Document:

Exhibit
10.17

 

INTERNATIONAL TRANSMISSION
COMPANY

MANAGEMENT SUPPLEMENTAL BENEFIT PLAN

 

                The International
Transmission Company (“ITC”) Management Supplemental Benefit Plan (the “Plan”),
established by International Transmission Company effective May 10, 2005.

 

1.     Purpose.

                The Plan is
designed to supplement the pension benefits of Joseph L. Welch (“Executive”),
the president and chief executive officer of ITC Holdings Corp. and ITC.

 

2.     Definitions.  Unless otherwise defined herein, all defined
terms shall have the same meaning as provided under the ITC Retirement Plan.

a.             Actuarial
Equivalent. “Actuarial Equivalent” means an amount calculated as
specified under Section 2, Step 2, below using the applicable mortality and
interest rate specified in Section 417(e) of the U.S. Internal Revenue Code of
1986, as amended (the “Code”).  The
interest rate will be based on the average 30-year U.S. Treasury Note rate of
interest (or its successor, as designated by Regulations promulgated by the
U.S. Internal Revenue Service) for the month prior to any calculation involving
the Actuarial Equivalent.

b.             Average
Final Compensation.  “Average
Final Compensation” is equal to one-fifth of Executive’s Compensation during
the 260 weeks of Company Service that results in the highest average of
Executive’s Compensation.

c.             Awarded
Service.  Years of service
(including calendar months) that may be imputed to Executive by the
Compensation Committee (“Committee”) of the Board of Directors of ITC (the “Board”),
taking into account the value to the Company of Executive’s prior
experience.  Awarded Service is
determined by the sole discretion of the Committee.  As of May 10, 2005, Executive has 2 years and
2 months of Awarded Service.

d.             Company.  Where the context requires in respect of the
liability for the payment of any benefit to an eligible participant or
beneficiary thereof, the term “Company” shall mean ITC or such other affiliate
of ITC employing or who employed Executive. 
All corporate officers and other administrative personnel referred to
herein refer to officers and administrative personnel of ITC.

e.             DTE
Service.  All years of service
with The Detroit Edison Company (“DTE”) (or any of its predecessors, affiliates
or other members of its controlled group) calculated to the nearest completed
calendar month.  Company Service is
calculated to the nearest whole month. 
As of May 10, 2005, Executive has 32 years and 1 month of Company
Service (based on Executive’s service with DTE).

f.              Compensation.  “Compensation” as defined in the ITC
Retirement Plan; provided, however, that for purposes of this
Plan, “Compensation” shall be Executive’s Normal Pay, any bonuses paid to
Executive without restrictions, and compensation related to Executive’s service
with DTE, and shall be calculated without regard to any limitation imposed

 

 

by Section 401(a)(17) of the
Code.  For purposes of compensation
related to service with DTE, including all pay from other sources while placed
on a suspension of employment, see Exhibit B.

g.             Normal
Pay.  Executive’s annual base
salary received from the Company for a standard forty-hour work week,
calculated without regard to any limitation imposed by Section 401(a)(17) of
the Code, including amounts deferred by Executive under the Company’s qualified
and non-qualified savings plans.  “Normal
Pay” does not include any bonuses, special pay, or premium for overtime work.

h.             ITC
Retirement Plan.  The ITC
Retirement Plan is a qualified defined benefit pension plan sponsored by ITC
for its eligible employees.

i.              Service.  Executive’s Company Service and Awarded
Service, if any, collectively.

3.     Eligibility.  Executive is
the only individual eligible to participate in this Plan.

4.     Target
Percentage of Average Final Compensation.  Payments from the Plan are based upon the
target percentage of Executive’s Average Final Compensation as calculated
below.  The target percentage is
determined by years of Service, and shall be determined as follows:

	
   

  	
  Target Percentage

  	
   

  	
   

  	
   

  
	
   

  	
  of Average Final

  	
   

  	
  Service

  	
   

  
	
   

  	
  Compensation

  	
   

  	
  Index

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  60%

  	
   

  	
  25

  	
   

  

 

Notwithstanding the foregoing, the target percentage shall be increased
by 0.5% for each year that the number of years of Executive’s Service is
greater than the Service Index.  The
Target Percentage is adjusted accordingly if the Service Index results in
fractional years.  The final
determination of Executive’s target percentage (e.g., 60% plus any increases)
of Executive’s Average Final Compensation shall hereinafter be referred to as
the “Final Percentage.”

 

5.     Payments
to Commence only after Termination of Employment.  Payments from the Plan are not payable until
Executive terminates employment with the Company (by death or otherwise), and
references in the following provisions of the Plan to “terminating employment”,
“terminates employment” or “employment termination” or similar provisions shall
mean termination of employment with the Company.

a.             Normal Retirement. 
Executive shall receive an unreduced Final Percentage if Executive
terminates employment at age 60 or older.

b.             Early Retirement. 
Executive shall receive a reduced or adjusted Final Percentage if
Executive terminates employment (including due to his death) at or after age 55
but prior to achieving age 60.  The early
retirement adjustment schedule is as follows:

 

 

 

	
   

  	
  Age At

  	
   

  	
  Early Retirement

  	
   

  
	
   

  	
  Termination

  	
   

  	
  Adjustment Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  55

  	
   

  	
  60%

  	
   

  
	
   

  	
  56

  	
   

  	
  68%

  	
   

  
	
   

  	
  57

  	
   

  	
  76%

  	
   

  
	
   

  	
  58

  	
   

  	
  84%

  	
   

  
	
   

  	
  59

  	
   

  	
  92%

  	
   

  
	
   

  	
  60 or older

  	
   

  	
  100%

  	
   

  

 

Age at termination is
calculated to the nearest whole calendar month and the Early Retirement
Adjustment Percentage is determined accordingly.

 

6.     Payment
of Benefit.  The
retirement benefit provided for under this Plan shall be paid to the Executive
upon the termination of his employment for any reason in the form of a
Guaranteed Term Plus Life Benefit.  The
Guaranteed Term Plus Life Benefit payment option provides for a minimum of 15
years of payments to Executive and, if he lives beyond such 15-year period, the
payments shall continue to be made to him for life.  Payments shall be made monthly.  If Executive dies before the end of the
15-year period, payments will continue to be made to his beneficiary or estate
(if no beneficiary election is on file) for the balance of the 15-year
period.  At the end of this 15-year
period, all payments cease, the Company will have no further liability to
Executive or his beneficiary or estate, and the Plan shall terminate.  All payments shall commence on the earliest
date on which such payment can be paid as may be permitted under Section 409A
of the Code, and the rules and regulations promulgated thereunder (together, “Section
409A”).

