Docstoc

ITC HOLDINGS S-1/A Filing

Document Sample
ITC HOLDINGS  S-1/A Filing Powered By Docstoc
					QuickLinks -- Click here to rapidly navigate through this document
                                  As filed with the Securities and Exchange Commission on June 10, 2005

                                                                                                                 Registration No. 333-123657




                       SECURITIES AND EXCHANGE COMMISSION
                                                             Washington, D.C. 20549


                                                         AMENDMENT NO. 2
                                                              TO

                                                              FORM S-1
                                                        REGISTRATION STATEMENT
                                                                UNDER
                                                       THE SECURITIES ACT OF 1933



                                                 ITC HOLDINGS CORP.
                                             (Exact Name of Registrant as Specified in its Charter)

                  Michigan                                             4911                                       32-0058047
        (State or other jurisdiction of                   (Primary Standard Industrial                         (I.R.S. Employer
       incorporation or organization)                     Classification Code Number)                       Identification Number)

                                                            39500 Orchard Hill Place
                                                                    Suite 200
                                                              Novi, Michigan 48375
                                                                 (248) 374-7100
                                          (Address, including zip code, and telephone number, including
                                              area code, of registrant's principal executive offices)

                                                       Daniel J. Oginsky, Esq.
                                           Vice President, General Counsel and Secretary
                                                         ITC Holdings Corp.
                                                 39500 Orchard Hill Place, Suite 200
                                                        Novi, Michigan 48375
                                                            (248) 374-7045
                 (Name and Address, including Zip Code, and Telephone Number, including Area Code of agent for service)




                                                                 With copies to:
                      Risë B. Norman, Esq.                                                       Erica A. Ward, Esq.
                Simpson Thacher & Bartlett LLP                                                 Richard B. Aftanas, Esq.
                     425 Lexington Avenue                                             Skadden, Arps, Slate, Meagher & Flom LLP
                New York, New York 10017-3954                                                    Four Times Square
                         (212) 455-2000                                                   New York, New York 10036-5622
                                                                                                   (212) 735-3000

     Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration
Statement.
     If the securities being registered on this form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. 

     If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 


.

    If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. 


.

    If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. 


.

     If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, please check the following box. 


       The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, or until this registration statement shall become effective on such
date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to
sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not
permitted.

PROSPECTUS

                                                  Subject to Completion, dated June 10, 2005

                                                           12,500,000 Shares




                                                            Common Stock

This is the initial public offering of ITC Holdings Corp. common stock. The selling stockholder is offering 10,000,000 shares of our common
stock and we are offering 2,500,000 shares of our common stock. No public market currently exists for our common stock. We will not receive
any proceeds from the sale of our common stock by the selling stockholder.

We intend to apply for the listing of our common stock on the New York Stock Exchange under the symbol "ITC." We currently estimate that
the initial public offering price will be between $19.00 and $21.00 per share.

Investing in our common stock involves risks. See "Risk Factors" beginning on page 11.
                                                                                        Per Share         Total

Public offering price                                                                   $             $
Underwriting discounts and commissions                                                  $             $
Proceeds to the selling stockholder (before expenses)                                   $             $
Proceeds to ITC Holdings Corp. (before expenses)                                        $             $

The selling stockholder has granted the underwriters a 30-day option to purchase up to an additional 1,875,000 shares of common stock on the
same terms and conditions as set forth above if the underwriters sell more than 12,500,000 shares of common stock in this offering.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


Lehman Brothers, on behalf of the underwriters, expects to deliver the shares on or about           , 2005.




LEHMAN BROTHERS                                  CREDIT SUISSE FIRST BOSTON                                       MORGAN STANLEY
               , 2005
                                                             TABLE OF CONTENTS

                                                                                                                                               Page

Summary                                                                                                                                            1
Risk Factors                                                                                                                                      11
Forward-Looking Statements                                                                                                                        21
Use of Proceeds                                                                                                                                   22
Dividend Policy                                                                                                                                   22
Capitalization                                                                                                                                    24
Dilution                                                                                                                                          25
Selected Consolidated Financial Data                                                                                                              26
Management's Discussion and Analysis of Financial Condition and Results of Operations                                                             30
Industry Overview                                                                                                                                 55
Rate Setting                                                                                                                                      58
Business                                                                                                                                          61
Management                                                                                                                                        68
Principal and Selling Stockholders                                                                                                                81
Certain Relationships and Related Party Transactions                                                                                              83
Description of Our Indebtedness                                                                                                                   89
Description of Our Capital Stock                                                                                                                  92
Shares Eligible for Future Sale                                                                                                                   98
Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders                                                             100
Underwriting                                                                                                                                     103
Legal Matters                                                                                                                                    107
Experts                                                                                                                                          107
Where You Can Find Additional Information                                                                                                        107
Index to Financial Statements                                                                                                                    F-1


     Until         , 2005, 25 days after the date of this prospectus, all dealers that effect transactions in our common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or subscriptions.


                                                          ABOUT THIS PROSPECTUS

     You should rely only on the information contained in this prospectus. We, the selling stockholder and the underwriters have not authorized
any other person to provide you with information different from that contained in this prospectus. If any person provides you with different or
inconsistent information, you should not rely on it. We and the selling stockholder are only offering to sell, and only seeking offers to buy, the
common stock in jurisdictions where offers and sales are permitted.

      The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since
that date.

     Unless otherwise noted or the context requires, all references in this prospectus to:

     •
            "ITC Holdings" are references to ITC Holdings Corp. and not any of its subsidiaries;

     •
            "ITC" are references to International Transmission Company, a wholly-owned subsidiary of ITC Holdings; and

     •
            "We," "our" and "us" are references to ITC Holdings, together with all of its subsidiaries.

     All references in this prospectus to "kV" are references to kilovolts (one kilovolt equaling 1,000 volts). All references to "MW" are
references to megawatts (one megawatt equaling 1,000,000 watts), all references to "kW" are references to kilowatts (one kilowatt equaling
1,000 watts) and all references to "TWh" are to terawatt hours (one terawatt hour equaling 1,000,000,000,000 watt hours).

                                                                          i
                                                                    SUMMARY

      This summary highlights selected information in this prospectus, but it may not contain all of the information that you should consider
before deciding to invest in our common stock. You should read this entire prospectus carefully, including the "Risk Factors" section and our
historical financial statements, which are included elsewhere in this prospectus.


                                                                   Our Business

Overview

      Our operating subsidiary, ITC, is the first independently owned and operated electricity transmission company in the United States. We
operate, maintain and invest in transmission infrastructure in order to enhance system integrity and reliability and relieve transmission
constraints. By pursuing this goal, we seek to reduce the overall cost of delivered energy for end-use consumers by providing them with access
to electricity from the lowest cost electricity generation sources. ITC owns a fully-regulated, high-voltage system that transmits electricity to
local electricity distribution facilities from generating stations in Michigan and surrounding areas. The local distribution facilities connected to
the ITC transmission system served a population of approximately 4.9 million people, as of December 31, 2004, in an area comprised of 13
southeastern Michigan counties, including the Detroit metropolitan area.

     As a transmission utility with rates regulated by the Federal Energy Regulatory Commission, ITC earns revenues through fees charged for
the use of its electricity transmission system by its customers, which include investor-owned utilities, municipalities, co-operatives, power
marketers and alternative energy suppliers. The rates charged to ITC's customers are established on a cost-of-service model, which allows for
the recovery of expenses and income taxes and a return on and of invested capital.

The Electricity Transmission Sector

     Electricity transmission is the flow of electricity at high voltages from electricity generation resources to local distribution systems. In the
United States, electricity transmission assets are predominantly owned, operated and maintained by utilities that also own electricity generation
and distribution assets, known as vertically integrated utilities. The vertically integrated model has discouraged investment in transmission
systems and has inhibited the provision of non-discriminatory transmission access to all market participants. Recent trends have resulted in
significant transmission constraints, increased stress on aging transmission equipment, power outages and other power quality problems. Given
historical underinvestment, continued growth in demand and the costs associated with outages, we believe a significant opportunity exists to
invest in transmission infrastructure with the support of policy makers and end-use consumers. See "Industry Overview" for a further
description of the electricity transmission sector.

Our Operations

     ITC began operations under independent ownership in February 2003. We have no ownership of or financial interest in electricity
generation or distribution assets, allowing us to focus solely on the transmission of electricity and investment in transmission infrastructure.
ITC's primary operating responsibilities include scheduling outages on system elements to allow for maintenance and construction, balancing
electricity generation and demand, and monitoring flows over transmission lines to ensure physical limits are not exceeded.

     ITC's operating assets consist primarily of approximately 2,700 circuit miles of transmission lines, approximately 16,000 transmission
towers and poles and 30 stations, which connect ITC's transmission lines to generation resources, distribution facilities and neighboring
transmission systems.

     ITC is committed to investing capital in its transmission system to improve reliability and meet its customers' ongoing needs. By prudently
investing capital in our transmission system, we believe we will

                                                                          1
enhance our earnings growth potential as we continue to earn a regulated return on this expanding rate base. When ITC began independent
operations, its net property, plant and equipment was approximately $435.8 million. Since that time, ITC has invested approximately
$122.5 million in property, plant and equipment and expects to invest approximately $100 million in additional property, plant and equipment
in each of 2005 and 2006. Prudent capital investment is indicative of our growth strategy.

     Property, plant and equipment additions in excess of depreciation and amortization expense as illustrated below result in an expansion of
ITC's rate base.




(a)
       Amount represents additions to property, plant and equipment. Additions to property, plant and equipment differ from cash
       expenditures for property, plant and equipment primarily due to construction labor and materials costs incurred as of the period end, but
       not yet paid for.

(b)
       Amount represents depreciation and amortization expense related to property, plant and equipment.

(c)
       Approximate amount that ITC expects to invest in property, plant and equipment additions.

     Substantially all of ITC's revenues for the year ended December 31, 2004 were derived from providing transmission service. ITC's
principal customer is The Detroit Edison Company, a wholly-owned subsidiary of DTE Energy Company, or DTE Energy, which accounted
for approximately 68% of ITC's revenues for the year ended December 31, 2004. We generated revenues, net income and adjusted EBITDA of
$126.4 million, $2.6 million and $57.7 million, respectively, for the year ended December 31, 2004. If ITC's customers had been billed the rate
under the Attachment O formula, we would have generated revenues of $168.5 million for the year ended December 31, 2004. We generated
revenues, net income and adjusted EBITDA of $42.5 million, $7.9 million and $26.5 million, respectively, for the three months ended
March 31, 2005. See "—Summary Historical Financial Data" for the definition of adjusted EBITDA and a discussion of its usefulness as a
measure of our overall financial and operating performance and a reconciliation of net income to adjusted EBITDA. As described below, ITC's
customers were charged a frozen rate until December 31, 2004.

Regulation and Ratemaking

      To further its policy objective of establishing the independent operation and ownership of, and investment in, transmission facilities, the
Federal Energy Regulatory Commission authorized our acquisition of the transmission assets of DTE Energy, and allowed ITC to earn a return
of 13.88% on the equity portion of its capital structure. The Federal Energy Regulatory Commission, in an order dated May 5, 2005, confirmed
that ITC Holdings and ITC will remain independent of market participants after this offering, subject to the enforcement of the restrictions on
ownership and voting by market participants in ITC Holdings' Amended and Restated Articles of Incorporation and notifications to the Federal
Energy Regulatory Commission regarding such ownership. Based on its independence from market participants, ITC will continue to collect
the 100 basis point incentive portion of its rate of return. As of December 31, 2004, equity constituted 60.8% of ITC's capital structure.

                                                                        2
     ITC's rates are determined using a Federal Energy Regulatory Commission-approved formulaic rate setting mechanism known as
Attachment O and automatically adjust annually to account for year-to-year changes in network load, expenses and return on and of invested
capital. Beginning June 1, 2005 and each June thereafter, ITC will implement a new rate calculated using data from the previous calendar year
as described above.

      On January 1, 2005, ITC's billed rate increased 47% from $1.075 per kW/month to $1.587 per kW/month, as it moved from a frozen rate
with a revenue deferral, approved in connection with our acquisition of ITC, to an Attachment O formula rate. The revenue deferral resulted
from the difference between the revenues ITC would have collected under Attachment O and the actual revenues ITC received based on the
frozen rate. ITC's customers would have been billed a rate of $1.278 per kW/month during the period from June 1, 2003 to May 31, 2004 and a
rate of $1.587 per kW/month during the period from June 1, 2004 to December 31, 2004 had its customers been charged the Attachment O rate
during those periods. Based upon 2004 year-end results, the rate for the one-year period which started June 1, 2005 is $1.594 per kW/month.

Business Strengths

     We believe that ITC's business combines the stability of a regulated utility with significant opportunities for growth through prudent
capital investment. Our business strengths include:

     Stability.   We believe that we benefit from the following strengths that enhance our stability as a regulated utility:

     •
             supportive regulatory environment for independent transmission companies;

     •
             efficient and predictable rate setting process;

     •
             minimal weather, commodity and energy demand risk;

     •
             attractive service territory;

     •
             lack of competition;

     •
             operational excellence; and

     •
             experienced and incentivized management team.

     Growth. Our growth strategy is aligned with the Federal Energy Regulatory Commission's policy objective to promote needed
investment in transmission infrastructure, improve reliability and reduce system constraints. Key elements of our strategy are significant
prudent investment in ITC's existing transmission system and the pursuit of acquisitions of other transmission systems.

Risks Related to Our Business

     Our ability to grow our business is subject to certain risks, including those generally associated with the electricity transmission industry.
In addition, ITC Holdings is a holding company and is not able to pay dividends to its stockholders and fulfill its cash obligations unless it
receives dividends or other payments from ITC. We had $519.8 million of consolidated indebtedness as of March 31, 2005, which may
adversely affect our ability to generate cash flow, pay dividends on our common stock, remain in compliance with debt covenants and operate
our business. In addition, we are a "controlled company" within the meaning of the New York Stock Exchange rules. Any of these factors or
other factors described in this prospectus under "Risk Factors" may limit our ability to grow our business.


      Our principal executive offices are located at 39500 Orchard Hill Place, Suite 200, Novi, Michigan 48375 and our telephone number at
that address is (248) 374-7100. ITC's website is located at www.itctransco.com. The information on ITC's website is not part of this prospectus.

                                                                         3
                                                               Ownership Structure

     ITC Holdings is controlled by International Transmission Holdings Limited Partnership, a Michigan limited partnership, or the IT
Holdings Partnership, which is managed by its general partner, Ironhill Transmission, LLC. The sole member of Ironhill Transmission, LLC is
Mr. Lewis M. Eisenberg. We refer to Ironhill Transmission, LLC, together with its sole member, Mr. Lewis Eisenberg, as the General Partner.
The IT Holdings Partnership has issued limited partnership interests to:

      •
               investment partnerships that are managed and advised by affiliates of Kohlberg Kravis Roberts & Co. L.P., or KKR;

      •
               investment partnerships that are managed and advised by affiliates of Trimaran Capital Partners, L.L.C., or Trimaran; and

      •
               Stockwell Fund, L.P., or Stockwell, an entity formed to make direct investments for certain State of Michigan retirement funds.

     The chart below illustrates the ownership of ITC Holdings on a fully-diluted basis after giving effect to the exercise of all outstanding
stock options held by management and employees of ITC Holdings at March 31, 2005, but before giving effect to this offering.




(1)
          KKR Millennium Fund, L.P. and KKR Partners III, L.P. (Series A).

(2)
          Trimaran Fund II, L.L.C., Trimaran Parallel Fund II, L.P., Trimaran Capital, L.L.C., CIBC Employee Private Equity Fund (Trimaran)
          Partners and CIBC MB Inc.

(3)
          After giving effect to this offering, the IT Holdings Partnership will own approximately 55.01%, investors in this offering will own
          approximately 35.04% and our management and employees will own approximately 9.95% of our outstanding common stock on a
          fully-diluted basis after giving effect to the exercise of all outstanding stock options held by management and employees of ITC
          Holdings and assuming that the underwriters do not exercise their over-allotment option.

                                                                          4
                                                                  The Offering

Shares of common stock outstanding prior to this offering                30,701,974.

Shares of common stock offered by the selling stockholder                10,000,000.

Shares of common stock offered by ITC Holdings Corp.                     2,500,000.

Shares of common stock outstanding after this offering                   33,201,974.

Use of proceeds                                                          We estimate that our net proceeds from this offering, after deducting
                                                                         estimated underwriting discounts and commissions and estimated
                                                                         offering expenses, will be approximately $43.2 million, assuming an
                                                                         initial public offering price of $20.00 per share, which is the midpoint
                                                                         of the range set forth on the cover page of this prospectus.

                                                                         We intend to use the net proceeds we receive from this offering to
                                                                         repay borrowings under ITC Holdings' revolving credit agreement and
                                                                         for general corporate purposes, including for capital expenditures at
                                                                         ITC.

                                                                         We will not receive any of the proceeds from the sale of shares of our
                                                                         common stock by the selling stockholder in this offering.

Dividend policy                                                          We currently intend to pay quarterly dividends on our common stock.
                                                                         We anticipate paying a dividend in the third quarter of 2005 and paying
                                                                         an aggregate of approximately $17.5 million in dividends to our
                                                                         stockholders in 2005.

Proposed New York Stock Exchange symbol                                  "ITC."

    Unless we specifically state otherwise, all information in this prospectus:

    •
            assumes no exercise of the over-allotment option by the underwriters;

    •
            gives retroactive and prospective effect to a 3.34-for-one stock split of our outstanding shares of common stock that will be
            effected immediately prior to the completion of this offering;

    •
            gives effect to the adjustment of the number of shares authorized under the Amended and Restated 2003 Stock Purchase and
            Option Plan for Key Employees of ITC Holdings Corp. and its Subsidiaries, or the 2003 Stock Purchase and Option Plan, as well
            as the share amounts of stock grants and the number of options and exercise prices of options under the 2003 Stock Purchase and
            Option Plan as a result the 3.34-for-one stock split;

    •
            gives effect to our Amended and Restated Articles of Incorporation, which will increase our authorized common stock to
            100 million shares prior to the completion of this offering; and

                                                                        5
     •
            assumes that none of the remaining 2,262,808 shares of common stock reserved for issuance under the 2003 Stock Purchase and
            Option Plan have been issued, including 1,991,887 shares of common stock issuable upon the exercise of outstanding stock options
            at an exercise price of $7.48 per share, 802,104 of which were vested as of March 31, 2005.




                                                                  Risk Factors

     Investing in our common stock involves substantial risk. You should carefully consider all of the information set forth in this prospectus
and, in particular, should evaluate the specific factors set forth under "Risk Factors" in deciding whether to invest in our common stock.

                                                                        6
                                                     Summary Historical Financial Data

     Set forth below is summary historical financial, operating and other data of ITC's predecessor and summary historical consolidated
financial, operating and other data of ITC Holdings and subsidiaries, in each case, at the dates and for the periods indicated.

     The summary historical financial data presented on the following pages for the year ended December 31, 2002, and for the two-month
period ended February 28, 2003, have been derived from audited financial statements of ITC's predecessor included elsewhere in this
prospectus. The summary historical consolidated financial data presented on the following pages as of and for the period from February 28,
2003 through December 31, 2003, and as of and for the year ended December 31, 2004, have been derived from our audited consolidated
financial statements included elsewhere in this prospectus. The summary historical condensed consolidated financial data presented on the
following pages as of March 31, 2005 and for the three months ended March 31, 2004 and 2005 have been derived from our unaudited
condensed consolidated financial statements included elsewhere in this prospectus. The financial data presented for the three months ended
March 31, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

    Prior to June 1, 2001, the provision of electricity transmission services over the facilities now owned by ITC was undertaken as part of
The Detroit Edison Company's, or Detroit Edison's, transmission business which was integrated with Detroit Edison's distribution business. On
May 31, 2001, Detroit Edison's transmission business was separated from Detroit Edison's distribution business and was contributed to ITC's
predecessor.

     From June 1, 2001 until February 28, 2003, ITC's predecessor was operated as a subsidiary of DTE Energy.

     On February 28, 2003, ITC Holdings acquired ITC's predecessor from DTE Energy and began operating the transmission system as a
stand-alone company, independent of DTE Energy and Detroit Edison. For the period from March 1, 2003 to December 31, 2004, ITC's rate
was $1.075 per kW/month based on a frozen rate with a revenue deferral to be recovered in future periods. The term "Predecessor ITC" refers
to the ITC business prior to its acquisition by ITC Holdings on February 28, 2003.

    The summary historical financial data presented below should be read together with "Selected Financial Data," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," Predecessor ITC's financial statements and the notes to those statements, our
consolidated financial statements and the notes to those statements, in each case, included elsewhere in this prospectus.

                                                                      7
                                                                                                                  ITC Holdings
                                                                                                                 and Subsidiaries

                                          Predecessor ITC

                                                                                                                                    Three Months Ended March 31,

                                                                               Period From
                                  Year Ended       Two-Month Period         February 28, 2003
                                  December 31,     Ended February 28,           Through                 Year Ended
                                      2002              2003(a)            December 31, 2003(a)      December 31, 2004

                                                                                                                                     2004                 2005

                                                                        (in thousands, except share and per share data)


Statement of operations
data:
Operating Revenues            $       137,535 $              20,936        $           102,362 $                126,449 $                   27,544 $             42,460

Operating Expenses:
  Operation and
  maintenance                           34,699                 5,675                     22,902                  24,552                      6,394                 6,522
  General and
  administrative                            —                     —                      26,342                  24,412                      6,448                 5,286
  Depreciation and
  amortization                          21,996                 3,665                     21,463                  29,480                      6,966                 8,018
  Taxes other than income
  taxes                                 15,776                 4,298                     11,499                  20,840                      5,424                 4,299

       Total operating
       expenses                         72,471               13,638                      82,206                  99,284                     25,232               24,125


Operating Income                        65,064                 7,298                     20,156                  27,165                      2,312               18,335


Other Expenses (Income):
  Interest expense                          58                    —                      21,630                  25,585                      6,291                 6,854
  Allowance for equity
  funds used in
  construction                              —                     —                        (322 )                 (1,691 )                   (318 )                (580 )
  Loss on extinguishment
  of debt                                   —                     —                      11,378                       —                         —                    —
  Other income                          (1,720 )                (147 )                     (197 )                 (1,289 )                     (12 )               (305 )
  Other expense                            245                    45                         27                      283                        37                  176

       Total other expenses
       (income)                         (1,417 )                (102 )                   32,516                  22,888                      5,998                 6,145


Income (Loss) Before
Income Taxes                            66,481                 7,400                    (12,360 )                  4,277                    (3,686 )             12,190


Income Tax Provision
(Benefit)                               23,268                 3,915                     (4,306 )                  1,669                    (1,268 )               4,320


Net Income (Loss)             $         43,213 $               3,485       $             (8,054 ) $                2,608 $                  (2,418 ) $             7,870

Net Income (loss) per
share data:(b)
Basic net income (loss) per
share:
   Net income (loss) per
   share                     $        (0.27 ) $         0.09 $        (0.08 ) $               0.26
   Weighted average shares       29,339,394       30,183,886     30,159,066             30,341,967
Diluted net income (loss)
per share:
   Net income (loss) per
   share                     $        (0.27 ) $         0.08 $        (0.08 ) $               0.25
   Weighted average shares       29,339,394       30,899,548     30,159,066             31,140,306

                                                                                  (footnotes on next page)


                                 8
                                                                                       As of December 31,                                  As of March 31, 2005

                                                                                    2003                    2004                        Acual                As Adjusted

                                                                                                                   (in thousands)


Balance sheet data:
Cash and cash equivalents                                                   $           8,139 $                14,074 $                     3,863 $                 26,031
Working capital (deficit)                                                             (17,633 )               (27,117 )                    (6,870 )                 15,298
Property, plant and equipment—net                                                     459,393                 513,684                     543,251                  543,251
Total assets                                                                          751,657                 808,847                     833,087                  856,160
Total debt:
    ITC Holdings                                                                      265,866                 273,485                     280,315                  266,015
    ITC                                                                               184,887                 209,945                     239,448                  239,448
Stockholders' equity                                                                  191,246                 196,602                     204,846                  243,668
                                                                                                                     ITC Holdings
                                            Predecessor ITC                                                         and Subsidiaries

                                                                                  Period From
                                                                                February 28, 2003
                                                                                    Through
                                                                                  December 31,
                                                                                    2003(a)                                             Three Months Ended March 31,

                                  Year Ended             Two-Month                                          Year Ended
                                  December 31,          Period Ended                                        December 31,
                                      2002           February 28, 2003(a)                                       2004

                                                                                                                                           2004                   2005

                                                                  (in thousands)


Other data:
Adjusted EBITDA(c)            $          88,535     $             11,065        $          41,789     $              57,651         $            9,253   $          26,482
Capital expenditures                     15,360                    5,616                   26,805                    76,779                     21,549              36,112
                                                                      2002                          2003                                2004                        2005

Operating data:
Monthly Peak Load (MW):
  January                                                               7,668                         7,608                              8,022                       8,090
  February                                                              7,572                         7,437                              7,656                       7,672
  March                                                                 7,566                         7,542                              7,434                       7,562
  April                                                                 8,386                         6,934                              7,305                       7,299
  May                                                                   8,702                         7,017                              8,718                       7,678
  June                                                                 11,067                        11,266                             11,114
  July                                                                 11,423                        10,225                             11,344
  August                                                               11,438                        11,617                             10,877
  September                                                            10,894                         8,717                              9,841
  October                                                               8,645                         7,369                              7,197
  November                                                              7,271                         7,843                              7,832
  December                                                              7,772                         8,124                              8,469


(a)
      Our business is seasonal, with peak transmission loads occurring during the summer air conditioning months. Annualized financial data
      for the two-month period ended February 28, 2003 and the period from February 28, 2003 through December 31, 2003 are not
      indicative of results for the full year.

(b)
      Net income (loss) per share is calculated by dividing net income (loss) by the weighted average shares outstanding. Weighted average
      shares for the purposes of the basic net income (loss) per share calculation has been adjusted to reflect the 3.34-for-one stock split that
      will be effected immediately prior to the completion of this offering. Basic net income (loss) per share excludes 405,485 and 337,273
      shares of restricted common stock at December 31, 2003 and 2004, respectively, and 438,523 and 344,629 shares of restricted common
      stock at March 31, 2004 and 2005, respectively, that were issued and outstanding, but had not yet vested as of such dates.
9
(c)
          Adjusted EBITDA is not a measurement of operating performance calculated in accordance with generally accepted accounting
          principles in the United States, or GAAP, and should not be considered a substitute for net income, operating income, net profit after tax
          or cash flows from operating activities, as determined in accordance with GAAP.

       We define adjusted EBITDA as net income plus :

            •
                      income taxes;

            •
                      depreciation and amortization expense; and

            •
                      interest expense;

        excluding :

            •
                      allowance for equity funds used during construction; and

            •
                      certain other items not related to day-to-day operating performance such as loss on extinguishment of debt.

       We use adjusted EBITDA on a consolidated basis to assess our overall financial and operating performance. We believe this non-GAAP
       measure, as we have defined it, is helpful in identifying trends in our day-to-day performance because the items excluded have little or no
       significance on our day-to-day operations. However, adjusted EBITDA has limitations as an analytical tool. An investor or potential
       investor may find this item important in evaluating our performance, results of operations, financial position and liquidity. We use
       non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors and
       trends affecting our business. However, adjusted EBITDA is not an alternative to net income, operating income or cash flows from
       operating activities as calculated and presented in accordance with GAAP. In addition, because adjusted EBITDA is not a measure of
       financial performance under GAAP and is susceptible to varying calculations, adjusted EBITDA, as presented in this prospectus, may
       differ from and may not be comparable to similarly titled measures used by other companies.

       The following table reconciles net income (loss) to adjusted EBITDA:

                                                                                                                    ITC Holdings
                                                       Predecessor ITC                                             and Subsidiaries

                                                                                          Period From
                                                                                        February 28, 2003
                                                                                            Through
                                                                                          December 31,
                                                                                            2003(a)                                   Three Months Ended March 31,

                                                                      Two-Month
                                                                     Period Ended
                                                                     February 28,
                                                                        2003(a)

                                              Year Ended                                                       Year Ended
                                              December 31,                                                     December 31,
                                                  2002                                                             2004

                                                                                                                                         2004              2005

                                                                             (in thousands)


      Net income (loss)                   $          43,213      $            3,485     $         (8,054 ) $           2,608      $        (2,418 ) $         7,870
      Income taxes                                   23,268                   3,915               (4,306 )             1,669               (1,268 )           4,320
      Loss on extinguishment of
      debt                                                   —                      —            11,378                       —                 —                 —
      Allowance for equity funds
      used during construction                           —                       —                 (322 )             (1,691 )               (318 )            (580 )
      Interest expense                                   58                      —               21,630               25,585                6,291             6,854
      Depreciation and                               21,996                   3,665              21,463               29,480                6,966             8,018
amortization

Adjusted EBITDA   $   88,535   $   11,065   $   41,789   $   57,651   $   9,253   $   26,482


                                       10
                                                                RISK FACTORS

      An investment in our common stock involves risks. You should carefully consider the risks described below, together with the other
information in this prospectus, before deciding to purchase any common stock.

Risks Related to Our Business

ITC Holdings is a holding company with no operations, and unless ITC Holdings receives dividends or other payments from ITC, ITC
Holdings will be unable to pay dividends to its stockholders and fulfill its cash obligations.

      As a holding company with no business operations, ITC Holdings' material assets consist only of the common stock of ITC (and any other
subsidiaries ITC Holdings may own in the future), dividends and other payments received from time to time from ITC or such subsidiaries and
the proceeds raised from the sale of debt and equity securities. ITC Holdings may not be able to access cash generated by ITC in order to fulfill
cash commitments or to pay dividends to stockholders. ITC Holdings will have to rely upon dividends and other payments from ITC (and any
other subsidiaries ITC Holdings may have in the future) to generate the funds necessary to fulfill its cash obligations. ITC, however, is legally
distinct from ITC Holdings and has no obligation, contingent or otherwise, to make funds available to ITC Holdings. The ability of ITC to
make dividend and other payments to ITC Holdings is subject to the availability of funds after taking into account ITC's funding requirements,
the terms of ITC's indebtedness, the regulations of the Federal Energy Regulatory Commission, or the FERC, under the Federal Power Act of
1935, or the FPA, and applicable state laws.

Certain elements of ITC's cost recovery through rates can be challenged before and by the regulators which could result in lowered rates
and have an adverse effect on our business, financial condition and results of operations.

     ITC provides transmission service under rates regulated by the FERC. The FERC has approved ITC's rate setting formula under
Attachment O, but it has not expressly approved the amount of ITC's actual capital and operating expenditures to be used in that formula. In
addition, all aspects of ITC's rates approved by the FERC, including the Midwest Independent Transmission System Operator, Inc., or MISO,
Attachment O rate mechanism, ITC's allowed 13.88% return on the equity portion of its capital structure, and the data inputs provided by ITC
for calculation of each year's rate, are subject to challenge by interested parties at the FERC in a Section 206 proceeding under the FPA. If a
challenger can establish that any of these aspects are unjust, unreasonable, imprudent or unduly discriminatory, then the FERC will make
appropriate adjustments to them and/or disallow ITC's inclusion of those aspects in the rate setting formula. This could result in lowered rates
and an adverse effect on our business, financial condition and results of operations.

The regulations to which ITC is subject may limit our ability to raise capital and/or pursue acquisition or development opportunities.

     ITC is a "public utility" under the FPA and, accordingly, is subject to regulation by the FERC. As a "public utility," ITC must obtain
approval from the FERC under Section 203 of the FPA for dispositions of its regulated facilities and acquisitions of regulated facilities and any
securities of another public utility. ITC must also seek approval by the FERC under Section 204 of the FPA for issuances of its securities.

    In addition, ITC is a "public-utility company" as defined under the Public Utility Holding Company Act of 1935, or PUHCA. ITC
Holdings and ITC are currently exempt from all provisions of PUHCA other than Section 9(a)(2), which generally requires prior Securities and
Exchange Commission, or SEC, approval for any person to, directly or indirectly, acquire a 5% or greater voting

                                                                       11
interest in more than one "public-utility company." The restrictions imposed on us by PUHCA may limit our ability to pursue acquisition or
development opportunities or subject us to more burdensome and costly regulation if an acquisition results in ITC Holdings or ITC having the
status of a registered holding company.

Changes in federal energy laws, regulations or policies could reduce the dividends we may be able to pay our stockholders.

     The Attachment O rate setting mechanism used by ITC has only been approved through January 31, 2008, subject to further extension that
must be approved by the FERC. After January 31, 2008, we cannot predict whether the FERC will change its policies or regulations or whether
the approved transmission rates, rate determination mechanism or methodologies will be changed. Any changes could significantly decrease
our revenues and ITC Holdings' ability to pay dividends to its stockholders and meet its obligations.

      Transmission costs constitute a relatively small portion of end-use consumers' overall electric utility costs. However, some large
institutional end-use consumers may attempt to influence government and/or regulators to change the rate setting system that applies to ITC,
particularly if rates for delivered electricity increase substantially.

     ITC is regulated by the FERC as a "public utility" under the FPA. The FERC could propose new policies and regulations concerning
transmission services or rate setting methodologies. In addition, the U.S. Congress has periodically considered enacting energy legislation that
would repeal PUHCA, shift certain of the SEC's responsibilities to the FERC, modify provisions of the FPA or provide the FERC or another
entity with increased authority to regulate transmission reliability matters. ITC cannot predict whether, and to what extent, it may be affected
by any such changes in federal energy laws, regulations or policies in the future.

If the network load on ITC's transmission system is lower than expected, our revenues would be reduced.

     ITC Holdings' sole operating asset is its interest in ITC. ITC's business is the regulated transmission of high-voltage electricity between
power generation facilities and local distribution networks. If the network load on ITC's transmission system is lower than expected due to mild
weather, a weak economy, changes in the nature or composition of the transmission grid in Michigan or surrounding regions, poor transmission
quality of neighboring transmission systems, or for any other reason, it would reduce ITC's and our revenues.

ITC's operating results fluctuate on a seasonal and quarterly basis and based upon weather conditions.

     Demand for electricity is largely dependent on weather conditions. As a result, ITC's overall operating results fluctuate substantially on a
seasonal basis, thereby impacting ITC's and our operating results. In general, ITC's revenues have historically exhibited summer peaking
patterns. However, a particularly cool summer may reduce demand for electricity below that expected by ITC, causing a decrease in ITC's
revenues from the same period of the previous year.

ITC depends on Detroit Edison, its primary customer, for a substantial portion of its revenues, and any material failure by Detroit Edison to
make payments for transmission services would adversely affect our revenues and our ability to service ITC's and our debt obligations.

     ITC derives a substantial portion of its revenues from the transmission of electricity between Detroit Edison's power generation facilities
and Detroit Edison's local distribution facilities. Payments from Detroit Edison, billed by MISO, constituted approximately 76%, 68% and 74%
of ITC's total operating revenues for the ten months ended December 31, 2003, the year ended December 31, 2004 and the three months ended
March 31, 2005, respectively, and are expected to constitute the majority

                                                                        12
of ITC's revenues for the foreseeable future. Any material failure by Detroit Edison to make payments for transmission services would
adversely affect our revenues and our ability to service ITC's and our debt obligations.

Deregulation and/or increased competition may adversely affect ITC's customers, or Detroit Edison's customers, which in turn may reduce
our revenues.

     The business of ITC's primary customer, Detroit Edison, is subject to regulation that has undergone substantial change in accordance with
Michigan Public Act 141 of 2000, which mandates the implementation of retail access, as well as changes in federal regulatory requirements.
The utility industry has also been undergoing dramatic structural change for several years, resulting in increasing competitive pressures on
electric utility companies, such as Detroit Edison, and we expect that trend to continue for the foreseeable future. Finally, the manufacturing
sector in Detroit Edison's service territory has also been subject to increasing competitive pressures. As a result, demand for electricity
transmission service by manufacturing companies in ITC's service territory may be negatively impacted. These factors may create greater risks
to the stability of Detroit Edison's revenues and may affect Detroit Edison's ability to make its payments for transmission service to MISO and
thus to ITC, which would adversely affect our financial condition and results of operations.

