Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such set-off and application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.



     (b) If any Finance Party shall obtain any payment or other recovery (whether voluntary,
involuntary, by application of setoff or otherwise) on account of any Loan (other than pursuant to
the terms of Section 2.10, 2.11 or 5.3) in excess of its pro rata share of payments obtained by all
Finance Parties, such Finance Party shall purchase from the other Finance Parties such
participations in Loans made by them as shall be necessary to cause such purchasing Finance Party
to share the excess payment or other recovery ratably (to the extent such other Finance Parties
were entitled to receive a portion of such payment or recovery) with each of them; provided that if
all or any portion of the excess payment or other recovery is thereafter recovered from such
purchasing Finance Party, the purchase shall be rescinded and each Finance Party which has sold a
participation to the purchasing Finance Party shall repay to the purchasing Finance Party the
purchase price to the ratable extent of such recovery together with an amount equal to such selling
Finance Party’s ratable share (according to the proportion of (a) the amount of such selling
Finance Party’s required repayment to the purchasing Finance Party to (b) total amount so recovered
from the purchasing Finance Party) of any interest or other amount paid or payable by the
purchasing Finance Party in respect of the total amount so recovered. The Borrower agrees that any
Finance Party purchasing a participation from another Finance Party pursuant to this Section may,
to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to
clause (a) above) with respect to such participation as fully as if such Finance Party were the
direct creditor of the Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law any Finance Party receives a secured claim in lieu of a
setoff to which this Section applies, such Finance Party shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with



56









 




the rights of the Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.




     12.9 Marshalling; Payments Set Aside.



     Neither the Administrative Agent nor any Lender shall be under any obligation to marshal any
assets in favor of the Borrower or any other party or against or in payment of any or all of the
Borrower’s obligations hereunder. To the extent that the Borrower makes a payment or payments to
the Administrative Agent or Lenders (or to the Administrative Agent for the benefit of Lenders), or
the Administrative Agent or Lenders enforce any security interests or exercise their rights of
setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other
provincial, state or federal law, common law or any equitable cause, then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights
and remedies therefor or related thereto, shall be revived and continued in full force and effect
as if such payment or payments had not been made or such enforcement or setoff had not occurred.



     12.10 Counterparts.



     This Agreement may be executed by one or more of the parties to this Agreement on any number
of separate counterparts (including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.



     12.11 Severability.



     Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.



     12.12 Integration.



     This Agreement represent the agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative to subject matter
hereof not expressly set forth or referred to herein.



     12.13 Governing Law.



     THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AND THE LAWS OF
THE UNITED STATES APPLICABLE THEREIN



57









 




(EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE WHICH MIGHT REFER SUCH CONSTRUCTION TO THE
LAWS OF ANOTHER JURISDICTION).




     12.14 Submission to Jurisdiction; Waivers.



     The Borrower hereby irrevocably and unconditionally:




     (a) submits for itself and its property in any legal action or proceeding relating to
this Agreement, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the courts of the State of New York;




     (b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;




     (c) agrees that service of process in any such action or proceeding may be effected in
accordance with the local rules of civil procedure or by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail), postage prepaid,
to the Borrower at its address set forth in Section 12.2 or at such other address of which
the Administrative Agent shall have been notified pursuant thereto;




     (d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and




     (e) waives, to the maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this Section 12.14 any special,
exemplary, punitive or consequential damages.



     12.15 Acknowledgements.



     The Borrower hereby acknowledges that:




     (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement;




     (b) neither the Administrative Agent nor any Lender (in any capacity) has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with this
Agreement, and the relationship between Administrative Agent and Lenders, on one hand, and
the Borrower, on the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and




     (c) no joint venture is created hereby or otherwise exists by virtue of the
transactions contemplated hereby among the Lenders or among the Borrower and the Lenders.



58









 





     12.16 Waivers of Jury Trial.



     THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.