7.     Benefit Payment Calculation.  Monthly payments made from the Plan pursuant
to Section 6 above are determined as follows:

                Step 1.                    Determine Gross Target
Benefit Amount

                The “Gross Target Benefit Amount” is determined by
multiplying the Final Percentage by Executive’s Average Final Compensation.

 

Step 2.                    Determine ITC Retirement
Plan Benefit

 

                Executive will be a participant in the ITC Retirement
Plan. At the time Executive’s benefits are calculated for the Plan, his cash
balance account under the ITC Retirement Plan as of the calculation date will
be converted into an annuity that is equal to the Actuarial Equivalent of the
Guaranteed Term Plus Life Benefit (the “ITC Plan Benefit”).

 

Step 3.                    DTE Retirement Plan &
DTE MSBP Offset

                The ITC Plan Benefit shall
be reduced by the sum of the benefits provided under the DTE Retirement Plan
and the DTE Management Supplemental Benefit Plan (“DTE Plans”).  Pursuant to that Separation Agreement entered
into by and between Executive 

 

 

 

and DTE dated [DATE], the aggregate amount of such benefits is equal to
$98,368.44, payable as a life annuity. 
For purposes of the Plan, the life annuity amount must be converted to
an amount that is equal to the Actuarial Equivalent of the Guaranteed Term Plus
Life Benefit.  For purposes of such
calculation, the Actuarial Equivalent shall be determined as of November
2002.  This amount is $95,496 (the “DTE
Plans Offset”).

 

Step 4.                    Determine Base Annual Target
Benefit Amount

 

                The “Base Annual Target Benefit Amount” is determined
by subtracting the ITC Plan Benefit and the DTE Plans Offset that would be
payable at retirement (without regard to whether Executive elects to defer
receipt of the benefit) from the Gross Target Benefit Amount.

 

Step 5.                    Determine Adjusted Annual
Target Benefit Amount

 

                The “Adjusted Annual Target Benefit Amount” is
determined by multiplying the Base Annual Target Benefit Amount by the Early
Retirement Adjustment Percentage.

 

Step
6.                           Determine Monthly Target Benefit Amount Under the
Guaranteed Term Plus Life Benefit

 

The “Monthly Target Benefit Amount” of the Guaranteed
Term Plus Life Benefit is determined by dividing the Adjusted Annual Target
Benefit Amount by 12.

 

Exhibit A displays
examples of the Plan payment calculation procedure as set forth in this Section
7.

 

In the event Executive
receives an assessment of income taxes from the Internal Revenue Service which
treats any amount payable to Executive under this Plan as includible in his
gross income prior to the actual payment of such amount to Executive, the
Company shall pay an amount equal to such federal income taxes imposed on such
amounts and payable by Executive to Executive within 30 days after receipt of
written notice from Executive of such assessment, which notice Executive shall
timely give to the Company.  Thereafter,
the Base Annual Target Benefit Amount (Step 4 above) shall be reduced by an
amount equal to such payment by the Company and the amounts calculated under
Steps 5 and 6 shall be reduced accordingly, so long as the Board determines
that the reduction of such amount will not result in taxes being imposed on
Executive under Section 409A. 
Notwithstanding the foregoing, in the event the Company decides to
challenge the Internal Revenue Service’s assessment, the Company shall promptly
notify Executive in writing of such decision and the Company shall have the
right to challenge such assessment, on behalf of Executive, at the Company’s
cost and expense.

 

Each payment under this Plan
shall be reduced by any federal, state or local taxes, which ITC determines
should be withheld from such payment.

 

8.     Establishment
of Grantor Trust.   As
soon as practicable after the effective date of this Plan, the Company shall
establish a grantor trust (a “Rabbi Trust”), which is intended 

 

 

to be a grantor trust within
the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the
U.S. Internal Revenue Code of 1986, as amended, which shall not affect the
status of the Plan as an unfunded arrangement for purposes of Title I of
ERISA.  Assets transferred to the Rabbi
Trust shall be in cash or other securities in the discretion of the Company.

9.     Beneficiary
Designation.  Executive
may name any beneficiary to whom payments under the Plan are to be paid in case
of Executive’s death.  Each designation
will revoke all prior designations and shall be on a form prescribed by ITC and
will be effective only when filed by Executive with the ITC Human Resource
Department.  In the absence of any such
designation, payments due shall be paid to Executive’s estate.

10.   Taxation.  The Company makes no representation as to the
tax consequences of the payment option provided under this Plan.  Executive is urged to consult his tax advisor
for information and advice.

11.     Non-Secured
Promise; Amendments.

a.             Executive has the status of general
unsecured creditor of the Company.  This
Plan constitutes a promise by the Company to make benefit payments in the
future.  The Company intends that this
Plan be unfunded for tax purposes and for purposes of Title I of ERISA.  The Company intends that this Plan be
maintained solely for Executive.

b.             Payments as they become due under
the Plan shall be paid by the Company from its general assets; provided,
however, that no provision of the Plan shall preclude the Company from
segregating assets which are intended to be a source for payment of benefits
under the Plan in the Company’s sole discretion, including the Rabbi Trust.

c.             ITC reserves the right to amend,
modify, or discontinue this Plan at any time; provided, however, that no such
amendment, modification or termination shall adversely affect the rights of
Executive or his beneficiaries who are receiving or are immediately eligible to
receive benefits from this Plan at the time of such amendment, modification, or
termination, without such person’s prior written consent.

d.             In the event of dissolution,
merger, consolidation or reorganization of the Company, the Plan shall
terminate as to the Company unless the Plan is continued by a successor thereto
(subject to the consent of the Chairman of the Board).  In the event the Plan is terminated,
Executive shall nevertheless receive payment of his accrued benefit hereunder
in accordance with Executive’s payment option election.

e.             Notwithstanding the foregoing
provisions of this section, no amendment, modification, termination or
withdrawal may be made after the occurrence of a Change of Ownership (as
defined in the Amended and Restated 2003 Stock Purchase and Option Plan for Key
Employees of ITC Holdings, Inc. and its Subsidiaries), that would adversely
affect the rights of Executive, who is receiving or upon termination would
thereupon be entitled to receive benefits under the Plan, without his prior
written consent.