    On April 1, 2005, MISO began centrally dispatching generation resources throughout much of the Midwest with the launch of its Midwest
Energy Markets. Because of this restructuring of power markets throughout the Midwest, the risk profile of some of ITC's customers may
change, thus affecting the ability of these customers to pay for the services provided by ITC.

Hazards associated with high-voltage electricity transmission may result in suspension of ITC's operations or the imposition of civil or
criminal penalties.

      ITC's operations are subject to the usual hazards associated with high-voltage electricity transmission, including explosions, fires,
inclement weather, natural disasters, mechanical failure, unscheduled downtime, equipment interruptions, remediation, chemical spills,
discharges or releases of toxic or hazardous substances or gases and other environmental risks. The hazards can cause personal injury and loss
of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations and
the imposition of civil or criminal penalties. We maintain property and casualty insurance, but we are not fully insured against all potential
hazards incident to our business, such as damage to poles and towers or losses caused by outages.

ITC is subject to environmental regulations and to laws that can give rise to substantial liabilities from environmental contamination.

      ITC's operations are subject to federal, state and local environmental laws and regulations, which impose limitations on the discharge of
pollutants into the environment, establish standards for the management, treatment, storage, transportation and disposal of hazardous materials
and of solid and hazardous wastes, and impose obligations to investigate and remediate contamination in certain circumstances. Liabilities to
investigate or remediate contamination, as well as other liabilities concerning hazardous materials or contamination such as claims for personal
injury or property damage, may arise at many locations, including formerly owned or operated properties and sites where wastes have been
treated or disposed of, as well as at properties currently owned or operated by ITC. Such liabilities may arise even where the contamination
does not result from noncompliance with applicable environmental laws. Under a number of environmental laws, such liabilities may also be
joint and several, meaning that a party can be held responsible for more than its share of the liability involved, or even the entire share.
Environmental requirements generally have become more stringent in recent years, and compliance with those requirements more expensive.

                                                                       13
     ITC has incurred expenses in connection with environmental compliance, and we anticipate that it will continue to do so in the future.
Failure to comply with the extensive environmental laws and regulations applicable to it could result in significant civil or criminal penalties
and remediation costs. ITC's assets and operations also involve the use of materials classified as hazardous, toxic, or otherwise dangerous.
Some of ITC's facilities and properties are located near environmentally sensitive areas such as wetlands. In addition, certain properties in
which ITC has an ownership interest or at which ITC operates are, and others are suspected of being, affected by environmental contamination.
Compliance with these laws and regulations, and liabilities concerning contamination or hazardous materials, may adversely affect our costs
and, therefore our business, financial condition and results of operations.

     In addition, claims have been made or threatened against electric utilities for bodily injury, disease or other damages allegedly related to
exposure to electromagnetic fields associated with electricity transmission and distribution lines. We cannot assure you that such claims will
not be asserted against us or that, if determined in a manner adverse to our interests, would not have a material adverse effect on our business,
financial condition and results of operations.

Acts of war, terrorist attacks and threats or the escalation of military activity in response to such attacks or otherwise may negatively affect
our business, financial condition and results of operations.

     Acts of war, terrorist attacks and threats or the escalation of military activity in response to such attacks or otherwise may negatively affect
our business, financial condition and results of operations in unpredictable ways, such as increased security measures and disruptions of
markets. Strategic targets, such as energy-related assets, including, for example, ITC's transmission facilities and Detroit Edison's generation
and distribution facilities, may be at risk of future terrorist attacks. In addition to the increased costs associated with heightened security
requirements, such events may have an adverse effect on the economy in general. A lower level of economic activity could result in a decline in
energy consumption, which may adversely affect our business, financial condition and results of operations.

Risks Related to Our Capital Structure and Leverage

Because we are controlled by the IT Holdings Partnership, your ability as a stockholder of ITC Holdings to influence our management and
policies will be severely limited.

      As of March 31, 2005, approximately 90.65% of the shares of common stock of ITC Holdings on a fully-diluted basis was beneficially
owned by the IT Holdings Partnership. Members of management and our employees own the remaining shares of common stock. After giving
effect to the sale of all of the shares of common stock in this offering, approximately 55.01% and 9.95% of the outstanding shares of common
stock of ITC Holdings will be beneficially owned by the IT Holdings Partnership and members of our management and employees,
respectively, after giving effect to the exercise of all outstanding stock options held by management and employees of ITC Holdings and
assuming that the underwriters do not exercise their over-allotment option. Consequently, the IT Holdings Partnership has, and after this
offering will continue to have, the power to determine matters submitted to a vote of ITC Holdings' stockholders without the consent of ITC
Holdings' other stockholders and could take other actions that might be favorable to the IT Holdings Partnership or its partners, including
electing all of ITC Holdings' directors, appointing new management and adopting amendments to ITC Holdings' Articles of Incorporation and
bylaws. In addition, the ability of stockholders, other than the IT Holdings Partnership, to influence our management and policies will be
severely limited, including with respect to our acquisition or disposition of assets, the approval of a merger or similar business combination, the
incurrence of indebtedness, the issuance of additional shares of common stock or other equity securities and the payment of dividends or other
distributions on our common stock. In addition, we cannot take certain actions that would adversely affect the limited partners of the IT
Holdings Partnership without their approval. We cannot assure you that the interests of the IT

                                                                         14
Holdings Partnership and/or its limited partners will not conflict with the interests of other holders of our common stock.

We are highly leveraged and our dependence on debt may limit our operating flexibility and ability to pay dividends and/or obtain
additional financing.

      We had $519.8 million of consolidated indebtedness as of March 31, 2005. ITC had $185.0 million of 4.45% First Mortgage Bonds
Series A due July 15, 2013 and ITC Holdings had $267.0 million of 5.25% Senior Notes due July 15, 2013 outstanding as of December 31,
2004 and March 31, 2005. Additionally, we had total revolving credit facility commitments at ITC and ITC Holdings of $25.0 million and
$40.0 million, respectively, and amounts outstanding of $25.0 million and $7.5 million, respectively, at December 31, 2004. We had total
revolving credit facility commitments at ITC and ITC Holdings of $65.0 million and $47.5 million, respectively, and amounts outstanding of
$54.5 million and $14.3 million, respectively, at March 31, 2005. Total interest paid (excluding interest capitalized) on the indebtedness
identified above for the year ended December 31, 2004 and for the three months ended March 31, 2005 was $22.4 million and $11.2 million,
respectively. At March 31, 2005, our total long-term debt to capitalization (total long-term debt plus total stockholders' equity) was 71.7% and
total stockholders' equity was $204.8 million.

     This capital structure can have several important consequences, including, but not limited to, the following:

     •
            If future cash flows are insufficient, we or our subsidiaries may need to incur further indebtedness in order to make the capital
            expenditures and other expenses or investments planned by us. We expect to invest approximately $100 million in ITC's
            transmission system in each of 2005 and 2006, but this amount could vary depending on the requirements of ITC's transmission
            system and the factors discussed below.

     •
            ITC Holdings' indebtedness will have the general effect of reducing its flexibility to react to changing business and economic
            conditions insofar as they affect its financial condition and, therefore, may pose substantial risk to ITC Holdings' stockholders. A
            substantial portion of the dividends and payments in lieu of taxes ITC Holdings receives from ITC will be dedicated to the
            payment of interest on its indebtedness, thereby reducing the funds available for the payment of dividends on our common stock.

     •
            In the event that ITC Holdings is liquidated, any senior or subordinated creditors of ITC Holdings and any senior or subordinated
            creditors of our subsidiaries will be entitled to payment in full prior to any distributions to the holders of shares of common stock
            of ITC Holdings.

     •
            Our credit facilities mature in March 2007, and our ability to secure additional financing prior to or after that time, if needed, may
            be substantially restricted by the existing level of our indebtedness and the restrictions contained in our debt instruments.



ITC's actual capital expenditures may be lower than planned, which would decrease ITC's expected rate base and therefore our revenues.

     ITC's rate base is determined in part by its capital expenditures, specifically for property, plant and equipment, or PP&E, when placed in
service. ITC expects to invest approximately $100 million in additional PP&E in each of 2005 and 2006. If ITC's capital expenditures and the
resulting in service PP&E are lower for any reason, including, among other things, the impact of weather conditions, union strikes, material
prices and availability, our ability to obtain financing for such expenditures, if necessary, limitations on the amount of construction that can be
undertaken on our system at any one time or regulatory approvals for reasons relating to environmental, siting or regional planning issues or as
a result of legal proceedings, ITC will have a lower than anticipated rate base during the year ending

                                                                        15
December 31, 2005, thus causing its revenue requirement and future earnings to be potentially lower than anticipated.

Certain provisions in our debt instruments limit our capital flexibility.

     Our debt instruments include senior notes and first mortgage bonds and revolving credit facilities containing numerous financial and
operating covenants that place significant restrictions on, among other things, our ability to:

     •
            incur additional indebtedness;

     •
            engage in sale and lease-back transactions;

     •
            create liens or other encumbrances;

     •
            enter into mergers, consolidations, liquidations or dissolutions, or sell or otherwise dispose of all or substantially all of our assets;
            and

     •
            pay dividends or make distributions on ITC Holdings' and ITC's capital stock.

     The revolving credit facilities also require ITC Holdings and ITC to meet certain financial ratios. The ability of ITC Holdings and ITC to
comply with these and other requirements and restrictions may be affected by changes in economic or business conditions, results of operations
or other events beyond our control. A failure to comply with the obligations contained in the senior secured credit facilities could result in
acceleration of the related debt and the acceleration of debt under other instruments evidencing indebtedness that may contain
cross-acceleration or cross-default provisions.

Our ability to raise capital may be restricted which may, in turn, restrict our ability to make capital expenditures or dividend payments to
our stockholders.

     Because the IT Holdings Partnership may seek to maintain its beneficial ownership percentage of ITC Holdings and may not choose to
acquire additional shares of our common stock in connection with a future issuance of shares of our common stock by us, we may be
constrained in our ability to raise equity capital in the future from sources other than the limited partners of the IT Holdings Partnership and
other affiliates of KKR, Trimaran or Stockwell. Moreover, we cannot assure you that the IT Holdings Partnership will make any capital
contributions to us in the future. If we are unable to raise capital and we do not receive capital contributions from the IT Holdings Partnership
in the future, our ability to make capital expenditures or dividend payments to our stockholders may be limited.

We are a "controlled company" within the meaning of the New York Stock Exchange rules and, as a result, will qualify for, and intend to
rely on, exemptions from certain corporate governance requirements.

     Upon completion of this offering, the IT Holdings Partnership will continue to control a majority of our outstanding common stock. As a
result, we are a "controlled company" within the meaning of the New York Stock Exchange, or NYSE, corporate governance standards. Under
the NYSE rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled
company" and may elect not to comply with certain NYSE corporate governance requirements, including:

     •
            the requirement that a majority of the board of directors consist of independent directors;

     •
            the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors
            with a written charter addressing the committee's purpose and responsibilities;

     •
            the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter
            addressing the committee's purpose and responsibilities; and

     •
the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.

                                                       16
     Following this offering, we intend to utilize these exemptions. As a result, we will not have a majority of independent directors nor will
our nominating/corporate governance and compensation committees consist entirely of independent directors. Accordingly, you will not have
the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

Future transactions may limit our ability to use our net operating loss carryforwards.

      As of December 31, 2004, we had net operating loss carryforwards, or NOLs, of approximately $74.7 million. These NOLs may be used
to offset future taxable income and thereby reduce our U.S. federal income taxes otherwise payable. Section 382 of the Internal Revenue Code
of 1986, as amended, imposes an annual limit on the ability of a corporation that undergoes an "ownership change" to use its NOLs to reduce
its tax liability. It is possible that the transactions described in this prospectus, when combined with future transactions (including issuances of
new shares of our common stock and sales of shares of our common stock), would cause us to undergo an ownership change. In that event, we
would not be able to use our pre-ownership-change NOLs in excess of the limitation imposed by Section 382.

Risks Related to This Offering

There is currently no public market for our common stock and we cannot assure you that an active market will develop to provide you with
adequate liquidity.

     There has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will
lead to the development of a trading market on the NYSE or otherwise or how liquid that market might become. The initial public offering
price for our common stock will be determined by negotiations between us, the selling stockholder and the representatives of the underwriters
and may not be indicative of prices that will prevail in the open market following this offering. We cannot assure you that the market price for
our common stock after this offering will ever exceed the price that you pay for our common stock in this offering.

Future sales of our shares could depress the market price of our common stock.

      The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market
after this offering or the perception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it
more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. We, our directors and executive
officers and the selling stockholder have agreed with the underwriters not to sell, dispose of or hedge any shares of our common stock or
securities convertible into or exchangeable for shares of our common stock during the period from the date of this prospectus continuing
through the date that is 180 days after the date of this prospectus, except with the prior written consent of Lehman Brothers Inc.

     Pursuant to the management stockholder's agreements that we entered into with each of our employees who have purchased or been
granted shares of our common stock (equal to an aggregate of 1,080,407 shares as of the date of this prospectus), generally these employee
stockholders have the right, upon the sale by IT Holdings Partnership of shares of our common stock in any underwritten offering, to sell a
percentage of the shares of our common stock that the employee stockholders hold at the time of the offering and any shares of our common
stock underlying then exercisable options. Under the management stockholder's agreements, as a percentage of total shares held, the employee
stockholders would be eligible to sell a percentage equal to the percentage sold by the IT Holdings Partnership. Otherwise, each of these
employee stockholders is restricted from selling any common stock he or she holds until the fifth anniversary of the date of the execution of the
employee

                                                                         17
stockholder's respective management stockholder's agreement (which were generally entered into between February 2003 and November
2004), which date in all cases falls after 180 days from the date of this prospectus. The "piggyback" registration rights described above also
expire on such fifth anniversary. See "Certain Relationships and Related Party Transactions—Management Stockholder's Agreements."

     Notwithstanding the foregoing, all of our employee stockholders have agreed to waive their right to exercise their "piggyback" registration
rights with respect to this offering in exchange for certain other rights and/or benefits as further described under "Executive and Non-Executive
Waiver and Agreements" below.

     After this offering, we will have approximately 33,201,974 shares of common stock outstanding. Of those shares, the 12,500,000 shares to
be sold in this offering will be freely tradeable and        of the restricted shares held by ITC employees will be freely tradeable.
The                 remaining shares will be eligible for resale from time to time after the expiration of the lock-up period, subject to contractual
and Securities Act restrictions. The approximately           shares that were outstanding immediately prior to this offering will be eligible for
resale from time to time, subject to the volume, manner of sale and other conditions of Rule 144, including approximately             shares which
may be sold freely pursuant to Rule 144(k) and approximately              shares which may be sold freely pursuant to Rule 144(k) once they have
been held for at least five years from the date of the relevant management stockholder's agreement. See "Shares Eligible for Future Sale."

     In addition, 2,262,808 shares were available for future issuance under our 2003 Stock Purchase and Option Plan as of March 31, 2005,
including 1,991,887 shares issuable upon the exercise of presently outstanding stock options, of which 802,104 were vested as of March 31,
2005. In the future, we may issue our common stock in connection with investments or repayment of our debt. The amount of such common
stock issued could constitute a material portion of our then outstanding common stock.

We may not be able to pay dividends, and the reduction or elimination of dividends would negatively affect the market price of our common
stock.

     While we currently intend to pay quarterly dividends on our common stock, we have no obligation to do so. We anticipate paying a
dividend in the third quarter of 2005 and paying an aggregate of approximately $17.5 million in dividends to our stockholders in 2005.
Dividend payments are within the absolute discretion of our board of directors and will depend on, among other things, our results of
operations, working capital requirements, capital expenditure requirements, financial condition, contractual restrictions, anticipated cash needs
and other factors that our board of directors may deem relevant. For example, we may not generate sufficient cash from operations in the future
to pay dividends on our common stock in the intended amounts or at all. In addition, ITC Holdings is a holding company and its ability to pay
dividends may be limited by restrictions upon transfer of funds applicable to its subsidiaries (including, for example, those which are contained
in ITC's revolving credit agreement and the IT Holdings Partnership agreement). As a holding company without any specific operations, ITC
Holdings is dependent on receiving dividends from its operating subsidiaries, such as ITC, in order to be able to make dividend distributions of
its own. Any reduction or elimination of dividends would adversely affect the market price of our common stock. See "Dividend Policy."

Provisions in the Articles of Incorporation and bylaws of ITC Holdings and Michigan corporate law may prevent efforts by our
stockholders to change the direction or management of our company.

    Prior to completion of this offering, the Articles of Incorporation and bylaws of ITC Holdings will be amended to contain provisions that
might enable our management to resist a proposed takeover. These provisions could discourage, delay or prevent a change of control or an
acquisition at a price

                                                                         18
that our stockholders may find attractive. These provisions also may discourage proxy contests and make it more difficult for our stockholders
to elect directors and take other corporate actions. The existence of these provisions could limit the price that investors might be willing to pay
in the future for shares of our common stock. These provisions will include:

     •
             a requirement that special meetings of our stockholders may be called only by our board of directors, the chairman of our board of
             directors, our president or the holders of a majority of the shares of our outstanding common stock;

     •
             a requirement of unanimity when stockholders are acting by consent without a meeting if the IT Holdings Partnership owns less
             than 35% of the common stock of ITC Holdings;

     •
             advance notice requirements for stockholder proposals and nominations; and

     •
             the authority of our board to issue, without stockholder approval, common or preferred stock, including in connection with our
             implementation of any stockholders rights plan, or "poison pill."

    For additional information regarding these provisions, you should read the information under the heading "Description of Our Capital
Stock."

Provisions of the Articles of Incorporation of ITC Holdings will restrict market participants from voting or owning 5% or more of the
outstanding shares of capital stock of ITC Holdings.

     ITC was granted favorable rate treatment by the FERC based on its independence from market participants. The FERC defines a "market
participant" as any person or entity that, either directly or through an affiliate, sells or brokers electricity or provides ancillary services to ITC
or MISO. An affiliate, for these purposes, includes any person or entity that directly or indirectly owns, controls or holds with the power to vote
5% or more of the outstanding voting securities of a market participant. To help ensure that ITC Holdings and ITC will remain independent of
market participants following this offering, we will amend ITC Holdings' Articles of Incorporation prior to the completion of this offering in
order to impose certain restrictions on the ownership and voting of shares of capital stock of ITC Holdings by market participants. In particular,
the Articles of Incorporation will provide that ITC Holdings is restricted from issuing any shares of capital stock or recording any transfer of
shares if the issuance or transfer would cause any market participant, either individually or together with members of its "group" (as defined in
SEC beneficial ownership rules), to beneficially own 5% or more of any class or series of our capital stock. Additionally, if a market
participant, together with its group members, acquires beneficial ownership of 5% or more of any series of the outstanding shares of capital
stock of ITC Holdings, such market participant or any stockholder who is a member of a group including a market participant will not be able
to vote or direct or control the votes of shares representing 5% or more of any series of ITC Holdings' outstanding capital stock. Finally, to the
extent a market participant, together with its group members, acquires beneficial ownership of 5% or more of the outstanding shares of any
series of capital stock of ITC Holdings, the Articles of Incorporation will allow the board of directors of ITC Holdings to redeem any shares of
capital stock of ITC Holdings so that, after giving effect to the redemption, the market participant, together with its group members, will cease
to beneficially own 5% or more of that series of ITC Holdings' outstanding capital stock.

                                                                         19
The trading price of our common stock is likely to be volatile and you may not be able to sell your shares at or above the initial public
offering price.

   The trading prices of securities of companies in the power industry have been highly volatile. Accordingly, the trading price of our
common stock is likely to fluctuate widely. Factors that will affect the trading price of our common stock include:

     •
            variations in our operating results;

     •
            the gain or loss of significant customers;

     •
            changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our
            common stock;

     •
            terrorist acts and political instability; and

     •
            market conditions in our industry and the economy as a whole.

     In addition, if the market for power industry securities, or the stock market in general, experiences continued or increased loss of investor
confidence, the trading price of our common stock could decline for reasons unrelated to our business, operating results or financial condition.

The book value of shares of common stock purchased in this offering will be immediately diluted.

     Purchasers of common stock in this offering will suffer immediate dilution of $17.92 per share in the pro forma net tangible book value
per share. We also have a large number of outstanding stock options to purchase common stock with exercise prices that are below the
estimated initial public offering price of the common stock. To the extent that these options are exercised, purchasers in this offering will be
further diluted.

We will incur increased costs as a result of being a public company.

     As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In
addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the SEC and the NYSE, have required changes in
corporate governance practices of public companies. We expect these new rules and regulations to significantly increase our legal and financial
compliance costs and to make some activities more time-consuming and costly. For example, in anticipation of becoming a public company,
we are in the process of creating additional board committees and adopting policies regarding internal controls and disclosure controls and
procedures. In addition, we are beginning the process of evaluating our internal control structure in relation to Section 404 of the
Sarbanes-Oxley Act and, pursuant to this section, we will be required to include management attestations and auditor reports on internal
controls in our annual report for the year ending December 31, 2006. We will incur additional costs and dedicate significant resources toward
complying with these requirements. We also expect these new laws, rules and regulations to make it more difficult and more expensive for us
to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on
our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these new laws, rules
and regulations, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. The costs of
compliance or our failure to comply with these laws, rules and regulations could adversely affect our reputation, financial condition, results of
operations and the price of our common stock.

                                                                         20
                                                   FORWARD-LOOKING STATEMENTS

    This prospectus contains certain statements that describe our management's beliefs concerning future business conditions and prospects,
growth opportunities and the outlook for our business and the electricity transmission industry based upon information currently available.
Wherever possible, we have identified these "forward-looking" statements by words such as "anticipates," "believes," "intends," "estimates,"
"expects," "projects" and similar phrases.

     These forward-looking statements are based upon assumptions our management believes are reasonable. Such forward-looking statements
are subject to risks and uncertainties which could cause our actual results, performance and achievements to differ materially from those
expressed in, or implied by, these statements, including, among other things:

     •
            our ability to obtain regulatory approval for rate adjustments in response to changing circumstances and changes in laws or
            regulations affecting us;

     •
            restrictions imposed by laws, including PUHCA and the FPA, or regulations affecting ITC Holdings and ITC;

     •
            changes in the nature or the composition of the transmission grid in surrounding areas, location of generation assets within ITC's
            service territory and in surrounding regions and the impact on the flow of transmission;

     •
            any changes in our regulatory construct;

     •
            the stability of Detroit Edison or deregulation affecting Detroit Edison;

     •
            protracted generation outages;

     •
            potential environmental liabilities;

     •
            hazards related to our business;

     •
            damage to our assets or our ability to serve our customers, market disruptions and other economic effects as a result of terrorism,
            military activity or war and action by the United States and other governments in reaction thereto;

     •
            higher property tax assessments from various municipalities;

     •
            decrease in revenues due to abnormal weather conditions; and

     •
            other risk factors discussed herein and listed from time to time in our public filings with the SEC.

     Any or all of our forward-looking statements in this prospectus may turn out to be wrong. They can be affected by assumptions we might
make or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this prospectus will be important in
determining future results. Consequently, we cannot assure you that our expectations or forecasts expressed in such forward-looking statements
will be achieved. Actual future results may vary materially.

     Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new
information, future events, or otherwise. Also, please note that we provide a cautionary discussion of risks and uncertainties under the caption
"Risk Factors" in this prospectus. These are factors that we think could cause our actual results to differ materially from expected results. Other
factors besides those listed here could adversely affect our business and results of operations.

                                                                        21
                                                              USE OF PROCEEDS

     We estimate that our net proceeds from the sale of 2,500,000 shares of common stock in this offering, after deducting estimated
underwriting discounts and commissions and estimated offering expenses, will be approximately $43.2 million, assuming an initial public
offering price of $20.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus. We intend to use the
net proceeds we receive from this offering to repay borrowings under ITC Holdings' amended and restated revolving credit agreement, to pay
an aggregate of $6.7 million of one-time termination fees under management agreements with KKR, Trimaran Fund Management, L.L.C. and
the IT Holdings Partnership and for general corporate purposes, including capital expenditures at ITC.

      ITC Holdings' amended and restated revolving credit agreement has a maturity date of March 19, 2007. Borrowings under this credit
agreement bear interest, at ITC Holdings' option, at either the applicable London Interbank Offered Rate, or LIBOR, plus 1.50% each year or
the applicable alternate base rate plus 0.50% each year, which applicable spreads are subject to adjustment based on the ratings by Moody's
Investor Service, Inc. and Standard & Poor's Ratings Services applicable to ITC Holdings' senior notes (described under "Description of Our
Indebtedness—5.25% Senior Notes and Mortgage Bonds—5.25% Senior Notes due July 15, 2013") from time to time. See "Description of Our
Indebtedness—Revolving Credit Facilities." An affiliate of Credit Suisse First Boston LLC, one of the underwriters of this offering, is one of
the lenders under this credit agreement. We expect to use $14.3 million of the net proceeds received by us in this offering to repay a portion of
the amount that is currently outstanding under this credit agreement.

     We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholder in this offering.


                                                              DIVIDEND POLICY

     We currently intend to declare and pay quarterly dividends on our common stock. We anticipate paying a dividend in the third quarter of
2005 and paying an aggregate of approximately $17.5 million in dividends to our stockholders in 2005. The declaration and payment of
dividends is subject to the discretion of our board of directors and depends on various factors, including our net income, financial condition,
cash requirements, future prospects and other factors deemed relevant by our board of directors. If and when our board of directors declares and
pays a dividend on our common stock, pursuant to a proposed new special bonus plan to be established for our executives and key employees,
amounts equivalent to the dividend may be paid to the special bonus plan participants in respect of vested and unvested performance units to be
granted to each such participant under such plan, unless our board of directors determines otherwise. See "Management—Dividend Equivalent
Rights Plan."

     In August 2003, ITC Holdings made a distribution to stockholders of $27.1 million, or $0.90 per share of common stock.

     As a holding company with no business operations, ITC Holdings' material assets consist only of the stock of ITC and cash on hand. ITC
Holdings' only sources of cash to pay dividends to its stockholders are dividends and other payments received by ITC Holdings from time to
time from ITC and the proceeds raised from the sale of our debt and equity securities. ITC, however, is legally distinct from ITC Holdings and
has no obligation, contingent or otherwise, to make funds available to ITC Holdings for the payment of dividends to ITC Holdings'
stockholders or otherwise. The ability of ITC to pay dividends and make other payments to ITC Holdings is subject to, among other things, the
availability of funds, after taking into account capital expenditure requirements, the terms of its indebtedness, applicable state laws and
regulations of the FERC and the FPA.

                                                                        22
     ITC Holdings' revolving credit agreement and ITC's revolving credit agreement impose restrictions on our ability to pay dividends if an
event of default has occurred under the relevant agreement, and thus our ability to pay dividends on our common stock will depend upon,
among other things, our level of indebtedness at the time of the proposed dividend and whether we are in compliance with the covenants under
our revolving credit facilities and our debt instruments. See "Description of Our Indebtedness." Our future dividend policy will also depend on
the requirements of any future financing agreements to which we may be a party and other factors considered relevant by our board of
directors. For a discussion of our cash resources and needs, see "Management's Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources."

                                                                      23
                                                              CAPITALIZATION

    The following table sets forth our capitalization as of March 31, 2005 on an actual basis and on an as adjusted basis after giving effect to:

    •
            the issue and sale by us of approximately 2,500,000 shares of our common stock in this offering at an assumed public offering
            price of $20.00 per share, the midpoint of the price range on the cover page of this prospectus, after deducting estimated
            underwriting discounts and commissions and estimated offering expenses;

    •
            a 3.34-for-one stock split of our outstanding shares of common stock that will be effected immediately prior to the completion of
            this offering;

    •
            the adjustment of the number of shares authorized under the 2003 Stock Purchase and Option Plan, as well as the share amounts of
            stock grants and the number of options and exercise prices of options under the 2003 Stock Purchase and Option Plan as a result
            the 3.34-for-one stock split;

    •
            Our Amended and Restated Articles of Incorporation, which will increase our authorized common stock to 100 million shares prior
            to the completion of this offering; and

    •
            the application of the net proceeds to us described under "Use of Proceeds."

     You should read the information in this table in conjunction with "Selected Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our audited financial statements and related notes included elsewhere in this
prospectus.

                                                                                        As of March 31, 2005

                                                                                     Actual               As Adjusted

                                                                                   (in thousands, except share data)


Cash and cash equivalents                                                      $          3,863       $        26,031


Long-term debt:
  5.25% Senior Notes due July 15, 2013                                         $       266,015        $       266,015
  4.45% First Mortgage Bonds Series A due July 15, 2013                                184,902                184,902
  Revolving credit facilities (a)                                                       68,800                 54,500
  Other                                                                                     39                     39

        Total long-term debt                                                   $       519,756        $       505,456


Stockholders' equity:
  Common stock, without par value, 100,000,000 shares authorized,
  30,686,595 shares issued and outstanding and 33,201,974 shares as
  adjusted for this offering                                                   $       203,848 $              247,041
  Unearned compensation-restricted stock                                                (1,426 )               (1,426 )
  Retained earnings (accumulated deficit)                                                2,424                 (1,947 )

        Total stockholders' equity                                             $       204,846        $       243,668

             Total long-term debt and stockholders' equity                     $       724,602        $       749,124
(a)
       Consists of amounts outstanding under a $65.0 million revolving credit agreement entered into by ITC with a March 2007 maturity date
       and a $47.5 million revolving credit agreement entered into by ITC Holdings with a March 2007 maturity date. The amounts available
       under our revolving credit facilities are subject to customary borrowing conditions.

     The table above excludes 802,104 shares of common stock issuable upon the exercise of options that were vested at March 31, 2005, with
an exercise price of $7.48 per share.

                                                                    24
                                                                      DILUTION

      Dilution is the amount by which the offering price paid by the purchasers of the common stock to be sold in this offering will exceed the
net tangible book value per share of common stock after this offering. The net tangible book value per share is equal to the amount of our total
tangible assets (total assets less intangible assets) less total liabilities, divided by the number of shares of our common stock outstanding as of
March 31, 2005. For purposes of the calculation of net tangible book value, our only intangible asset is goodwill. Calculations relating to shares
of common stock in the following disclosures and tables assume a 3.34-for-one stock split of our outstanding shares of common stock that will
be effected immediately prior to the completion of this offering. After giving effect to the sale of shares of common stock in this offering at an
assumed initial public offering price of $20.00 per share, the midpoint of the range set forth on the cover page of this prospectus, and after
deducting estimated underwriting discounts and commissions and estimated offering expenses, our pro forma net tangible book value as of
March 31, 2005 would have been $69.1 million, or $2.08 per share of common stock. This represents an immediate increase in net tangible
book value of $1.09 per share to existing stockholders and an immediate dilution in net tangible book value of $17.92 per share to new
investors.

      The following table illustrates this per share dilution:

                                                                                                              Per Share

Initial public offering price per share                                                                   $         20.00
   Net tangible book value per share before this offering                                                            0.99
   Increase per share attributable to this offering                                                                  1.09

Pro forma net tangible book value per share after this offering                                                      2.08

Dilution per share to new investors                                                                       $         17.92

     The following table summarizes, on a pro forma basis as of March 31, 2005, the total number of shares of common stock purchased from
us and the selling stockholder, the total consideration paid to us and the selling stockholder and the average price per share paid by new
investors purchasing shares in this offering:

                                                             Shares Purchased                 Total Consideration

                                                                                                                                     Average Price
                                                                                                                                      Per Share

                                                           Number           Percent          Amount                 Percent

Existing stockholders                                      30,193,244             92.4 % $   225,600,536                  81.9 % $              7.47
New investors(1)                                            2,500,000              7.6 %      50,000,000                  18.1                 20.00

      Total                                                32,693,244           100.00 % $   275,600,536             100.00 % $                  8.43

(1)
        Excludes shares of common stock being sold by the selling stockholder.

     The tables and calculations above assume no exercise of outstanding options. As of March 31, 2005, there were 1,991,887 shares of our
common stock reserved for issuance upon exercise of outstanding options at an exercise price of $7.48 per share. To the extent that these
options are exercised, there will be further dilution to new investors. See "Management—Compensation of Directors and Executive
Officers—Option Holdings" and "Description of Our Capital Stock."

                                                                           25
                                             SELECTED CONSOLIDATED FINANCIAL DATA

    The following table sets forth selected historical financial data of Predecessor ITC and selected historical consolidated financial data of
ITC Holdings and subsidiaries as of the dates and for the periods indicated.

     The selected financial data presented on the following pages as of and for the seven-month period ended December 31, 2001 has been
derived from the audited financial statements of Predecessor ITC not included in this prospectus. The selected financial data presented on the
following pages as of and for the year ended December 31, 2002, and for the two-month period ended February 28, 2003, have been derived
from audited financial statements of Predecessor ITC included elsewhere in this prospectus. The selected consolidated financial data presented
on the following pages as of and for the period from February 28, 2003 through December 31, 2003, and as of and for the year ended
December 31, 2004, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected
historical condensed consolidated financial data presented on the following pages as of March 31, 2005 and for the three months ended
March 31, 2004 and 2005 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this
prospectus. The financial data presented for the three months ended March 31, 2005 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2005.

     The selected financial data for the year ended December 31, 2000 and the five months ended May 31, 2001 are omitted because, prior to
June 1, 2001, the provision of electricity transmission services over the facilities now owned by ITC was undertaken as part of Detroit Edison's
transmission business which was integrated with Detroit Edison's distribution business and the revenues, expenses and cash flows associated
with the transmission business were integrated with Detroit Edison's other operations and were not separately identifiable. On May 31, 2001,
Detroit Edison's transmission business was separated from Detroit Edison's distribution business and was contributed to Predecessor ITC.

     From June 1, 2001 until February 28, 2003, Predecessor ITC was operated as a subsidiary of DTE Energy.

     On February 28, 2003, ITC Holdings acquired Predecessor ITC from DTE Energy and began operating the transmission system as a
stand-alone company, independent of DTE Energy and Detroit Edison. For the period from March 1, 2003 to December 31, 2004, ITC's rate
was $1.075 per kW/month based on a frozen rate with a revenue deferral for recovery in future periods.

     The selected financial data presented below should be read together with Predecessor ITC's financial statements and the notes to those
statements, our consolidated financial statements and the notes to those statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," in each case, included elsewhere in this prospectus.