     12.17 Confidentiality.



     The Administrative Agent and each Lender shall hold all non-public information furnished by or
on behalf of the Borrower in connection with such Lender’s evaluation of whether to become a Lender
hereunder or obtained by such Lender or the Administrative Agent pursuant to the requirements of
this Agreement (“Confidential Information”), in accordance with its customary procedure for
handling confidential information of this nature and (in the case of a Lender that is a bank) in
accordance with safe and sound banking practices and in any event may make disclosure as required
or requested by any Governmental Authority, representatives thereof or any nationally recognized
rating agency that requires access to information about such Lender’s investment portfolio in
connection with ratings issued with respect to such Lender or pursuant to legal process or to such
Lender’s or the Administrative Agent’s lawyers, professional advisors or independent auditors or
Affiliates; provided that, unless specifically prohibited by applicable law or court order, each
Lender and the Administrative Agent shall notify the Borrower of any request by any governmental
agency or representative thereof (other than any such request in connection with an examination of
the financial condition or regulatory compliance of such Lender by such Governmental Authority or
in connection with ratings by such rating agency with respect to such Lender) for disclosure of any
such non-public information prior to disclosure of such information, and provided further that in
no event shall any Lender or the Administrative Agent be obligated or required to return any
materials furnished by the Borrower or any Subsidiary of the Borrower. Each Lender and the
Administrative Agent agrees that it will not provide to prospective Assignees or Participants or to
prospective direct or indirect contractual counterparties in swap agreements to be entered into in
connection with Loans made hereunder any of the Confidential Information unless such Person shall
have previously executed a Confidentiality Agreement substantially in the form prescribed from time
to time by the Loan Sales and Trading Association.



     12.18 Treatment of Loans.



     (a) The Borrower does not intend to treat the Loans and related transactions as being a
“reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In the
event the Borrower determines to take any action inconsistent with such intention, it will promptly
notify the Administrative Agent thereof.



     (b) The Borrower acknowledges that the Administrative Agent and one or more of the Lenders
may treat its Loans as part of a transaction that is subject to Treasury Regulation Section
1.6011-4 or Section 301.6112-1, and the Administrative Agent and such Lender or Lenders, as
applicable, may file such IRS forms or maintain such lists and other records as they may determine
is required by such Treasury Regulations.




59











 





     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.



	 	 	 	 	 
	 	ITC HOLDINGS CORP.,

as the Borrower

 	 
	 	By:  	/s/ Edward M. Rahill
 	 
	 	 	Name:  	Edward M. Rahill 	 
	 	 	Title:  	Senior Vice President and Chief 	 
	 
	 	LEHMAN COMMERCIAL PAPER INC.

as Administrative Agent

 	 
	 	By:  	/s/ Adrian De Lagarde
 	 
	 	 	Name:  	Adrian De Lagarde 	 
	 	 	Title:  	Authorized Signatory 	 



60









 






	 	 	 	 	 



	 	 	 	 	 
	 	LEHMAN BROTHERS BANK, FSB,

as Lender

 	 
	 	By:  	/s/ Janine M. Shugan
 	 
	 	 	Name:  	Janine M. Shugan 	 
	 	 	Title:  	Authorized Signatory 	 



61









 






	 	 	 	 	 



	 	 	 	 	 
	 	COMERICA BANK,

as Lender

 	 
	 	By:  	/s/ Blake Arnett
 	 
	 	 	Name:  	Blake Arnett 	 
	 	 	Title:  	Assistant Vice President 	 



62









 






	 	 	 	 	 



	 	 	 	 	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Lender

 	 
	 	By:  	/s/ Thomas Cantello
 	 
	 	 	Name:  	Thomas Cantello 	 
	 	 	Title:  	Director 	 
	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Lender

 	 
	 	By:  	/s/ Shaheen Malik
 	 
	 	 	Name:  	Shaheen Malik 	 
	 	 	Title:  	Associate 	 
	 



[Signature page to ITC Holdings Credit Agreement]