 

 

12.     Administration; Arbitration.

The Vice President in charge of ITC Human Resources is
responsible for the administration of the Plan and for the administration of
benefits payable under the Plan.  The
Board (or its designated representative) has the authority to interpret the
provisions of the Plan and prescribe any regulations relating to its
administration.  The decisions of the
Board (or its designated representative) with respect thereto made prior to the
occurrence of a Change of Ownership shall be conclusive.  The Vice President in charge of ITC Human
Resources shall review the Plan from time to time and as part of such review is
hereby directed to make any recommendations to amend the Plan he or she in good
faith deems necessary for ease of administration and/or to comply with
applicable federal, state and local laws.

 

Notwithstanding any
provision in this Plan to the contrary, in the event of any dispute, claim or
controversy (hereinafter referred to as a “Grievance”) between Executive and
the Company with respect to the payment of benefits to him under the Plan, the
computation of benefits under the Plan, or any of the terms or conditions of
the Plan, such Grievance shall be resolved by arbitration.  Arbitration shall be the sole exclusive
remedy to redress any Grievance. The arbitration decision shall be final and
binding, and a judgment on the arbitration award may be entered in any court of
competent jurisdiction and enforcement may be had according to its terms.  The arbitration shall be conducted by the
American Arbitration Association and expenses of the arbitrator(s) and the
American Arbitration Association shall be borne by the Company.  Neither the Company nor Executive shall be
entitled to attorneys’ fees, expert witness fees, or other expenses expanded in
the course of such arbitration or the enforcement of any award rendered there
under.  The place of the arbitration
shall be the offices of the American Arbitration Association in the Detroit
metropolitan area, Michigan.  The
arbitrator(s) shall not have the jurisdiction or authority to change any of the
provisions of this Plan by alteration of, addition to, or subtraction from the
terms thereof.  The arbitrator(s) sole
authority shall be to apply any terms and conditions of this Plan.  Since arbitration is the exclusive remedy
with respect to any Grievance, Executive does not have the right to resort to
any federal court, state court, local court, or administrative agency
concerning breaches of any terms and provisions hereunder, and the decision of
the arbitrator(s) shall be a complete defense to any suite, action or
proceeding instituted in any federal court, state court, local court, or
administrative agency by Executive or the Company with respect to any Grievance
which can be subject to arbitration as herein set forth.  The arbitration provisions shall, with
respect to any Grievance survive the termination of this Plan.

 

13.    Non-Alienability and Non-Transferability.  The right of Executive, his spouse or
beneficiary to payment of any benefit hereunder shall not be alienated,
assigned, transferred, pledged of encumbered and shall not be subject to
execution, attachment or similar process. 
No account shall be subject in any manner to alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or other levy
of any kind, whether voluntary or involuntary, including, but not limited to
any liability which is for alimony or other payments for the support of a
spouse or former spouse, or for any other relative of Executive.  Any attempted assignment, pledge, levy or
similar process shall be null and void without effect.Exhibit 10.24

 

EMPLOYMENT AGREEMENT

(Joseph Welch)

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of May 10,
2005 (the “Effective Date”) by
and between ITC Holdings Corp. (the “Company”)
and Joseph Welch (the “Executive”).

 

WHEREAS, in connection with the contemplated public
registration of common stock of the Company, the Company and the Executive
desire to enter into an agreement embodying the terms of the Executive’s
employment with the Company and International Transmission Company (“ITC”).

 

NOW, THEREFORE, in consideration of the premises and
mutual covenants herein and for other good and valuable consideration, the
parties agree as follows:

 

1.               Term of Employment.  Subject to the
provisions of Section 7 of this Agreement, Executive shall be employed by
the Company, ITC and any of its subsidiaries that the Board of Directors of the
Company (the “Board”) shall
designate (collectively, the “Employer”)
for an initial period commencing on the Effective Date and ending on the second
anniversary thereof on the terms and subject to the conditions set forth in
this Agreement; provided, however, that such period of employment
shall automatically be extended for successive one-year periods unless the
Employer or Executive, at least thirty (30) days prior to the end of any such
period, provides written notice to the other party of the intent not to extend
such period of employment for any additional one-year period.  For purposes of this Agreement, the term “Employment Term” shall mean the period of
time during which Executive is employed by Employer under this Agreement.

 

2.               Position.

 

a.                                       During the Employment Term,
Executive shall serve as the Employer’s President and Chief Executive
Officer.  In such position, Executive
shall have such duties and authority as the Board of Directors of the Employer
(the “Board”) determines from time to
time.  If requested, Executive shall also
serve as a member of the Board without additional compensation.

 

b.                                      During the Employment Term,
Executive will devote Executive’s full business time and best efforts to the
performance of Executive’s duties hereunder and will not engage in any other
business, profession or occupation for compensation or otherwise which would
conflict or interfere with the rendition of such services either directly or
indirectly, without the prior written consent of the Board; provided
that nothing herein shall preclude Executive, subject to the prior approval of
the Board, from accepting appointment to or continue to serve on any board of
directors or trustees of any business corporation or any charitable
organization; provided in each case, and in the aggregate, that such
activities do not conflict or interfere with the performance of Executive’s
duties hereunder or conflict with Section 8 of this Agreement.

 

 

3.               Base Salary.  During the Employment Term, ITC shall pay
Executive a base salary at the annual rate of [AMOUNT TO BE PROVIDED BY BOARD]
payable in regular installments in accordance with ITC’s normal payroll
practices.  Executive’s base salary shall
be reviewed annually by the Board and Executive shall be entitled to such
increases in Executive’s base salary, if any, as may be determined from time to
time in the sole discretion of the Board. 
Executive’s annual base salary, as in effect from time to time, is
hereinafter referred to as the “Base Salary”.