                                                                        26
                                                                                                                   ITC Holdings
                                            Predecessor ITC                                                       and Subsidiaries

                                                                                    Period From
                                                                                   February 28,
                                                                                   2003 Through
                                                                                   December 31,
                                                                                      2003(a)

                             Seven-Month                         Two-Month
                             Period Ended                       Period Ended
                             December 31,                       February 28,
                                2001(a)                            2003(a)                                                       Three Months Ended March 31,

                                               Year Ended                                                 Year Ended
                                               December 31,                                               December 31,
                                                   2002                                                       2004

                                                                                                                                     2004              2005

                                                                      (in thousands, except share and per share data)


Statement of
operations data:
Operating Revenues       $         63,664 $         137,535 $        20,936 $             102,362 $              126,449 $              27,544 $          42,460

Operating Expenses:
 Operation and
 maintenance                       22,566            34,699           5,675                 22,902                24,552                    6,394             6,522
 General and
 administrative                         —                 —               —                 26,342                24,412                    6,448             5,286
 Depreciation and
 amortization                      12,481            21,996           3,665                 21,463                29,480                    6,966             8,018
 Taxes other than
 income taxes                       8,875            15,776           4,298                 11,499                20,840                    5,424             4,299

      Total operating
      expenses                     43,922            72,471          13,638                 82,206                99,284                25,232            24,125


Operating Income                   19,742            65,064           7,298                 20,156                27,165                    2,312         18,335


Other Expenses
(Income):
  Interest expense                      12                58              —                 21,630                25,585                    6,291             6,854
  Allowance for equity
  funds used in
  construction                          —                 —               —                    (322 )              (1,691 )                 (318 )              (580 )
  Loss on
  extinguishment of
  debt                                 —                 —               —                  11,378                     —                       —                  —
  Other income                     (1,120 )          (1,720 )          (147 )                 (197 )               (1,289 )                   (12 )             (305 )
  Other expense                       551               245              45                     27                    283                      37                176

      Total other
      expenses
      (income)                       (557 )          (1,417 )          (102 )               32,516                22,888                    5,998             6,145


Income (Loss) Before
Income Taxes                       20,299            66,481           7,400                (12,360 )                4,277               (3,686 )          12,190


Income Tax Provision
(Benefit)                           7,105            23,268           3,915                 (4,306 )                1,669               (1,268 )              4,320
Net Income (Loss)         $   13,194 $      43,213 $        3,485 $             (8,054 ) $               2,608 $              (2,418 ) $               7,870


Net Income (loss) per
share data:(b)
Basic net income (loss)
per share:
  Net income (loss) per
  share                                                              $           (0.27 ) $                 0.09 $              (0.08 ) $                0.26
  Weighted average
  shares                                                                  29,339,394               30,183,886             30,159,066           30,341,967
Diluted net income
(loss) per share:
  Net income (loss) per
  share                                                              $           (0.27 ) $                 0.08 $              (0.08 ) $                0.25
  Weighted average
  shares                                                                  29,339,394               30,899,548             30,159,066           31,140,306
                                                                                                         ITC Holdings and Subsidiaries

                                                                                                    As of
                                                  Predecessor ITC                                December 31,

                                                                                                                                As of March 31, 2005

                                            As of                 As of
                                         December 31,          December 31,
                                             2001                  2002

                                                                                          2003                  2004           Actual           As Adjusted

                                                                                      (in thousands)


Balance sheet data:
Cash and cash equivalents            $                8 $                  —      $         8,139 $              14,074 $         3,863 $              26,031
Working capital (deficit)                        (2,573 )              46,041             (17,633 )             (27,117 )        (6,870 )              15,298
Property, plant and equipment— net              441,035               434,539             459,393               513,684         543,251               543,251
Total assets                                    514,927               634,785             751,657               808,847         833,087               856,160
Total debt:
           ITC Holdings                              —                     —              265,866               273,485         280,315               266,015
           ITC                                       —                     —              184,887               209,945         239,448               239,448
Stockholders'/Member's equity                   339,577               382,790             191,246               196,602         204,846               243,668

                                                                                                                                         (footnotes on next page)

                                                                    27
                                                                                                                         ITC Holdings
                                        Predecessor ITC                                                                 and Subsidiaries

                                                                                               Period From
                                                                                              February 28,
                                                                                              2003 Through
                                                                                              December 31,
                                                                                                 2003 (a)                                  Three Months Ended March 31,

                        Seven-Month                                     Two-Month
                        Period Ended                                   Period Ended
                        December 31,                                   February 28,
                          2001 (a)                                       2003 (a)

                                             Year Ended                                                               Year Ended
                                             December 31,                                                             December 31,
                                                 2002                                                                     2004

                                                                                                                                               2004            2005

                                                                                       (in thousands)


Other data:
Adjusted
EBITDA (c)          $          32,792    $         88,535          $         11,065      $               41,789   $         57,651         $     9,253     $     26,482
Capital
expenditures                   22,322              15,360                      5,616                     26,805             76,779              21,549           36,112
Operating data:                                             2001                  2002                  2003              2004                 2005

Monthly Peak Load (MW):
 January                                                     7,753                 7,668                 7,608             8,022                8,090
 February                                                    7,355                 7,572                 7,437             7,656                7,672
 March                                                       7,258                 7,566                 7,542             7,434                7,562
 April                                                       7,012                 8,386                 6,934             7,305                7,299
 May                                                         8,068                 8,702                 7,017             8,718                7,678
 June                                                       10,895                11,067                11,266            11,114
 July                                                       11,309                11,423                10,225            11,344
 August                                                     11,875                11,438                11,617            10,877
 September                                                  10,037                10,894                 8,717             9,841
 October                                                     7,145                 8,645                 7,369             7,197
 November                                                    7,343                 7,271                 7,843             7,832
 December                                                    7,573                 7,772                 8,124             8,469


(a)
        Our business is seasonal, with peak transmission loads occurring during the summer air conditioning months. Annualized financial data
        for the seven-month period ended December 31, 2001, the two-month period ended February 28, 2003 and the period from February 28,
        2003 through December 31, 2003 are not indicative of results for the full year.

(b)
        Net income (loss) per share is calculated by dividing net income (loss) by the weighted average shares outstanding. Weighted average
        shares for the purposes of the basic net income (loss) per share calculation has been adjusted to reflect the 3.34-for-one stock split that
        will be effected immediately prior to the completion of this offering. Basic net income (loss) per share excludes 405,485 and 337,273
        shares of restricted common stock at December 31, 2003 and 2004, respectively, and 438,523 and 344,629 shares of restricted common
        stock at March 31, 2004 and 2005, respectively, that were issued and outstanding, but had not yet vested as of such dates.

(c)
        Adjusted EBITDA is not a measurement of operating performance calculated in accordance with GAAP and should not be considered a
        substitute for net income, operating income, net profit after tax or cash flows from operating activities, as determined in accordance
        with GAAP.

      We define adjusted EBITDA as net income plus :

           •
              income taxes;

   •
              depreciation and amortization expense; and

   •
              interest expense;

excluding :

   •
              allowance for equity funds used during construction; and

                                                                  28
     •
            certain other items not related to day-to-day operating performance such as loss on extinguishment of debt.

We use adjusted EBITDA on a consolidated basis to assess our overall financial and operating performance. We believe this non-GAAP
measure, as we have defined it, is helpful in identifying trends in our day-to-day performance because the items excluded have little or no
significance on our day-to-day operations. However, adjusted EBITDA has limitations as an analytical tool. An investor or potential
investor may find this item important in evaluating our performance, results of operations, financial position and liquidity. We use
non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors and
trends affecting our business. Adjusted EBITDA is not an alternative to net income, operating income or cash flows from operating
activities as calculated and presented in accordance with GAAP. In addition, because Adjusted EBITDA is not a measure of financial
performance under GAAP and is susceptible to varying calculations, adjusted EBITDA, as presented in this prospectus, may differ from
and may not be comparable to similarly titled measures used by other companies.

The following table reconciles net income (loss) to adjusted EBITDA:

                                                                                                         ITC Holdings
                                            Predecessor ITC                                             and Subsidiaries

                                                                                    Period From
                                                                                   February 28,
                                                                                   2003 Through
                                                                                   December 31,                            Three Months Ended
                                                                                      2003 (a)                                  March 31,

                            Seven-Month                        Two-Month
                            Period Ended                      Period Ended
                            December 31,                      February 28,
                              2001 (a)                          2003 (a)

                                              Year Ended                                              Year Ended
                                              December 31,                                            December 31,
                                                  2002                                                    2004

                                                                                                                           2004          2005

                                                              (in thousands)


  Net income (loss)     $         13,194 $          43,213 $          3,485    $           (8,054 ) $         2,608 $       (2,418 ) $     7,870
  Income taxes                     7,105            23,268            3,915                (4,306 )           1,669         (1,268 )       4,320
  Loss on
  extinguishment of
  debt                                 —                 —                —                11,378                 —               —             —
  Allowance for
  equity funds used
  during construction                  —                 —                —                  (322 )          (1,691 )         (318 )        (580 )
  Interest expense                     12                58               —                21,630            25,585          6,291         6,854
  Depreciation and
  amortization                    12,481            21,996            3,665                21,463            29,480          6,966         8,018

  Adjusted EBITDA       $         32,792 $          88,535 $        11,065     $           41,789 $          57,651 $        9,253 $     26,482


                                                                        29
                                          MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                       FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      You should read the following discussion together with our audited consolidated financial statements and related notes and the audited
financial statements and related notes of International Transmission Company, LLC, or Predecessor ITC, included elsewhere in this
prospectus. This discussion contains forward-looking statements. Actual results could differ materially from those discussed below. Please see
"Forward-Looking Statements" and "Risk Factors" for a discussion of certain of the uncertainties, risks and assumptions associated with these
statements.

Overview

      ITC is the first independently owned and operated electricity transmission company in the United States. ITC owns, operates and
maintains a fully-regulated, high-voltage transmission system that transmits electricity to local electricity distribution facilities from generating
stations in Michigan, other midwestern states and Ontario, Canada. The local distribution facilities connected to the ITC transmission system
served a population of approximately 4.9 million people, as of December 31, 2004, in an area comprised of 13 southeastern Michigan counties,
including the Detroit metropolitan area. ITC's electricity transmission system also acts as a conduit for transmitting electricity to and from
adjacent third party electricity transmission systems.

      ITC was formed as a legal entity and subsidiary of Detroit Edison in January 2001, but initially had no assets or employees and was
supported by employees of DTE Energy. Prior to January 1, 2001, there was no separation of the transmission business from the distribution
business within Detroit Edison. The distribution and transmission operations were commingled and operated jointly until June 1, 2001. Detroit
Edison separated its transmission assets from its distribution assets on June 1, 2001, placing these assets in a separate subsidiary, namely ITC.
A process to separately identify costs and revenues associated with ITC was implemented simultaneously with ITC becoming a subsidiary of
DTE Energy. ITC became independent as a result of DTE Energy's divestiture of its electricity transmission business, consistent with FERC
and State of Michigan policy initiatives promoting an independent transmission system. The FERC's transmission policy was developed in part
in response to the significant historical underinvestment in transmission infrastructure in the United States and the potential for discrimination
that arises when a utility operates transmission and generation facilities within the same region.

     ITC is a member of MISO, a FERC-approved regional transmission organization, or RTO, which has responsibility for the oversight and
coordination of transmission service for a substantial portion of the midwestern United States and Manitoba, Canada. MISO establishes
regional operating and market practices and scheduling protocols. It also administers the transmission tariff under which all customers procure
transmission service.

     ITC's primary operating responsibilities include maintaining, improving and expanding its transmission system to meet its customers'
ongoing needs, scheduling outages on system elements to allow for maintenance and construction, balancing electricity generation and demand,
maintaining appropriate system voltages and monitoring flows over transmission lines and other facilities to make sure physical limits are not
exceeded. ITC's operating assets consist primarily of approximately 2,700 circuit miles of transmission lines, approximately 16,000
transmission towers and poles and 30 stations, which connect ITC's transmission lines to generation resources, distribution facilities and
neighboring transmission systems. ITC's transmission system serves distribution utilities that are located in an approximately 7,600 square mile
area throughout southeastern Michigan. As of February 28, 2003, ITC's net PP&E was $435.8 million. Since that time, and through
December 31, 2004, ITC has invested approximately $122.5 million in PP&E and has incurred other net PP&E activity of $0.8 million
consisting of accrued asset removal costs reclassified to regulatory liabilities and asset settlements with

                                                                         30
DTE Energy, offset by depreciation and amortization of $45.4 million, increasing its net PP&E to $513.7 million, as of December 31, 2004.
For each of 2005 and 2006, ITC expects to invest approximately $100 million in additional PP&E, primarily on projects reviewed by MISO.
During the three months ended March 31, 2005, ITC invested approximately $35.7 million in PP&E and has incurred other net PP&E activity
of $1.2 million consisting of accrued asset removal costs reclassified to regulatory liabilities and asset settlements with DTE Energy, offset by
depreciation and amortization of $7.3 million, increasing its net PP&E to $543.3 million, as of March 31, 2005.

     As a transmission utility whose rates are regulated by the FERC, ITC earns revenues through fees charged for the use of its transmission
system by its customers, which include investor-owned utilities, municipalities, co-operatives, power marketers and alternative energy
suppliers. ITC's rates are established on a cost-of-service model allowing for the recovery of expenses, including depreciation and amortization,
and a return on invested capital. ITC's transmission rates are determined on an annual basis using a FERC-approved formulaic rate setting
mechanism known as Attachment O.

Attachment O Rate Setting

      Attachment O is a FERC-approved cost of service rate formula mechanism that is applied annually by MISO to determine the rate for
transmission service to customers in the zones of most transmission-owning members of MISO. MISO verifies and uses selected financial and
operating data from the transmission owner's most recently completed calendar year to determine the new rate for transmission to its customers
in its zone. These data are taken from the transmission owner's FERC Form 1 filing, made by the end of April of each year, which is designed
to collect financial and operating information from electric utilities subject to the jurisdiction of the FERC. Under Attachment O, transmission
rates and revenue requirements incorporate a return on the transmission owner's rate base, consisting primarily of net PP&E, an accumulated
deferred income tax adjustment, certain regulatory assets and a materials and supplies allocation; and a recovery of operating expenses,
including depreciation and amortization, and interest expense and taxes. After MISO confirms the rate derived from the information supplied
by the transmission owner, no further actions or approvals are required for the new calculated rate to take effect. By completing the
Attachment O template on an annual basis, ITC is able to adjust its transmission rates based on year-to-year changes in network load on its
transmission system, operating expenses and rate base.

      ITC charged a fixed rate of $1.075 per kW/month from June 1, 2002 to December 31, 2004, which was based primarily on actual and
allocated transmission expenses from Detroit Edison's 2000 FERC Form 1 when the transmission business was integrated with the overall
utility business of Detroit Edison. Neither ITC nor its transmission business existed as a separate FERC Form 1 reporting entity until June 1,
2001. Instead, the transmission-related activities of Detroit Edison were integrated into the overall utility business of Detroit Edison. The
increase in tariff rates from $1.075 per kW/month to $1.587 per kW/month in January 2005, was due primarily to changes in capital structure,
the elimination of deferred taxes, the inclusion of certain regulatory assets, the inclusion in rate base of the revenue deferral associated with the
rate freeze, the increase in the FERC-approved return on equity and increases in plant in service and operating expenses. Beginning June 1,
2005 and each June thereafter, ITC will implement a new rate calculated using data from the previous calendar year as described above. Based
upon 2004 year-end results, the rate for the one-year period which started June 1, 2005 is $1.594 per kW/month.

     We expect that our revenues, operating cash flows and net income will increase in 2005 compared to 2004 as a result of the increase in the
rates ITC charges; however, other factors may affect these measures, such as the effect of changes in expenses on operating cash flows and net
income or the effect of network load on operating revenues, operating cash flows and net income.

                                                                         31
Recent Regulatory Matters

       Initial Public Offering. On March 30, 2005, we filed a Joint Application for Authorization of an Indirect Disposition of Jurisdictional
Facilities under Section 203 of the FPA and Notification of Change in Ownership Structure with the FERC. The filing contemplates the public
offering of ITC Holdings' common stock, including an initial public offering and potential future public offerings. The FERC approved the
application in its order issued on May 5, 2005 and, in doing so, authorized this offering, as well as potential future public offerings of ITC
Holdings' common stock occurring within two years of May 5, 2005.

      Redirected Transmission Service. In January and February 2005, in FERC Docket EL05-55 and EL05-63, transmission customers filed
complaints against MISO claiming that MISO was charging excessive rates for redirected transmission service. In April 2005, the FERC
ordered MISO to refund, with interest, excess amounts charged to all affected transmission customers. ITC earns revenues based on an
allocation from MISO for this redirected transmission service and is obligated to refund the excess amounts charged to all affected transmission
customers. We had not accrued any amounts relating to this proceeding as of March 31, 2005 based on our assessment of the likelihood of any
refunds resulting from these complaints at that date. Based on the April 2005 order, we will be required to refund amounts relating to redirected
transmission service upon completion of the refund calculations by MISO, which MISO expects to complete during second quarter of 2005.
We cannot estimate the amount of the refund until the calculations are completed.

       Long-Term Pricing. In November 2004, in FERC Docket EL02-111 et al., the FERC approved a pricing structure to facilitate seamless
trading of electricity between MISO and PJM Interconnection. The order establishes a Seams Elimination Cost Adjustment, or SECA, as set
forth in previous FERC orders, to take effect December 1, 2004, and remain in effect through March 31, 2006 as a transitional pricing
mechanism. The SECA revenues are subject to refund and will be litigated in a contested hearing before the FERC with a final order expected
in 2006. We cannot anticipate whether any refunds of amounts earned by ITC will result from this hearing and we have not accrued any
amounts relating to this proceeding. Through March 31, 2005, ITC has recorded $0.7 million of SECA revenue.

      Elimination of Transmission Rate Discount. Several energy marketers filed a complaint against MISO in February 2005 in FERC
Docket EL05-66, asserting that MISO improperly eliminated a rate discount that had previously been effective for transmission service at the
Michigan-Ontario Independent Electric System Operator interface. Since the complaints were filed, MISO has held amounts in escrow that it
has collected for the difference between the discounted tariff rate and the full tariff rate. The FERC has not yet acted on this complaint. ITC has
recorded revenues based only on the amounts collected by MISO and remitted to ITC. These amounts do not include the amounts held in
escrow by MISO of $0.6 million as of March 31, 2005.

ITC Acquisition

     ITC Holdings was formed for the purpose of acquiring International Transmission Company, LLC, or Predecessor ITC. On February 28,
2003, following the approval of the transaction by the FERC, ITC Holdings acquired the outstanding ownership interests of Predecessor ITC
from DTE Energy for $610.0 million in cash plus direct transaction costs, subject to purchase price adjustments relating to PP&E and other
items identified subsequent to February 28, 2003. In 2003, we paid $8.3 million in additional consideration for the acquisition of Predecessor
ITC. Immediately following the acquisition, Predecessor ITC was merged with and into ITC Holdings Merger Sub, Inc., an entity formed by
ITC Holdings, and ITC Holdings Merger Sub, Inc. was then renamed International Transmission Company.

     We accounted for the acquisition using the purchase method. The excess purchase price, including transaction costs, over the fair value of
net assets acquired was classified as goodwill. The acquisition was treated as a taxable transaction, adjusting the tax basis of the assets to fair
value pursuant to an

                                                                        32
election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended. The goodwill amount of $174.6 million as of March 31,
2005 is expected to be deductible for federal income tax purposes, with the majority of the goodwill being amortized over 15 years.

Trends and Seasonality

     We expect a general trend of moderate growth in our tariff rate over the next few years under Attachment O, although we cannot predict a
specific year-to-year trend due to the variability of network load and other factors beyond our control. The tariff rate for the period from June 1,
2005 through May 31, 2006 is based primarily on FERC Form 1 data for the year ended December 31, 2004 and is $1.594 per kW/month
compared to $1.587 per kW/month for the period from January 1, 2005 through May 31, 2005. Absent any other factors, there are two known
items that will cause an increase in rate in 2006. Beginning June 1, 2006, one-fifth, or approximately $11.9 million, of the revenue that was
deferred during the rate freeze will be included in ITC's rates in each of the following five 12-month periods, which will cause an increase in
rates during these periods. Another component of the increase in rates that is expected to continue over the next few years is as a result of
increased capital investment in excess of depreciation. This is in part due to our application of industry standards in our capital investment
decision process. We continually test our transmission system against reliability standards established by the North American Electric
Reliability Council, or NERC, and the MISO. These reliability standards have become more specific and stringent in recent years, primarily as
a reaction to the August 2003 electrical blackout. We believe that investing in the system to meet these NERC standards, although not
mandated by FERC, is a prudent way to prioritize capital spending. Moreover, since the August 2003 blackout, Congress has several times
considered legislation that would make compliance with reliability standards established by NERC or another entity mandatory. In addition to
investments that improve the reliability of the transmission system, we continue to identify investment opportunities that increase throughput
and reduce transmission constraints in ITC's system and in turn reduce the delivered cost of energy to end-use consumers. We expect the levels
for capital spending for the next few years to be moderately higher than those seen in 2004. ITC strives for improved reliability of its system
and lower delivered costs of electricity to end-use consumers.

     In support of the application of the NERC reliability standards, the FERC in a Policy Statement on Matters Related to Bulk Power System
Reliability, Docket No. PL04-5-000, issued April 19, 2004, clarified its position on several matters relating to the application of the standards,
one of which was a policy to allow utilities "to recover prudently incurred costs necessary to ensure bulk electric system reliability, including
prudent expenditures for vegetation management, improved grid management and monitoring equipment, operator training, and compliance
with NERC reliability standards and Good Utility Practices."

      Our results of operations are subject to seasonal variations. Our revenues depend on the monthly peak loads and regulated transmission
rates. Demand for electricity and thus transmission load, to a large extent depend upon weather conditions. Our revenues and operating income
are higher in the summer months when cooling demand and network load are higher.

     We are not aware of any trends or uncertainties in the economy and industries in ITC's service territory that are reasonably likely to have a
material effect on our financial condition or results of operations. However, any changes in economic conditions that either increase or decrease
the use of ITC's system to transmit electricity will impact revenue for a given year. Additionally, adverse economic conditions could impact our
customers' ability to pay for our services.

Management Fees

     On February 28, 2003, we entered into agreements with KKR, Trimaran Fund Management, L.L.C. and the IT Holdings Partnership for
the provision of management, consulting and financial services in

                                                                        33
exchange for annual fees. We incurred expenses of $1.0 million and $1.3 million for 2003 and 2004, respectively, in respect of these annual
fees, excluding out-of-pocket costs. In connection with this offering, the parties to these agreements and ITC Holdings have agreed to amend
these agreements by terminating ITC's obligation to pay these annual fees in exchange for one-time fees to KKR and Trimaran Fund
Management of $4.0 million and $1.7 million, respectively, and a one-time fee to the IT Holdings Partnership of $1.0 million which will be
payable by ITC Holdings upon the completion of this offering.

Termination of Dividend Equivalent Rights Plan

    On May 10, 2005, our board of directors determined that it is in the best interests of our company to terminate the Dividend Equivalent
Rights Plan. Upon termination of the plan, 25 plan participants will receive their full account balances. As a result, an aggregate amount of
approximately $1.8 million will be paid by us from the funded trust to participants in the plan.

Basis of Presentation

     We acquired the outstanding ownership interests of Predecessor ITC from DTE Energy on February 28, 2003 and accounted for the
acquisition as a purchase. We adopted certain accounting policies and methods which differ from those followed by Predecessor ITC prior to
the acquisition and as reflected in Predecessor ITC's audited financial statements and related notes included elsewhere in this prospectus.

Revenues

      We derive nearly all of our revenues from providing network transmission service, point-to-point transmission service and other related
services over our system. The revenue information throughout this Basis of Presentation section is presented for a full year of operations for the
year ended December 31, 2004, which may be more meaningful than revenue information presented for a three-month period given the
seasonality of our revenues. Most of our expenses and substantially all of our assets are devoted to providing transmission service. ITC's
principal transmission service customer is Detroit Edison which accounted for approximately 68% of ITC's total operating revenues for the
year ended December 31, 2004. ITC's system is the only transmission system that directly interconnects with Detroit Edison's distribution
network. ITC's remaining revenues were generated from providing service to other entities such as alternative electricity suppliers, power
marketers and other wholesale customers that provide electricity to end-use consumers and from transaction-based capacity reservations on
ITC's transmission system. MISO is responsible for billing and collection of transmission services in the MISO service territory. MISO, as the
billing agent for ITC, collects fees for the use of ITC's transmission system, invoicing Detroit Edison and other ITC customers on a monthly
basis. MISO has implemented credit policies for its members, which include ITC's customers.

      Network Revenues are generated from fees charged to network customers for their use of ITC's electricity transmission system during the
one hour of monthly peak usage. For the year ended December 31, 2004, approximately 90.2% of ITC's operating revenues were derived from
the provision of network service. ITC's network revenues are dependent on monthly peak loads and regulated transmission rates.

    Network revenues are determined using rates regulated by the FERC. ITC's monthly network revenues are the result of a calculation
which can be simplified into the following:

     (1)
            multiply:

     •
            the network load measured in kWs achieved during the one hour of monthly peak usage for ITC's transmission system by

                                                                       34
    •
            the appropriate monthly tariff rate as calculated under Attachment O by

    •
            12 by

    •
            the number of days in that month; and

    (2)
            divide the result by 365.

Therefore, ITC earns proportionately more revenues in months with 31 days than in months with a lesser number of days if all other factors
remain equal. Set forth below is a simplified illustrative calculation of the network revenue earned for the month of December 2004:

    8,469,000 (peak network load in kW in December) × $1.075 (the monthly tariff) × 12 × 31 (days in December)/365 = $9,278,776 total
    December network revenues.

      Point-to-Point Revenues consist of revenues generated from a type of transmission service for which the customer pays for transmission
capacity reserved along a specified path between two points on an hourly, daily, weekly or monthly basis. Point-to-point revenues also include
other components pursuant to schedules under the MISO transmission tariff. Approximately 13.4% of ITC's operating revenues for the year
ended December 31, 2004 was derived from providing point-to-point service, without giving effect to the refund described below.

     The rates approved by the FERC in connection with our acquisition of ITC from DTE Energy included a departure from the Attachment O
formula with respect to the treatment of point-to-point revenues received during 2003 and 2004. Based on FERC orders as part of the
acquisition of ITC's transmission system from DTE Energy, ITC has refunded or will refund a portion of point-to-point revenues earned during
the period from March 1, 2003 through December 31, 2004 to network and point-to-point customers pro rata. ITC refunded 100% of 2003
point-to-point revenues in March 2004 and refunded 75% of 2004 point-to-point revenues in March 2005. Point-to-point revenues collected for
periods after December 31, 2004 are no longer refunded.

      Scheduling, Control and Dispatch Revenues also are approved by the FERC and are allocated to ITC by MISO as compensation for the
services ITC performs, jointly with the Michigan Electric Transmission Company, or METC, in operating the Michigan Electric Coordinated
Systems, or MECS, control area. Such services include processing energy schedule requests utilizing the MECS system, monitoring of
reliability data, implementation of emergency procedures, and coordination of the MECS operation. Approximately 4.9% of ITC's operating
revenues for the year ended December 31, 2004 were derived from providing scheduling, control and dispatch services.

     Other Revenues consist primarily of rental revenues received from METC for the use of the Michigan Electric Power Coordination
Center, or MEPCC, building as well as property easement revenues. Approximately 1.6% of ITC's revenues for the year ended December 31,
2004 consisted of other revenues.

                                                                      35
    The following table sets forth the components of our revenue, expressed as a dollar amount and percentage of net revenues, for the year
ended December 31, 2004:

                                                                                                    Year Ended
                                                                                                 December 31, 2004

                      Revenues

                                                                                              Amount               Percentage

                                                                                          (in thousands, except percentages)


                      Network                                                            $      114,082                   90.2 %
                      Point-to-point                                                             16,989                   13.4
                      Scheduling, control and dispatch                                            6,146                    4.9
                      Other                                                                       1,973                    1.6

                      Total                                                                     139,190                 110.1
                      Refundable point-to-point                                                 (12,741 )               (10.1 )

                      Net operating revenues                                             $      126,449                 100.0 %


     The total of the monthly peak loads for 2004 was up 4.0% and down 2.4% as compared to the corresponding totals for 2003 and 2002,
respectively.

                                                                        Monthly Peak Load (in Megawatts)

                                                    2001             2002              2003                 2004                  2005

January                                              7,753            7,668             7,608                8,022                 8,090
February                                             7,355            7,572             7,437                7,656                 7,672
March                                                7,258            7,566             7,542                7,434                 7,562
April                                                7,012            8,386             6,934                7,305                 7,299
May                                                  8,068            8,702             7,017                8,718                 7,678
June                                                10,895           11,067            11,266               11,114
July                                                11,309           11,423            10,225               11,344
August                                              11,875           11,438            11,617               10,877
September                                           10,037           10,894             8,717                9,841
October                                              7,145            8,645             7,369                7,197
November                                             7,343            7,271             7,843                7,832
December                                             7,573            7,772             8,124                8,469

Expenses

       Operation and Maintenance Expenses consist primarily of the costs of contractors to operate and maintain ITC's transmission system
and salary-related expenses for ITC personnel involved in operation and maintenance activities. The majority of expenses for the operation of
the transmission system relate to activities of the MECS control area. Maintenance expenses include preventative or planned maintenance, such
as vegetation management, tower painting and equipment inspections, as well as reactive maintenance for equipment failures.

      Prior to February 28, 2003, ITC had entered into a Master Services Agreement with Detroit Edison whereby Detroit Edison performed
maintenance, asset construction and day-to-day management of transmission operations and administration services. Detroit Edison received
compensation for wages and benefits for employees performing work on behalf of ITC and for costs of construction or maintenance directly
related to ITC in addition to overhead and other fees. Subsequent to February 28, 2003 and through April 2004, ITC had operated under a
construction and maintenance, engineering, and system operations service level agreements, or the SLA, with Detroit Edison whereby Detroit
Edison performed maintenance, asset construction, and certain aspects of transmission operations and administration, or the SLA Activities, on
behalf of ITC. ITC entered into the SLA to provide an

                                                                      36
orderly transition from being a subsidiary of an integrated utility to a stand-alone independent transmission company. The SLA, as amended,
had a term through February 29, 2004, with certain specified services extending through April 30, 2004, as necessary. Under the terms of the
SLA, ITC's SLA Activities were jointly managed by ITC and Detroit Edison and therefore ITC did not have exclusive control over its
expenditures relating to the SLA Activities through the term of the SLA. The terms of the SLA included an agreed upon pricing mechanism
whereby Detroit Edison was paid an amount to compensate them for their fully allocated costs.

     In August 2003, ITC entered into an Operation and Maintenance Agreement with its primary maintenance contractor and a Supply Chain
Management Agreement with its primary purchasing and inventory management contractor to perform these services subsequent to the term of
the SLA. In order to facilitate the transition from Detroit Edison, the new contractors had performed work in parallel with Detroit Edison prior
to the termination of the SLA. The agreements reduce uncertainty with regard to ITC's cost structure for the period ending August 28, 2008.
Additionally, the new operating agreements allow ITC to exclusively manage and control operating expenditures.

    Because Predecessor ITC had no employees of its own, it was supported by employees of other DTE Energy subsidiaries, principally
Detroit Edison. Any work a person did on behalf of Predecessor ITC (both field operations or administrative) was captured and recorded as
operation and maintenance expense. In addition, there were allocations of employee benefits (for those employees whose time was billed to
Predecessor ITC), corporate overhead (executive staff, legal) and infrastructure costs (facilities, information technology, equipment etc.) that
were assigned to Predecessor ITC and recorded as operation and maintenance expense. Administrative costs such as employee benefits,
corporate overhead and infrastructure costs are now recorded in general and administrative expenses at ITC.

      General and Administrative Expenses consist primarily of compensation and related costs for personnel and facilities for our finance,
human resources, regulatory, information technology and legal organizations, and fees for professional services. Professional services are
principally composed of outside legal, audit, consulting and information technology services. Additionally, benefits expenses for all employees
are included in general and administrative expenses.

     During 2003, under the terms of the SLA, Detroit Edison performed many of the administrative duties in support of ITC's construction
program. Subsequent to the termination of the SLA, we began to capitalize certain general and administrative expenses in July 2004 that
resulted from our management of the expanded construction program. These expenses are included in PP&E.

      Depreciation and Amortization Expenses consist primarily of depreciation of PP&E using the straight-line method for financial
reporting. Additionally, we amortize the regulatory asset-acquisition adjustment, representing a portion of the goodwill created from the
acquisition of ITC that was approved for recovery in rates by the FERC. The original amount of $60.6 million as of February 28, 2003 is being
amortized over 20 years on a straight-line basis.

      Taxes other than Income Taxes consist primarily of property tax expenses. In accordance with Michigan law, ITC's real property tax
values were uncapped as a result of the change in ownership of the assets of ITC. Additionally, numerous municipalities have applied their own
valuation tables in assessing the value of ITC's personal property, rather than using the valuation tables approved by the State Tax Commission,
or STC, resulting in higher property values. ITC has filed tax appeals and is in the process of discussing December 31, 2003 tax assessments
with various municipalities, which are the basis for 2004 property tax expense. ITC has developed an appeal strategy and filed formal appeals
with the Michigan Tax Tribunal, or MTT, for the municipalities that did not utilize the STC tax tables. The December 31, 2004 tax assessments
received from the municipalities that are the basis for 2005 personal property taxes use the STC-approved valuation tables.

    The Michigan Single Business Tax, a value-added tax, will be recorded in taxes other than income taxes when incurred. We did not incur
any Michigan Single Business Tax during the period from February 28, 2003 through December 31, 2003 or during 2004.

                                                                        37
      Interest Expense consists primarily of interest on ITC Holdings' $267.0 million of 5.25% Senior Notes and ITC's $185.0 million of
4.45% Series A Mortgage Bonds. ITC Holdings and ITC also have revolving credit facilities outstanding, with the interest expense and facility
fees being recorded to interest expense. Additionally, the amortization of debt financing expenses is recorded to interest expense.

Non-GAAP Financial Measures

     A non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial
position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. In this
prospectus, we define and use adjusted EBITDA, a non-GAAP financial measure, as set forth below.

Definition of Adjusted EBITDA

     We define adjusted EBITDA as follows:

     net income plus :

     •
               income taxes;

     •
               depreciation and amortization expense; and

     •
               interest expense;

         excluding :

     •
               allowance for equity funds used during construction; and

     •
               certain other items not related to day-to-day operating performance such as loss on extinguishment of debt.



Management's Use of Adjusted EBITDA

     We use adjusted EBITDA on a consolidated basis to assess our overall financial and operating performance. We believe this non-GAAP
measure, as we have defined it, is helpful in identifying trends in our day-to-day performance because the items excluded have little or no
significance on our day-to-day operations. This measure provides an assessment of controllable expenses and affords management the ability to
make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance. It provides an
indicator for management to determine if adjustments to current spending decisions are needed.

    We have not used adjusted EBITDA as a measure of segment performance. We only measure performance on a consolidated basis
because we have only one primary operating segment.

Limitations of Adjusted EBITDA

     Adjusted EBITDA has limitations as an analytical tool. It should not be viewed in isolation or as a substitute for GAAP measures of
earnings. Material limitations in making the adjustments to our earnings to calculate adjusted EBITDA, and using this non-GAAP financial
measure as compared to GAAP net income (loss), include:

     •
               the cash portion of interest expense, income tax (benefit) provision and non-recurring charges related to securities issuance
               activities generally represent charges (gains) which may significantly affect our financial results;

     •
               depreciation and amortization, though not directly affecting our current cash position, represent the wear and tear and/or reduction
               in value of other plant, equipment and intangible assets which permit us to provide electricity transmission to our customers and
               may be indicative of future needs for capital expenditures, or development or acquisition of intangible assets; and
38
     •
             allowance for equity funds used during construction is a result of strategic capital spending decisions and is excluded for the same
             reason as interest expense.

     An investor or potential investor may find this item important in evaluating our performance, results of operations, financial position and
liquidity. We use non-GAAP financial measures to supplement our GAAP results in order to provide a more complete understanding of the
factors and trends affecting our business.

     Adjusted EBITDA is not an alternative to net income, operating income or cash flows from operating activities as calculated and
presented in accordance with GAAP. You should not rely on adjusted EBITDA as a substitute for any such GAAP financial measure. We
strongly urge you to review the reconciliation of adjusted EBITDA to GAAP net income (loss), along with our consolidated financial
statements included elsewhere in this prospectus. We also strongly urge you to not rely on any single financial measure to evaluate our
business. In addition, because adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to varying
calculations, the adjusted EBITDA measure, as presented in this prospectus, may differ from and may not be comparable to similarly titled
measures used by other companies.

Critical Accounting Policies and Methods

     Preparation of financial statements and related disclosures in compliance with GAAP requires the application of appropriate technical
accounting rules and guidance, as well as the use of estimates. The application of these policies necessarily involves judgments regarding future
events, including legal and regulatory challenges and anticipated recovery of costs. These judgments, in and of themselves, could materially
impact the financial statements and disclosures based on varying assumptions. In addition, the financial and operating environment also may
have a significant effect, not only on the operation of our business, but on our results reported through the application of accounting measures
used in preparing the financial statements and related disclosures, even if the nature of the accounting policies applied has not changed.