 









 








	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as Lender

 	 
	 	By:  	/s/ Patrick N. Martin
 	 
	 	 	Name:  	Patrick N. Martin 	 
	 	 	Title:  	Vice President 	 
	 



[Signature page to ITC Holdings Credit Agreement]





 









 








	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.,

as Lender

 	 
	 	By:  	/s/ Nancy R. Barwig
 	 
	 	 	Name:  	Nancy R. Barwig 	 
	 	 	Title:  	Vice President 	 
	 



[Signature page to ITC Holdings Credit Agreement]





 









 








	 	 	 	 	 
	 	MORGAN STANLEY BANK,

as Lender

 	 
	 	By:  	/s/ Daniel Twenge
 	 
	 	 	Name:  	Daniel Twenge 	 
	 	 	Title:  	Authorized Signatory 	 
	 



[Signature page to ITC Holdings Credit Agreement]





 









 








SCHEDULE I

COMMITMENTS




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	REVOLVING CREDIT
	 	 	 	 	REVOLVING CREDIT	 	COMMITMENT
	LENDER	 	ADDRESS FOR NOTICES	 	COMMITMENT	 	PERCENTAGE
	 	 	 
	 	 	 	 	 	 	 	 
	Lehman Brothers Bank, FSB
	 	Lehman Brothers

Deal Closing & Servicing Department

745 7th Avenue, 16th Floor,

New York NY 10019

Attention: Janine Shugan 

Facsimile No.: (212) 526 8625

	 	$	350,000,000	 	 	 	45.75	%
	 	 	 
	 	 	 	 	 	 	 	 
	Comerica Bank
	 	Comerica

500 Woodward Avenue, 9th Floor,

Detroit MI 48226

Attention: Stacey McVeigh

Facsimile No.: (313) 222-9514

	 	$	15,000,000	 	 	 	1.96	%
	 	 	 
	 	 	 	 	 	 	 	 
	Credit Suisse, Cayman Islands Branch
	 	Credit Suisse, Cayman Islands Branch

Eleven Madison Avenue

New York NY 10010

Attention: Loan Closers

Facsimile No.: (212) 538-9120

	 	$	275,000,000	 	 	 	35.95	%






 









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	REVOLVING CREDIT
	 	 	 	 	REVOLVING CREDIT	 	COMMITMENT
	LENDER	 	ADDRESS FOR NOTICES	 	COMMITMENT	 	PERCENTAGE
	 	 	 
	 	 	 	 	 	 	 	 
	Bank of America, N.A.
	 	Bank of America, N.A.

901 Main Street

Dallas TX 75202-3714

Attention: Jacqueline Archuleta

Facsimile No.: (214) 290 8372

	 	$	25,000,000	 	 	 	3.27	%
	 	 	 
	 	 	 	 	 	 	 	 
	JPMorgan Chase Bank, N.A.
	 	JPMorgan Chase Bank, N.A.

Loan Operations

10 South Dearborn, 7th Floor

Mail Code IL1-0010

Chicago, IL 60603

Attention: Nanette Wilson

Facsimile No.: (312) 385-7096


with copy to (except in the case of notices
relating to borrowings, continuation,
conversions and letters of credit):


JPMorgan Chase Bank, N.A.

10 South Dearborn, 9th Floor

Mail Code IL1-0090

Chicago, IL 60603

Attention: Nancy R. Barwig

Vice President, Mid- Corporate Power Credit 

Facsimile No.: (312) 732-1762
	 	$	75,000,000	 	 	 	9.80	%






 









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	REVOLVING CREDIT
	 	 	 	 	REVOLVING CREDIT	 	COMMITMENT
	LENDER	 	ADDRESS FOR NOTICES	 	COMMITMENT	 	PERCENTAGE
	 	 	 