 

4.               Annual Bonus.  During the Employment Term, Executive shall
be eligible to earn an annual bonus award in respect of each fiscal year of
Employer (an “Annual Bonus”),
payable upon ITC’s achievement of certain performance targets established by
the Board pursuant to the terms of an incentive compensation plan established
by the Board (the “Incentive Plan”).  Executive’s target Annual Bonus for each
fiscal year of Employer shall generally be 100% of Executive’s Base Salary (the
“Target Bonus”).

 

5.               Employee
Benefits and Perquisites; Business Expenses.

 

a.                                       Employee Benefits.  During the Employment Term, Executive shall
be entitled to participate in ITC employee benefit and retirement plans (the “ITC Plans”) as in effect from time to
time as determined by the Board, which provide certain benefits (collectively
the “Employee
Benefits”) to
Executive, including the following plans: (a) welfare benefit plans
(including active medical, life, disability, flexible spending accounts and
other related welfare plans); (b) fringe benefit plans (including
education assistance and adoption assistance); (c) retiree welfare benefit
plans (medical and life insurance); (d) qualified and non-qualified
defined benefit and defined contribution plans; and (e) vacation plans
(except that there shall be limitations set on the amount of vacation that
Executive may carry forward from any given calendar year to the next), but
excluding absence bank plans.

 

b.                                      Perquisites.
During the Employment Term, Executive shall also be entitled to receive such
perquisites as are generally provided to executives of the Employer from time
to time, as determined by the Board (or a compensation committee thereof).

 

c.                                       Executive
Supplemental Retirement Plan.  The Employer acknowledges that
Executive is entitled to the benefits detailed in the Management Supplemental
Benefit Plan and the schedules attached thereto (“MSBP”)
(attached hereto as Exhibit 1). 
Employer shall provide such benefits in accordance with the terms of the
MSBP as set forth in Exhibit 1.

 

d.                                      Business
Expenses. 
During the
Employment Term, reasonable business expenses incurred by Executive in the
performance of Executive’s duties hereunder shall be reimbursed by ITC in
accordance with ITC’s policies.

 

6.               Equity
Participation.  Executive’s
equity participation in the Company has been documented pursuant to the 2003
Stock Purchase and Option Plan for Key Employees of the Company and its
Subsidiaries and in a Management Stockholder’s Agreement, Stock Option
Agreement, Restricted Stock Award Agreement and Sale Participation Agreement,
each as executed by the Executive, the Company, and its shareholders, as
applicable (such documents, collectively, the “Equity
Documents”).  The Company and
Executive each acknowledges that the terms and conditions of the aforementioned
documents govern Executive’s acquisition, holding,

 

 

2

 

sale or other disposition of
Executive’s equity in the Company, and Executive’s and the Company’s rights
with respect thereto.

 

7.               Termination.  Executive’s
employment hereunder may be terminated by either party at any time and for any
reason, subject to the applicable provisions of this Section 7; provided
that Executive will be required to give the Employer at least 30 days advance
written notice of any resignation of Executive’s employment; and provided,
further, that the Employer will be required to give Executive at least
ten (10) business days advance notice of a termination of Executive’s
employment by the Employer without Cause (other than in the event of Executive’s
Disability) (the “Company Notice Period”), unless the Employer provides
Executive with a payment equal to the Base Salary that would otherwise be payable
in respect of any portion of the Company Notice Period which the Employer
elects to waive.  Notwithstanding any
other provision of this Agreement (and except as may otherwise be provided in
the Equity Documents), the provisions of this Section 7 shall exclusively
govern Executive’s rights upon termination of employment with the Employer.

 

a.                                       By the Employer For Cause or By
Executive Resignation Without Good Reason.

 

(i)  Executive’s
employment hereunder may be terminated by the Employer for Cause (as defined
below) and shall terminate automatically upon Executive’s resignation without
Good Reason.

 

(ii)  For
purposes of this Agreement, “Cause”
shall mean (A) Executive’s continued failure substantially to perform
Executive’s duties hereunder (other than as a result of total or partial
incapacity due to physical or mental illness) for a period of 10 days following
written notice by the Employer to Executive of such failure, (B) dishonesty
in the performance of Executive’s duties hereunder, (C) Executive’s conviction
of, or plea of nolo  contendere to a crime constituting (x) a
felony under the laws of the United States or any state thereof or (y) a
misdemeanor involving moral turpitude, (D) Executive’s willful malfeasance
or willful misconduct in connection with Executive’s duties hereunder or any
act or omission which is injurious to the financial condition or business
reputation of the Employer or affiliates or (E) Executive’s breach of the
provisions of Sections 8 or 9 of this Agreement.

 

(iii)  If
Executive’s employment is terminated by the Employer for Cause or if Executive
resigns without Good Reason (other than due to a Disability (as such term is
defined below)), Executive shall be entitled to receive:

 

(A)                                        any
Base Salary earned through the date of termination, payable in a lump sum at
such time as the Base Salary would otherwise be payable in accordance with the
normal payroll practices of the Employer;

 

(B)                                          any
Annual Bonus earned but unpaid as of the date of termination for any previously
completed fiscal year, payable in a lump sum at such time as such Annual Bonus
would normally be paid under the Incentive Plan (or, if later, such other
earliest date on which such amount can be paid as may be permitted under Section 409A
of the Internal Revenue Code, as

 

3

 

amended, and the rules and regulations
promulgated thereunder (collectively, “Section 409A”));

 

(C)                                          reimbursement
for any unreimbursed business expenses properly incurred by Executive, payable
at such time(s) and in accordance with ITC policy prior to the date of
Executive’s termination ((or such other earliest date on which such expenses
can be reimbursed as may be permitted under Section 409A); and

 

(D)                                         such
Employee Benefits, if any, as to which Executive may be entitled under the
applicable ITC Plans upon termination of employment hereunder (the payments and
benefits described in clauses (A) through (D) hereof being referred
to, collectively, as the “Accrued Rights”).

 

Following such termination of Executive’s employment
by the Employer for Cause or resignation by Executive, except as set forth in
this Section 7(a) (iii), Executive shall have no further rights to
any compensation or any other benefits under this Agreement.

 

b.                                      Disability or Death.