     The following is a list of accounting policies that are most significant to the portrayal of our financial condition and results of operations
and that require management's most difficult, subjective or complex judgments.

     Regulation. Nearly all of ITC's business is subject to regulation. As a result, we apply accounting principles in accordance with
Statement of Financial Accounting Standards, or SFAS, 71, "Accounting for the Effects of Certain Types of Regulation," or SFAS 71. Use of
SFAS 71 results in differences in the application of GAAP between regulated and non-regulated businesses. SFAS 71 requires the recording of
regulatory assets and liabilities for certain transactions that would have been treated as expense or revenue in non-regulated businesses. Future
regulatory changes or changes in the competitive environment could result in discontinuing the application of SFAS 71. If we were to
discontinue the application of SFAS 71 on ITC's operations, we may be required to record extraordinary losses of $55.1 million relating to the
regulatory asset-acquisition adjustment and $8.1 million of other regulatory assets relating to deferred financing fees at December 31, 2004.
Additionally, we may be required to record extraordinary gains of $43.9 million relating to asset removal costs that have been accrued in
advance of incurring these costs, recorded as regulatory liabilities at December 31, 2004.

     We believe that currently available facts support the continued applicability of SFAS 71 and that all regulatory assets and liabilities are
recoverable or refundable under our current rate environment.

     Attachment O Revenue Deferral. ITC's revenue deferral resulted from the difference between the revenue ITC would have collected
under Attachment O and the actual revenue ITC received based on the frozen rate. The final revenue deferral at December 31, 2004 as
established during the rate freeze was $59.7 million ($38.8 million net of tax). The revenue deferral and related taxes are not reflected as

                                                                         39
an asset or as revenue in our consolidated financial statements because they do not meet the criteria to be recorded as regulatory assets in
accordance with SFAS 71 or Emerging Issues Task Force 92-7, "Accounting by Rate-Regulated Utilities for the Effects of Certain Alternative
Revenue Programs," or EITF 92-7. SFAS 71 provides that an enterprise shall capitalize all or part of an incurred cost that would otherwise be
charged to expense if certain criteria are met, including whether it is probable that future revenue in an amount at least equal to the capitalized
cost will result from inclusion of that cost in allowable costs for rate-making purposes. Although the amortization of the revenue deferral is an
allowable component of future rates based on FERC approval obtained for this item, the revenue deferral does not represent an incurred cost.
Rather, it is a delayed recovery of revenue based on many components of our tariff rate, including incurred costs, rate base, capital structure,
network load and other components of Attachment O. EITF 92-7 provides that a regulated enterprise should recognize revenue for other than
incurred costs if the revenue program meets certain criteria. The revenue deferral does not satisfy the criteria of EITF 92-7 to record the
revenue deferral in the year it is determined. We believe the proper revenue recognition relating to the revenue deferral occurs when we begin
to charge the rate that includes the amortization of the revenue deferral beginning in June 2006.

     Purchase Accounting. We accounted for our acquisition of Predecessor ITC using the purchase method, prescribed by SFAS 141,
"Business Combinations." Estimates have been made in valuing certain assets and liabilities in the balance sheet. The provisions of the
acquisition required an adjustment to the acquisition price of $610.0 million based on the closing balance sheet at February 28, 2003 prepared
by DTE Energy. ITC Holdings paid an additional $8.3 million to DTE Energy subsequent to February 28, 2003 relating to the acquisition.
During 2004, ITC Holdings and DTE Energy negotiated additional adjustments to the purchase price relating to the acquisition for various
PP&E and inventory balances. These negotiations are not final; however, ITC Holdings recorded an increase in the purchase price related to its
best estimate of the outcome. There may be additional purchase price adjustments as ITC and DTE Energy continue to identify differences
from the closing balance sheet at February 28, 2003. We do not expect any additional purchase price adjustments to be significant. If additional
purchase price adjustments are identified, the amount recorded for goodwill or other balance sheet items would be impacted.

     Goodwill. We have goodwill resulting from the acquisition of Predecessor ITC. In accordance with SFAS 142, "Goodwill and Other
Intangible Assets," we are required to perform an impairment test annually or whenever events or circumstances indicate that the value of
goodwill may be impaired. In order to perform these impairment tests, we determined fair value using valuation techniques based on estimates
of market-based valuation multiples for companies within ITC's peer group and also considered discounted future cash flows under various
scenarios. The market-based multiples involve judgment regarding the appropriate peer group and the appropriate multiple to apply in the
valuation and the cash flow estimates involve judgments based on a broad range of assumptions, information and historical results. To the
extent estimated market-based valuation multiples and/or discounted cash flows are revised downward, we may be required to write down all
or a portion of ITC's goodwill, which would adversely impact earnings. As of December 31, 2004, goodwill totaled $176.0 million and we
determined that no impairment existed as of our goodwill impairment testing date of October 1, 2004.

      Valuation. Our accounting for stock-based compensation requires us to determine the fair value of shares of ITC Holdings' common
stock. The fair value of ITC Holdings' common stock is determined using a discounted future cash flow method, which is a valuation technique
that is acceptable for privately-held companies. The cash flow estimates involve judgments based on a broad range of assumptions, information
and historical results. In the event different assumptions were used, it would result in a different fair value of ITC Holdings' common stock
which would impact the amount of compensation expense recognized related to our stock-based awards.

     Property Taxes. Property taxes recognized for 2004 are based on a total annual legal liability of $20.3 million from the 2004 tax
statements received from municipalities. Numerous municipalities have

                                                                         40
applied their own valuation tables in assessing the value of ITC's personal property subsequent to the acquisition of Predecessor ITC, rather
than the valuation tables approved by the STC. ITC has filed tax appeals and is in the process of discussing December 31, 2003 tax assessments
with various municipalities, which are the basis for 2004 property tax expense. ITC has developed an appeal strategy and filed formal appeals
with the MTT for the municipalities that did not utilize the STC tax tables. Until this issue is resolved, ITC is making property tax payments
based on the valuation tables approved by the STC, while continuing to expense the full amounts billed by the municipalities in applying their
own valuation tables. In the event that there are changes to the estimated personal property tax values based on negotiations with municipalities
or through appeals with the MTT, any adjustments to ITC's property tax expense would be recorded at that time.

Results of Operations

     The financial information presented in this prospectus includes results of operations for Predecessor ITC for the two-month period ended
February 28, 2003 and ITC Holdings Corp. for the period from February 28, 2003 through December 31, 2003. Neither the two-month period
nor the ten-month period is reflective of a twelve-month year of operations and, accordingly, neither of such periods individually is directly
comparable to the results of operations for the year ended December 31, 2004 or for the year ended December 31, 2002.

     In order to provide a year-over-year analysis, audited financial information for Predecessor ITC for the two-month period ended
February 28, 2003 and audited information for ITC Holdings for the period from February 28, 2003 through December 31, 2003 have been
combined to create a pro forma period consisting of the year ended December 31, 2003, which we refer to as the 2003 Pro Forma Period. The
discussion is provided for comparative purposes only, but the value of such a comparison may be limited. You should not interpret the 2003
Pro Forma Period financial information as the result of operations that ITC Holdings would have achieved had the acquisition occurred prior to
January 1, 2003.

                                                                       41
      The following statement summarizes historical operating results for the periods indicated:

                                                                                ITC Holdings
                                                                               and Subsidiaries

                                                                                                                                             ITC Holdings
                                                                                                                                            and Subsidiaries

                                           Predecessor ITC

                                                                                 Period From
                                                                                February 28,
                                                                                2003 Through
                                                                                December 31,
                                                                                     2003

                                                                                                                                                     Three              Three
                                                        Two-Month                                                                                    Months             Months
                                  Year Ended           Period Ended                                      2003 Pro            Year Ended              Ended              Ended
                                  December 31,         February 28,                                       Forma              December 31,           March 31,          March 31,
                                      2002                 2003                                           Period                 2004                 2004               2005

                                                                                                        (unaudited)


                                                                                           (in thousands)


Operating revenues            $            137,535 $             20,936 $                 102,362 $            123,298 $              126,449 $          27,544 $           42,460
Operating expenses:
   Operation and
   maintenance                              34,699                5,675                   22,902                28,577                 24,552             6,394              6,522
   General and
   administrative                                —                      —                 26,342                26,342                 24,412             6,448              5,286
   Depreciation and
   amortization                             21,996                3,665                   21,463                25,128                 29,480             6,966              8,018
   Taxes other than income
   taxes                                    15,776                4,298                   11,499                15,797                 20,840             5,424              4,299

        Total operating
        expenses                            72,471               13,638                   82,206                95,844                 99,284            25,232             24,125
Operating income                            65,064                7,298                   20,156                27,454                 27,165             2,312             18,335
Other expenses (income):
   Interest expense                              58                     —                 21,630                21,630                 25,585             6,291              6,854
   Allowance for equity
   funds used in
   construction                                  —                      —                    (322 )                 (322 )             (1,691 )            (318 )            (580 )
   Loss on extinguishment
   of debt                                      —                       —                 11,378                11,378                     —                    —              —
   Other income                             (1,720 )                  (147 )                (197 )                (344 )               (1,289 )                (12 )         (305 )
   Other expense                               245                      45                    27                    72                    283                   37            176

       Total other expenses
       (income)                             (1,417 )                  (102 )              32,516                32,414                 22,888             5,998              6,145

Income (loss) before
income taxes                                66,481                7,400                   (12,360 )             (4,960 )                4,277             (3,686 )          12,190
Income tax provision
(benefit)                                   23,268                3,915                    (4,306 )                 (391 )              1,669             (1,268 )           4,320

Net income (loss)             $             43,213 $              3,485 $                  (8,054 ) $           (4,569 ) $              2,608 $           (2,418 ) $         7,870



                                                                                     42
 Results of Operations for the Three Months Ended March 31, 2004 Compared to the Three Months Ended March 31, 2005

     Operating Revenues. Revenues increased by $15.0 million, or 54.5%, from $27.5 million in the three months ended March 31, 2004 to
$42.5 million in the three months ended March 31, 2005.

      The following table sets forth the components of our revenue, expressed as a dollar amount and percentage of net operating revenues, for
the three months ended March 31, 2004 and 2005:

                                                                                                 Three Months
                                                                                                Ended March 31,

                                                                                   2004                                      2005

                                                                        Amount            Percentage           Amount               Percentage

                                                                                        (in thousands, except percentages)


Network                                                             $        24,741               89.8 % $         36,577                  86.2 %
Point-to-point                                                                3,890               14.1              4,087                   9.6
Scheduling, control and dispatch                                              1,359                5.0              1,332                   3.1
Other                                                                           471                1.7                464                   1.1

Total                                                                        30,461              110.6             42,460                100.0
Refundable point-to-point                                                    (2,917 )            (10.6 )               —                    —

Net operating revenues                                              $        27,544              100.0 % $         42,460                100.0 %


      Network revenues increased by $11.9 million, or 48.2%, from $24.7 million in the three months ended March 31, 2004 to $36.6 million in
the three months ended March 31, 2005. The increase was due primarily to an increase in the rate used for network revenues from $1.075 per
kW/month in the three months ended March 31, 2004 to $1.587 in the three months ended March 31, 2005, which increased revenues by
$11.4 million. The remaining increase of $0.5 million was primarily due to an increase in the total of the monthly peak loads for the three
months ended March 31, 2005 of 0.9% compared to the three months ended March 31, 2004, which increased revenues by $0.3 million.

     Point-to-point revenues, net of refunds, increased by $3.1 million, or 310.0% from $1.0 million in the three months ended March 31, 2004
to $4.1 million in the three months ended March 31, 2005, primarily because ITC is no longer is required to refund point-to-point revenues
earned in 2005, as was required for point-to-point revenues earned during the three months ended March 31, 2004 in the amount of
$2.9 million.

    Operating Expenses. Total operating expenses decreased by $1.1 million, or 4.4%, from $25.2 million in the three months ended
March 31, 2004 to $24.1 million in the three months ended March 31, 2005.

      Operation and maintenance expenses increased by $0.1 million, or 1.6%, from $6.4 million in the three months ended March 31, 2004 to
$6.5 million in the three months ended March 31, 2005. The increase was due to increased operation and maintenance activities performed
during the three months ended March 31, 2005 of $1.7 million, primarily due to increases in preventative maintenance for vegetation
management of $0.9 million and circuit breaker inspections of $0.6 million, as well as other net increases of $0.2 million. Partially offsetting
this increase was a $1.6 million decrease in expenses relating to training contract personnel to transition ITC's operation and maintenance
activities from Detroit Edison in the three months ended March 31, 2004 that did not recur during the three months ended March 31, 2005.

     General and administrative expenses decreased by $1.1 million, or 17.2%, from $6.4 million in the three months ended March 31, 2004 to
$5.3 million in the three months ended March 31, 2005. The decrease was primarily due to the capitalization of certain general and
administrative expenditures totaling $0.9 million in the three months ended March 31, 2005. No such amounts were capitalized in the three
months ended March 31, 2004. Additionally, general and administrative expenses decreased

                                                                        43
by $0.9 million due to losses incurred in the three months ended March 31, 2004 related to our investment in Conjunction LLC, or
Conjunction, through our wholly-owned subsidiary, New York Transmission Holdings Corporation, or NYTHC. Conjunction was formed in
2003 to develop a high-voltage direct current line to be built within New York state to transmit power to the metropolitan New York City area.
There was no impact from Conjunction in the three months ended March 31, 2005. Partially offsetting these decreases of $1.8 million were
increases of $0.7 million, which related to higher compensation and benefits expense of $0.6 million due to additions in headcount and various
other items totaling a net increase of $0.1 million.

      Depreciation and amortization expenses increased by $1.0 million, or 14.3%, from $7.0 million in the three months ended March 31, 2004
to $8.0 million in the three months ended March 31, 2005 due to a higher depreciable asset base as a result of PP&E additions during 2004 and
the three months ended March 31, 2005.

     Taxes other than income taxes decreased by $1.1 million, or 20.4%, from $5.4 million in the three months ended March 31, 2004 to
$4.3 million in the three months ended March 31, 2005 due to ITC's lower assessed property tax values as of December 31, 2004 that are the
basis for the 2005 property taxes compared to the assessed values as of December 31, 2003 that were the basis for the 2004 property taxes.
Numerous municipalities had applied their own valuation tables in assessing the value of ITC's personal property at December 31, 2003, rather
than using the valuation tables approved by the STC. The municipalities used the valuation tables approved by the STC in assessing the value
of ITC's personal property at December 31, 2004, which will result in lower property taxes in 2005 compared to 2004.

      Other Expenses. Interest expense increased by $0.6 million, or 9.5%, from $6.3 million in the three months ended March 31, 2004 to
$6.9 million in the three months ended March 31, 2005. The increase was primarily due to higher borrowing levels under our revolving credit
facilities in the three months ended March 31, 2005 to finance capital expenditures at ITC.

     Net Income (Loss). As a result of the factors identified above, net income after taxes increased by $10.3 million from a net loss of
$2.4 million in the three months ended March 31, 2004 to net income of $7.9 million in the three months ended March 31, 2005.

Results of Operations for the Year Ended December 31, 2004 Compared to the 2003 Pro Forma Period

     Operating Revenues. Revenues increased by $3.1 million, or 2.5%, from $123.3 million in the 2003 Pro Forma Period to
$126.4 million in 2004. This increase was primarily due to higher monthly peak load in 2004 resulting in increased network revenues of
$2.8 million and a $1.3 million increase in net point-to-point revenues. Partially offsetting these increases was a net $1.0 million decrease
primarily in revenues associated with scheduling, controlling and dispatch services and amounts received for use of utility property.

     Operating Expenses.      Total operating expenses increased by $3.5 million, or 3.7%, from $95.8 million in the 2003 Pro Forma Period to
$99.3 million in 2004.

     Operation and maintenance expenses decreased by $4.0 million, or 14.0%, from $28.6 million in the 2003 Pro Forma Period to
$24.6 million in 2004 primarily due to active cost management. During 2003, Detroit Edison and ITC jointly controlled maintenance activities
under the terms of the SLA. Beginning in April 2004, ITC had exclusive control over its operation and maintenance activities.

     General and administrative expenses decreased by $1.9 million, or 7.2%, from $26.3 million in the 2003 Pro Forma Period to
$24.4 million in 2004. The decrease was primarily due to non-recurring expenses of $4.9 million in the 2003 Pro Forma Period comprised of
regulatory asset amortization relating to MISO and ITC start-up costs partially offset by general increases in salary, benefits, and professional
services in 2004. The offsetting increase relating to salary, benefits and other expenses

                                                                        44
would have been higher in 2004 if not for the capitalization of certain general and administrative expenditures totaling $2.5 million.

     Depreciation and amortization expenses increased by $4.4 million, or 17.5%, from $25.1 million in the 2003 Pro Forma Period to
$29.5 million in 2004 due to a higher depreciable asset base as a result of PP&E additions during 2004 and the 2003 Pro Forma Period.

     Taxes other than income taxes increased by $5.0 million, or 31.6%, from $15.8 million in the 2003 Pro Forma Period to $20.8 million in
2004 due to ITC's higher property tax values as of December 31, 2003. In accordance with Michigan law, ITC's real property tax values were
uncapped as a result of the change in ownership of ITC's assets. Additionally, numerous municipalities have applied their own valuation tables
in assessing the value of ITC's personal property, rather than using the valuation tables approved by the STC, resulting in higher property taxes.

     Other Expenses. Interest expense increased by $4.0 million, or 18.5%, from $21.6 million in the 2003 Pro Forma Period to
$25.6 million in 2004. The increase was primarily due to 12 months of borrowings in 2004, as compared to 10 months of borrowings in the
2003 Pro Forma Period, as well as higher borrowing levels in 2004 related to increased capital expenditures in 2004.

    There was a non-recurring expense of $11.4 million in the 2003 Pro Forma Period relating to the extinguishment of debt as a result of ITC
Holdings' debt refinancing in July 2003.

     Net Income (Loss). As a result of the factors identified above, net income after taxes increased by $7.2 million from a net loss of
$4.6 million in the 2003 Pro Forma Period to net income of $2.6 million in 2004.

Results of Operations for the 2003 Pro Forma Period Compared to the Year Ended December 31, 2002

     Operating Revenues. Revenues decreased by $14.2 million, or 10.3%, from $137.5 million in 2002 to $123.3 million in the 2003 Pro
Forma Period. This decrease was due to a $13.3 reduction of net Point-to-Point revenues due primarily to the refunding of 100% of March
through December 2003 Point-to-Point revenues and a $4.2 million decrease in network revenues due primarily to lower monthly peak loads.
Partially offsetting these decreases was a net increase of $3.3 million primarily as a result of scheduling, controlling and dispatch revenues and
amounts received for use of utility property.

    Operating Expenses.       Total operating expenses increased by $23.3 million, or 32.1%, from $72.5 million in 2002 to $95.8 million in the
2003 Pro Forma Period.

      Operation and maintenance expenses decreased by $6.1 million, or 17.6%, from $34.7 million in 2002 to $28.6 million in the 2003 Pro
Forma Period. In 2002 and the first two months of 2003, general and administrative costs were classified as operation and maintenance
expense. Directly identifiable general and administrative costs of $9.0 million and allocated corporate overhead costs of $11.0 million were
billed by DTE Energy to ITC and classified as operation and maintenance expense in 2002 as compared to $3.1 million and $0.9 million,
respectively, in the 2003 Pro Forma Period. Predecessor ITC had no employees and was supported by employees of other DTE Energy
subsidiaries. We record these types of expenses as general and administrative expenses. Offsetting the $16.0 million decrease was an increase
relating to operation and maintenance expenses for transmission station equipment of $6.8 million and overhead and underground lines of
$1.7 million and an increase of $1.4 million in miscellaneous expenses.

     General and administrative expenses increased by $26.3 million in the 2003 Pro Forma Period as Predecessor ITC recognized no general
and administrative expenses in 2002. The 2003 Pro Forma Period general and administrative expenses resulted from non-recurring expenses of
$4.9 million for the amortization of a regulatory asset relating to MISO and Predecessor ITC start-up costs. In 2003, we acquired a majority
interest in Conjunction. We recorded $1.6 million of expenses at NYTHC in the 2003 Pro Forma Period related to the start-up activities of
Conjunction. The remaining increase of

                                                                        45
$19.8 million related to certain general and administrative expenses. In 2002 expenses for these functions charged by DTE Energy to
Predecessor ITC were recorded as operation and maintenance expense. These expenses in the 2003 Pro Forma Period included salary and
benefits costs of $8.8 million, professional services of $6.4 million, insurance expense of $1.7 million and $2.9 million of general office
expenses such as rent and supplies.

     Depreciation and amortization expenses increased by $3.1 million, or 14.1%, from $22.0 million in 2002 to $25.1 million in the 2003 Pro
Forma Period primarily due to $2.5 million in amortization expense related to a regulatory asset-acquisition adjustment in the 2003 Pro Forma
Period, as well as other increases of $0.6 million for depreciation expense as a result of a higher depreciable asset base in 2003.

     Taxes other than income taxes were $15.8 million in both 2002 and the 2003 Pro Forma Period.

     Other Expenses. Interest expense increased by $21.5 million from $0.1 million in 2002 compared to $21.6 million in the 2003 Pro
Forma Period primarily as a result of the fact that no debt was outstanding during 2002. 2003 Pro Forma Period interest expense on borrowings
was $11.4 million and $7.6 million at Holdings and ITC, respectively. Additionally, amortization of debt issuance costs of $2.6 million was
recorded in the 2003 Pro Forma Period with no corresponding amount in 2002.

    There was a non-recurring expense of $11.4 million in the 2003 Pro Forma Period relating to the extinguishment of debt as a result of
Holdings' debt refinancing in July 2003.

     Net Income (Loss). As a result of the factors identified above, net income after taxes decreased by $47.8 million from net income of
$43.2 million in 2002 to a net loss of $4.6 million in the 2003 Pro Forma Period.

Liquidity and Capital Resources

Liquidity

     We expect to fund our future liquidity needs with cash from operations, our cash and cash equivalents, proceeds from our initial public
offering of common stock and amounts available under our revolving credit facilities, subject to certain conditions. We expect that our liquidity
requirements will arise principally from our need to:

     •
            fund capital expenditures;

     •
            fund ITC Holdings' and ITC's debt service requirements;

     •
            fund working capital requirements; and

     •
            pay dividends on our common stock.

We believe that we have sufficient liquidity to meet our cash and other needs for at least the next 12 months.

      For each of 2005 and 2006, we expect to invest approximately $100 million in additional PP&E, primarily on projects reviewed by MISO.
This amount could vary as ITC continues to identify prudent capital investment opportunities that would reduce transmission constraints,
increase flows across the system, or improve system reliability. Additionally, the amount could vary for other reasons, including, among other
things, the impact of weather conditions, union strikes, material prices and availability, our ability to obtain financing for such expenditures, if
necessary, limitations on the amount of construction that can be undertaken on our system at any one time or regulatory approvals for reasons
relating to environmental, siting or regional planning issues or as a result of legal proceedings, as well as variances between the actual costs of
construction contracts awarded compared to the forecasted costs.

    We expect to pay approximately $24.0 million of interest expense in 2005. In 2005, we expect to pay an aggregate of approximately
$17.5 million in dividends to our stockholders.

                                                                        46
      The following table summarizes cash flows for the periods indicated:

                                                                                       ITC Holdings
                                                                                           and
                                                                                        Subsidiaries

                                                                                                                                                   ITC Holdings
                                                                                                                                                       and
                                                                                                                                                    Subsidiaries

                                                        Predecessor ITC

                                                                                        Period From
                                                                                       February 28,
                                                                                       2003 Through
                                                                                       December 31,
                                                                                            2003

                                                                                                                                                        Three             Three
                                                                    Two-Month                                                                           Months            Months
                                                Year Ended         Period Ended                                 2003 Pro            Year Ended          Ended             Ended
                                                December 31,       February 28,                                  Forma              December 31,       March 31,         March 31,
                                                    2002               2003                                      Period                 2004             2004              2005

                                                                                                               (unaudited)


                                                                                                  (in thousands)


Operating activities
Net income (loss)                           $          43,213 $              3,485 $              (8,054 ) $           (4,569 ) $            2,608 $        (2,418 ) $         7,870
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
    Depreciation and amortization
    expense                                            21,996                3,665                21,463               25,128              29,480            6,966             8,018
    Loss on extinguishment of debt                         —                    —                 11,378               11,378                  —                —                 —
    Deferred income taxes                                 646                 (827 )              (4,306 )             (5,133 )             1,435           (1,269 )           4,320
    Regulatory assets                                  (2,469 )               (105 )               6,769                6,664               1,933              483               483
    Other deferred assets and liabilities                  —                    —                  6,962                6,962                 552              335               560
    Changes in working capital                         28,356              (36,203 )              18,664              (17,539 )            13,638           (7,789 )         (31,063 )

            Net cash provided by (used
            in) operating activities                   91,742              (29,985 )              52,876               22,891              49,646           (3,692 )          (9,812 )

Investing activities
   Expenditures for property, plant and
   equipment                                           (15,360 )            (5,616 )             (26,805 )            (32,421 )            (76,779 )       (21,549 )         (36,112 )
   Acquisition of ITC and related
   transaction fees                                         —                   —               (634,004 )           (634,004 )                 —                  —              —
   Change in affiliated note receivable                (72,355 )            72,355                    —                72,355                   —                  —              —
   Other                                                   304                  12                (2,000 )             (1,988 )                308                 —             229

            Net cash provided by (used
            in) investing activities                   (87,411 )            66,751              (662,809 )           (596,058 )            (76,471 )       (21,549 )         (35,883 )

Financing activities
   Issuance of long-term debt                               —                     —              891,593              891,593                   46                 —              —
   Repayment of long-term debt                              —                     —             (435,000 )           (435,000 )                 —                  —              —
   Borrowings under revolving credit
   facilities                                               —                     —                    —                     —             54,500           21,500            51,000
   Repayments of revolving credit
   facilities                                               —                     —                   —                    —               (22,000 )               —         (14,700 )
   Distributions to stockholders                            —                     —              (27,095 )            (27,095 )                 —                  —              —
   Acquisition-related debt issuance
   costs                                                    —                     —             (20,878 )             (20,878 )                 —               —                 —
   Issuance of common stock                                 —                     —             218,675               218,675                1,020             264                —
   Cash effect of assets and liabilities
   transferred to DTE Energy                                —              (36,766 )                   —              (36,766 )                 —                  —              —
   Net short-term borrowings from DTE
   Energy                                               (4,339 )                  —                   —                    —                    —               —                 —
   Other                                                    —                     —               (9,223 )             (9,223 )               (806 )          (355 )            (816 )

            Net cash provided by (used
            in) financing activities                    (4,339 )           (36,766 )            618,072               581,306              32,760           21,409            35,484

Net increase in cash and cash
equivalents                                                 (8 )                  —                8,139                8,139                5,935          (3,832 )         (10,211 )
Cash and cash equivalents—beginning
of period                                 8     —            —         —       8,139      8,139     14,074


Cash and cash equivalents—end of
period                                $   — $   — $        8,139 $   8,139 $   14,074 $   4,307 $    3,863



                                                      47
Operating Activities

     Net cash used in operating activities was $9.8 million and $3.7 million for the three months ended March 31, 2005 and 2004, respectively.
Our main source of liquidity is our cash flows generated by operating activities. We experienced negative operating cash flows for the three
months ended March 31, 2004 and 2005, as a result of the seasonality of operating revenues, as well as property taxes, interest and
point-to-point revenue refunds paid during the first quarter.

     Net cash from operating activities was $49.6 million, $22.9 million and $91.7 million for 2004, the 2003 Pro Forma Period and 2002,
respectively. Our main source of liquidity is our cash flow generated by operating activities. Excluding the changes in operating cash flows
from Predecessor ITC during the 2003 Pro Forma Period, which primarily consisted of significant non-recurring items relating to settlement of
intercompany balances prior to our acquisition of ITC from DTE Energy, operating cash flows were consistent between the 2003 Pro Forma
Period and 2004.

Investing Activities

     Net cash used in investing activities was $35.9 million and $21.5 million for the three months ended March 31, 2005 and 2004,
respectively. The majority of our cash outflows related to expenditures for PP&E.

     Net cash used by investing activities was $76.5 million, $596.1 million and $87.4 million for 2004, the 2003 Pro Forma Period and 2002,
respectively. The majority of our cash outflow for 2004 related to expenditures for PP&E. The majority of our cash outflow for the 2003 Pro
Forma Period related to our acquisition of ITC from DTE Energy for $618.3 million, plus transaction costs of $15.7 million. Net cash used by
investing activities in 2002 included a working capital loan of $72.4 million from Predecessor ITC to DTE Energy.

     During 2004, ITC made capital expenditures of $76.8 million, primarily relating to projects that improved the transmission system
reliability or projects that reduced transmission constraints. During the 2003 Pro Forma Period, ITC made capital expenditures of
$32.4 million. The majority of these expenditures were made under the SLA. Capital expenditures for 2002 were $15.4 million.

Financing Activities

     Net cash provided by financing activities was $35.5 million and $21.4 million for the three months ended March 31, 2005 and 2004,
respectively. The amount of net cash from financing activities is attributable to borrowings under our revolving credit facilities to finance our
capital expenditures.

     Net cash from financing activities was $32.8 million for 2004 and $581.3 million for the 2003 Pro Forma Period. Net cash used in
financing activities was $4.3 million for 2002.

     We manage our cash needs for capital expenditures through revolving credit facilities at both ITC Holdings and ITC. The cash inflow for
2004 represented primarily net borrowings under those revolving credit facilities. In July 2003, the original term loans borrowed in connection
with our acquisition of ITC from DTE Energy were refinanced. ITC Holdings issued $267.0 million of its 5.25% Senior Notes due July 15,
2013, or the ITC Holdings 5.25% Senior Notes, and ITC issued $185.0 million of its 4.45% First Mortgage Bonds Series A due July 15, 2013,
or the ITC Series A Mortgage Bonds. The proceeds of both issues were used to redeem the term loans used to partially finance the acquisition
and, in addition, ITC Holdings' proceeds were used in part to make a $27.1 million distribution to its stockholders, or $0.90 per share of
common stock. ITC also issued $15.0 million of its First Mortgage Bonds Series B due February 28, 2006, or the ITC Series B Mortgage
Bonds, in July 2003 in support of its revolving credit agreement. Under the terms of the ITC Series B Mortgage Bonds, ITC is only required to
make interest or principal payments on the ITC Series B Mortgage Bonds if payments are not made under ITC's revolving credit agreement.

                                                                        48
      In July 2003, ITC entered into a 2 1 / 2 -year $15.0 million revolving credit agreement with a syndicate of lenders. On September 15,
2003, ITC obtained FERC approval to issue an additional $10.0 million of long-term debt, increasing the authorized debt capacity at ITC from
$200.0 million to $210.0 million. The additional $10.0 million capacity was obtained under ITC's revolving credit agreement in January 2004
and ITC issued an additional $10.0 million of the ITC Series B Mortgage Bonds in support of its revolving credit agreement at that time.

     On February 13, 2004, ITC filed an application with the FERC to issue additional debt and/or equity securities in the amount of
$50.0 million, which increased ITC's total FERC-approved borrowing capacity to $75.0 million. On March 10, 2004, the FERC issued a letter
order authorizing the issuance of such securities subject to various terms and conditions. At December 31, 2004, ITC had $25.0 million
outstanding under its revolving credit agreement.

     In March 2004, ITC Holdings obtained capacity of $20.0 million under a three-year revolving credit agreement, subject to increase to up
to $45.0 million under certain conditions. ITC Holdings obtained an additional $10.0 million of commitments in May 2004 and another
$10.0 million of commitments in June 2004. At December 31, 2004, ITC Holdings had $7.5 million outstanding under its revolving credit
agreement.

      On January 12, 2005, ITC Holdings and a syndicate of lenders amended and restated ITC Holdings' revolving credit agreement to increase
the total commitments thereunder to $47.5 million, with an option to increase the commitments to $50.0 million subject to ITC Holdings'
ability to obtain the agreement of willing lenders. ITC Holdings' revolving credit agreement contains a $10.0 million letter of credit
sub-facility. As amended and restated, ITC Holdings' revolving credit agreement has a maturity date of March 19, 2007. At March 31, 2005,
ITC Holdings had $14.3 million outstanding under its revolving credit facility. There were no letters of credit outstanding under the letter of
credit sub-facility.

     On January 19, 2005, ITC and a syndicate of lenders amended and restated ITC's revolving credit agreement to increase the total
commitments thereunder to $65.0 million, with an option to increase the commitments to $75.0 million subject to ITC's ability to obtain the
agreement of willing lenders. ITC issued an additional $50.0 million of the ITC Series B Mortgage Bonds in support of its amended and
restated revolving credit agreement. As amended and restated, ITC's revolving credit agreement and the aggregate of $75.0 million of ITC's
Series B Mortgage Bonds have a maturity date of March 19, 2007. At March 31, 2005, ITC had $54.5 million outstanding under its revolving
credit facility.

      Borrowings under ITC's revolving credit agreement bear interest, at ITC's option, at either LIBOR plus 1.25% each year or the alternate
base rate plus 0.25% each year, which applicable spreads are subject to adjustment based on the ratings by Moody's Investor Service, Inc. and
Standard & Poor's Ratings Services applicable to ITC's First Mortgage Bonds from time to time. ITC's revolving credit agreement also
provides for the payment to the lenders of a commitment fee on the average daily unused commitments under the revolving credit agreement at
a rate equal to 0.50% each year, payable quarterly in arrears.

     Borrowings under ITC Holdings' revolving credit agreement bear interest, at ITC Holdings' option, at either LIBOR plus 1.50% each year
or the alternate base rate plus 0.50% each year, which applicable spreads are subject to adjustment based on the ratings by Moody's Investor
Service, Inc. and Standard & Poor's Ratings Services applicable to ITC Holdings' senior notes from time to time. ITC Holdings' revolving
credit agreement provides for the payment to the lenders of a commitment fee on the average daily unused commitments under the revolving
credit agreement at a rate equal to 0.375% each year and a letter of credit fee on the average daily stated amount of all outstanding letters of
credit at a rate equal to the then-applicable spread for LIBOR loans, in each case payable quarterly in arrears. ITC Holdings' revolving credit
agreement also provides for the payment to Canadian Imperial

                                                                       49
Bank of Commerce, as letter of credit issuer, of a letter of credit fronting fee on the average daily stated amount of all outstanding letters of
credit at a rate equal to 0.125% each year, payable quarterly in arrears.

    The ITC Holdings 5.25% Senior Notes, ITC Series A Mortgage Bonds and revolving credit facilities contain numerous financial and
operating covenants that place significant restrictions on, among other things, our ability to:

     •
             incur additional indebtedness;

     •
             engage in sale and lease-back transactions;

     •
             create liens or other encumbrances;

     •
             enter into mergers, consolidations, liquidations or dissolutions, or sell or otherwise dispose of all or substantially all of our assets;
             and

     •
             pay dividends or make distributions on ITC Holdings' and ITC's capital stock.

      In addition, ITC's revolving credit agreement requires ITC to maintain a ratio of total debt to total capitalization (calculated as total debt
plus total stockholder's equity) of less than or equal to 60%, and ITC Holdings' revolving credit agreement requires ITC Holdings to maintain a
ratio of total debt to total capitalization (calculated as total debt plus total stockholders' equity) of less than or equal to 85%. Both ITC and ITC
Holdings have complied with their respective total debt to total capitalization ratios over the life of the revolving credit agreements as well as
their other covenants. We do not expect that the completion of this offering will have any affect on ITC Holdings' or ITC's ability to comply
with the financial covenants described above. See "Description of Our Indebtedness."

     We rely on both internal and external sources of liquidity to provide working capital and to fund capital requirements. We expect to
continue to utilize our existing revolving credit facilities as needed to meet our cash requirements and we may secure additional funding from
either our existing equity investors or in the financial markets.