	 	 	 	 	 	 	 	 
	Morgan Stanley Bank
	 	Morgan Stanley Bank

2500 Lake Blvd, Suite 300 C

West Valley City, Utah 84120


On or prior to the Closing Date:


Attention: Nomi Clarke

Facsimile No.: (718) 233-2132


After the Closing Date:


Attention: Martin Telford, Ly Dinh and
 Kathy Wu
Facsimile No.: (718) 233-2140

	 	$	25,000,000	 	 	 	3.27	%
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	Total amount

	 	$	765,000,000	 	 	 	100	%






 









 






SCHEDULE II

ENVIRONMENTAL MATTERS




[NONE]




 









 





SCHEDULE III

PENSION AND WELFARE MATTERS




[NONE]




 









 





SCHEDULE IV

OUTSTANDING LIENS ON CLOSING DATE




[NONE]





 











 





EXHIBIT A




Form of Notice of Borrowing




NOTICE OF BORROWING




	 	 	 
	TO:

	 	Lehman Commercial Paper Inc.
	 

	 	as Administrative Agent under the
	 

	 	Credit Agreement (as defined below)
	 

	 	745 Seventh Avenue
	 

	 	New York, New York 10019
	 

	 	Attention: Maritza Ospina
	 

	 	Facsimile No.: (646) 758-4648






     Pursuant to the Bridge Loan Agreement, dated as of September 26, 2007 (as the same may be
amended, modified, supplemented, restated or replaced from time to time, the “Credit Agreement”;
the terms defined therein and not otherwise defined herein being used herein as therein defined),
among ITC Holdings Corp., a Michigan corporation (the “Borrower”), the Lenders, and Lehman
Commercial Paper Inc., as the Administrative Agent, this represents the Borrower’s request to
borrow as follows:



          Loan:





	 	1.	 	Date of borrowing:
	 
	 	2.	 	Amount of borrowing:
	 
	 	3.	 	Lender(s): Lenders, in accordance with their Commitments under
the Credit Agreement
	 
	 	4.	 	Interest rate option:





     Please wire transfer the proceeds of the Borrowing in accordance with the funds flow
memorandum delivered under separate cover.



     The undersigned officer, to the best of his or her knowledge, in his or her capacity as an
officer of the Borrower certifies that:









 



2



     All representations and warranties made by the Borrower contained in the Credit
Agreement are true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date hereof (except where such
representations and warranties expressly relate to an earlier date, in which case such representations and warranties are true and correct in all material respects
as of such earlier date); and




     No event has occurred and is continuing or would result from the consummation of the
Borrowing contemplated hereby that would constitute a Default or an Event of Default.


Dated:




	 	 	 	 	 
	 	ITC HOLDINGS CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 









 



 

	 	 	 	 	 




EXHIBIT B




Form of Notice of Continuation




	 	 	 
	TO:

	 	Lehman Commercial Paper Inc.,
	 

	 	as Administrative Agent under the
	 

	 	Credit Agreement (as defined below)
	 

	 	745 Seventh Avenue
	 

	 	New York, New York 10019
	 

	 	Attention: Maritza Ospina
	 

	 	Facsimile No.: (646) 758-4648






          Pursuant to the Credit Agreement, dated as of September 26, 2007 (as the same may be amended,
modified, supplemented, restated or replaced from time to time, the “Credit Agreement”; the terms
defined therein and not otherwise defined herein being used herein as therein defined), among ITC
Holdings Corp., a Michigan corporation (the “Borrower”), the various financial institutions and
other persons from time to time referred to as “Lenders” in the Credit Agreement (the “Lenders”),
and Lehman Commercial Paper Inc., as the Administrative Agent, this represents the Borrower’s
request to continue Loans as follows:





	 	1.	 	Date of continuation or conversion:
	 
	 	 	 	                                        , ___
	 
	 	2.	 	Amount of Loans being continued or converted:
	 
	 	 	 	$                                        
	 
	 	3.	 	Nature of continuation or conversion:






	 	____	 	a. Conversion of a LIBOR Loan as an ABR Loan
	 
	 	____	 	b. Conversion of an ABR Loan as a LIBOR Loan
	 
	 	____	 	c. Continuation (rollover) of LIBOR Loans as LIBOR Loans






	 	4.	 	If Loans are being continued as or converted into LIBOR Loans, the duration of
the new LIBOR Period that commences on the continuation or conversion date:






	 	____	 	month(s)





          The undersigned officer, to the best of his or her knowledge, in his or her capacity as an
officer of the Borrower, certifies that:










 



4





     (i) All representations and warranties made by the Borrower contained in the Credit
Agreement are true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date hereof (except where such
representations and warranties expressly relate to an earlier date, in which case such
representations and warranties are true and correct in all material respects as of such
earlier date) provided that, the representation made in Section 7.14 shall be made
only on the Closing Date; and




     (ii) No event has occurred and is continuing or would result from the consummation of
the Borrowing contemplated hereby that would constitute a Default or an Event of Default.


Dated:                                         




	 	 	 	 	 
	 	ITC HOLDINGS CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 









 



5

	 	 	 	 	 




EXHIBIT C




Form of Closing Certificate




CLOSING CERTIFICATE




ITC HOLDINGS CORP.






               I, the undersigned, an Authorized Officer of ITC Holdings Corp. (the “Borrower”),
hereby certify to the best of my knowledge, information and belief, for and on behalf of the
Borrower, and not in my personal capacity, that:




	 	(a)	 	This certificate is furnished pursuant to the Bridge Loan Agreement (as the
same may be amended, modified, supplemented, restated or replaced from time to time,
the “Credit Agreement”), dated as of September 26, 2007, among the Borrower, a
Michigan corporation, the Lenders thereto and Lehman Commercial Paper Inc., as
administrative agent. Unless otherwise defined herein, capitalized terms used in this
certificate shall have the meanings set forth in the Credit Agreement.
	 
	 	(b)	 	Attached hereto as Exhibit A is a true and complete copy of the
Certificate of Incorporation of the Borrower as filed in the Office of the Secretary of
State of the State of Michigan, together with all amendments thereto adopted through
the date hereof and as in effect on the date hereof.
	 
	 	(c)	 	Attached hereto as Exhibit B is a true and complete copy of the Bylaws
of the Borrower, together with all amendments thereto adopted through the date hereof
and as in effect on the date hereof.
	 
	 	(d)	 	Attached hereto as Exhibit C is a true and complete copy of the
resolutions duly adopted by the Board of Directors of the Borrower at a meeting of such
Board of Directors held on [     ], approving and authorizing the execution, delivery and
performance of the Credit Agreement and the transactions contemplated thereby. Such
resolutions have not been amended, modified, revoked or rescinded since the date of
adoption thereof, are in full force and effect on the date hereof and are the only
resolutions that have been adopted by the Board of Directors of the Borrower with
respect to the subject matter thereof.
	 
	 	(e)	 	The persons whose names appear on Exhibit D attached hereto are duly
elected, qualified and acting officers of the Borrower occupying the offices set forth
opposite their respective names on Exhibit D, and the signature set forth
opposite their respective names are their true and genuine signatures, and each of such
officers is duly authorized to execute and deliver the Credit Agreement on behalf of
the Borrower and each of the related documents to which it is a party and any other
agreement, instrument or document to be delivered by the Borrower pursuant to the
Credit Agreement.










 



6


	 	(f)	 	The representations and warranties of the Borrower set forth in the Credit Agreement are
true and correct in all material respects.
	 
	 	(g)	 	No Default or Event of Default has occurred and is continuing.





* * * * *










 



7




     IN WITNESS WHEREOF, I have hereunto set my hand on behalf of the Borrower this [__]th day of
[_____], 2007.