 

(i)  Executive’s
employment hereunder shall terminate upon Executive’s death and may be
terminated by the Employer if Executive experiences a “Disability” (as such term shall be defined
from time to time under Section 409A). 
Any question as to the existence of the Disability of Executive as to
which Executive and the Employer cannot agree shall be determined in writing by
a qualified independent physician mutually acceptable to Executive and the
Employer.  If Executive and the Employer
cannot agree as to a qualified independent physician, each shall appoint such a
physician and those two physicians shall select a third who shall make such
determination in writing.  The
determination of Disability made in writing to the Employer and Executive shall
be final and conclusive for all purposes of the Agreement.

 

(ii)  Upon
termination of Executive’s employment hereunder for Disability or death,
Executive, Executive’s then spouse, or Executive’s estate (as the case may be),
shall be entitled to receive:

 

(A)                                        the
Accrued Rights;

 

(B)                                          a
pro rata portion of the Target Bonus (calculated based on the number of days
Executive was employed hereunder during the calendar year in which the date of
such termination of employment occurs, relative to the applicable full calendar
year), payable in a lump sum within fifteen (15) business days after the date
of such termination of employment (or, if later, such other earliest date on
which such amount can be paid as may be permitted under Section 409A); and

 

(C)                                          full and immediate vesting
of any then unvested options to purchase shares of common stock of the Company
held by Executive immediately prior to the date of such termination of
employment.

 

4

 

(D)                                         the
vested benefits under the a) ITC Holdings, Inc. Management supplemental
Retirement Plan; b) the International Transmission Company Retirement Plan; c)
the International Transmission Company Savings and Investment Plan; and d) the
International Transmission Company Executive Deferred Compensation Plan.

 

Following Executive’s termination of employment due to
death or Disability, except as set forth in this Section 7(b) (ii),
Executive shall have no further rights to any compensation or any other
benefits under this Agreement.

 

c.                                       By the Employer Without Cause or
by Executive Resignation for Good Reason.

 

(i)  Executive’s employment hereunder may be terminated (A) by
the Employer without Cause (which shall not include Executive’s termination of
employment due to his Disability) or (B) or by Executive for Good Reason
(as defined below).

 

(ii)  For
purposes of this Agreement, “Good Reason”
shall mean (A) a greater than 10% reduction in the total value of
Executive’s Base Salary, Target Bonus, and Employee Benefits; (B) Executive’s
job responsibility and authority are substantially diminished; and (C) Executive’s
work location is relocated to more than fifty (50) miles from Novi, Michigan or
Ann Arbor, Michigan; and provided, further, that “Good Reason” shall cease to exist for an event on the 60th
day following the later of its occurrence or Executive’s knowledge thereof,
unless Executive has given the Employer written notice thereof prior to such
date.

 

(iii)  If
Executive’s employment is terminated by the Employer without Cause (other than
by reason of death or Disability) or by Executive for Good Reason, subject to
Executive’s execution of a release of all claims against Employer, Executive
shall be entitled to receive:

 

(A)                                        the
Accrued Rights;

 

(B)                                          a
pro rata portion of the Target Bonus (calculated based on the number of days
Executive was employed hereunder during the calendar year in which the date of
such termination of employment occurs, relative to the full calendar year),
payable in a lump sum within fifteen (15) business days after the date of such
termination of employment (or, if later, such other earliest date on which such
amount can be paid as may be permitted under Section 409A);

 

(C)                                          continued
payment in substantially equal installments, in accordance with the normal
payroll practices of Employer, for a period of two (2) years following the
date of termination of Executive’s employment hereunder (the “Severance Period”), of the
sum of (x) the Executive’s annual rate of Base Salary as in effect
immediately prior to such termination plus
(y) an amount equal to the average of each of the Annual Bonuses that were
payable to Executive (including any portion of any such Annual Bonus the
receipt of which Executive elected to defer) for the three fiscal years

 

5

 

immediately preceding the fiscal
year in which Executive’s employment terminates (such aggregate
amount, the “Severance Payment”); provided
that the amount of the Severance Payment shall be reduced by the present value
of any other cash severance or termination benefits payable to Executive under
any other plans, programs or arrangements of the Employer or its affiliates;
and provided, further, however, that in the event
Executive is a “specified employee” within the meaning of Section 409A,
payment of the Severance Payment shall not commence until the first business
day following the date that is six months after the date of termination of
Executive’s employment hereunder (or such other earliest date on which such
amount can be paid as may be permitted under Section 409A) (the period
during which no such payment may be made under Section 409A, the “409A Period”), at which time Employer shall (I) pay to
Executive, in one lump sum, an amount equal to the portion of the Severance
Payment that would otherwise have been payable during the 409A Period, and (II)
thereafter continue to pay the remaining unpaid portion of the Severance
Payment in accordance with the normal payroll practices of Employer through the
end of the Severance Period as otherwise provided in this Section 7(c)(iii)(C) above;

 

(D)                                         continued provision, during
the Severance Period, of the applicable Employee Benefits that are health and
welfare benefits (including health insurance as required to be provided by ITC
pursuant to the Consolidated Omnibus Budget Reconciliation Act), to be provided
by ITC at the same cost(s) to Executive as paid by other executives of the
Employer during such time;

 

(E)                                           in addition to the benefits
provided under subsection (D) above, Executive shall, regardless of
Executive’s age or number of years of service with the Employer on the date of
termination of employment, be deemed to have satisfied the age and service
requirements for benefit eligibility under the ITC Retiree Welfare Plan (as in
effect from time to time), and shall, at such time as Executive actually
achieves the age at which benefits would otherwise be provided to a participant
in such plan, be entitled to receive benefits under such plan on the same terms
and conditions as all other plan participants who actually satisfy such
requirements;  and

 

(F)                                           outplacement services of a
duration of not less than one year, and at a level commensurate with Executive’s
former position with the Company, and by a provider as determined by the
Employer in good faith; provided, however, that such services may
only be provided to the extent permitted under Section 409A.