     ITC Holdings maintains credit ratings of BBB- and Baa3 and ITC maintains credit ratings of BBB+ and Baa1 by Standard and Poor's and
Moody's, respectively. In July 2004, Standard and Poor's lowered ITC's outlook from "stable" to "negative" to recognize ITC's significant use
of cash for its extensive capital and maintenance programs while operating under a rate freeze. In March 2005, Standard and Poor's revised its
outlook to "stable" from "negative" following the rate increase that occurred January 1, 2005. We believe our investment-grade credit ratings
should provide a significant degree of flexibility in obtaining funds on competitive terms. However, these credit ratings reflect the views of the
rating agencies only. An explanation of the significance of these ratings may be obtained from each rating agency. Such ratings are not a
recommendation to buy, sell, or hold debt securities, but rather an indication of creditworthiness. Any rating can be revised upward or
downward or withdrawn at any time by a rating agency if it decides that the circumstances warrant the change. Each rating should be evaluated
independently of any other rating.

                                                                          50
Reconciliation of PP&E Activity

     The following table displays the activity for gross PP&E for the period from February 28, 2003 through December 31, 2003 and for the
year ended December 31, 2004:

                                                                                                2003                    2004

                                                                                                       (in thousands)




Gross PP&E at February 28, 2003 and January 1, 2004                                     $        816,767 $                847,664
Additions to PP&E                                                                                 40,968                   81,520
Retirements of PP&E (a)                                                                          (10,071 )                 (8,260 )
Net reductions in PP&E due to proposed asset settlements with DTE Energy (b)                          —                    (5,214 )

Gross PP&E at December 31, 2003 and 2004                                                $        847,664        $         915,710



(a)
       When PP&E is replaced or otherwise disposed of, the gross book value of the retired PP&E is removed from gross PP&E.

(b)
       Subsequent to February 28, 2003, ITC Holdings and DTE Energy identified certain PP&E that was included in the February 28, 2003
       balance sheet that was not transmission PP&E and should not be included in PP&E on our balance sheet. These items reduced our gross
       PP&E balance when they were identified and recorded in 2004. These items are partially offset by transmission PP&E ITC Holdings
       and DTE Energy identified that should have been included in the February 28, 2003 balance sheet that was not included in PP&E. We
       recorded our best estimate of the outcome of these negotiations based on actual recorded balances for this PP&E.

     The following table reconciles the differences between additions to PP&E from the table above to cash expenditures for PP&E for the
period from February 28, 2003 through December 31, 2003 and for the year ended December 31, 2004:

                                                                                                  2003                    2004

                                                                                                         (in thousands)




Additions to PP&E                                                                           $           40,968 $           81,520
Change in accrued liabilities and accounts payable relating to PP&E (a)                                (14,216 )           (5,963 )
PP&E actual removal costs (b)                                                                              375              4,365
Non-cash PP&E adjustments (c)                                                                             (322 )           (3,143 )

Expenditures for PP&E in statements of cash flows                                           $          26,805       $      76,779



(a)
       PP&E additions that are unpaid as of year end are not cash expenditures for PP&E for purposes of the statement of cash flows.

(b)
       Consists of actual costs incurred for the removal of PP&E. These amounts are not included in additions to PP&E, but are included in
       cash expenditures for PP&E in the statements of cash flows. We classify accruals for future removal costs as regulatory liabilities, and
       actual removal costs incurred reduce the regulatory liability.

(c)
       Consists primarily of allowance for equity funds used in construction, which is included in additions to PP&E, but is a non-cash item, as
       well as proposed asset settlements with DTE Energy in 2004.

                                                                       51
    The following table displays the activity for accumulated depreciation and amortization for the period from February 28, 2003 through
December 31, 2003 and for the year ended December 31, 2004:

                                                                                                                  2003                        2004

                                                                                                                         (in thousands)


Accumulated depreciation and amortization at February 28, 2003 and
January 1, 2004                                                                                            $        (380,962 ) $                (388,271 )
PP&E depreciation expense                                                                                            (18,938 )                   (26,450 )
Retirements of depreciable PP&E (a)                                                                                   10,071                       8,236
Net reductions in accumulated depreciation and amortization due to proposed asset settlements
with DTE Energy                                                                                                             —                        2,603
Accrued removal costs and other (b)                                                                                      1,558                       1,856

Accumulated depreciation and amortization at December 31, 2003 and 2004                                    $        (388,271 ) $                (402,026 )



(a)
        When depreciable PP&E is replaced or otherwise disposed of, the gross book value of the retired PP&E is removed from accumulated
        depreciation and amortization.

(b)
        Consists primarily of estimated accrued removal costs that are a component of depreciation expense but are not recorded in
        accumulated depreciation and amortization. We record accruals for future removal costs as regulatory liabilities.

Contractual Obligations and Commitments

      The following table details our contractual obligations as of December 31, 2004:

                                                                                Less than              1-3                4-5                 More than
                                                               Total             1 year               years              years                 5 years

                                                                                                (in thousands)


Long-term debt:
    ITC Series A Mortgage Bonds                           $      185,000    $               —   $            —     $             —        $          185,000
    ITC revolving credit agreement                                25,000                    —            25,000                  —                        —
    ITC Holdings 5.25% Senior Notes                              267,000                    —                —                   —                   267,000
    ITC Holdings revolving credit agreement                        7,500                    —             7,500                  —                        —
    Other                                                             46                    7                22                  8                         9
Interest payments for long-term debt:
    ITC Series A Mortgage Bonds                                   70,342              8,232              24,698            16,465                     20,947
    ITC Holdings 5.25% Senior Notes                              119,772             14,017              42,053            28,035                     35,667
Operating leases                                                   2,781                771               2,010                —                          —
Deferred payables                                                  6,109              1,222               3,665             1,222                         —
Electric plant-related                                            52,009             49,894               1,164               951                         —
Minimum pension funding                                              758                758                  —                 —                          —

Total obligations                                         $      736,317    $        74,901     $      106,112     $       46,681         $          508,623

     Interest payments included above relate to our fixed-rate long-term debt. We also expect to make interest payments under our variable-rate
revolving credit agreements.

     Pursuant to the terms of the SLA, deferred payables were recorded for operation and maintenance expenses incurred by ITC under the
SLA during 2003 to the extent these expenses exceeded $15.9 million. Accordingly, deferred payables of $6.1 million were recognized as
expense but payment was deferred as a long-term payable and will subsequently be paid to Detroit Edison in five equal annual installments
beginning June 30, 2005.

    The electric plant-related items represent commitments for materials, services and equipment that had not been received as of
December 31, 2004 for construction and maintenance projects for which
52
we have an executed contract. The majority of the items relate to materials and equipment that have long production lead times.

     The minimum pension funding requirement is only estimable for 2005 as of December 31, 2004. Our minimum contribution is
$0.8 million, which is included above; however, we expect to contribute $1.6 million to the defined benefit retirement plan relating to 2004
during 2005. It is expected that there will be additional minimum funding requirements in future years.

Off-balance Sheet Arrangements

     We have no off-balance sheet arrangements.

Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

     ITC has commodity price risk arising from market price fluctuations for materials such as copper, aluminum, steel, oil and gas and other
goods used in construction and maintenance activities. Higher costs of these materials are passed on to ITC by the contractors for these
activities, which are a component of the tariff rate under Attachment O.

Interest Rate Risk

     ITC and ITC Holdings had been subject to interest rate risk in connection with the issuance of variable rate term loans used to partially
finance our acquisition of ITC from DTE Energy. In order to manage interest costs, ITC entered into an interest rate swap as a hedge of the
variable rate interest on the ITC term loans. In July 2003, ITC's variable rate term loan was repaid with the proceeds from the issuance of the
ITC Series A Mortgage Bonds and the interest rate swap agreement was terminated at that time. Additionally in July 2003, ITC Holdings'
variable rate term loans were repaid with the proceeds from the issuance of the ITC Holdings 5.25% Senior Notes.

     At March 31, 2005, ITC had $54.5 million outstanding under its revolving credit agreement and ITC Holdings had $14.3 million
outstanding under its revolving credit agreement, both of which are variable rate loans and therefore fair value approximates book value.

     Based on the borrowing rates currently available for bank loans with similar terms and average maturities, the fair value of the ITC
Series A Mortgage Bonds and ITC Holdings 5.25% Senior Notes was $432.7 million at March 31, 2005. The total book value of the ITC
Series A Mortgage Bonds and ITC Holdings 5.25% Senior Notes was $450.9 million at March 31, 2005. We performed a sensitivity analysis
calculating the impact of changes in interest rates on the fair value of long-term debt at March 31, 2005. An increase in interest rates of 10% at
March 31, 2005 would decrease the fair value of debt by $16.0 million, and a decrease in interest rates of 10% at March 31, 2005 would
increase the fair value of debt by $16.8 million.

Credit Risk

      Our credit risk is primarily with Detroit Edison, which was responsible for approximately 68% of our total operating revenues for 2004
and 74% of our total operating revenues for the three months ended March 31, 2005. Under Detroit Edison's current rate structure, Detroit
Edison includes the cost of transmission services provided by ITC in its billings to its customers, effectively passing through to end-use
consumers the total cost of transmission service. However, any financial difficulties experienced by Detroit Edison may affect Detroit Edison's
ability to make its payments for transmission service to ITC which could negatively impact our business. MISO, as ITC's billing agent, bills
Detroit Edison and other ITC customers on a monthly basis and collects fees for the use of ITC's transmission system. MISO has implemented
strict credit policies for its members, which include customers using ITC's

                                                                        53
transmission system. In general, if these customers do not maintain their investment grade credit rating or have a history of late payments,
MISO may require them to provide MISO with a letter of credit or cash deposit equal to the highest monthly invoiced amount over the previous
12 months.

Recent Accounting Pronouncements

     We adopted the SFAS and implemented the Financial Accounting Standards Board Interpretation, or FIN, listed below on the dates set
forth below. Except as noted below, implementation of these accounting standards has had no significant impact on our financial position,
results of operations or cash flows.

SFAS 150                   Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity
SFAS 123R                  Share-Based Payment
FIN 46R                    Consolidation of Variable Interest Entities—an Interpretation of ARB No. 51 (revised)
FIN 47                     Accounting for Conditional Asset Retirement Obligations

      SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both
liabilities and equity. SFAS 150 requires that certain financial instruments be classified as liabilities that were previously considered equity.
The adoption of this standard as of July 1, 2003, as required, had no impact on our consolidated financial statements.

     SFAS 123R requires all entities to recognize compensation expense in an amount equal to the fair value of share-based payments made to
employees, among other requirements. SFAS 123R is effective in the first reporting period beginning after December 15, 2005. We have
already adopted the expense recognition provisions of SFAS 123 for our stock-based compensation and have not concluded whether the
transition to SFAS 123R will have a material effect on our consolidated financial statements.

     FIN 46R provides guidance on the identification of entities for which control is achieved through means other than through voting rights
("variable-interest entity") and how to determine when an entity is the primary beneficiary and required to consolidate a variable interest entity.
The adoption of FIN 46R, as of January 1, 2004, had no impact on our consolidated financial statements.

      FIN 47 is an interpretation of SFAS 143, "Accounting for Asset Retirement Obligations." FIN 47 clarifies that the term "conditional asset
retirement obligation" as used in SFAS 143, refers to a legal obligation to perform an asset retirement activity in which the timing and/or
method of settlement are conditional on a future event that may or may not be within the control of the entity. An entity is required to recognize
a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. FIN 47 is
effective for us on December 31, 2005. We have not concluded whether FIN 47 will have a material effect on our consolidated financial
statements.

                                                                         54
                                                           INDUSTRY OVERVIEW

Overview

     Electricity transmission is the flow of electricity at high voltages from electricity generation resources to local distribution systems. The
FERC has a policy goal of ensuring non-discriminatory transmission access for all transmission customers. In the United States, electricity
transmission assets are predominantly owned, operated and maintained by utilities that also own electricity generation and distribution assets,
known as vertically integrated utilities. The FERC has recognized that the vertically integrated utility model inhibits the provision of
non-discriminatory transmission access and, in order to alleviate this discrimination, the FERC has mandated that all transmission systems over
which it has jurisdiction, must be operated on an arm's-length basis from any associated electricity generation operations. The FERC has also
indicated that independent transmission companies should play a prominent role in furthering its policy goals and has encouraged the legal and
functional separation of transmission operations from generation and distribution operations.

     On the basis of recent data collected by the U.S. Department of Energy, or the DOE, the U.S. electricity transmission system consists of
nearly 160,000 miles of high-voltage transmission lines and has an estimated $60 billion of net installed assets. The electricity transmission
sector has historically experienced significant underinvestment. According to the Edison Electric Institute, transmission investment made by
investor-owned utilities declined from $42.3 billion in the 10-year period from 1975 to 1984 to $29.5 million in the 10-year period from 1992
to 2001 (both in 2003 dollars), or a reduction of $12.8 billion. According to the DOE, annual electricity consumption more than doubled in the
same period, increasing from 1,747 TWh in 1975 to 3,544 TWh in 2001. The DOE expects electricity to remain the fastest growing segment of
delivered energy and projects total electricity consumption to increase by approximately 50.0% from 2003 through 2025. The disproportionate
growth in electricity generation, wholesale power sales and consumption versus transmission investment have resulted in significant
transmission constraints across the United States and increased stress on aging equipment. These problems will be exacerbated without
increased investment in transmission infrastructure.

      The blackout in August 2003 and the investigations into its causes have confirmed the need for broad-based transmission investment with
estimates ranging from $50 billion to $100 billion across the United States, according to a recent DOE study. After the blackout, the DOE
established the Office of Electric Transmission and Distribution to improve the reliability of, and to increase investment in, transmission and
distribution infrastructure.

     According to the Electric Power Research Institute, U.S. businesses lose $45.7 billion annually in foregone production due to power
outages and another $6.7 billion annually due to power quality issues. The cost of power outages includes losses of production materials and
employee productivity due to interrupted manufacturing processes. For example, cost estimates attributed to the 2003 blackout range from
$4 billion to $10 billion in the United States alone. Transmission system investments over and above maintenance-related investments can
increase system reliability and reduce the frequency of power outages. Such investments can reduce transmission constraints and improve
access to lower cost generation resources, resulting in a lower overall cost of delivered electricity for end-use consumers. Given historical
underinvestment, continued growth in demand and the costs associated with outages, we believe a significant opportunity exists to invest in
transmission infrastructure with the support of policy makers and end-use consumers.

Regulatory Environment

     Regulators and public policy makers have seen the need for further investment in the transmission grid. After the 2003 blackout, DOE has
established the new Office of Electric Transmission and Distribution, focused on working with reliability experts from the power industry, state
governments, and their Canadian counterparts to improve grid reliability and increase investment in the country's

                                                                       55
electric infrastructure. In addition, the FERC has clearly signaled its desire for substantial new investment in the transmission sector by
proposing financial incentives, such as raising the return on equity for transmission-only companies to a level that is greater than that of
traditional utilities and then implementing such an incentive in ITC's case.

      In the FERC's January 15, 2003 "Proposed Pricing Policy for Efficient Operation and Expansion of Transmission Grid," the FERC stated
that its proposed policy is to "promote competitive wholesale electric markets, reduce wholesale electric costs and improve electric reliability."
The FERC further proposed to "reward transmission owners for forming independent transmission companies or taking other measures which
make their transmission facilities operationally independent from the activities of other market participants." The FERC defines a "market
participant" as any entity that sells or brokers electricity, or provides ancillary services to ITC or MISO or any person or entity that holds 5% or
more of the voting securities of such entity or any affiliate thereof. An affiliate, for these purposes, includes any person or entity that directly or
indirectly owns, controls or holds with the power to vote 5% or more of the outstanding voting securities of a market participant. The FERC
distinguishes market participants from truly independent owners of transmission assets because of the potential for discrimination inherent in
operating a transmission system and participating in the sale of electricity in wholesale or retail markets. The FERC also proposed to "reward
transmission owners for pursuing additional measures to operate and expand the transmission grid efficiently in ways that resolve . . . system
needs using either classic transmission investment or innovative technologies."

Federal Regulation

     Background of the Federal Energy Regulatory Commission. The FERC is an independent regulatory commission within the
Department of Energy that regulates the interstate transmission and certain wholesale sales of natural gas, the transmission of oil and oil
products by pipeline, and the transmission and wholesale sale of electricity in interstate commerce. The FERC also administers accounting and
financial reporting regulations and standards of conduct for the companies it regulates.

     Federal Regulatory History. In 1996, in order to facilitate open access transmission for participants in wholesale power markets, the
FERC issued Order No. 888. The open access policy promulgated by the FERC in Order No. 888 was upheld in a United States Supreme Court
decision issued on March 4, 2002. To facilitate open access, among other things, Order No. 888 encouraged investor owned utilities, or IOUs,
to cede control over their transmission systems to Independent System Operators, or ISOs, which are not-for-profit entities.

      As an alternative to ceding operating control of their transmission assets to ISOs, increasing numbers of IOUs began to promote the
formation of for-profit transmission companies, which would assume control of the operation of the grid. In December 1999, the FERC issued
Order No. 2000, which strongly encouraged utilities to voluntarily transfer operational control of their transmission systems to Regional
Transmission Organizations, or RTOs. RTOs, as envisioned in Order No. 2000, would assume many of the functions of an ISO, but the FERC
permitted greater flexibility with regard to the organization and structure of RTOs than it had for ISOs. Unlike ISOs, RTOs could accommodate
the inclusion of independently owned, for-profit companies that own transmission assets within their operating structure. Independent
ownership would facilitate not only the independent operation of the transmission systems but also the formation of companies with a greater
financial interest in maintaining and augmenting the capacity and reliability of those systems.

     MISO was formed in 1996 as a voluntary association of electricity transmission owners consistent with the principles in FERC Order
No. 888. Later, in response to Order 2000, MISO evolved into an RTO with an open architecture framework capable of accommodating a
variety of business models including independently owned, for-profit transmission companies. On December 20, 2001, the FERC approved
MISO as the nation's first RTO. MISO, in its role as a regional transmission organization,

                                                                          56
monitors electric reliability throughout much of the Midwest — an area that encompasses more than 100,000 miles of interconnected, high
voltage transmission lines in 15 states and the Canadian province of Manitoba. MISO is responsible for more than 107,000 MW of peak load
and 132,000 MW of generation. MISO is responsible for coordinating the operation of the wholesale electricity transmission system and
ensuring fair, non-discriminatory access to the transmission grid. On April 1, 2005, MISO began centrally dispatching generation resources
throughout much of the Midwest with the launch of its Midwest Energy Markets.

    In Order No. 2000, the FERC also expressed a willingness to create financial incentives for new investment in transmission assets and to
motivate the independent ownership and operation of transmission assets.

State Regulation

     The MPSC does not have jurisdiction over ITC's rates or terms and conditions of service, but it has jurisdiction over siting of new
transmission lines. Pursuant to Michigan Public Acts 197 and 198 of 2004, ITC has the right as an independent transmission company to
condemn property in the State of Michigan for the purposes of building new transmission facilities.

     ITC is also subject to the regulatory oversight of the Michigan Department of Environmental Quality for compliance with all
environmental standards and regulations.

                                                                      57
                                                                RATE SETTING

Rate Setting and Attachment O

     Transmission Rates. ITC's revenue for transmission services is collected by charging transmission service rates that are regulated by
the FERC. ITC, ITC Holdings, IT Holdings Partnership, DTE Energy and Detroit Edison submitted a joint application seeking authorization for
the acquisition of ITC and its transmission facilities by ITC Holdings and approval of transmission rates for ITC as a stand-alone, independent
transmission company. On February 20, 2003, the FERC issued an order authorizing the acquisition, approving ITC's transmission rates and
deeming ITC independent from all market participants, as defined by the FERC. In its February 20, 2003 order, the FERC accepted ITC's
proposed return of 13.88% on the equity portion of its capital structure. ITC's proposal to use its actual capital structure, targeting 60% equity
and 40% debt, was also accepted by the FERC consistent with Attachment O which uses ITC's actual capital structure from its FERC Form 1.
Since Attachment O is a FERC-approved rate formula, no FERC filing is required to put the calculated rates into effect. The FERC, in an order
dated May 5, 2005, confirmed that ITC Holdings and ITC will remain independent of market participants after this offering, subject to the
enforcement of the restrictions on ownership and voting by market participants in ITC Holdings' Amended and Restated Articles of
Incorporation and notifications to the FERC regarding such ownership. Based on its independence from market participants, ITC will continue
to collect the 100 basis point incentive portion of its rate of return.

     In accordance with the FERC's February 20, 2003 order, ITC's billed transmission service rate was frozen at $1.075 per kW/month from
March 1, 2003 through December 31, 2004. In order to compensate ITC for the revenue foregone during the rate freeze, FERC allowed ITC to
recover the difference between the revenue ITC would have been entitled to collect using Attachment O and the actual revenue ITC received
from March 1, 2003 to December 31, 2004. At December 31, 2004, this difference, which we refer to as the revenue deferral, was fixed at
$59.7 million, which will be included in ITC's rates over the five-year period beginning June 1, 2006. The revenue deferral will be included in
the rate that would otherwise be charged under Attachment O, resulting in higher payments to ITC during this five-year period.

     Attachment O is a FERC-approved cost of service formula rate template that is completed annually by most transmission-owning
members of MISO. Rates are set annually under Attachment O and are in effect for the one-year period beginning June 1 of each year. Pursuant
to the FERC's February 20, 2003 order, on January 1, 2005, ITC began billing its then effective Attachment O transmission rate of $1.587 per
kW/month. This rate is based on financial data and load information for the year ended December 31, 2003, and will be charged for service on
the ITC transmission system for the period from January 1, 2005 through May 31, 2005. For the purpose of determining rates for the period
from June 1, 2005 through May 31, 2006, MISO will use primarily selected financial and operating data as reported on ITC's FERC Form 1 as
of and for the year ended December 31, 2004 and its network load for 2004. As a result, the Attachment O rate is based on data collected
during the year ending five months prior to the effectiveness of the Attachment O rate. To the extent that actual conditions during the 12-month
period vary from the data on which the Attachment O rate is based, ITC may recover more or less than its revenue requirement for that period.
Rates derived using Attachment O are posted on the MISO Open Access Same-time Information System on June 1 of each calendar year. The
information used to complete the Attachment O template comes from the previous calendar year's FERC Form 1 (or other pertinent financial
information), and is subject to verification by MISO. By completing the Attachment O template on an annual basis, ITC is able to adjust its
transmission rates for any variances experienced in the prior calendar year, including the amount of network load on its transmission system,
operating expenses and capital expenditures. Because Attachment O is a FERC-approved formula rate, no further action or FERC filings are
required for the calculated rates to go into effect, although the rate is subject to legal challenge at the FERC.

                                                                       58
     The Attachment O rate setting mechanism has been approved for MISO transmission owners through January 31, 2008, subject to further
extension that must be approved by the FERC.

      Revenue Calculations—Transmission Tariff Rate.            The following three steps illustrate ITC's rate plan methodology:

     Step One—Establish Rate Base and Calculate Allowed Return




     ITC's rate base is calculated at December 31 each year and consists primarily of net PP&E, an accumulated deferred income tax
adjustment, certain regulatory assets and a materials and supplies allocation; and a recovery of operating expenses, including depreciation and
amortization, and taxes. PP&E included in rate base is restricted to those assets used only for utility transmission services and includes capital
expenditures incurred and in service which are added to rate base on an annual basis. Moreover, ITC's rate base includes a regulatory asset
approved for recovery by the FERC at the time of our acquisition of ITC from DTE Energy and the revenue deferral.

     The rate base is then multiplied by ITC's weighted average cost of capital to determine the allowed return on rate base. The weighted
average cost of capital is calculated using the actual capital structure of ITC, the actual pre-tax cost of the debt portion of our capital structure
and a FERC-approved 13.88% return on the equity portion of its capital structure.

     Step Two—Calculate Revenue Requirement




     The gross revenue requirement is calculated beginning with the allowed return on rate base, as calculated in Step One above and adding
recoverable operating expenses, including depreciation and amortization and taxes.

     Step Three—Calculate Transmission Rate




                                                                          59
     After calculating the gross revenue requirement in Step Two above, ITC is required to credit certain revenues, other than network
revenues, such as point-to-point and rental revenues, which it generated during the prior year. This net amount represents revenues to be
recovered from network customers through transmission rates. This transmission rate is calculated by dividing the net amount by the prior
year's annual network load.

     Illustration of Attachment O Rate Setting. Set forth below is a simplified illustration of the calculation of ITC's monthly network and
point-to-point rates under the Attachment O rate setting mechanism for the period from January 1, 2005 through May 31, 2005, based primarily
upon ITC's 2003 FERC Form 1 data.

Line
                                      Attachment O Items                                          Instructions                       Amount
       1       Rate Base (as of December 31, 2003)                                                                            $        475,781,576
       2       Multiply by Weighted Average Cost of Capital relying on                                                                       10.81 %
               data from the 2003 FERC Form 1 (1)
        3      Allowed Return on Rate Base                                         (Line 1 × Line 2)                          $         51,431,988
        4      Recoverable Operating Expenses                                                                                 $         52,821,008
        5      Taxes and Depreciation and Amortization                                                                        $         60,917,884
        6      Allowed Return on Rate Base                                         (Line 3)                                   $         51,431,988
        7      Gross Revenue Requirement                                           (Line 4 + Line 5 + Line 6)                 $        165,170,880
        8      Less Revenue Credits                                                                                           $          3,766,551
        9      Net Revenue Requirement                                             (Line 7 – Line 8)                          $        161,404,329
       10      Divide by 2003 Network Load (in kW)                                                                                       8,474,917
       11      Annual Network and P-T-P Transmission Rate                          (Line 9 divided by Line 10)                $             19.045
       12      Monthly Network and P-T-P Transmission Rate ($/kW                   (Line 11 divided by 12)                    $              1.587
               per month)

(1)

            The weighted average cost of capital is calculated as follows:


                                                                                                                       Weighted
                                                           Percentage of ITC's                                        Average Cost
                                                           Total Capitalization                 Cost of Capital        of Capital

                             Debt                                38.95                 x    6.00%       (Pre-tax)=      2.34%

                             Equity                              61.05                 x   13.88%      (After tax)=     8.47%

                                                                100.00                                                 10.81%

Rate Setting Proceeding

     In PSC Kentucky v. FERC , decided on February 18, 2005, the U.S. Court of Appeals for the District of Columbia Circuit found that the
FERC failed to give customers adequate notice that it would add 50 basis points to the rate of return on equity used in Attachment O to
encourage participation in MISO. By its terms, the order would prohibit certain MISO transmission owners other than ITC from collecting the
50 basis point incentive component of the Attachment O formula. The court reached its conclusion on purely procedural grounds and declined
to address the merits of whether such an incentive, if supported by a proper record, is appropriate.

      On June 3, 2005, the FERC issued an order on remand requiring MISO transmission owners whose rates were set in the general docket
before it to make refunds of the 50 basis point incentive component of their rates. However, neither the court's order nor the FERC's order on
remand applies to ITC's rates. In its February 20, 2003 order, the FERC, acting from a separate record in a distinct case, approved a 13.88%
rate of return on the equity portion of ITC's capital structure. This determination as to ITC's rates was not challenged on rehearing or appeal
either in the PSC Kentucky v. FERC proceeding or in any other proceeding. As with all FERC-approved rates, ITC's rates remain subject to
challenge under Section 206 of the FPA.

                                                                                  60
                                                                     BUSINESS

Our History

     In 1996, FERC issued Order No. 888. That landmark order directed utilities to file open access transmission tariffs allowing the open use
of their transmission lines by others on a non-discriminatory basis. The first step in the formation of a truly independent, stand-alone
transmission company occurred in May 2000, when Predecessor ITC, Detroit Edison and DTE Energy filed a joint application with the FERC,
seeking permission to transfer all jurisdictional transmission assets from Detroit Edison to a subsidiary of Detroit Edison. This permission was
granted in June 2000 and Predecessor ITC became a subsidiary of Detroit Edison on January 1, 2001.

      Also in 2000, the State of Michigan enacted legislation to permit unbundled retail electric service and allow consumers a choice among
electricity generation providers. That legislation, in part, required major electric utilities, such as Detroit Edison, to join an RTO and/or divest
its transmission facilities. Michigan's effort to unbundle electric service dates back to 1994 when it first established a retail electric choice
program in Detroit Edison's and Consumers Energy Company's service territories.

     On June 1, 2001, Predecessor ITC began operations as a wholly-owned subsidiary of DTE Energy. In December of that year, Predecessor
ITC joined MISO. Predecessor ITC was the first company to join MISO under Appendix I of the MISO transmission owners agreement, which
allows independent transmission companies to claim greater control over certain functions. Consistent with the policy goals of the FERC and
the State of Michigan regarding the separation of electricity transmission from electricity generation, distribution, marketing and trading, DTE
Energy decided to undertake a corporate restructuring and to divest Predecessor ITC.

     ITC Holdings was incorporated in Michigan in November 2002 for the purpose of acquiring Predecessor ITC, and has no material assets
other than the common stock of ITC and cash on hand. The FERC-approved the sale of Predecessor ITC by DTE Energy to ITC Holdings on
February 20, 2003 and the transaction closed on February 28, 2003. After an accelerated transition period during which Detroit Edison
performed limited service-related functions for ITC, on April 8, 2004, ITC became the first independently owned and operated electricity
transmission company in the United States.

Overview

     ITC transmission facilities are located in an approximately 7,600 square mile area serving distribution customers in 13 counties in
southeastern Michigan with a population of approximately 4.9 million as of December 31, 2004. Much of ITC's service area is urban, densely
populated, and industrial. ITC's transmission system consists of:

     •
             approximately 2,700 circuit miles of overhead and underground transmission lines rated at 120 kV to 345 kV;

     •
             approximately 16,000 transmission towers and poles;

     •
             30 stations which connect transmission facilities;

     •
             other transmission equipment necessary to safely operate the system ( e.g. , switching stations, breakers and metering equipment);

     •
             associated land, rights of way and easements;

     •
             certain assets of our Novi, Michigan-based office space, which consist of a transmission operations control room, furniture,
             fixtures and office equipment; and

                                                                         61
     •
            the Michigan Electric Power Coordination Center, or MEPCC, located near Ann Arbor, Michigan, which provides control area
            services for all of the electrical systems of ITC and the METC.

Business Strengths

     Our strategy is aligned with the FERC's policy objective to promote needed investment in transmission infrastructure in order to enhance
competition in wholesale power markets, improve reliability and reduce system constraints to decrease the overall costs of delivered electricity.
As a result, we believe ITC's business combines the stability of a regulated utility with significant opportunities for growth through prudent
capital investment.

Stability

     •
            Supportive Regulatory Environment for Independent Transmission Companies. The FERC has allowed independent transmission
            system owners to earn incentive rates of return to encourage the separation of transmission systems from the generation and sale of
            electricity and to facilitate greater investment in transmission infrastructure. The FERC currently allows ITC, as the first
            independently owned and operated electricity transmission company in the United States, to collect in its rates a 13.88% return on
            the equity portion of its capital structure, which includes 100 basis points of additional return to reward ITC for its independent
            status.

     •
            Efficient and Predictable Rate Setting Process . The formulaic nature of ITC's rate setting mechanism enables ITC to generate
            predictable revenues and cash flows as the rates ITC charges are determined annually using actual historical data. ITC's rate setting
            process is approved by the FERC, and administered and confirmed by MISO pursuant to Attachment O, which significantly
            streamlines ITC's rate determination procedures and substantially reduces the delay between the incurrence and recovery of costs
            through rates. By contrast, most regulated investor-owned utilities endeavor to recover their investments and expenses through
            rates set by state commissions or the FERC. These proceedings are often adversarial and protracted and may delay recovery of
            costs for years with an uncertain outcome. ITC is obligated and committed to ensure that its operating and capital expenditures are
            prudent.

     •
            Minimal Weather, Commodity and Energy Demand Risk. ITC's network revenues are a product of its regulated transmission rate
            and the monthly peak network load that is connected to its transmission system. Peak network load varies with weather and the
            general demand for electricity. ITC's rates are adjusted annually to incorporate any changes in network load. If loads are reduced
            due to cool weather in a calendar year, ITC's rates would increase effective the following June 1, assuming all other conditions
            remained equal. ITC operates a transmission system and, accordingly, is not impacted by electricity commodity pricing or price
            volatility.

     •
            Attractive Service Territory . ITC is the only transmission system in its service territory, serving 13 counties in southeastern
            Michigan. ITC's service territory includes a concentration of industrial end-use consumers, including automobile manufacturers
            and suppliers. Many of these industrial consumers employ advanced manufacturing techniques that require reliable delivery of
            electricity. These consumers are receptive to transmission infrastructure projects as the cost of lost productivity resulting from poor
            reliability may far exceed the cost of reliability enhancements. ITC's service territory also includes residential and other end-use
            consumers in a densely populated urban area. These characteristics have provided ITC with operating and capital expenditure
            efficiencies that lead to relatively low operating and maintenance costs compared to more geographically dispersed transmission
            systems.

     •
            Lack of Competition. The introduction of deregulation to foster competition among power industry participants is not expected to
            have any impact on independent operators of

                                                                       62
         transmission systems. ITC's transmission system is the primary means in its service territory to transmit electricity from generators to
         distribution facilities that ultimately provide electricity to end-use consumers.

    •
            Operational Excellence . ITC's goal is to provide best-in-class system performance to better serve the needs of its customers. A
            recent study by the East Central Area Reliability Council, or ECAR, on 345 kV lines showed that ITC's system performed well
            above the system average of those surveyed. For example, in 2004 ITC's system had an average of 0.68 outages per 100 miles
            compared to the ECAR system average of 2.21. ITC's system outperformed the ECAR system average in momentary outages as
            well, experiencing 0.43 momentary outages per 100 miles compared to the ECAR system average of 2.0. ITC's goal is not only to
            outperform other transmission systems, but also to operate the most reliable, highest performing system possible. In addition to
            consistently outperforming the ECAR system average, ITC has experienced year-over-year improvement from 1.11 outages per
            100 miles in 2003 to 0.68 outages per 100 miles in 2004.

    •
            Experienced and Incentivized Management Team . Our pioneering management team identified the business opportunity for the
            formation of ITC. They have worked over the past decade with state and federal regulators to understand their policy objectives
            and to contribute to the development of the current policy framework for independent transmission companies. Our senior
            management team is comprised of individuals with an average of 22 years of utility industry experience. Much of that experience
            relates directly to ITC's transmission system. Our management and employees collectively own approximately 9.35% of ITC
            Holdings' common stock on a fully-diluted basis at March 31, 2005.

Growth

     Our growth strategy, which includes prudently investing in ITC's transmission system as well as pursuing opportunities to acquire other
transmission systems, has relatively low execution risk. No single investment project represents a material portion of our total capital
expenditure program and a significant portion of our budget is based on upgrading or replacing existing equipment, rather than building new
transmission lines with new right-of-way requirements.

    •
            Significant Prudent Investment Opportunities in ITC's Existing Transmission System . We believe that prudent capital investment
            will expand ITC's rate base and earnings potential. We intend to invest our resources to upgrade ITC's transmission system to meet
            system capacity needs, to increase reliability and to provide lower delivered electricity costs to end-use consumers. We intend to
            invest in infrastructure projects, such as replacing outdated equipment, enhancing security for transmission infrastructure,
            providing interconnection to new generation resources in the region and responding to power flows in neighboring regions that
            impact ITC's service territory. For the year ended December 31, 2004, we invested $81.5 million in ITC's transmission system,
            versus $26.4 million of depreciation and amortization. We expect to invest approximately $100 million in additional PP&E during
            each of 2005 and 2006, primarily on projects reviewed by MISO.

    •
            Pursue Opportunities to Acquire Other Transmission Systems . We intend to pursue opportunities to acquire transmission systems
            similar to ITC's in order to expand our existing service territory. Subject to applicable regulatory limitations, we will seek to
            identify attractive transmission systems and apply our business model and operating expertise across these systems to improve
            reliability, deliver lower energy costs to end-use customers and create value for our stockholders. We believe we are well
            positioned to capitalize on these opportunities given our experienced management team, our relationships with our financial
            sponsors and the ability to use our publicly traded common stock as acquisition consideration.