	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 




     I, the undersigned, [_____] of the Borrower, do hereby certify solely on behalf of the Borrower
and not in my individual capacity that [_____] is the duly elected and qualified Secretary of the
Borrower and the signature above is his genuine signature.



     IN WITNESS WHEREOF, I have hereunto set my hand on behalf of the Borrower this [__]th day of
[_____], 2007.



	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Name:  	 	 
	 	Title:  	 	 









 



 



EXHIBIT D




Form of Compliance Certificate



TO: The Lenders and the Administrative Agent



The undersigned, an Authorized Officer of ITC Holdings Corp. (the “Borrower”), in such capacity and
not personally, hereby certifies to the best of my knowledge, information and belief that:





	1.	 	I am the duly appointed                                                              of the Borrower named in the Bridge Loan
Agreement, dated as of September 26, 2007 (as the same may be amended, modified, supplemented,
restated or replaced from time to time, the “Credit Agreement”), among ITC Holdings Corp., a
Michigan corporation (the “Borrower”), the Lenders and Lehman Commercial Paper Inc., as the
Administrative Agent and as such I am providing this certificate for and on behalf of the
Borrower pursuant to Section 8.1(c) of the Credit Agreement. Unless the context otherwise
requires, capitalized terms in the Credit Agreement which appear herein without definitions
shall have the meanings ascribed thereto in the Credit Agreement.
	 
	2.	 	I am familiar with and have examined the provisions of the Credit Agreement including those
of Articles 7, 8, 9 and 10 therein and have reviewed and am familiar with the contents of this
certificate.
	 
	3.	 	Delivered herewith are the financial statements required to be delivered pursuant to Section
8.1(a) and (b) of the Credit Agreement.
	 
	4.	 	No Default or Event of Default has occurred and is continuing as of the date hereof [or if
any Default or Event of Default does exist, specify the nature and extent thereof].
	 
	5.	 	As of the last day of the fiscal [year/quarter] ending ___, the financial ratio
referred to in Section 9.4(a) of the Credit Agreement is ___:___and was calculated as set
forth in Part A of Schedule I.
	 
	6.	 	As of the last day of the fiscal [year/quarter] ending ___, the financial ratio
referred to in Section 9.4(b) of the Credit Agreement is ___:___and was calculated as set
forth in Part B of Schedule I.




Dated this day of                     ,                     .




	 	 	 	 	 
	 	 	 
	
 	 	 
	[Name and Title] 	 	 
	 	 	 









 



 

	 	 	 	 	 




Schedule I




Part A




Total Debt to Capitalization Ratio




	 	 	 	 	 
	1. Total Debt for the last day of the relevant fiscal [year/quarter]
	 	$	                    	 
	2. Total Capitalization for such day
	 	 	 	 
	(a) Total Debt
	 	$	                    	 
	(b) Total stockholder’s equity of the Borrower
	 	$	                    	 
	(c) Total Capitalization: The sum of Items 2(a) and 2(b)
	 	$	                    	 
	3. TOTAL DEBT TO CAPITALIZATION RATIO: the ratio of Item 1 to Item 2
	 	 	                    	%
	4. Maximum Total Debt to Capitalization Ratio allowed
	 	 	85	%
	5. In compliance
	 	Yes  /  No






Part B




Newco Debt to Capitalization Ratio




	 	 	 	 	 
	1. Newco Total Debt for the last day of the relevant fiscal
[year/quarter]
	 	$	                    	 
	2. Newco Total Capitalization for such day
	 	 	 	 
	(a) Newco Total Debt
	 	$	                    	 
	(b) Total stockholder’s equity of Newco
	 	$	                    	 
	(c) Newco Total Capitalization: The sum of Items 2(a) and
2(b)
	 	$	                    	 
	3. NEWCO DEBT TO CAPITALIZATION RATIO: the ratio of Item 1
to Item 2
	 	 	                    	%
	4. Maximum Newco Debt to Capitalization Ratio allowed
	 	 	60	%
	5. In compliance
	 	Yes  /  No