 

Notwithstanding anything set forth in Section 7(c)(iii)(E),
if ITC terminates the ITC Retiree Welfare Plan (and does not replace it
with any successor plan that provides retiree welfare benefits that are
comparable to those provided under the ITC Retiree Welfare Plan (“Retiree
Benefits”)) either (x) prior to an event giving rise to the Employer’s
obligations under this Section 7(c)(iii)(E) or (y) at any time after
such event and, at such time, by operation of Section 7(c)(iii)(E) Executive
would otherwise be eligible to receive the benefits provided therein, then,
in satisfaction of all obligations the Employer would otherwise have under Section 7(c)(iii)(E),

 

6

 

the Employer shall be permitted to either (I)
establish and maintain a plan for the purpose of providing Executive with
Retiree Benefits for so long as the Employer would otherwise be required to
provide benefits under Section 7(c)(iii)(E) or (II) at that time (or,
if later, on such other earliest date on which amounts can be paid as may be
permitted under Section 409A) pay Executive in cash a lump sum amount
equal to the Employer’s cost of otherwise providing such benefits, the amount
of which shall be determined by an enrolled actuary retained by the Employer
for such purpose.

 

Following Executive’s termination of
employment by the Employer without Cause (other than by reason of Executive’s
death or Disability) or Executive for Good Reason, except as set forth in this Section 7(c)(iii),
Executive shall have no further rights to any compensation or any other
benefits under this Agreement.

 

d.                                      Notice of Termination.  Any purported termination of employment by
the Employer or by Executive (other than due to Executive’s death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 12(h) hereof. 
For purposes of this Agreement, a “Notice of Termination” shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment under the provision so indicated.

 

e.                                       Board/Committee Resignation;
Execution of Release of all Claims.

 

(i)  Upon termination of Executive’s employment for any reason,
Executive agrees to resign, as of the date of such termination and to the
extent applicable, from the Board (and any committees thereof) and the board of
directors (and any committees thereof) of any of the Company’s affiliates.

 

(ii)  Upon termination of Executive’s employment for any reason,
Executive agrees to execute a release of all claims against the Company, its
Subsidiaries, affiliates, shareholders, directors, officers, employees, and
agents, substantially in a form to be provided to Executive by Employer at such
time.  Notwithstanding anything set forth
in this Agreement to the contrary, upon termination of Executive’s employment
for any reason, Executive shall not receive any payments or benefits to which
he may be entitled hereunder (other than those which by law cannot be subject
to the execution of a release) (A) if Executive revokes such release or (B) until
eight (8) days after the date Executive signs such release (or until such
other date as applicable law may provide that Executive cannot revoke such
release).

 

8.               Non-Competition.

 

a.                                       Executive acknowledges and
recognizes the highly competitive nature of the businesses of the Employer and
its affiliates and accordingly agrees as follows:

 

(i)  During
the Employment Term and (x) in the event of a termination of Executive’s
employment without Cause by Employer (other than due to Executive’s Disability)
or for Good Reason by Executive, at all times during the Severance Period, or
(y) in the event of any termination of Executive’s employment for Cause by
Employer, due to Executive’s Disability or otherwise without Good Reason by
Executive, for a period of one year following

 

7

 

the date Executive ceases to be employed by the Employer (the
“Restricted Period”), Executive
will not, whether on Executive’s own behalf or on behalf of or in conjunction with
any person, firm, partnership, joint venture, association, corporation or other
business organization, entity or enterprise whatsoever (“Person”), directly or indirectly solicit
or assist in soliciting in competition with the Employer, the business of any
customer or prospective customer:

 

(A)                                        with
whom Executive had personal contact or dealings on behalf of the Employer
during the one-year period preceding Executive’s termination of employment;

 

(B)                                          with
whom employees reporting to Executive have had personal contact or dealings on
behalf of the Employer during the one year immediately preceding Executive’s
termination of employment; or

 

(C)                                          for
whom Executive had direct or indirect responsibility during the one year
immediately preceding Executive’s termination of employment.

 

(ii)  During
the Restricted Period, Executive will not directly or indirectly:

 

(A)                                        engage
in any business that competes with the business of the Employer or its
affiliates (including, without limitation, businesses which the Employer or its
affiliates have specific plans to conduct in the future and as to which
Executive is aware of such planning) in any geographical area that is within
100 miles of any geographical area where the Employer or its affiliates
manufactures, produces, sells, leases, rents, licenses or otherwise provides
its products or services (a “Competitive
Business”);

 

(B)                                          enter
the employ of, or render any services to, any Person (or any division or
controlled or controlling affiliate of any Person) who or which engages in a
Competitive Business;

 

(C)                                          acquire
a financial interest in, or otherwise become actively involved with, any
Competitive Business, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant; or

 

(D)                                         interfere
with, or attempt to interfere with, business relationships (whether formed
before, on or after the date of this Agreement) between the Employer or any of
its affiliates and customers, clients, suppliers, partners, members or investors
of the Employer or its affiliates.

 

(iii)  Notwithstanding
anything to the contrary in this Agreement, Executive may, directly or
indirectly own, solely as an investment, securities of any Person engaged in
the business of the Employer or its affiliates which are publicly traded on a
national or regional stock exchange or on the over-the-counter market if
Executive (A) is not a controlling person of, or a member of a group which
controls, such person and (B) does not, directly or indirectly, own 5% or
more of any class of securities of such Person.

 

8

 

(iv)  During
the Restricted Period, Executive will not, whether on Executive’s own behalf or
on behalf of or in conjunction with any Person, directly or indirectly:

 

(A)                                        solicit
or encourage any employee of the Employer or its affiliates to leave the
employment of the Employer or its affiliates; or

 

(B)                                          hire
any such employee who was employed by the Employer or its affiliates as of the
date of Executive’s termination of employment with the Employer or who left the
employment of the Employer or its affiliates coincident with, or within one
year prior to or after, the termination of Executive’s employment with the
Employer.

 

(v)  During
the Restricted Period, Executive will not, directly or indirectly, solicit or
encourage to cease to work with the Employer or its affiliates any consultant
then under contract with the Employer or its affiliates.

 

b.                                      It is expressly understood and
agreed that although Executive and the Employer consider the restrictions
contained in this Section 8 to be reasonable, if a final judicial
determination is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement is an unenforceable
restriction against Executive, the provisions of this Agreement shall not be
rendered void but shall be deemed amended to apply as to such maximum time and
territory and to such maximum extent as such court may judicially determine or
indicate to be enforceable. 
Alternatively, if any court of competent jurisdiction finds that any
restriction contained in this Agreement is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such finding shall not affect
the enforceability of any of the other restrictions contained herein.