                                                                      63
Operations

     As a transmission-only company, ITC functions as a conduit, moving power from generators to local distribution systems either entirely
through its own system or in conjunction with other neighboring transmission systems. Detroit Edison and other third parties then transmit
power through these local distribution systems, to end-use consumers. The transmission of electricity by ITC is a central function to the
provision of electricity to residential, commercial and industrial end-use consumers. The operations performed by ITC fall into the following
categories:

     •
             asset planning;

     •
             engineering, design and construction;

     •
             maintenance; and

     •
             real time operations.

Asset Planning

      ITC is focused on identifying opportunities to reduce transmission system constraints, increase flows across its system and increase
system reliability through prudent capital investment. ITC believes that the historic under-investment in the transmission grid, coupled with an
ability to generate attractive returns on equity, will provide it with opportunities for growth.

     The planning division uses detailed system models and long-term load forecasts to develop ITC's capital expansion plan. The expansion
plan identifies projects that address potential future reliability issues and produce economic savings for customers by eliminating constraints.

     ITC works closely with MISO in the development of ITC's annual capital plan performing technical evaluations and detailed studies to
identify capital investment requirements to improve reliability or eliminate constraints on its transmission system. As the regional planning
authority, MISO reviews regional system improvement projects by its members, including ITC, and if MISO supports the projects, it
incorporates them into its regional transmission expansion plan.

Engineering, Design and Construction

      ITC's engineering, design and construction division is responsible for design, creating equipment specifications, developing maintenance
plans and project management for capital, operation and maintenance work. ITC works with outside contractors to perform some of its
engineering and design and all of its construction, but retains internal technical experts that have expertise with respect to the key elements of
the transmission system such as substations, towers and relays. This internal expertise allows ITC to effectively manage outside contractors,
keeping projects on track and minimizing costs.

     ITC's engineering, design and construction operations are handled by six sub-groups. The relay group is responsible for developing all
new designs for protective relaying and for the day-to-day monitoring of performance, development, testing, and maintenance of the protective
relay system. The tower group is responsible for all the overhead lines. Station design is responsible for designing new and existing stations and
substations, as well as leading the design for overhead and underground lines. The equipment group manages all the technical aspects,
specifications, and policies and procedures for the electric system equipment. They are also responsible for the upkeep of engineering data and
asset tracking in ITC's asset management system. Project engineering schedules and is responsible for the construction of capital projects, as
well as leading the effort to develop and track the preventative maintenance plan to help ensure a safe and reliable system. Field supervision
monitors, evaluates, and audits all work on the ITC system.

                                                                        64
Maintenance

     ITC's maintenance division develops and tracks the preventative maintenance plan to help ensure a safe and reliable system. By
performing preventative maintenance on its assets, ITC can minimize the need for reactive maintenance, which may impact reliability and
tends to be more costly than preventative maintenance. ITC contracts with Utility Lines Construction, which is a division of Asplundh Tree
Expert Co., to perform the bulk of its maintenance. We do not expect the pricing structure of the agreements with the contractors to have a
negative impact on our financial results. The agreements provide ITC with access to an experienced and scalable workforce with intimate
knowledge of the ITC system at a known cost for the five-year period ending August 28, 2008.

Real Time Operations

      Joint Control Area Operator. Under the operational control of MISO, ITC and METC operate their electricity transmission systems as
a combined control area under the MECS Control Area Agreement. The operation is performed at the MEPCC where employees of both ITC
and METC jointly perform the functions as the control area operator which include balancing loads and generation in order to ensure a supply
of electricity to customers, maintaining voltage, coordinating the use of ITC and METC transmission facilities and monitoring the flow on
critical facilities to avoid exceeding operating security limits.

     Field Operations. As part of day to day operations in ITC's operations control room located in Novi, Michigan, transmission system
coordinators analyze system conditions at all times, allowing them to react quickly to changing conditions. Transmission system coordinators
must also work with maintenance and construction crews in the field to ensure the safe and reliable operation of the grid. A key component of
this work involves scheduling outages on system elements to allow crews to safely perform maintenance and construction while maintaining
reliability for our customers.

Operating Contracts

      Detroit Edison operates the electricity distribution system to which ITC's transmission system connects. A set of three operating contracts
sets forth terms and conditions related to Detroit Edison's and ITC's ongoing working relationship. These contracts include the following:

     Master Operating Agreement. The Master Operating Agreement, or MOA, governs the primary day-to-day operational responsibilities
of ITC and Detroit Edison and will remain in effect until terminated by mutual agreement of the parties (subject to any required FERC
approvals) unless earlier terminated pursuant to its terms. The MOA identifies the control area coordination services that ITC is obligated to
provide to Detroit Edison. The MOA also requires Detroit Edison to provide certain generation-based support services to ITC.

     Generator Interconnection and Operation Agreement. Detroit Edison and ITC entered into the Generator Interconnection and
Operation Agreement, or GIOA, in order to establish, re-establish and maintain the direct electricity interconnection of Detroit Edison's
electricity generating assets with ITC's transmission system for the purposes of transmitting electric power from and to the electricity
generating facilities. Unless otherwise terminated by mutual agreement of the parties (subject to any required FERC approvals), the GIOA will
remain in effect until Detroit Edison elects to terminate the agreement with respect to a particular unit or until a particular unit ceases
commercial operation.

      Coordination and Interconnection Agreement. The Coordination and Interconnection Agreement, or CIA, governs the rights,
obligations and responsibilities of ITC and Detroit Edison regarding, among other things, the operation and interconnection of Detroit Edison's
distribution system and ITC's transmission system, and the construction of new facilities or modification of existing facilities. Additionally, the
CIA allocates costs for operation of supervisory, communications and metering

                                                                        65
equipment. The CIA will remain in effect until terminated by mutual agreement of the parties (subject to any required FERC approvals).

Billing

      MISO administers the transmission tariff under which all customers procure transmission service and, in addition, MISO is responsible for
billing and collection for transmission services in the MISO service territory. As the billing agent for ITC, MISO bills Detroit Edison, a wholly
owned subsidiary of DTE Energy whose long-term senior unsecured rating is Baa1/BBB (Moody's/S&P), and other ITC customers on a
monthly basis and collects fees for the use of ITC's transmission system. MISO has implemented strict credit policies for its members, which
include customers using ITC's transmission system. In general, if these customers do not maintain their investment grade credit rating or have a
history of late payments, MISO may require them to provide MISO with a letter of credit or a cash deposit equal to the highest monthly
invoiced amount over the previous 12 months.

Competition

     ITC is the only transmission system in its service area and, therefore, effectively has no competitors.

Employees

     As of March 31, 2005, we had 122 employees. We consider our relations with our employees to be good.

Environmental Matters

      ITC's operations are subject to federal, state, and local environmental laws and regulations, which impose limitations on the discharge of
pollutants into the environment, establish standards for the management, treatment, storage, transportation and disposal of hazardous materials
and of solid and hazardous wastes, and impose obligations to investigate and remediate contamination in certain circumstances. Liabilities to
investigate or remediate contamination, as well as other liabilities concerning hazardous materials or contamination, such as claims for personal
injury or property damage, may arise at many locations, including formerly owned or operated properties and sites where wastes have been
treated or disposed of, as well as at properties currently owned or operated by ITC. Such liabilities may arise even where the contamination
does not result from noncompliance with applicable environmental laws. Under a number of environmental laws, such liabilities may also be
joint and several, meaning that a party can be held responsible for more than its share of the liability involved, or even the entire share.
Environmental requirements generally have become more stringent and compliance with those requirements more expensive. We are not aware
of any specific developments that would increase ITC's costs for such compliance in a manner that would be expected to have a material
adverse effect on our results of operations, financial position or liquidity.

     ITC's assets and operations also involve the use of materials classified as hazardous, toxic or otherwise dangerous. Many of the properties
ITC owns or operates have been used for power generation, transmission and distribution operations for many years, and include older facilities
and equipment that may be more likely than newer ones to contain or be made from such materials. Some of these properties include
aboveground or underground storage tanks and associated piping. Some of them also include large electrical equipment filled with mineral oil,
which may contain or previously have contained polychlorinated biphenyls (sometimes known as PCBs). ITC's facilities and equipment are
often situated close to or on property owned by others so that, if they are the source of contamination, other's property may be affected. For
example, aboveground and underground transmission lines sometimes traverse properties that ITC does not own, and, at some of ITC's

                                                                        66
transmission stations, transmission assets (owned or operated by ITC) and distribution assets (owned or operated by ITC's transmission
customer) are commingled.

     Several properties in which ITC has an ownership interest or at which ITC operates are, and others are suspected of being, affected by
environmental contamination. ITC is not aware of any claims pending or threatened against ITC with respect to environmental contamination,
or of any investigation or remediation of contamination at any properties, that entail costs likely to materially affect it. In addition, DTE Energy
has certain indemnity obligations under the stock purchase agreement relating to our acquisition of ITC with respect to environmental
conditions, including certain known or suspected environmental contamination at such properties. Some facilities and properties are located
near environmentally sensitive areas such as wetlands.

     Claims have been made or threatened against electric utilities for bodily injury, disease or other damages allegedly related to exposure to
electromagnetic fields associated with electricity transmission and distribution lines. While ITC does not believe that a causal link between
electromagnetic field exposure and injury has been generally established and accepted in the scientific community, if such a relationship is
established or accepted, the liabilities and costs imposed on our business could be significant. We are not aware of any claims pending or
threatened against ITC for bodily injury, disease or other damages allegedly related to exposure to electromagnetic fields and electricity
transmission and distribution lines that entail costs likely to have a material adverse effect on our results of operations, financial position or
liquidity.

Litigation

     Various claims and legal proceedings generally incidental to the normal course of business are pending against us. Management intends to
vigorously defend all lawsuits. The ultimate outcome of these lawsuits is not expected to have a material adverse effect on our results of
operations, financial position or liquidity.

                                                                        67
                                                                 MANAGEMENT

Directors and Executive Officers

       Set forth below are the names and titles of the directors and executive officers of ITC Holdings as of March 31, 2005.

Name                                                    Age                           Position

Lewis M. Eisenberg                                      62      Director
Joseph L. Welch                                         56      Director, President, Chief Executive Officer and
                                                                Treasurer
Daniel J. Oginsky                                       32      Vice President, General Counsel and Secretary
Edward M. Rahill                                        51      Vice President—Finance and Chief Financial
                                                                Officer
Richard A. Schultz                                      61      Vice President—Asset Planning
Linda H. Blair                                          35      Vice President—Business Strategy
Jim D. Cyrulewski                                       59      Vice President—Asset Performance
Joseph R. Dudak                                         58      Vice President—Resource and Asset
                                                                Management
Larry Bruneel                                           48      Vice President—Federal Affairs
Jon E. Jipping                                          39      Vice President—Engineering

    Lewis M. Eisenberg. Mr. Eisenberg is the sole member of Ironhill Transmission LLC. From April 1995 to December 2001, he was the
Chairman of the Board of Commissioners of the Port Authority of New York and New Jersey. From December 2001 to April 2003,
Mr. Eisenberg served as a director of the Lower Manhattan Development Corporation for which he chaired the Victims' Families and
Transportation Advisory Councils. Mr. Eisenberg is co-founder and co-chairman of Granite Capital International Group, an investment
management company. Prior to co-founding Granite Capital, Mr. Eisenberg was a general partner and co-head of the equity division of
Goldman, Sachs & Co.

     Mr. Eisenberg currently serves on the Advisory Council of Samuel Johnson Graduate School of Management at Cornell University.
Mr. Eisenberg also currently serves on the Board of Directors of Granum Value Fund. Mr. Eisenberg has been a member of the Board of
Directors of the Republican Jewish Coalition since November 1996 and a member of its Vice Chairman's Council since 1995. He served on the
National Board of Directors for American Israel Public Affairs Committee from June 1998 to April 2003. Mr. Eisenberg was a board member
of St. Barnabas Health Care System from April 1997 to April 2003 and Chairman of its Investment Committee from June 1998 to April 2003.
He also served on the Board of Trustees of Monmouth Medical Center Foundation from October 1998 to May 2003, and since then has been a
member of its honorary Board of Trustees.

       Mr. Eisenberg graduated from Dartmouth College in 1964 and received an MBA from Cornell University in 1966.

     Joseph L. Welch. Mr. Welch is Director, President, Chief Executive Officer and Treasurer. As its founder, Mr. Welch had overall
responsibility for ITC's vision, foundation and transformation into the first independently owned and operated electricity transmission company
in the United States. As president and CEO, Mr. Welch is focused on establishing ITC as a best-in-class electricity transmission company
through the implementation of innovative methods to improve reliability, reduce transmission constraints and lower the total cost of delivered
energy. During his career at Detroit Edison from 1971 to 2003, Mr. Welch has held positions of increasing responsibility in the electricity
transmission, distribution, rates, load research, marketing and pricing areas and regulatory affairs that included the development and
implementation of regulatory strategies.

                                                                        68
    Mr. Welch has a Bachelor of Science degree in Electrical Engineering from the University of Kansas and is a Licensed Professional
Engineer in the State of Michigan.

     Daniel J. Oginsky. Mr. Oginsky is Vice President, General Counsel and Secretary. Mr. Oginsky's official appointment to those
positions was effective on December 27, 2004 but his employment with us began on October 20, 2004. As Vice President and General Counsel,
Mr. Oginsky is responsible for the legal affairs of ITC Holdings and manages our legal department. From June 2002 until joining Holdings,
Mr. Oginsky was an attorney with Dykema Gossett PLLC in Lansing, Michigan. At Dykema Gossett, Mr. Oginsky represented ITC and other
energy clients, as well as telecommunications clients, on regulatory, administrative litigation, transactional, property tax and legislative matters.
Mr. Oginsky practiced state regulatory law at Dickinson Wright PLLC in Lansing, Michigan from August 2001 to May 2002. From 1999 to
2001, Mr. Oginsky was an attorney with Sutherland Asbill & Brennan LLP in Washington, D.C. At Sutherland Asbill & Brennan, Mr. Oginsky
focused on the FERC and state electric and natural gas matters on behalf of various energy clients.

     Mr. Oginsky earned his Bachelor of Arts degree, with honors, from Michigan State University (James Madison College) in East Lansing,
Michigan. He earned his Juris Doctor, with honors, from George Washington University Law School in Washington, D.C. Mr. Oginsky is a
licensed attorney in Michigan and Washington, D.C.

     Edward M. Rahill. Mr. Rahill has been Vice President—Finance and Chief Financial Officer since 2003, and has responsibility for the
financial operations and reporting, including Treasury Management, Accounting, Tax and the Financial Planning and Analysis functions for
ITC. Prior to his current position, Mr. Rahill headed the Planning and Corporate Development functions for DTE. He joined DTE Energy in
1999 as the Manager of Mergers, Acquisitions and Alliances. Mr. Rahill has over 22 years of experience in finance and accounting. Prior to
joining DTE Energy, Mr. Rahill led the Corporate Development Function for Equitable Resources. He has also held various finance and
accounting positions with Bell & Howell, Atlantic Richfield and Carborundum Corporation.

    Mr. Rahill earned an undergraduate degree from the University of Notre Dame and an MBA in Finance and a Masters Certification in
Economics from State University of New York at Buffalo.

     Richard A. Schultz. Mr. Schultz has been Vice President—Asset Planning since 2003 and is responsible for transmission planning and
system optimization for ITC. He began his career in 1968 with Detroit Edison. Over the years, Mr. Schultz held a variety of positions with
leading companies, including Florida Power and Light and Midland Cogeneration Venture. From 2000 to 2003, Mr. Schultz was Director for
Restructuring/Regulation in the Transmission Organization at Detroit Edison. From 1997 to 2000, Mr. Schultz worked for Seminole Electric
Cooperative as a Transmission Planning Engineer.

     Mr. Schultz is a graduate of the University of Michigan with a Bachelor of Science degree in Electrical Engineering. He is a Registered
Professional Engineer in the States of Michigan and Florida.

     Linda H. Blair. Ms. Blair is Vice President—Business Strategy and is responsible for managing Regulatory Affairs, Policy
Development, Internal and External Communications, Community Affairs and Human Resource functions. Ms. Blair has served in this
capacity since March 2003. From 2001 through February 2003, Ms. Blair was the Manager of Transmission Policy and Business Planning at
ITC when it was a subsidiary of DTE Energy. Prior to this time, Ms. Blair was the Supervisor of Regulatory Relations within Detroit Edison's
Regulatory Affairs organization from 1999 to 2000. In this position, her responsibilities included the development and management of all
regulatory relations and communications activities with the MPSC and the FERC. Ms. Blair joined Detroit Edison in 1994.

     Ms. Blair earned both her MBA and a Bachelor of Science degree in Public Affairs Management from Michigan State University.

                                                                         69
     Jim D. Cyrulewski. Mr. Cyrulewski has been Vice President—Asset Performance for ITC since March 2003. He is responsible for
ITC's real-time operation of transmission facilities including its Novi Operation Control Room. Mr. Cyrulewski also is responsible for the
operation of the MECS Control Area as Manager of the MEPCC, which is located in Ann Arbor. From 1999 to 2003, Mr. Cyrulewski worked
for DTE Energy as Manager of the MEPCC. From 1997 to 1999, he was Detroit Edison's Director of Power Delivery
Transactions-Transmission and was responsible for development and administration of the Detroit Edison Open Access Transmission Tariff
and Michigan Electric Coordinated Systems Joint Open Access Transmission Tariff. During his 30-year career at Detroit Edison, he also held
positions in generation engineering, planning, engineering research, power-supply transactions and worked on the Fermi 1, Fermi 2 and St.
Clair power plants, as well as the Atomic Power Development Authority.

    Mr. Cyrulewski has a Masters of Engineering and Bachelor of Science degrees in Engineering from the University of Detroit and is a
Registered Professional Engineer in the State of Michigan.

     Joseph R. Dudak. Mr. Dudak is Vice President—Resource and Asset Management. He is responsible for suppliers, capital projects,
operation and maintenance management and services for the ITC assets company-wide. From April 2001 to April 2003, Mr. Dudak was a
management consultant to energy, utility and manufacturing clients, a business he pursued after his early retirement from National Steel
Corporation in 2001. While at National Steel from 1970 to 2001, he held various executive and management positions in energy and
environmental affairs, purchasing, strategic sourcing, transportation, special projects and asset sales. Throughout his career, Mr. Dudak has
served as an active large industrial customer advocate in the utility regulatory and legislative arenas in Washington, D.C., Minnesota, Illinois,
Indiana, and especially in Michigan, in both natural gas and electricity matters, including restructuring. Mr. Dudak led the industrial group, the
Association of Businesses Advocating Tariff Equity, as Chairperson for 10 years.

    Mr. Dudak holds a Bachelor of Science degree in Mechanical Engineering Technology from Western Michigan University, an MBA from
Robert Morris University, and a lifetime Certified Purchasing Management certification.

      Larry Bruneel. Mr. Bruneel is Vice President—Federal Affairs. Located in ITC's Washington, D.C. office, Mr. Bruneel is primarily
responsible for the development of federal regulatory strategies and advocacy before the U.S. Congress and federal agencies, including the
FERC. Mr. Bruneel has more than 20 years of experience in federal energy policy issues, most recently focusing on issues affecting electric
utilities. From 1997 until joining ITC in 2003, he was the Assistant Vice President for Federal Policy at We-Energies, a combined gas and
electric utility company subsidiary of the Wisconsin Energy Corporation. From 1993 to 1997, Mr. Bruneel served as Technical Advisor to
Commissioner Vicky A. Bailey at the FERC and from 1991 to 1993, he was an Industry Policy Analyst at the U.S. Department of Energy.
Mr. Bruneel was at the Madison Public Affairs Group from 1989 to 1991, where he facilitated policy disputes under the auspices of the
Keystone Energy program and prior to that he was at the American Public Power Association. Mr. Bruneel started his energy career in 1980 at
the General Accounting Office where he investigated energy and natural resource issues for the U.S. Congress.

     Mr. Bruneel received a Bachelor of Science degree in Engineering Arts from Michigan State University. He went on to receive a Masters
of Science degree in Science, Technology and Values from Rensselaer Polytechnic Institute with a specialty in energy policy.

     Jon E. Jipping. Mr. Jipping is Vice President—Engineering and is responsible for transmission system design, maintenance and
project engineering. Prior to joining ITC in 2003, Mr. Jipping was Manager of Business Systems & Applications in Detroit Edison's Service
Center Organization, responsible for implementation and management of business applications across the distribution business unit.
Mr. Jipping joined Detroit Edison in 1990 and has held various positions of increasing

                                                                        70
responsibility in Transmission Operations and Transmission Planning, including serving as Principal Engineer and Manager of Transmission
Planning during the sale of ITC.

     Mr. Jipping earned a Bachelor of Science degree in Electrical Engineering from Calvin College and a Masters of Science degree in
Electrical Engineering, concentrating in power systems, from Michigan Technological University. He is a Registered Professional Engineer in
the State of Michigan.

Board of Directors

Composition

     Our board of directors currently consists of two directors.

     We intend to avail ourselves of the "controlled company" exception under the NYSE corporate governance rules that eliminates the
requirements that we have a majority of independent directors on our board of directors and compensation and nominating and corporate
governance committees composed entirely of independent directors. As a controlled company, we are required to have an audit committee
composed entirely of independent members and consisting of at least three members within one year of the completion of this offering.
Consequently, we will add an independent member to our board of directors prior to the completion of this offering, an additional independent
member within 90 days of this offering and a third independent member within one year of this offering. After giving effect to these additions,
we expect our board of directors to consist of five members.

Committees

     Audit Committee. Prior to the completion of this offering, we will form an audit committee. We plan to nominate a new independent
member to our audit committee prior to the completion of this offering, a second new independent member within 90 days thereafter and a third
new independent member within one year thereafter to replace existing members so that all of our audit committee members will be
independent as such term is defined in Rule 10A-3(b)(i) under the Exchange Act and under NYSE Rule 303A. In addition, one of them will be
determined to be an "audit committee financial expert" as such term is defined under the SEC rules.

      Our audit committee will be responsible for (1) selecting our independent public accountants, (2) approving the overall scope of the audit,
(3) assisting the board in monitoring the integrity of our financial statements, the independent public accountant's qualifications and
independence, the performance of the independent public accountants and our internal audit function and our compliance with legal and
regulatory requirements, (4) annually reviewing a report of the independent public accountants describing the firm's internal quality-control
procedures and any material issues raised by the most recent internal quality-control review, or peer review, of the firm, (5) discussing the
annual audited and quarterly financial statements with management and our independent public accountants, (6) discussing earnings press
releases, as well as financial information and earnings guidance provided to analysts and rating agencies, (7) discussing policies with respect to
risk assessment and risk management, (8) meeting separately, periodically, with management, internal auditors and our independent public
accountants, (9) reviewing with our independent public accountants any audit problems or difficulties and managements' response, (10) setting
clear hiring policies for employees or former employees of our independent public accountants, (11) handling such other matters that are
specifically delegated to the audit committee by the board of directors from time to time and (12) reporting regularly to the full board of
directors.

     Our board of directors will adopt a written charter for the audit committee which will be available on our website.

    Compensation Committee. Prior to the completion of this offering, we will form a compensation committee. Our compensation
committee will be responsible for (1) reviewing key employee compensation policies, plans and programs, (2) reviewing and approving the
compensation of our

                                                                        71
executive officers, (3) reviewing and approving employment contracts and other similar arrangements between us and our executive officers,
(4) reviewing and consulting with the chief executive officer on the selection of officers and evaluation of executive performance and other
related matters, (5) administration of stock plans and other incentive compensation plans and (6) such other matters that are specifically
delegated to the compensation committee by the board of directors from time to time.

     Our board of directors will adopt a written charter for the compensation committee which will be available on our website.

      Nominating and Corporate Governance Committee. Prior to the completion of this offering, we will form a nominating and corporate
governance committee. The nominating and corporate governance committee will be responsible for (1) developing and recommending criteria
for selecting new directors, (2) screening and recommending to the board of directors individuals qualified to become executive officers,
(3) overseeing evaluations of the board of directors, its members and committees of the board of directors and (4) handling such other matters
that are specifically delegated to the nominating and corporate governance committee by the board of directors from time to time.

    Our board of directors will adopt a written charter for the nominating and corporate governance committee which will be available on our
website.

2003 Stock Purchase and Option Plan

     The 2003 Stock Purchase and Option Plan, which has been approved by our stockholders, provides for the granting of equity awards,
which consist of the right to purchase shares of common stock, restricted common stock and options to purchase shares of common stock, as
well as stock appreciation rights and dividend equivalent rights, for up to an aggregate of 3,343,214 shares of ITC Holdings' common stock.
The 2003 Stock Purchase and Option Plan is administered by the compensation committee of our board of directors. The compensation
committee has the power to select the recipients of equity awards, although it may delegate to certain officers the authority to grant equity
awards and to otherwise act with respect to awards made to participants who are not officers or directors of ITC Holdings, subject to Section 16
of the Securities Exchange Act of 1934. Employees, non-employee directors, consultants and other persons having a relationship with ITC
Holdings are eligible to receive awards under the 2003 Stock Purchase and Option Plan.

     The compensation committee also has broad power to determine the terms of equity awards and to change such terms in various ways
subsequent to grant, but generally may not change such terms in a manner adverse to the grantee without the grantee's consent other than
certain adjustments made in good faith in connection with certain corporate events, such as a stock split or other change in the outstanding
common stock or a merger or other extraordinary transaction involving ITC Holdings. The board is permitted to amend or terminate the 2003
Stock Purchase and Option Plan at any time without stockholder approval, other than to increase the number of shares available under the 2003
Stock Purchase and Option Plan, decrease the price of outstanding grants, change the requirements relating to the compensation committee,
extend the term of the 2003 Stock Purchase and Option Plan or in a manner that would be materially adverse to all participants with respect to
outstanding grants. No grants may be made under the 2003 Stock Purchase and Option Plan after February 28, 2013.

     Options are granted under the 2003 Stock Purchase and Option Plan pursuant to stock option agreements. The options generally vest and
become exercisable over the passage of time at the rate of 20% per year over five years, assuming the recipient of the option continues to be
employed during such time by ITC Holdings or any of its subsidiaries, and expire on the tenth anniversary of the date of the grant. The
purchase price of the shares subject to each currently outstanding option is greater than or equal to the fair market value of the shares on the
date of the grant of the option. In addition, the options automatically become exercisable immediately prior to a change of ownership of ITC
Holdings (as defined in the 2003 Stock Purchase and Option Plan) as to 100% of the shares subject to the

                                                                       72
option. The options expire earlier in the event of the termination of the option holder's employment, certain change in ownership events, or a
termination of the option pursuant to the Management Stockholder's Agreement.

      Restricted stock is also granted under the 2003 Stock Purchase and Option Plan pursuant to restricted stock award agreements. The
restricted stock grants generally vest five years after the date of grant, assuming the grantee continues to be employed by ITC Holdings or any
of its subsidiaries during such time. Restricted stock becomes 100% vested immediately upon a change of ownership of ITC Holdings (as
defined in the 2003 Stock Purchase and Option Plan). In addition, restricted stock will become vested upon termination of the recipient's
employment with ITC Holdings if termination is by ITC Holdings without cause or by the recipient for good reason (as such terms are defined
in the restricted stock award agreements). However, if the recipient's employment is terminated due to the recipient's death or permanent
disability (as defined in the restricted stock award agreements), any unvested restricted stock will only become vested in increments of 20% of
such stock in respect of each anniversary of the date of the grant on which the recipient was employed by ITC Holdings prior to his or her death
or permanent disability. If the recipient's employment is terminated by ITC Holdings for cause or by the recipient without good reason, any
unvested restricted shares will be forfeited.

Dividend Equivalent Rights Plan

     This plan was adopted by the stockholders of ITC Holdings on August 21, 2003. This plan allowed all employees of ITC Holdings who
hold options to purchase shares of ITC Holdings common stock the opportunity to participate in any dividends otherwise payable to ITC
Holdings stockholders. Under this plan, ITC Holdings established bookkeeping accounts for each participant, to which cash amounts were
credited upon the payment of any cash or non-common stock dividends. For cash dividends, the amount that was credited to each participant's
account was equal to the per share dividend amount, multiplied by the number of shares of ITC Holdings common stock that was subject to any
unexercised options held by the participant (whether such options are vested or unvested) at the time the dividend was paid. For dividends that
were paid in the form of ITC Holdings common stock, the amount that was credited to each participant's account was equal to the per share fair
market value of the stock dividend being paid, multiplied by the number of shares of ITC Holdings common stock that were subject to any
unexercised options held by the participant (whether such options are vested or unvested) at the time the dividend was paid. Under the plan, the
participants' account balances are treated as being invested in certain investment alternatives, and any gains or losses on such deemed
investments are credited to each participant's plan account accordingly. Plan participants are fully vested at all times in all amounts held in their
plan accounts.

     Under the plan, participants' accounts are payable in cash only upon the earliest to occur of (1) the fifth anniversary of the date the
participant was first granted an option on ITC Holdings' common stock, (2) the participant's death or permanent disability, (3) a change of
ownership of ITC Holdings (as such term is defined in the plan) or (4) termination of the plan. Participants' accounts under the plan are also
payable pro rata upon the sale or other disposition by the IT Holdings Partnership of any portion of its ITC Holdings common stock, based on
the percentage of ITC Holdings common stock being sold by the IT Holdings Partnership relative to the total number of shares of ITC Holdings
common stock held by the IT Holdings Partnership, on a fully diluted basis, at the time of such sale.

      When ITC Holdings made a distribution in August 2003, the board of directors authorized compensation under the plan to all option
holders in an amount equivalent to the per share distribution with respect to vested and unvested options, as well as shares of common stock,
that they owned on that date.

    This plan is administered, and may be amended or terminated at any time, by the compensation committee of our board of directors. ITC
Holdings' obligations under this plan are funded through a

                                                                         73
grantor trust established by ITC Holdings. As of December 31, 2004, the aggregate amount of all plan participants' account balances equaled
approximately $1.9 million.

    On May 10, 2005, our board of directors determined that it is in the best interests of our company to terminate the Dividend Equivalent
Rights Plan. Upon termination of the plan, the 25 plan participants will receive their full account balances. As a result, an aggregate amount of
approximately $1.8 million will be paid by us from the funded trust to participants in the plan.

Special Bonus Plan

     On May 10, 2005, our board of directors approved a proposal for ITC Holdings to establish a new, discretionary bonus plan under which
plan participants (which will include the executive officers) may receive bonus payments at such time(s) as our board of directors declares and
pays a dividend on our common stock. The proposal anticipates that the amount of these bonus payments will be based on the per share
dividend paid, multiplied by the number of performance units that will have been awarded to each plan participant prior to such dividend being
declared. The bonuses will only be payable at such time(s) as the underlying performance units will have vested. Generally, 40% of
performance units granted to executive officers will be vested upon grant and in increments of 20% per year. The performance units granted to
non-executive employees will generally vest at one time in 2008.

     In addition, this plan will provide that, to the extent permissible under applicable tax laws relating to deferred compensation, the executive
officers will be permitted to defer receipt of such bonus payments into a new deferred compensation plan that will have terms consistent with
our Deferred Compensation Plan currently in existence.

Compensation of Directors and Executive Officers

      Director Compensation. Except as described below under "—Partnership Director Compensation," we do not currently pay any
compensation to any of our directors for serving as a director or as a member or chair of a committee of the board of directors. We expect to
add an independent director prior to the completion of this offering, another independent director within three months after the completion of
this offering and a third independent director to our board within 12 months after the completion of this offering. We plan to pay our
independent directors an annual cash retainer of $         and a fee of $       for each board meeting and each committee meeting attended.
We may also pay them a fee for acting as committee chair and we may grant them stock options and/or restricted stock awards under the 2003
Stock Purchase and Option Plan.

      Partnership Director Compensation. ITC Holdings, ITC and the IT Holdings Partnership entered into a partnership services letter
agreement whereby the IT Holdings Partnership or its designee performs certain management, consulting, and financial services, which
includes participation on the board of directors. The IT Holdings Partnership designated Lewis M. Eisenberg to the board of directors. We
incurred $200,000 of expenses in 2004 relating to this agreement. Prior to the completion of this offering we will terminate our agreement with
Mr. Eisenberg in exchange for a one-time payment of $1.0 million to the General Partner. After the completion of this offering, Mr. Eisenberg
will receive the same retainer and fee as our independent directors.

    Executive Compensation. We have established or will establish compensation plans for our executive officers that will link
compensation with our performance including the Deferred Compensation Plan and the Short-Term Incentive Compensation Plan described
below. We will continually review our compensation programs to ensure that they are competitive.

     Summary Compensation Table. The following table sets forth information, for the fiscal year ended December 31, 2004, with respect
to the compensation of our Chief Executive Officer, each of our four other most highly compensated executive officers who were serving as
executive officers on December 31, 2004 and one executive officer who was not serving as an executive officer on December 31, 2004, but
who would otherwise have been one of our four most highly compensated officers. These six executive officers are collectively referred to as
the "named executive officers."

                                                                        74
                                                          Summary Compensation Table

                                                                                                         Long-term
                                                            Annual Compensation                      Compensation Awards

                                                                                                                 Securities
                                                                             Other Annual         Restricted     Underlying        All Other
                                                 Salary                      Compensation           Stock         Options        Compensation
Name and Principal Position                        ($)        Bonus ($)         ($)(1)            Awards($)         (#)              ($)(9)

Joseph L. Welch
Director, President, Chief Executive Officer
and Treasurer                                    361,981       296,800             150,848 (2)             —               —             21,756

Edward M. Rahill
Vice President—Finance and Chief
Financial Officer                                198,326         80,674              35,861 (3)            —               —             20,586

Larry Bruneel
Vice President—Federal Affairs                   184,171         74,520              23,160 (4)            —               —             21,014

Linda H. Blair
Vice President—Policy and Business
Development                                      170,283         69,630              31,319 (5)            —               —              9,792

Joseph R. Dudak
Vice President—Resource and Asset
Management                                       169,189         68,640              52,996 (6)            —               —             38,645

John H. Flynn(8)
Former Vice President, General Counsel
and Secretary                                    166,269         66,000              34,146 (7)            —               —             83,063


(1)
        Other annual compensation includes amounts for perquisites such as auto allowance and expenses, financial planning, income tax return
        preparation, social clubs and home security, as well as reimbursements for income tax gross-ups related to the inclusion of the value of
        the payment by ITC Holdings of certain perquisites. Perquisites with an incremental cost to ITC Holdings of more than 25% of the total
        other annual compensation for the named executive officers are separately itemized in the footnotes below.

(2)
        Includes country club initiation fee and monthly dues of $66,676 and reimbursement for income tax gross-ups related to the inclusion of
        the value of the payment by ITC Holdings of certain perquisites of $52,205.

(3)
        Includes auto allowance and related expenses of $14,751.

(4)
        Includes auto allowance and related expenses of $13,434.

(5)
        Includes auto allowance and related expenses of $13,998.

(6)
        Includes auto allowance and related expenses of $14,513, financial planning of $14,500 and reimbursement for income tax gross-ups
        related to the inclusion of the value of the payment by ITC Holdings of certain perquisites of $17,027.

(7)
        Includes auto allowance and related expenses of $13,605.

(8)
Mr. Flynn resigned from his position as Vice President, General Counsel and Secretary of ITC Holdings effective December 31, 2004.

                                                             75
(9)
       All other compensation includes the following amounts:


                                                                                          Executive
                                              Relocation                                   Defined
                                              Assistance         401K Match              Contribution              Termination
Name                                             ($)                 ($)                   Plan($)                Payments($)(10)             Total($)

Joseph L. Welch                                         —                 12,135                     9,621                        —             21,756
Edward M. Rahill                                        —                 10,329                    10,257                        —             20,586
Larry Bruneel                                           —                 10,251                    10,763                        —             21,014
Linda H. Blair                                          —                  9,792                        —                         —              9,792
Joseph R. Dudak                                     16,928                12,037                     9,680                        —             38,645
John H. Flynn                                           —                  7,147                    11,067                    64,849            83,063

(10)
       Pursuant to Mr. Flynn's termination agreement, ITC Holdings paid Mr. Flynn $2,528 in vacation pay and $62,321 in lieu of certain
       other benefits to which he had been entitled under his employment agreement with ITC Holdings.