 

9.               Confidentiality.

 

a.                                       Executive will not at any time
(whether during or after Executive’s employment with the Employer) (i) retain
or use for the benefit, purposes or account of Executive or any other Person;
or (ii) disclose, divulge, reveal, communicate, share, transfer or provide
access to any Person outside the Employer (other than its professional advisers
who are bound by confidentiality obligations), any non-public, proprietary or
confidential information — including without limitation rates, trade secrets,
know-how, research and development, software, databases, inventions, processes,
formulae, technology, designs and other intellectual property, information
concerning finances, investments, profits, pricing, costs, products, services,
vendors, customers, clients, partners, investors, personnel, compensation,
recruiting, training, advertising, sales, marketing, promotions, government and
regulatory activities and approvals — concerning the past, current or future
business, activities and operations of the Employer, its subsidiaries or
affiliates and/or any third party that has disclosed or provided any of same to
the Employer on a confidential basis (“Confidential Information”) without the prior written
authorization of the Board.

 

b.                                      “Confidential Information” shall not include any
information that is (i) generally known to the industry or the public
other than as a result of Executive’s breach of this covenant or any breach of
other confidentiality obligations by third parties; (ii) made legitimately
available to Executive by a third party without breach of any confidentiality

 

9

 

obligation; or (iii) required by law to be disclosed; provided
that Executive shall give prompt written notice to the Employer of such
requirement, disclose no more information than is so required, and cooperate
with any attempts by the Employer to obtain a protective order or similar
treatment.

 

c.                                       Except as required by law,
Executive will not disclose to anyone, other than Executive’s immediate family
and legal or financial advisors, the existence or contents of this Agreement; provided
that Executive may disclose to any prospective future employer the provisions
of Sections 8 and 9 of this Agreement provided they agree to maintain the
confidentiality of such terms.

 

d.                                      Upon termination of Executive’s
employment with the Employer for any reason, Executive shall (i) cease and
not thereafter commence use of any Confidential Information or intellectual
property (including without limitation, any patent, invention, copyright, trade
secret, trademark, trade name, logo, domain name or other source indicator)
owned or used by the Employer, its subsidiaries or affiliates; (ii) immediately
destroy, delete, or return to the Employer, at the Employer’s option, all
originals and copies in any form or medium (including memoranda, books, papers,
plans, computer files, letters and other data) in Executive’s possession or
control (including any of the foregoing stored or located in Executive’s
office, home, laptop or other computer, whether or not the Employer’s property)
that contain Confidential Information or otherwise relate to the business of
the Employer, its affiliates and subsidiaries, except that Executive may retain
only those portions of any personal notes, notebooks and diaries that do not
contain any Confidential Information; and (iii) notify and fully cooperate
with the Employer regarding the delivery or destruction of any other
Confidential Information of which Executive is or becomes aware.

 

e.                                       Executive shall not improperly
use for the benefit of, bring to any premises of, divulge, disclose,
communicate, reveal, transfer or provide access to, or share with the Employer
any confidential, proprietary or non-public information or intellectual
property relating to a former employer or other third party without the prior
written permission of such third party. 
Executive hereby indemnifies, holds harmless and agrees to defend the
Employer and its officers, directors, partners, employees, agents and
representatives from any breach of the foregoing covenant.  Executive shall comply with all relevant
policies and guidelines of the Employer, including regarding the protection of
confidential information and intellectual property and potential conflicts of
interest.  Executive acknowledges that
the Employer may amend any such policies and guidelines from time to time, and
that Executive remains at all times bound by their most current version.  Notwithstanding anything set forth herein,
the Company hereby represents and warrants that the Company shall not employ
the provisions of this Section 9 in a manner that would interfere with
Executive’s ability to obtain or retain any future employment that would not or
does not otherwise violate Section 8 of this Agreement.

 

f.                                         The provisions of this Section 9
shall survive the termination of Executive’s employment for any reason.

 

10

 

10.         Specific
Performance.  Executive
acknowledges and agrees that the Employer’s remedies at law for a breach or
threatened breach of any of the provisions of Section 8 or Section 9
would be inadequate and the Employer would suffer irreparable damages as a
result of such breach or threatened breach. 
In recognition of this fact, Executive agrees that, in the event of such
a breach or threatened breach, in addition to any remedies at law, the
Employer, without posting any bond, shall be entitled to cease making any payments
or providing any benefit otherwise required by this Agreement and obtain
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which
may then be available.

 

11.         Arbitration.  Except as provided in Section 10,
any other dispute arising out of or asserting breach of this Agreement, or any
statutory or common law claim by Executive relating to his employment under
this Agreement or the termination thereof (including any tort or discrimination
claim), shall be exclusively resolved by binding statutory arbitration in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association.  Such
arbitration process shall take place within 100 miles of the Detroit, Michigan
metropolitan area.  A court of competent
jurisdiction may enter judgment upon the arbitrator’s award.  In the event of any such dispute, all
reasonable fees and disbursements of counsel incurred by Executive shall be
reimbursed by Employer within a reasonable period of time following receipt
from Executive (or Executive’s counsel) of a final bill invoicing all such fees
and disbursements, so  long  as the arbitrator does not
determine that such dispute was based on claims made by Executive that were
frivolous or in bad faith.

 

12.         Miscellaneous.

 

a.                                       Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan, without regard
to conflicts of laws principles thereof.

 

b.                                      Entire Agreement/Amendments.  Except with respect to the matters contained
in the Equity Documents, this Agreement contains the entire understanding of
the parties with respect to the employment of Executive by the Employer.  There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties with
respect to the subject matter herein other than those expressly set forth
herein.  This Agreement may not be
altered, modified, or amended except by written instrument signed by the
parties hereto.

 

c.                                       No Waiver.  The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party’s rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.

 

d.                                      Severability.  In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.

 

11

 

e.                                       Assignment.  This Agreement, and all of Executive’s rights
and duties hereunder, shall not be assignable or delegable by Executive.  Any purported assignment or delegation by
Executive in violation of the foregoing shall be null and void ab initio and of no force and
effect.  This Agreement may be assigned
by the Employer to a person or entity that is an affiliate or a successor in
interest to substantially all of the business operations of the Employer.  Upon such assignment, the rights and
obligations of the Employer hereunder shall become the rights and obligations
of such affiliate or successor person or entity.