     Option Grants in Last Fiscal Year.    There were no individual grants of stock options made during 2004 to any of the named executive
officers.

    Option Holdings. The following table sets forth information concerning the value of unexercised options held by each of the named
executive officers as of December 31, 2004. There were no exercises during 2004 by the named executive officers. The dollar values of
unexercised in-the-money options were determined using the Black-Scholes pricing model. Assumptions used for stock option value of $5.49
was as follows: expected volatility of 30.3%, risk-free interest rate of 3.2%, exercise price of $7.48, dividend yield of 0%, fair value of
underlying shares of $11.90 and expected lives of 3.2 years.


                          Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

                                                                  Number of Securities Underlying                     Value of Unexercised
                                                                            Unexercised                              In-the-Money Options
                                                                  Options at December 31, 2004(#)                   at December 31, 2004($)

Name

                                                                 Exercisable         Unexercisable           Exercisable             Unexercisable

Joseph L. Welch                                                      120,356                481,423      $         660,671      $             2,642,685

Edward M. Rahill                                                      20,059                  80,237               110,112                     440,447

Larry Bruneel                                                         10,698                  42,793                58,726                     234,905

Linda H. Blair                                                        20,059                  80,237               110,112                     440,447

Joseph R. Dudak                                                       10,698                  42,793                58,726                     234,905

John H. Flynn (1)                                                     20,059                         —             110,112                               —


(1)
       Mr. Flynn resigned from his position as Vice President, General Counsel and Secretary of ITC Holdings effective December 31, 2004.



     Pension Plans. ITC maintains a defined benefit retirement plan for eligible employees, comprised of a traditional pension plan and a
cash balance plan. ITC has also established two supplemental nonqualified, noncontributory, unfunded retirement benefit plans for selected
management employees. The plans provide for benefits that supplement those provided by ITC's defined benefit retirement plan.

                                                                     76
      Under the traditional final average pay portion of the defined benefit plan, retirement benefits payable as a life annuity at the normal
retirement age of 65 are based on a participant's average final compensation and years of service multiplied by certain specified percentages. A
participant's average final compensation is equal to one-fifth of the participant's 260 highest compensation weeks of credited service with ITC.
For this purpose, a participant's compensation is defined as the participant's base salary, exclusive of bonuses, overtime, and fringe benefits, but
includes the participant's salary reduction contributions made by the participant to the ITC Holdings tax-qualified defined contribution plan.
Participants in the traditional pension plan become vested after five years of service. Benefits payable under the traditional final average pay
portion of the defined benefit plan are not subject to offset for Social Security or other benefits. There is no lump sum payment option for this
benefit.

      The following table shows the estimated annual pension benefits payable at normal retirement age to plan participants under the traditional
final average pay portion of the defined benefit plan, based on compensation that is covered under the plan.


                                            PENSION PLAN TABLE—ANNUAL PENSION BENEFIT
                                                             (in Dollars)

                                                                              Years of Service

                  Average Final
                  Compensation                15                 20                  25                 30                  35

                        $125,000        $     28,125       $      37,500       $      46,875       $     56,250       $      65,000
                         150,000              33,750              45,000              56,250             67,500              78,000
                         175,000              39,375              52,500              65,625             78,750              91,000
                         200,000              45,000              60,000              75,000             90,000             104,000
                         210,000              47,250              63,000              78,750             94,500             109,200

     Mr. Rahill is the only named executive officer who participates in the traditional final average pay portion of the defined benefit plan. The
covered annual compensation for Mr. Rahill under this plan is $210,000, the maximum amount permitted to be taken into account for purposes
of calculating his annual pension benefit in 2005 under federal tax law. He currently has six years of credited service and is vested in his
benefits under the plan.

      For participants (which include the named executive officers other than Mr. Rahill) in the cash balance portion of the defined benefit plan,
a participant's plan account is credited with two amounts at the close of each year of participation in the defined benefit plan. First, there is a
credit of 7% of the participant's total compensation earned for the year. For this purpose, a participant's compensation includes a participant's
base salary and bonuses, as well as any elective salary reduction contribution made by the participant to ITC Holdings' 401(k) plan. However,
this plan does not consider annual compensation in excess of the maximum amount permitted to be taken into account for purposes of
calculating this contribution amount under federal tax law ($210,000 for 2005). Second, each participant's plan account as of January 1 of each
year is credited with interest at an assumed rate equal to the 30-year U.S. Treasury bond rate in effect for September of the previous year. The
effective rate used to determine participants' interest credits on January 1, 2004 was 5.14% and the rate used on January 1, 2005 was 4.90%.

      Participants in the cash balance portion of the defined benefit plan are entitled to a lump sum distribution of their plan account upon
retirement or may elect to have this balance transferred to one of several lifetime annuity options using the plan's stated actuarial assumptions
for the age at which payments are to begin. Benefits payable under the cash balance portion of the defined benefit plan are not offset for Social
Security or other benefits.

                                                                        77
      ITC has also established two supplemental nonqualified, noncontributory, unfunded retirement benefit plans for selected management
employees. First, ITC has established the Management Supplemental Benefit Plan for Mr. Welch, which entitles him to receive a supplemental
pension benefit from ITC Holdings if the sum of his pension benefits under the cash balance portion of the plan and certain other retirement
benefits to which he is entitled under retirement plans of his prior employer, DTE Energy, do not equal a target percentage of his final average
compensation. For this purpose, Mr. Welch's compensation includes his base salary and bonuses, and the target percentage is determined by
years of service. Benefits payable under this plan are not offset by Social Security or any other benefits. The current estimated lump sum and
annual lifetime benefits payable to Mr. Welch under this agreement are included in the amounts set forth in the table below. Mr. Welch is not
entitled to receive a lump sum payment of his supplemental pension benefit under the plan.

      The named executive officers other than Mr. Welch are also entitled to receive a supplemental pension benefit from ITC Holdings. At the
close of each year of participation in this supplemental plan, each officer's supplemental pension plan account is credited with two amounts.
First, there is a credit of 9% of the participant's total compensation earned for the year. For this purpose, compensation includes a participant's
base salary, plus bonuses, as well as any elective salary reduction contribution made by the participant to ITC Holdings' 401(k) plan. Second,
each participant's plan account as of January 1 of each year is credited with interest at an assumed rate equal to 9.5%. Benefits payable under
this plan are not offset by Social Security or any other benefits.

     Estimated lump sum benefits and annual lifetime annuity amounts payable at age 65 to each of the named executive officers, based on
projected future earnings and interest rates as of December 31, 2004, are as follows:

                                                                             Projected Lump Sum Balance        Alternative Annual
              Name                                                              Plan Benefit at Age 65          Benefit at Age 65

              Joseph L. Welch                                                $               5,959,028    $                  561,568
              Edward M. Rahill                                                                 818,152                        57,129
              Larry Bruneel                                                                  1,487,801                       109,623
              Linda H. Blair                                                                 5,068,890                       359,353
              Joseph R. Dudak                                                                  486,479                        37,166
              John H. Flynn(1)                                                                 414,531                        31,962


(1)
       Mr. Flynn resigned from his position as Vice President, General Counsel and Secretary of ITC Holdings effective December 31, 2004.

      The amounts in the table above represent aggregate amounts payable under the qualified cash balance portion of the defined benefit
retirement plan and the nonqualified supplemental pension plans, to each of the named executive officers other than Mr. Rahill. The amounts
payable to Mr. Rahill under the traditional final average pay portion of the defined benefit retirement plan have been excluded, but see the
discussion of the calculation of such amounts above. Supplemental pension plan benefits included in the annual benefit amount in the table
above represent amounts payable in the first year only. Annual benefit payments for all of the named executive officers except Mr. Welch
would increase from year to year based on interest earned on the unpaid balance of their pension plan accounts. All annual benefits are
normally payable as life annuities, except that Mr. Welch's supplemental pension plan benefit is normally payable as a 15-year certain and life
annuity.

Employment Agreements

    ITC Holdings has entered into employment agreements with each of Messrs. Welch, Schultz, Rahill, Jipping, Oginsky, Cyrulewski,
Bruneel and Dudak and Ms. Blair. The employment agreements are substantially similar to each other, with the exceptions described below.

                                                                        78
    Each of the employment agreements has an initial term of employment of two years and is subject to automatic one-year employment term
renewals thereafter unless either party provides the other with 30 days advance written notice of intent not to renew the employment term.
Under the employment agreements, Mr. Welch reports to our board of directors and all of the other executives report to Mr. Welch.

      The employment agreements also state each executive's current annual base salary, which will be subject to annual review and increase by
our board of directors in their discretion. The employment agreements also provide that the executives are eligible to receive an annual cash
bonus, subject to our achievement of certain performance targets established by our board of directors. The target annual bonuses stated in the
employment agreements are as follows: (1) Mr. Welch, 100% of his base salary; (2) Messrs. Rahill, Schultz and Jipping and Ms. Blair, 80% of
their base salary; and (3) Messrs. Oginsky, Cyrulewski, Bruneel and Dudak, 40% of their base salary.

      The employment agreements also provide the executives with the right to participate in certain welfare and pension benefits, including the
right to participate in certain tax qualified and non-tax-qualified defined benefit and defined contribution plans and a retiree welfare benefit
plan. Mr. Welch's employment agreement also acknowledges that he is entitled to receive benefits under the supplemental pension plan
(described above) that is maintained for him.

     If the executives' employment with ITC Holdings is terminated without cause by ITC Holdings or by the executive for good reason (as
such terms are defined in the employment agreements), the executives will receive:

     •
            any accrued but unpaid compensation and benefits;

     •
            continued payment during a specified severance period (as described below) of the executive's annual rate of base salary (plus, for
            Mr. Welch only, an amount equal to the average of each of the annual bonuses that were payable to him for the three fiscal years
            immediately preceding the fiscal year in which his employment terminates, commencing on the earliest date that is permitted under
            the new Section 409A of the Internal Revenue Code of 1986, as amended, or the Code (relating to the taxation of deferred
            compensation));

     •
            continued coverage under our active health and welfare plans for the specified severance period and outplacement services for at
            least one year; and

     •
            (1) for Messrs. Welch and Rahill and Ms. Blair only, deemed satisfaction of the eligibility requirements of our retiree welfare
            benefit plan for purposes of participation therein; and (2) for the other executives, participation in our retiree welfare benefit plan
            only if, by the end of their specified severance period, they have achieved the necessary age and service credit otherwise necessary
            to meet the eligibility requirements.

In addition, if we terminate our retiree welfare benefit plan and, by application of the provisions described in the prior sentence, the executives
would otherwise be entitled to retiree welfare benefits, the executives will receive a cash payment to the executives equal to our cost of
providing such benefits, in order to assist the executives in obtaining other retiree welfare benefits.

     The specified severance period referenced above is two years for each of Messrs. Welch, Rahill, Schultz and Jipping and Ms. Blair and
one year for each of Messrs. Oginsky, Cyrulewski, Bruneel and Dudak.

      In addition, while employed by ITC Holdings and (1) for Messrs. Welch, Rahill, Schultz and Jipping and Ms. Blair, (x) for a period of two
years after any termination of employment without cause by ITC Holdings (other than due to their disability) or for good reason by them, and
(y) for a period of one year following any other termination of their employment and (2) for Messrs. Oginsky, Cyrulewski, Bruneel and Dudak,
for a period of one year following any termination of their

                                                                        79
employment, the executives will be subject to certain covenants not to compete with or assist other entities in competing with our business and
not to encourage our employees to terminate their employment with us. At all times while employed and thereafter, the executives will also be
subject to a covenant not to disclose confidential information.

Executive Compensation Plans

      Short-Term Incentive Plan. On May 10, 2005, our board of directors approved a short-term cash incentive plan, designed to provide
certain of our employees, including the executive officers, with incentive compensation, on an annual or other short-term basis, based upon the
achievement of pre-established performance goals. The annual incentive plan is designed to comply with the performance-based compensation
exemption from Section 162(m) of the Code during any period during which Section 162(m) of the Code is applicable. The incentive plan will
be administered by the compensation committee of our board of directors, which will have the authority to identify the individuals who will be
eligible to receive an award under the plan and award bonuses under the plan.

      In the event that the bonuses are awarded to employees covered by Section 162(m) of the Code during any period during which
Section 162(m) of the Code is applicable, ITC Holdings contemplates that bonuses will be payable to such employees only upon the
achievement of certain pre-established performance goals, which will be based on one or more of the following criteria, as determined by the
committee: (1) earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (2) net income;
(3) operating income; (4) earnings per share; (5) book value per share; (6) return on stockholders' equity; (7) expense management; (8) return
on investment before or after the cost of capital; (9) improvements in capital structure; (10) profitability of an identifiable business unit or
product; (11) maintenance or improvement of profit margins; (12) stock price; (13) market share; (14) revenues or sales; (15) costs; (16) cash
flow; (17) working capital; (18) return on assets; and (19) changes in net assets. The foregoing criteria may relate to ITC Holdings, one or more
of its subsidiaries or one or more of its divisions or units, all as the committee shall determine. The incentive plan imposes a $500,000 limit on
the maximum amount of any bonuses that a participant in the plan may receive under the plan with respect to any given fiscal year.

      Deferred Compensation Plan. ITC Holdings maintains the Deferred Compensation Plan, which provides all executive officers of ITC
Holdings with the opportunity to defer receipt of certain compensation into a bookkeeping account established under the plan for each
participant. For this purpose, compensation includes all wages, including base salary, bonuses, and any other taxable or deferred compensation
earned by a participant. Also under the plan, ITC Holdings is required to credit to the participants' accounts certain "make whole" contributions
in respect of benefits lost under the ITC Holdings tax-qualified defined contribution and defined benefit plans in which the Deferred
Compensation Plan participant participates, due to such participant's election to defer certain amounts into the Deferred Compensation Plan.
Under the plan, all such deferred compensation is treated as being invested in certain investment alternatives, and any gains or losses on such
deemed investments are credited to each participant's plan account accordingly. Deferred Compensation Plan participants are fully vested at all
times in all amounts held in their plan accounts.

     Under this plan, account balances can be distributed upon the earliest to occur of the participant's termination, reaching normal retirement
age, becoming disabled or experiencing a financial hardship or a change in control of ITC Holdings (as all such terms are defined in the plan).
The Deferred Compensation Plan may be amended or terminated at any time by the board of directors.

    ITC Holdings' obligations under the Deferred Compensation Plan are funded through a grantor trust established by ITC Holdings.
Currently, the only participants in this plan are Mr. Welch and Mr. Flynn, and the aggregate liability under this plan as of December 31, 2004
was approximately $0.4 million.

                                                                       80
                                                 PRINCIPAL AND SELLING STOCKHOLDERS

      The following table sets forth information as of March 31, 2005 with respect to the beneficial ownership of our common stock before and
after this offering by:

      •
               each person who beneficially owns more than 5% of our common stock;

      •
               each of our directors and named executive officers; and

      •
               all of our directors and executive officers as a group.

     Unless otherwise indicated, the address of each person named in the table below is c/o ITC Holdings Corp., 39500 Orchard Hill Place,
Suite 200, Novi, Michigan 48375.

                                                                                                                   Percentage After
                                                                                                                     this Offering

                                               Beneficial Ownership
                                                of Common Stock

                                                                                     Shares of        Without Exercise           With Exercise
                                                                                  Common Stock        of Underwriters'          of Underwriters'
                                                                                   Being Sold in      Over-Allotment            Over-Allotment
                                                                                   this Offering          Option                    Option

                                                              Percentage
                                                              Prior to this
Name of Beneficial Owner                  Number(1)            Offering

International Transmission
Holdings Limited
Partnership(2)                             29,621,568                    94.1 %        10,000,000                   57.7 %                    52.2 %
Lewis M. Eisenberg(3)                      29,621,568                    94.1 %        10,000,000                   57.7 %                    52.2 %
Joseph L. Welch                               441,304                     1.4 %                —                     1.3 %                     1.3 %
Edward M. Rahill                               80,237                       *                  —                       *                         *
Larry Bruneel                                  48,142                       *                  —                       *                         *
Linda H. Blair                                 73,551                       *                  —                       *                         *
Joseph R. Dudak                                48,142                       *                  —                       *                         *
John H. Flynn(4)                               53,491                       *                  —                       *                         *
All directors and executive
officers as a group
(10 persons)(3)                            30,544,355                    97.0 %        10,000,000                   60.4 %                    54.9 %


*
          Less than one percent.

(1)
          The amounts and percentages of our common stock beneficially owned are reported on the basis of regulations of the SEC governing
          the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a "beneficial owner" of a
          security if that person has or shares "voting power," which includes the power to vote or to direct the voting of such security, or
          "investment power," which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a
          beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules,
          more than one person may be deemed to be a beneficial owner of such securities as to which such person has an economic interest.



          The column includes shares of common stock that the individual had the right to acquire on March 31, 2005 or within 60 days thereafter
          pursuant to stock options, as set forth below.


                            Name                                                                             Option Shares
                       Joseph L. Welch                                                                 240,711
                       Edward M. Rahill                                                                 40,119
                       Larry Bruneel                                                                    21,397
                       Linda H. Blair                                                                   40,119
                       Joseph R. Dudak                                                                  21,397
                       John H. Flynn                                                                    20,059
                       All directors and executive officers as a group (10 persons)                    472,062

(2)
      The "Limited Partners" of the IT Holdings Partnership are the KKR partnerships (KKR Millennium Fund, L.P. and KKR Partners III,
      L.P. (Series A)), the Trimaran partnerships (Trimaran Fund II, L.L.C.,

                                                                    81
      Trimaran Parallel Fund II, L.P., Trimaran Capital, L.L.C., CIBC Employee Private Equity Fund (Trimaran) Partners and CIBC MB Inc.)
      and Stockwell Fund, L.P. (an entity formed to make direct investments for certain State of Michigan retirement funds), Ironhill
      Transmission LLC (the sole member of Ironhill Transmission, LLC is Lewis M. Eisenberg) is the General Partner of the IT Holdings
      Partnership. See "Summary—Ownership Structure."

(3)
        Includes 29,621,568 shares beneficially owned by the IT Holdings Partnership. Mr. Eisenberg is the sole member of Ironhill
        Transmission, LLC, which is the General Partner of the IT Holdings Partnership.

(4)
        Mr. Flynn resigned from his position as Vice President, General Counsel and Secretary of ITC Holdings effective December 31, 2004.

                                                                      82
                                CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

       The following is a brief summary of the material agreements we have entered into with our current and former stockholders as amended
prior to the completion of this offering. The descriptions below are summaries and should not be relied upon as a complete description of all
the various terms and provisions of these agreements. We will file copies of these agreements as exhibits to the registration statement of which
this prospectus forms a part.

The IT Holdings Partnership

IT Holdings Partnership Agreement

     Prior to our acquisition of ITC from DTE Energy, the General Partner, the KKR partnerships and the Trimaran partnerships formed the IT
Holdings Partnership to facilitate their investment in ITC Holdings. Under the terms of the IT Holdings partnership agreement as amended
upon completion of this offering, the General Partner will have the exclusive and complete authority and discretion to manage the day-to-day
operations and affairs of the IT Holdings Partnership and to make all decisions regarding the business of the IT Holdings Partnership. However,
the IT Holdings partnership agreement will contain restrictions on the ability of the General Partner to take (or permit ITC Holdings and ITC to
take) limited actions with respect to us and our business, except with the approval of a majority in interest or, in some cases, three-fourths in
interest, of the Limited Partners. In particular, following this offering, ITC Holdings and ITC may not, without the required approval of the
Limited Partners, among other things:

     •
            create any additional class, or issue or sell equity interests, of the IT Holdings Partnership (or any warrants, options or rights to
            acquire such equity interests or securities convertible into or exchangeable for such equity interests);

     •
            amend, modify or repeal any provision of the formation or organizational documents of the IT Holdings Partnership or any of its
            subsidiaries in a manner adverse to the Limited Partners;

     •
            initiate, settle or compromise certain suits in which any amount is claimed by or against the IT Holdings Partnership or that would
            require the IT Holdings Partnership to be subject to equitable relief or to take or refrain from taking any material action;

     •
            take any material action with respect to any transaction that results in actual or potential conflicts of interest that arise with the
            General Partner or any of the Limited Partners (and their respective affiliates); or

     •
            take (or fail to take) any action that would result in a Limited Partner (or its affiliates) (1) being deemed to be engaged in a trade or
            business for U.S. federal tax purposes or having unrelated business taxable income for U.S. federal tax purposes, (2) being deemed
            to be a holding company, subsidiary company or an affiliate of a public-utility company under PUHCA or any similar legislation,
            or as a public utility under the FPA or (3) being subject to any other federal or state regulation that would have an adverse effect on
            the Limited Partners or any of their affiliates (in addition to this provision, a majority in interest of the Limited Partners may, at
            any time, direct the General Partner to take reasonable actions to preclude the foregoing regulatory events).

      The IT Holdings partnership agreement will also provide that certain of the Limited Partners have the right to attend meetings of the
boards of directors of ITC Holdings and ITC and receive information provided to the directors and notice of certain significant events. The
Limited Partners have agreed to take reasonable steps to maintain the confidentiality of any non-public information concerning ITC Holdings
or its subsidiaries.

                                                                         83
Registration Rights Agreement

     In connection with the acquisition, the IT Holdings Partnership entered into a Registration Rights Agreement with ITC Holdings. Pursuant
to the Registration Rights Agreement, the IT Holdings Partnership has the right to require ITC Holdings to effect an unlimited number of
registrations of ITC Holdings' common stock. ITC Holdings has agreed to pay for the first six of these demand registrations. In addition, if ITC
Holdings conducts a registered offering of its common stock, such as this offering, the IT Holdings Partnership has the right to include all or a
portion of its common stock in the offering.

    The Management Stockholders (as defined below under "—Management Stockholder's Agreement") are also parties to this Registration
Rights Agreement, but generally do not have the ability to demand a registration. See "—Management Stockholder's Agreements."

Management, Consulting and Financial Services Letter Agreements

      Each of KKR and Trimaran Fund Management, L.L.C., the investment manager to the Trimaran partnerships, entered into a management,
consulting and financial services letter agreement with the IT Holdings Partnership and ITC. Under these agreements, each of KKR and
Trimaran Fund Management received a one-time transaction fee from us for advisory services with respect to the acquisition of ITC of
$7.0 million and $3.0 million, respectively. In addition, pursuant to these agreements, KKR and Trimaran Fund Management agreed to provide
customary management, consulting and financial services to us in exchange for annual fees of $0.7 million and $0.3 million, respectively, plus
out of pocket expenses and a 7% annual escalation factor. We incurred expenses of $0.7 million in 2003 and $0.9 million in 2004 from KKR
and $0.4 million in 2003 and $0.3 million in 2004 from Trimaran Fund Management relating to these agreements. In connection with this
offering, the parties to these agreements and ITC Holdings have agreed to amend these agreements by terminating ITC's obligation to pay these
annual fees in exchange for one-time fees to KKR and Trimaran Fund Management of $4.0 million and $1.7 million, respectively, which will
be payable by ITC Holdings upon the completion of this offering. The amended agreements also contain provisions for additional fees for
future, mutually agreed-upon services, which may include advisory, consulting or financial services. ITC Holdings, ITC and the IT Holdings
Partnership have also agreed to reimburse KKR and Trimaran Fund Management for reasonable expenses incurred in providing services under
the agreement and ITC Holdings and ITC have agreed to indemnify KKR and Trimaran Fund Management (and their affiliates) for losses
arising out of the performance of these services. The terms of the management, consulting and financial services letter agreements, including
the related fees, are no less favorable to ITC Holdings, the IT Holdings Partnership and ITC than those that ITC Holdings, the IT Holdings
Partnership and ITC could have obtained from unaffiliated third parties.

      ITC Holdings and ITC also agreed to retain the IT Holdings Partnership to provide to ITC, when and if called upon, certain management,
consulting and financial services. As consideration for these services, ITC Holdings and ITC agreed to pay an annual fee of $0.2 million to IT
Holdings Partnership. We incurred expenses of $0.2 million in each of 2003 and 2004 under this agreement. In connection with this offering,
the parties to this agreement have agreed to terminate ITC's and ITC Holdings' obligation to pay this annual fee in exchange for a one-time fee
of $1.0 million to the IT Holdings Partnership, which will be payable by ITC Holdings upon the completion of this offering. The agreement
also contains provisions for additional fees for future, mutually agreed-upon services. We have also agreed to reimburse IT Holdings
Partnership for reasonable expenses incurred in providing services under the agreement and to indemnify IT Holdings Partnership (and its
affiliates) for losses arising out of the performance of these services.

Management Rights Letters

     In connection with the acquisition, ITC, ITC Holdings and the IT Holdings Partnership entered into agreements with each of (1) the KKR
Millennium Fund, L.P., or KKR Millennium, a KKR

                                                                       84
Partnership, and (2) Trimaran Fund II, L.L.C., or Trimaran II, a Trimaran Partnership, pursuant to which, for so long as the IT Holdings
partnership agreement remains in full force and effect, KKR Millennium and Trimaran II will have the right to designate one representative
each to:

     •
            attend as a non-voting observer all meetings of the board of directors of ITC and ITC Holdings (although such representative is not
            entitled to vote at any such meeting and his or her attendance at any such meeting does not affect any quorum requirements); and

     •
            meet periodically with the General Partner at such times as reasonably requested by KKR Millennium or Trimaran II, as
            applicable.

     In addition, each of KKR Millennium and Trimaran II is entitled to (x) receive advance written notice of any meetings of the boards of
directors of ITC or ITC Holdings and all information provided to the members of such boards of directors and (y) meet with the appropriate
officers and/or directors of each of ITC, ITC Holdings and/or the IT Holdings Partnership periodically and at such times as reasonably
requested by KKR Millennium or Trimaran II, as applicable, with respect to matters relating to the business and affairs of each of ITC, ITC
Holdings and the IT Holdings Partnership. The IT Holdings Partnership has agreed to cause ITC Holdings and ITC to grant similar rights to
certain Limited Partners from time to time.

Management Stockholder's Agreements

     ITC Holdings has entered into management stockholder's agreements, or the Management Stockholder's Agreements, with all current and
former officers and employees of ITC Holdings and/or ITC who have purchased or acquired shares of ITC Holdings' common stock and/or
received options to purchase ITC Holdings' common stock. We refer to these persons as Management Stockholders. The Management
Stockholder's Agreements contain transfer restrictions, put and call rights, registration rights and a non-compete and confidentiality covenant.

     Restrictions on Transfers. The Management Stockholder's Agreements impose significant restrictions on transfers of shares of
common stock. Pursuant to the Management Stockholder's Agreements, the shares of common stock acquired by a Management Stockholder
generally will be non-transferable until the fifth anniversary of the effective date of the Management Stockholder's Agreement, or the Closing
Date, except for (1) permitted non-public transfers (as defined in the Management Stockholder's Agreements), (2) subject to the provisions
described under "—Registration Rights" and "Executive and Non-Executive Waiver and Agreements" below, a sale of shares of common stock
pursuant to an effective registration statement filed by ITC Holdings under the Securities Act (not including a registration statement on
Form S-8), (3) pursuant to the Sale Participation Agreement described below or (4) transfers approved by our board of directors.

     Stockholder's Resale of Common Stock and Options to ITC Holdings Upon Death or Disability. If, prior to the fifth anniversary of
the applicable Closing Date, a Management Stockholder is still employed by ITC Holdings or any subsidiary of ITC Holdings and that
Management Stockholder either dies or becomes permanently disabled, then the Management Stockholder will have the right, for a period of
60 days to require ITC Holdings to purchase (1) all of the shares of common stock then held by the Management Stockholder at the fair market
value per share of the underlying common stock and (2) all of the Management Stockholder's then exercisable options to purchase ITC
Holdings' common stock at a price equal to the excess, if any, of the fair market value per share of the underlying common stock over the
applicable option exercise price. However, we propose to amend this provision in the manner discussed under "First Amendment to
Management Stockholder's Agreements" below.

     ITC Holdings' Right to Repurchase Common Stock and Options of Stockholder. ITC Holdings may repurchase common stock and
exercisable options to purchase ITC Holdings' common stock held by a Management Stockholder upon the termination of that Management
Stockholder's employment with ITC Holdings or any of its subsidiaries if the termination occurs prior to the fifth anniversary of the

                                                                       85
applicable Closing Date at various repurchase prices that are equal to or less than the fair market value per share of the common stock being
repurchased.

     Lapse of Certain Provisions on Change of Ownership. Some of the provisions of the Management Stockholder's Agreement,
including those described under "—Restrictions on Transfers," "—Stockholder's Resale of Common Stock and Options to ITC Holdings Upon
Death or Disability" and "—ITC Holdings' Right to Repurchase Common Stock and Options of Stockholder" above, will lapse upon the
occurrence of a change of ownership of ITC Holdings. A change of ownership means any of the following events that result in the inability of
any of the IT Holdings Partnership, the General Partner or the Limited Partners (other than Stockwell) to designate or elect a majority of our
board of directors:

     •
             the sale of all or substantially all of our assets to any person or group other than the IT Holdings Partnership, the General Partner, a
             Limited Partner and their respective affiliates (any such person or group, an "unaffiliated person");

     •
             a sale resulting in more than 50% of our voting stock being held by an unaffiliated person; or

     •
             a merger, consolidation, recapitalization or reorganization of us with or into another unaffiliated person.

      Registration Rights. If the IT Holdings Partnership sells shares of common stock in a public offering in accordance with the
Registration Rights Agreement, generally, the Management Stockholders have limited "piggyback" registration rights with respect to the shares
of common stock purchased under or held subject to the Management Stockholder's Agreement or underlying then exercisable options. These
registration rights terminate upon the fifth anniversary of the applicable Closing Date. Shares of common stock included in a public offering
pursuant to the Registration Rights Agreement will cease to be subject to any restrictions on transfer imposed by the Management
Stockholder's Agreements. However, ITC Holdings has asked for, and received from all Management Stockholders, an agreement to waive
their "piggyback" registration rights in this offering in exchange for certain other rights and/or benefits as further described under "Executive
and Non-Executive Waiver and Agreements" below.

     Restrictions on Public Sale Relating to a Public Offering. Except as described under "Executive and Non-Executive Waiver and
Agreements" below, each Management Stockholder will be prohibited from effecting any public sale or distribution of shares of common stock
not covered by a registration statement within the period between seven days before and 180 days after, the effective date of a registration
statement (or, if later, the date of the public offering pursuant to the registration statement) in connection with a public offering of capital stock
of ITC Holdings. ITC Holdings may waive this restriction.

     Non-Compete and Confidentiality Covenant. Pursuant to the Management Stockholder's Agreements, for so long as a Management
Stockholder is employed by ITC Holdings or one of its subsidiaries and for a period of one year thereafter, the Management Stockholder is
subject to covenants not to:

     •
             be engaged in or have financial interest (other than an ownership position of less than 5% in any company whose shares are
             publicly traded or any non-voting non-convertible debt securities in any company) in any business which competes with any
             business of ITC Holdings or any of its subsidiaries;

     •
             solicit customers or clients of ITC Holdings or any of its subsidiaries to terminate their relationship with ITC Holdings or any of its
             subsidiaries or otherwise compete with any business of ITC Holdings or any of its subsidiaries; or

                                                                         86
     •
            solicit or offer employment to any person who has been employed by ITC Holdings or any of its subsidiaries at any time during the
            12 months immediately preceding the termination of the Management Stockholder's employment.

In addition, the Management Stockholder has agreed not to disclose or use at any time any confidential information pertaining to the business
of ITC Holdings or any of its subsidiaries, except when required to perform his or her duties to ITC Holdings or one of its subsidiaries, by law
or judicial process.

First Amendment to Management Stockholder's Agreements

     ITC Holdings proposes to enter into amendments to the Management Stockholder's Agreements with each Management Stockholder in
order to eliminate the Management Stockholder's (or his or her estate's or personal representative's, as applicable) current right under the
Management Stockholder's Agreement, in the event of the Management Stockholder's death or permanent disability, to cause ITC Holdings to
purchase all of the Management Stockholder's then exercisable options to purchase ITC Holdings' common stock.

     In exchange for the foregoing, upon the Management Stockholder's death or permanent disability, the proposed amendments would allow
the Management Stockholder (or his or her estate or personal representative, as applicable) to:

               (1) exercise all then outstanding exercisable options of the Management Stockholder by having ITC Holdings withhold, from
          the shares being acquired upon exercise of the option, a number of shares of ITC Holdings common stock having a value that is equal
          to the option exercise price as payment for such option exercise price, and, from the 181st day after the date of such option exercise
          through the 211th day after such exercise date, the Management Stockholder (or estate or personal representative, as applicable) may
          cause ITC Holdings to purchase the shares of ITC Holdings' common stock obtained through such option exercise and held for such
          180 day period at the then fair market value of such shares; or

                (2) on and after the date of the Management Stockholder's death or permanent disability, to elect to have any transfer
          restrictions that may have been imposed on the shares acquired upon exercise of the then exercisable options to purchase shares of
          ITC Holdings' common stock generally removed from such shares, which will allow such shares to be freely sold or transferred in the
          market (subject to any other limitations and/or requirements imposed by applicable securities laws or other provisions of the
          Management Stockholder's Agreement with respect to any such sale or transfer).

Executive and Non-Executive Waiver and Agreements

     ITC Holdings has entered into certain waiver and agreement arrangements with all Management Stockholders as described below.

      All of our executive officers have agreed to waive their right to exercise their "piggyback" registration rights described above with respect
to this offering in exchange for:

     •
            the right to sell, at any time 180 days after the date of this prospectus, a certain number of shares of ITC Holdings' common stock
            that they hold equal to, in the aggregate, $1,846,000 (based on the midpoint of the price range set forth on the cover page of this
            prospectus and after deducting taxes relating to the sale of such shares); and

     •
            the grant (other than to Mr. Oginsky) of options to purchase an aggregate of 475,850 shares of ITC Holdings' common stock at an
            exercise price equal to the offering price per share of ITC Holdings' common stock set forth on the cover page of this prospectus
            that vest 20% per year as long as the executive officer remains employed with ITC Holdings.

                                                                        87
     •
            All Management Stockholders who are not executive officers have agreed to waive their right to exercise their "piggyback"
            registration rights described above with respect to this offering in exchange for the right to sell, pursuant to a registration statement
            on Form S-8 filed concurrently with the sale of ITC Holdings' common stock in this offering, at any time after the date of this
            prospectus, all or any portion of the same number of shares of ITC Holdings' common stock that the Management Stockholders
            could have disposed of by exercising their "piggyback" registration rights.

Sale Participation Agreements

      Each Management Stockholder has also entered into a Sale Participation Agreement with the IT Holdings Partnership, which grants to the
Management Stockholders the right to participate in any sale (other than a public offering or sale to an affiliate of the IT Holdings Partnership)
for cash or other consideration of shares of common stock by the IT Holdings Partnership occurring prior to the fifth anniversary of this
offering. The Management Stockholder may also be required to participate in such a sale in the event the acquiring party in the sale so requires.
Shares of common stock sold by a Management Stockholder pursuant to the Sale Participation Agreements will not be subject to any
restrictions on transfer imposed by the Management Stockholder's Agreements.