 

f.                                         Set Off; No Mitigation.  The Employer’s obligation to pay Executive
the amounts provided and to make the arrangements provided hereunder shall be
subject to set-off, counterclaim or recoupment of amounts owed by Executive to
the Employer or its affiliates. 
Executive shall not be required to mitigate the amount of any payment
provided for pursuant to this Agreement by seeking other employment or
otherwise and the amount of any payment provided for pursuant to this Agreement
shall not be reduced by any compensation earned as a result of Executive’s
other employment or otherwise.

 

g.                                      Successors; Binding Agreement.  This Agreement shall inure to the benefit of
and be binding upon the Company, its subsidiaries, Subsidiaries, and the
Executive and any personal or legal representatives, executors, administrators,
successors, assigns, heirs, distributees, devisees and legatees.  Further, the Company will require any
successor (whether, direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. 
As used in this Agreement, “Company”
shall mean the Company and any successor to its business and/or assets which is
required by this Section 12(g) to assume and agree to perform this
Agreement or which otherwise assumes and agrees to perform this Agreement; provided,
however, in the event that any successor, as described above, agrees to
assume this Agreement in accordance with the preceding sentence, as of the date
such successor so assumes this Agreement, the Company shall cease to be liable
for any of the obligations contained in this Agreement.

 

h.                                      Notice.  For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered by hand or overnight
courier or three days after it has been mailed by United States registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth below in this Agreement, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.

 

If to the Employer:

 

ITC Holdings Corp.

39500 Orchard Hill Place

Suite 200

Novi, Michigan 48375

Attention:  
General Counsel

 

With a copy to:

 

12

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Attention:  
Alvin H. Brown, Esq.

 

If to Executive:

 

To the most recent address of Executive set forth in Employer’s
personnel records of the Employer.

 

i.                                          Executive Representation.  Executive hereby represents to the Employer
that the execution and delivery of this Agreement by Executive and the Employer
and the performance by Executive of Executive’s duties hereunder shall not
constitute a breach of, or otherwise contravene, the terms of any employment
agreement or other agreement or policy to which Executive is a party or
otherwise bound.

 

j.                                          Prior Agreements. This Agreement supercedes all
prior agreements and understandings (including, without limitation, any verbal
agreements, offer letters or summaries of principal terms pertaining to the
employment of Executive by the Employer, between Executive and the Employer
and/or its affiliates regarding the terms and conditions of Executive’s
employment with the Employer and/or its affiliates; provided, however,
that the Equity Documents shall govern the terms and conditions of Executive’s
equity holdings in the Company.

 

k.                                       Cooperation.  Executive shall provide Executive’s
reasonable cooperation in connection with any action or proceeding (or any
appeal from any action or proceeding) that relates to events occurring during
Executive’s employment hereunder.  This
provision shall survive any termination of this Agreement.

 

l.                                          Taxes.

 

(i)  Withholding Taxes. 
The Employer may withhold from any amounts payable under this Agreement
such Federal, state and local taxes as may be required to be withheld pursuant
to any applicable law or regulation.

 

(ii)  409A
Penalties.  Notwithstanding any other
provision of this Agreement, while Executive acknowledges that Employer may
take actions hereunder as are required to comply with or to minimize any
potential interest charges and/or additional taxes as may be imposed by Section 409A
(the “409A Penalties”) with
respect to any payment or benefit due to Executive under this Agreement
(including a delay in payment until six months after the date of
termination of Executive’s employment hereunder, in the event Executive is a “specified
employee” within the meaning of Section 409A), the parties hereby confirm that all such payments and
benefits due to Executive will in fact be made or provided at the earliest time
at which it is determined either that no 409A Penalties are applicable, or that
such 409A Penalties will apply without exception.  Further, if at any time it is determined that
any payment or benefit due to Executive under this Agreement may be subject to
any 409A Penalties, the Employer shall (A) be permitted to modify the
provision of such payment or benefit if such modification would reasonably be
expected to eliminate or minimize such 409A Penalties, so  long  as
such

 

13

 

modification does not adversely affect, in
any material respect, the economic benefit to Executive of such payment or
benefit, or (B) to the extent that the course of action proposed in clause
(A) cannot be effected, within fifteen (15) days after the date of such
determination (or such other earliest date on which such amount can be paid as
may be permitted under Section 409A) pay to Executive an additional amount
equal to such Section 409A Penalties, along with such additional amount as
is required to pay any income and/or payroll taxes due on the 409A Penalties
and the additional tax gross-up payment (subject to the computational rules set
forth in Section 12(b)).

 

(iii)  Parachute
Taxes.  If at any time it is
determined that any payment and/or benefit provided to Executive by Employer
pursuant to this Agreement or otherwise (the “Employer
Payments”), would be subject to the tax (the “Excise Tax”)
imposed by Section 4999 of the Code, the Employer shall within fifteen
(15) days after the date of such determination (or such other earliest date on
which such amount can be paid as may be permitted under Section 409A) pay
to Executive an additional amount (the “Gross-up Payment”)
such that the net amount retained by Executive, after deduction of any Excise
Tax due and any income and/or payroll taxes due on the Gross-up Payment (but
before payment of any income and/or payroll taxes due on the Employer
Payments), shall be equal to the Employer Payments.  For purposes of making any computations
hereunder: (i) the Employer’s independent accountants, at the Employer’s
expense, shall make such reasonable assumptions and determinations as are
consistent with Sections 4999 and 280G of the Code; and (ii) Executive
shall be deemed to pay income taxes at the highest applicable marginal rates
for the calendar year in which the Gross-up Payment is to be made.  In the event any initial determination under
this provision is subsequently modified by the Employer’s accountants or the
Internal Revenue Service, Executive and Employer agree to reasonably cooperate
to resolve any matter related thereto, including modification of the Gross-up
Payment previously received.

 

m.                                    Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 

[Signatures on next page.]

 

14

 

[SIGNATURE PAGE TO
EMPLOYMENT AGREEMENT]

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

 

 

	
  ITC HOLDINGS CORP.:

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Joseph L. Welch

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

15

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