Put Agreement

     In connection with the investment by Management Stockholders in ITC Holdings, CIBC, Inc., a bank affiliated with one of the Limited
Partners, and Comerica Bank, a non-affiliated bank, provided some of the Management Stockholders with loans to acquire shares of our
common stock. The loans are evidenced by notes made by the Management Stockholders and require a pledge of each Management
Stockholder's shares of our common stock. We refer to CIBC and Comerica together as the Lenders. As a condition to making these loans, ITC
Holdings entered into put agreements with the Lenders pursuant to which ITC Holdings agreed that upon the occurrence of certain events, ITC
Holdings would be assigned the note and pledge and would either pay the Lenders the aggregate principal amount outstanding of the note plus
interest thereon or execute a demand promissory note in a principal amount equal to the aggregate principal amount outstanding of the note
plus interest thereon. The maximum potential amount of future payments for ITC Holdings under these put agreements was approximately
$2.0 million at December 31, 2004. The fair value of the liability in respect of the put agreements at inception and as of December 31, 2004
was not material.

      Prior to this offering, ITC Holdings and Comerica terminated the put agreement between them. The put agreement with CIBC will remain
in effect until the date when the ITC Holdings obligations under the agreement are satisfied or when any amounts outstanding under the notes
have been paid in full. This put agreement with CIBC previously covered loans to Management Stockholders who are executive officers of ITC
Holdings; however, this put agreement currently is only applicable to loans made to Management Stockholders who are not executive officers
of ITC Holdings.

Agreements with Detroit Edison

     ITC and Detroit Edison entered into a construction and maintenance, engineering, and system operations service level agreement, or the
SLA, whereby Detroit Edison performed maintenance, asset construction, and certain aspects of transmission operations and administration on
behalf of ITC. Under the SLA, as amended, ITC utilized Detroit Edison or other vendors for the services specified. When other vendors were
used, ITC was required to pay Detroit Edison 100% of the operation and maintenance expenditure markup fees and 50% of the capital
expenditure markup fees specified in the SLA. ITC entered into the SLA to provide a more orderly transition from an integrated utility to a
stand-alone independent transmission company. The SLA, as amended, had a term through February 29, 2004, with certain specified services
extending through April 30, 2004, as necessary.

     In August 2003, ITC entered into an Operation and Maintenance Agreement and a Supply Chain Management Agreement with other
contractors to perform these services subsequent to the term of the SLA. In order to facilitate the transition from Detroit Edison, the new
contractors performed work in parallel with Detroit Edison prior to the termination of the SLA.

                                                                        88
                                                DESCRIPTION OF OUR INDEBTEDNESS

Revolving Credit Facilities

     In July 2003, ITC entered into a 2 1 / 2 -year $15.0 million revolving credit agreement with Canadian Imperial Bank of Commerce, as
administrative agent, and Credit Suisse First Boston, Cayman Islands Branch, as documentation agent. In January 2004, the capacity under
ITC's revolving credit facility was increased to $25.0 million. At December 31, 2004, ITC had $25.0 million outstanding under its revolving
credit agreement.

     On January 19, 2005, ITC and a syndicate of lenders led by Canadian Imperial Bank of Commerce amended and restated this revolving
credit agreement to increase the total commitments thereunder to $65.0 million, with an option to increase the commitments to $75.0 million
subject to ITC's ability to obtain the agreement of willing lenders. As amended and restated, ITC's revolving credit agreement has a maturity
date of March 19, 2007. ITC's obligations under its revolving credit agreement are supported by an aggregate of $75.0 million of its Series B
Mortgage Bonds (described below) issued to Canadian Imperial Bank of Commerce.

     Borrowings under ITC's revolving credit agreement bear interest, at ITC's option, at either LIBOR plus 1.25% each year or the alternate
base rate plus 0.25% each year, which applicable margins are subject to adjustment based on the ratings by Moody's Investor Service, Inc. and
Standard & Poor's Ratings Services applicable to ITC's Mortgage Bonds from time to time.

   ITC's revolving credit agreement also provides for the payment to the lenders of a commitment fee on the average daily unused
commitments under the revolving credit agreement at a rate equal to 0.50% per annum, payable quarterly in arrears.

    On March 19, 2004, ITC Holdings entered into a three-year $20.0 million revolving credit agreement with Canadian Imperial Bank of
Commerce, as administrative agent, and Credit Suisse First Boston, Cayman Islands Branch, as documentation agent. In May 2004, the
capacity under ITC Holdings' revolving credit facility was increased to $30.0 million and in June 2004 it was increased to $40.0 million. At
December 31, 2004, ITC Holdings had $7.5 million outstanding under its revolving credit agreement.

     On January 12, 2005, ITC Holdings and a syndicate of lenders led by Canadian Imperial Bank of Commerce amended and restated this
revolving credit agreement to increase the total commitments thereunder to $47.5 million, with an option to increase the commitments to
$50.0 million subject to ITC Holdings' ability to obtain the agreement of willing lenders. As amended and restated, ITC Holdings' revolving
credit agreement has a maturity date of March 19, 2007. ITC Holdings' revolving credit agreement contains a $10.0 million letter of credit
sub-facility.

      ITC Holdings' obligations under its revolving credit agreement are secured by 158 shares of ITC's common stock, representing 15 5 / 6 %
of the total outstanding common stock of ITC. Increasing commitments to $50.0 million would require an additional 8 shares of security, for a
total of 166 shares, representing 16 3 / 5 % of the total outstanding common stock of ITC.

     Borrowings under ITC Holdings' revolving credit agreement bear interest, at ITC Holdings' option, at either LIBOR plus 1.50% each year
or the alternate base rate plus 0.50% each year, which applicable margins are subject to adjustment based on the ratings by Moody's Investor
Service, Inc. and Standard & Poor's Ratings Services applicable to ITC Holdings' 5.25% Senior Notes (described below) from time to time.

     ITC Holdings' revolving credit agreement provides for the payment to the lenders of a commitment fee on the average daily unused
commitments under the revolving credit agreement at a rate equal to 0.375% per annum and a letter of credit fee on the average daily stated
amount of all outstanding letters of credit at a rate equal to the then-applicable spread for LIBOR loans, in each case payable quarterly in
arrears. ITC Holdings' revolving credit agreement also provides for the payment to Canadian Imperial Bank of Commerce, as letter of credit
issuer, of a letter of credit

                                                                      89
fronting fee on the average daily stated amount of all outstanding letters of credit at a rate equal to 0.125% per annum, payable quarterly in
arrears.

     Our revolving credit facilities contain numerous financial and operating covenants that limit the discretion of our management with
respect to certain business matters. These covenants place significant restrictions on, among other things, our ability to:

     •
            create liens or other encumbrances;

     •
            enter into any mergers, consolidations, liquidations or dissolutions, or sell or otherwise dispose of all or substantially all of our
            assets; and

     •
            pay dividends or make distributions on or redemptions of ITC's and ITC Holdings' capital stock.

      In addition, ITC's revolving credit agreement requires ITC to maintain a ratio of total debt to total capitalization (calculated as total debt
plus total stockholders' equity) of less than or equal to 60%, and ITC Holdings' revolving credit agreement requires ITC Holdings to maintain a
ratio of total debt to total capitalization (calculated as total debt plus total stockholders' equity) of less than or equal to 85%.

    Our revolving credit facilities provide for voluntary prepayments of the loans and voluntary reductions of the unutilized portions of the
commitments, without penalty, subject to certain conditions pertaining to minimum notice and pre-payment/reduction amounts and subject to
payment of any applicable breakage costs on LIBOR loans.

5.25% Senior Notes and Mortgage Bonds

     In July 2003, we refinanced the original variable rate term loans used to finance our acquisition of ITC from DTE Energy through the
issuance by:

     •
            ITC Holdings of $267 million of its 5.25% Senior Notes due July 15, 2013, or the ITC Holdings 5.25% Senior Notes; and

     •
            ITC of $185 million of its 4.45% First Mortgage Bonds Series A due July 15, 2013, or the 4.45% First Mortgage Bonds Series A.



      Additionally, the proceeds from the issuance of the ITC Holdings 5.25% Senior Notes were used in part to make a $27.1 million
distribution to ITC Holdings' stockholders.

     In July 2003, ITC also issued $15.0 million of its 4.45% First Mortgage Bonds Series B due February 28, 2006, or the ITC Series B
Mortgage Bonds. We refer to the ITC Series B Mortgage Bonds, together with the 4.45% First Mortgage Bonds Series A, as the Mortgage
Bonds. In January 2004, ITC issued an additional $10.0 million of its Series B Mortgage Bonds and on January 19, 2005, ITC issued an
additional $50.0 million of its Series B Mortgage Bonds. As amended and restated in connection with the January 2005 amended and restated
revolving credit agreement, all outstanding ITC Series B Mortgage Bonds will mature on March 19, 2007. All of the ITC Series B Mortgage
Bonds were issued to Canadian Imperial Bank of Commerce, as administrative agent under ITC's revolving credit agreement, in support of its
obligations under that agreement. Under the terms of the ITC Series B Mortgage Bonds, ITC is only required to make interest or principal
payments on the ITC Series B Mortgage Bonds if payments are not made under ITC's revolving credit agreement.

     There are no maintenance covenants governing the ITC Holdings 5.25% Senior Notes or Mortgage Bonds.

5.25% Senior Notes due July 15, 2013

     General. The ITC Holdings 5.25% Senior Notes were issued under an indenture, dated as of July 16, 2003, between ITC Holdings and
BNY Midwest Trust Company, as trustee, as amended and supplemented by the first supplemental indenture thereto, dated as of July 16, 2003.
The ITC Holdings 5.25% Senior Notes bear interest at a rate of 5.25% per annum.

                                                                         90
     Ranking. The ITC Holdings 5.25% Senior Notes rank equally in right of payment with all of our existing and future unsecured senior
indebtedness. The ITC Holdings 5.25% Senior Notes are structurally subordinated to all existing and future indebtedness and other obligations
of ITC Holdings' subsidiaries, including trade payables and the Mortgage Bonds.

     Optional Redemption. The ITC Holdings 5.25% Senior Notes may be redeemed, in whole or in part, at any time, at ITC Holdings'
option, at a redemption price equal to the greater of (1) 100% of the principal amount of the ITC Holdings 5.25% Senior Notes being redeemed
and (2) as determined by an independent investment banker (as such term is defined in the indenture), the sum of the present values of the
remaining scheduled payments of principal and interest on the ITC Holdings 5.25% Senior Notes being redeemed (not including any portion of
such payments of interest accrued as of the redemption date) discounted to the redemption date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the adjusted treasury rate (as such term is defined in the indenture), plus, in each case, accrued and
unpaid interest thereon to, but excluding, the redemption date.

     Covenants.     The indenture contains covenants limiting, among other things, the ability of ITC Holdings to:

     •
            incur additional indebtedness;

     •
            create liens; and

     •
            engage in sale and lease-back transactions.

     Events of Default. The indenture provides for events of default, which, if any of them occurs, would permit or require the principal of
and accrued interest on the ITC Holdings 5.25% Senior Notes to become or to be declared due and payable.

4.45% First Mortgage Bonds due July 15, 2013

     General. The Mortgage Bonds were issued under a first mortgage and deed of trust, dated as of July 15, 2003, between ITC and BNY
Midwest Trust Company, as trustee, as supplemented and amended by the first and second supplemental indentures thereto, each dated as of
July 15, 2003, and the amendment to the second supplemental indenture, dated as of January 19, 2005. The mortgage and deed of trust, as
supplemented, does not limit the amount of Mortgage Bonds that ITC may offer thereunder. The Mortgage Bonds bear interest at a rate of
4.45% per annum.

     Ranking. The Mortgage Bonds are secured by a first mortgage lien on substantially all of the property owned by ITC from time to
time. The Mortgage Bonds will be secured equally with all other securities issued under the first mortgage and deed of trust.

     Optional Redemption. The Mortgage Bonds may be redeemed, in whole or in part, at any time, at ITC's option, at a redemption price
equal to the greater of (1) 100% of the principal amount of the Mortgage Bonds being redeemed and (2) as determined by an independent
investment banker (as such term is defined in the first mortgage and deed of trust), the sum of the present values of the remaining scheduled
payments of principal and interest on the Mortgage Bonds being redeemed (not including any portion of such payments of interest accrued as
of the redemption date) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the adjusted treasury rate (as such term is defined in the first mortgage and deed of trust), plus, in each case, accrued and unpaid
interest thereon to, but excluding, the redemption date.

     Events of Default. The first mortgage and deed of trust provides for events of default, which, if any of them occurs, would permit or
require the principal of and accrued interest on the Mortgage Bonds to become or to be declared due and payable.

                                                                        91
                                                 DESCRIPTION OF OUR CAPITAL STOCK

      The following is a summary of the material terms of ITC Holdings' capital stock and the provisions of ITC Holdings' Articles of
Incorporation and bylaws as they will be amended prior to the completion of this offering, which we refer to as "our capital stock," "our
Articles of Incorporation" and "our bylaws," respectively. It also summarizes relevant provisions of the Michigan Business Corporation Act, or
MBCA. Since the terms of our Articles of Incorporation, bylaws and the MBCA are more detailed than the general information provided below,
we urge you to read the actual provisions of those documents and the MBCA. The following summary of our capital stock is subject in all
respects to the MBCA, our Articles of Incorporation and our bylaws. We will file our Articles of Incorporation and bylaws as exhibits to the
registration statement of which this prospectus forms a part.

General

     Immediately following this offering, our authorized capital stock will consist of:

     •
             100 million shares of common stock, without par value; and

     •
             10 million shares of preferred stock, without par value.

     Prior to this offering, there are 30,701,974 shares of our common stock outstanding and no shares of preferred stock outstanding.
Immediately following the completion of this offering, there are expected to be 33,201,974 shares of common stock issued and outstanding,
and no shares of preferred stock outstanding, excluding 802,104 shares of common stock issuable upon the exercise of options outstanding at
March 31, 2005, with an exercise price of $7.48 per share.

     As of March 31, 2005, we had 124 holders of record of our common stock.

Common Stock

     All of the outstanding shares of our common stock are fully paid and nonassessable.

     Voting Rights. Each holder of our common stock is entitled to cast one vote for each share held of record on all matters submitted to a
vote of stockholders, including the election of directors, subject to the restrictions on market participants described below. Holders of our
common stock have no cumulative voting rights.

      Dividends. Holders of our common stock are entitled to receive dividends or other distributions declared by the board of directors. The
right of the board of directors to declare dividends is subject to the right of any holders of our preferred stock, to the extent that any preferred
stock is authorized and issued, and the availability under the MBCA of sufficient funds to pay dividends.

     Liquidation Rights. If our company is dissolved, the holders of our common stock will share ratably in the distribution of all assets that
remain after we pay all of our liabilities and satisfy our obligations to the holders of any of our preferred stock, to the extent that any preferred
stock is authorized and issued.

     Preemptive and Other Rights. Holders of our common stock have no preemptive rights to purchase or subscribe for any stock or other
securities of our company, and, other than as described below, there are no conversion rights or redemption or sinking fund provisions with
respect to our common stock.

    Restrictions on Ownership by Market Participants. Our Articles of Incorporation include the following restrictions on issuance to, and
ownership and voting of our capital stock by, "market participants," as defined below, which are provisions designed to ensure that ITC
remains an "independent" transmission company eligible for favorable rate treatment, consistent with FERC orders.

                                                                         92
     •
            We are restricted from issuing any shares of capital stock or recording any transfer of shares if the issuance or transfer would cause
            any market participant, either individually or together with members of its "group" (as defined in SEC beneficial ownership rules),
            to beneficially own 5% or more of any class or series of our capital stock, provided that we may issue shares in excess of 5% to the
            underwriters of this offering or underwriters or initial purchasers in future underwritten offerings or private placements approved
            by our board of directors. In addition, this restriction will not preclude settlement of any transfer that occurs on the New York
            Stock Exchange (or another national securities exchange or automated inter-dealer quotation system on which the shares may
            trade).

     •
            If a market participant, together with its group members, beneficially owns 5% or more of any class or series of our capital stock,
            that market participant, together with its group members, will not be permitted to exercise voting rights on shares constituting 5%
            or more of that class or series.

     •
            We will have the right to redeem shares of capital stock beneficially owned by a market participant (or its group members) if that
            market participant, together with its group members, beneficially owns 5% or more of any class or series of our capital stock so
            that the market participant, together with its group members, ceases to beneficially own 5% or more of that class or series.



Prior to redeeming any shares, we will be required to give at least 45 days' written notice to the holder of the shares. Prior to the redemption
date, the stockholder may sell any shares that would otherwise be redeemed to avoid redemption of those shares. The redemption price for any
shares redeemed will be the fair market value of the shares, as determined by our board of directors in good faith. If our shares are listed on the
New York Stock Exchange (or another national securities exchange or automated inter-dealer quotation system), the fair market value will be
equal to the lesser of (x) the volume weighted average price for the shares over the 10 most recent trading days immediately prior to the
delivery of the redemption notice and (y) the volume weighted average price for the shares over the 10 trading days immediately prior to the
date the shares are redeemed.

     A "market participant" has the meaning given to that term by the FERC and includes:

     •
            any person or entity that, either directly or through an affiliate, sells or brokers electric energy, or provides ancillary services to
            ITC or to an RTO to which we belong (unless the FERC finds that the person or entity does not have economic or commercial
            interests that would be significantly affected by the actions or decisions of ITC or an RTO to which we belong); or

     •
            any other person or entity that the FERC finds to be a market participant because it has economic or commercial interests that
            would be significantly affected by the actions or decisions of ITC or any RTO to which we belong.

An affiliate, for these purposes, includes any person or entity that directly or indirectly owns, controls or holds with the power to vote 5% or
more of the outstanding voting securities of a market participant.

     A determination by our board of directors, acting in good faith, that a person or entity is a market participant will be binding on all
stockholders. In determining whether any shares of capital stock are beneficially owned by a market participant, or its group members, our
board of directors may rely solely on our stock transfer records, public filings with the SEC on Schedule 13G or Schedule 13D by beneficial
owners of our shares and on the declarations described below.

                                                                         93
     Certain Stockholders Required to Certify as to Market Participant Relationships.          Our Articles of Incorporation permit, and require if
we request, the following persons or entities to make certain declarations to us:

     •
            any person or entity that, together with its group members, acquires beneficial ownership of 5% or more of any class or series of
            capital stock of ITC Holdings and which has made a filing with the SEC under Regulation 13D-G in respect of such beneficial
            ownership; or

     •
            any person or entity (other than a depositary institution or broker-dealer who is not a beneficial owner for purposes of
            Regulation 13D-G) that is a record holder of 5% or more of any class or series of capital stock of ITC Holdings.

     The declaration must be delivered to us within 10 days of any request and must include the following information:

     •
            the number of shares of capital stock beneficially owned by such person or entity, together with its group members, together with
            the name of the record holders of such shares; and

     •
            a certification by such person or entity that neither it nor its group members is a market participant (or, in lieu of such certification,
            the stockholder may deliver a certified list of all of such person's or entity's activities and investments related to the sale,
            marketing, trading, brokering or distribution of electric energy or provision of ancillary services to ITC or to the RTO to which we
            belong).

     Any person, entity or group that fails to deliver the declaration when requested by us to do so will be deemed to be a market participant for
purposes of the voting restrictions and redemption provisions described above, unless that person, entity or group subsequently delivers the
required declaration to ITC Holdings and the board of directors determines that such person, entity or group is not a market participant.

Preferred Stock

      Our Articles of Incorporation authorize our board of directors to establish one or more series of preferred stock. Unless required by law or
by any stock exchange on which our common stock is listed, the authorized shares of preferred stock will be available for issuance without
further action by you. Our board of directors is authorized to determine, with respect to any series of preferred stock, the terms and rights of
that series including:

     •
            the designation of the series;

     •
            the number of shares of the series;

     •
            the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions of
            such series; and

     •
            the voting rights, if any, of the holders of the series.

Provisions That May Discourage Takeovers

     The MBCA and our Articles of Incorporation and bylaws contain provisions that may have the effect of discouraging transactions
involving an actual or threatened change of control. These provisions could protect the continuity of our directors and management and
possibly deprive our stockholders of an opportunity to sell their shares of common stock at prices higher than the prevailing market prices. The
following description is subject in its entirety to applicable provisions of the MBCA and our Articles of Incorporation and bylaws.

                                                                         94
     Availability of Authorized but Unissued Shares. Under the terms of our Articles of Incorporation, our board of directors may issue
shares of authorized common stock without stockholder approval. However, the listing requirements of the NYSE, which would apply so long
as our common stock is listed on the NYSE, require stockholder approval of certain issuances equal to or exceeding 20% of the
then-outstanding voting power or then-outstanding number of shares of common stock. If our board of directors decides to issue shares to
persons supportive of current management, this could render more difficult or discourage an attempt to obtain control of our company by
means of a merger, tender offer, proxy contest or otherwise. Authorized but unissued shares also could be used to dilute the stock ownership of
persons seeking to obtain control of our company, including dilution through a stockholder rights plan of the type commonly known as a
"poison pill," which the board of directors could adopt without a stockholder vote.

     Issuance of Preferred Stock. In addition, our board of directors could issue shares of preferred stock having voting rights that
adversely affect the voting power of holders of our common stock, which could have the effect of delaying, deferring or impeding a change in
control of our company.

     No Cumulative Voting. Under the MBCA, stockholders do not have cumulative voting rights for the election of directors unless the
Articles of Incorporation so provide. Our Articles of Incorporation do not provide for cumulative voting.

     Limitation on Calling Special Meetings of Stockholders. The MBCA allows the board of directors or officers, directors or
stockholders authorized in our bylaws to call special meetings of stockholders. Our bylaws provide that a special meeting may be called by our
board of directors, the chairperson of the board (if the office is filled) or president, and shall be called by the president or secretary at the
written request of stockholders holding a majority of the outstanding shares of stock entitled to vote at the proposed special meeting. Business
to be transacted at a special meeting is limited by our bylaws to the purpose or purposes stated in the notice of the meeting.

     Action without Meeting of Stockholders. If the IT Holdings Partnership, or its affiliates or limited partners or their respective affiliates,
hold less than 35% of the outstanding capital stock of ITC Holdings, any action required or permitted by the MBCA to be taken at a meeting of
stockholders may be taken without a meeting, without prior notice and without a vote, only if consent in writing to such action is signed by the
holders of all of the outstanding capital stock.

     Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our bylaws provide that stockholders seeking to
nominate candidates for election as directors or to bring business before an annual or special meeting of stockholders must provide timely
notice of their proposal in writing to the corporate secretary. Generally, to be timely, a stockholder's notice must be received at our principal
executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the previous year's annual meeting or, in the
case of a special meeting, the date of the special meeting. Our bylaws also specify requirements as to the form and content of a stockholder's
notice. These provisions may impede stockholders' ability to bring matters before an annual or special meeting of stockholders or make
nominations for directors at an annual or special meeting of stockholders.

     Business Combinations and Change of Control.           The MBCA contains statutes which regulate business combinations and changes in
control of Michigan corporations.

      Chapter 7A of the MBCA provides that a business combination subject to Chapter 7A between a covered Michigan corporation or any of
its subsidiaries and a beneficial owner of shares entitled to 10% or more of the voting power of such corporation generally requires the
affirmative vote of 90% of the votes of each class of stock entitled to vote, and not less than 2 / 3 of the votes of each class of stock entitled to
vote (excluding voting shares owned by such 10% or more owner), voting as a separate class.

                                                                          95
These requirements do not apply if (1) the corporation's board of directors approves the transaction before the 10% or more owner becomes
such or (2) the transaction satisfies certain fairness standards, certain other conditions are met and the 10% or more owner has been such for at
least five years. Chapter 7A business combinations include, among other transactions, mergers, significant asset transfers, certain
disproportionate issuances of shares to an interested stockholder, certain reclassifications and recapitalizations disproportionately favorable to
such stockholder, and the adoption of a plan of liquidation or dissolution in which such a stockholder would receive anything other than cash.
Chapter 7A does not restrict the purchase of shares from other stockholders in the open market, through private transactions or acquired
through a tender offer.

     As permitted by Chapter 7A, our Articles of Incorporation provide that we are not governed by the provisions of that Chapter. In order for
ITC Holdings to become subject to the provisions of Chapter 7A, our stockholders would have to vote affirmatively to amend our Articles of
Incorporation.

     Chapter 7B of the MBCA provides that, unless a corporation's articles of incorporation or bylaws provide that Chapter 7B does not apply,
"control shares" of a corporation acquired in a control share acquisition have no voting rights except as granted by the stockholders of the
corporation. "Control shares" are outstanding shares which, when added to shares previously owned by a stockholder, increase such
stockholder's voting power, acting alone or in a group, to exceed three separate thresholds: (1) more than 20% but less than 33 1 / 3 %, (2) more
than 33 1 / 3 % but less than a majority, or (3) more than a majority of the shares entitled to vote for the election of directors. A control share
acquisition must be approved by the affirmative vote of a majority of the votes cast by holders of all shares entitled to vote, excluding shares
owned by the acquiror and certain officers and employee directors. However, no such approval is required for gifts or other transactions not
involving consideration, for a merger to which the corporation is a party or for certain other transactions described in Chapter 7B. Although
control shares include, for the purpose of determining whether the thresholds have been met, shares beneficially owned by persons acting as a
group, the formation of a group does not constitute a control share acquisition of shares held by members of the group.

     Chapter 7B applies to Michigan corporations which have 100 or more stockholders of record, their principal place of business or
substantial assets in Michigan and at least one of the following characteristics: (a) more than 10% of their shares are owned of record by
Michigan residents; (b) more than 10% of their stockholders of record are Michigan residents or (c) 10,000 of their stockholders of record are
Michigan residents.

     As permitted by Chapter 7B, our bylaws provide that we will not be governed by the provisions of that Chapter. In order for ITC Holdings
to become subject to the provisions of Chapter 7B, our board of directors or stockholders may at any time amend our bylaws to cause Chapter
7B to become applicable to us if the statutory conditions for applicability are satisfied.

Limitation on Liability and Indemnification of Officers and Directors

      As permitted by the MBCA, our Articles of Incorporation and bylaws generally limit the personal liability of our directors to us and our
stockholders for breach of their fiduciary duty and require us to indemnify our directors and officers to the fullest extent permitted by the
MBCA. Specifically, our bylaws require us to indemnify directors and officers against expenses (including actual and reasonable attorneys'
fees), judgments, penalties, fines, excise taxes and settlements actually and reasonably incurred in connection with any threatened, pending or
completed action or proceeding brought against a director or officer by reason of the fact that the person is or was a director or officer of ITC
Holdings or, while serving as a director or officer, is or was serving at the request of ITC Holdings as a director, officer, member, partner,
trustee, employee, fiduciary or agent of another enterprise to the maximum extent permitted by, and in accordance with the procedures and
requirements specified in, the MBCA. Our bylaws also provide that indemnification is a contractual right between us and the

                                                                        96
officer or director, who may not be adversely affected by a repeal of the indemnification provisions of our bylaws.

     The MBCA and our bylaws authorize us to purchase and maintain insurance on behalf of a person who is or was a director, officer,
employee or agent of ITC Holdings or who serves at the request of ITC Holdings as a director, officer, partner, trustee, employee or agent of
another enterprise, whether or not we would have the power to indemnify him or her under the bylaws or the laws of the State of Michigan. We
intend to maintain a directors' and officers' insurance policy. The policy will insure directors and officers against unindemnified losses from
certain wrongful acts in their capacities as directors and officers and reimburses us for those losses for which we have lawfully indemnified the
directors and officers.

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to officers and directors pursuant to the
provisions described above or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Transfer Agent and Registrar

     EquiServe Trust Company, N.A. will be the transfer agent and registrar for our common stock.

Listing

     We propose to list our common stock on the New York Stock Exchange under the symbol "ITC."

                                                                        97
                                                   SHARES ELIGIBLE FOR FUTURE SALE

Sales of Restricted Shares

     Upon the completion of this offering, 33,201,974 shares of our common stock will be outstanding. Of these shares, 12,500,000 shares of
our common stock sold in this offering will be freely tradable by persons other than our affiliates, as that term is defined in Rule 144 under the
Securities Act, without restriction or further registration under the Securities Act.

      Approximately            of the shares of common stock that will be outstanding after this offering will be either "restricted securities" or
affiliate securities as such terms are defined in Rule 144. These restricted and affiliate securities may be sold in the future without registration
under the Securities Act to the extent permitted under Rule 144. Approximately              outstanding shares of these restricted or affiliate
securities will be eligible for sale under Rule 144 subject to applicable holding period, volume limitations, manner of sale and notice
requirements set forth in applicable SEC rules, and approximately            shares of the restricted securities will be saleable without regard to
these restrictions under Rule 144(k).

Rule 144

     In general, under Rule 144, a stockholder who has beneficially owned his or her restricted shares for at least one year is entitled to sell,
within any three-month period, a number of shares of our common stock that does not exceed the greater of:

     •
             1% of the then-outstanding shares of our common stock, which is 332,020 shares, upon the completion of this offering; or

     •
             the average weekly trading volume in our common stock on the NYSE during the four calendar weeks preceding the date on which
             notice of such sale is filed, provided certain requirements concerning availability of public information, manner of sale and notice
             of sale are satisfied.

      In addition, our affiliates must comply with the restrictions and requirements of Rule 144, other than the one-year holding period
requirement, in order to publicly sell shares of our common stock which are not restricted securities. A stockholder who is not one of our
affiliates and has not been our affiliate for at least three months prior to the sale and who has beneficially owned restricted shares of our
common stock for at least two years may resell the shares without limitation. In meeting the one-and two-year holding periods described above,
a holder of restricted shares of our common stock can include the holding period of a prior owner who was not our affiliate. The one- and
two-year holding periods described above do not begin to run until the full purchase price or other consideration is paid by the person acquiring
the restricted shares of our common stock from us or one of our affiliates.

Lock-Up Agreements

     We, all of our directors and executive officers and the selling stockholder have agreed that, without the prior written consent of Lehman
Brothers Inc., we and they will not, directly or indirectly, offer, pledge, announce the intention to sell, sell, contract to sell, sell an option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of
any common stock or any securities which may be converted into or exchanged for any common stock or enter into any swap or other
agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock for a period of 180 days
from the date of this prospectus other than permitted transfers.

    Pursuant to the terms of the Management Stockholder's Agreements, the Management Stockholders have the right, upon the sale by the IT
Holdings Partnership of shares of our common

                                                                          98
stock in any underwritten offering to sell a percentage of the shares of our common stock that they hold at the time of the offering and any
shares of our common stock underlying then exercisable options. As a percentage of total shares held, the Management Stockholders would be
eligible to sell a percentage equal to the percentage sold by the IT Holdings Partnership. Otherwise, each Management Stockholder is restricted
from selling any common stock he or she holds until the fifth anniversary of the date of the execution of the Management Stockholder's
respective Management Stockholder's Agreement. The "piggyback" registration rights described above also expire on such fifth anniversary.
See "Certain Relationships and Related Party Transactions—Management Stockholder's Agreements."

     Notwithstanding the foregoing, all of our employee stockholders have agreed to waive their right to exercise their "piggyback" registration
rights with respect to this offering in exchange for certain other rights and/or benefits as further described under "Executive and Non-Executive
Waiver and Agreements" below.

Rule 701

     Under Rule 701, common stock acquired upon the exercise of certain currently outstanding options or pursuant to other rights granted
under our stock plans may be resold, to the extent not subject to lock-up agreements or the restriction on transfer in the management
stockholder's agreement, (1) by persons other than affiliates, beginning 90 days after the effective date of this offering, subject only to the
manner-of-sale provisions of Rule 144, and (2) by affiliates, subject to the manner-of-sale, current public information, and filing requirements
of Rule 144, in each case, without compliance with the one-year holding period requirement of Rule 144.

Stock Options

     Options to purchase up to an aggregate of 2,467,737 shares of our common stock will be outstanding as of the completion of this offering.
Of these options, 802,104 will have vested at or prior to the closing of this offering and 979,071 may vest over the next two years.

     Concurrently with this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act to register all
shares of common stock subject to outstanding stock options and options issuable under our 2003 Stock Option and Purchase Plan. After
expiration of the applicable contractual resale restrictions, shares covered by these registration statements will be eligible for sale in the public
markets, other than shares owned by our affiliates, which may be sold in the public market if they are registered or qualify for an exemption
from registration under Rule 144.

Registration Rights

     We granted registration rights to all of our current stockholders with respect to a percentage of the shares of our common stock that each
of them owns and will own upon the completion of this offering. For a description of the terms of these registration rights, see "Certain
Relationships and Related Party Transactions—Registration Rights Agreement."

     Any sales of substantial amounts of our common stock in the public markets, or the perception that such sale may occur, could adversely
affect the market price of our common stock. See "Risk Factors—Risks Related to this Offering—Future sales of our shares could depress the
market price of our common stock."

                                                                          99
                                  CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX
                                           CONSEQUENCES TO NON-U.S. HOLDERS

     The following is a summary of certain United States federal income and estate tax consequences of the purchase, ownership and
disposition of our common stock as of the date hereof. Except where noted, this summary deals only with common stock that is held as a
capital asset by a non-U.S. holder.

     A "non-U.S. holder" means a person (other than a partnership) that is not for United States federal income tax purposes any of the
following:

     •
            an individual citizen or resident of the United States;

     •
            a corporation (or any other entity treated as a corporation for United States federal income tax purposes) created or organized in or
            under the laws of the United States, any state thereof or the District of Columbia;

     •
            an estate the income of which is subject to United States federal income taxation regardless of its source; or

     •
            a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have
            the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States
            Treasury regulations to be treated as a United States person.

     This summary is based upon provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and
judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income
and estate tax consequences different from those summarized below. This summary does not address all aspects of United States federal
income and estate taxes and does not deal with foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light
of their personal circumstances. In addition, it does not represent a detailed description of the United States federal income and estate tax
consequences applicable to you if you are subject to special treatment under the United States federal income tax laws (including if you are a
United States expatriate, "controlled foreign corporation," "passive foreign investment company," corporation that accumulates earnings to
avoid United States federal income tax or an investor that holds our common stock through a pass-through entity). We cannot assure you that a
change in law will not alter significantly the tax considerations that we describe in this summary.

     If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and the
activities of the partnership. If you are a partner of a partnership holding our common stock, you should consult your tax advisors.

     If you are considering the purchase of our common stock, you should consult your own tax advisors concerning the particular
United States federal income and estate tax consequences to you of the ownership of the common stock, as well as the consequences to
you arising under the laws of any other taxing jurisdiction.

Dividends

     Dividends paid to a non-U.S. holder of our common stock generally will be subject to withholding of United States federal income tax at a
30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the
conduct of a trade or business by the non-U.S. holder within the United States (and, where a tax treaty applies, are attributable to a United
States permanent establishment of the non-U.S. holder) are not subject to the withholding tax, provided certain certification and disclosure
requirements are satisfied. Instead, such dividends are subject to United States federal income tax on a net income basis in the same manner as

                                                                       100
if the non-U.S. holder were a United States person as defined under the Code. Any such effectively connected dividends received by a foreign
corporation may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income
tax treaty.

      A non-U.S. holder of our common stock who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as
discussed below, for dividends will be required to (a) complete Internal Revenue Service Form W-8BEN (or other applicable form) and certify
under penalty of perjury that such holder is not a United States person as defined under the Code or (b) if our common stock is held through
certain foreign intermediaries, satisfy the relevant certification requirements of applicable United States Treasury regulations. Special
certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals.

     A non-U.S. holder of our common stock eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty may
obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service.

Gain on Disposition of Common Stock

     Any gain realized on the disposition of our common stock generally will not be subject to United States federal income tax unless:

     •
            the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, where a tax treaty
            applies, is attributable to a United States permanent establishment of the non-U.S. holder);

     •
            the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition,
            and certain other conditions are met; or

     •
            we are or have been a "United States real property holding corporation" for United States federal income tax purposes.

      An individual non-U.S. holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the
sale under regular graduated United States federal income tax rates. An individual non-U.S. holder described in the second bullet point
immediately above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by United States source capital
losses, even though the individual is not considered a resident of the United States. If a non-U.S. holder that is a foreign corporation falls under
the first bullet point immediately above, it will be subject to tax on its net gain in the same manner as if it were a United States person as
defined under the Code and, in addition, may be subject to the branch profits tax equal to 30% of its effectively connected earnings and profits
or at such lower rate as may be specified by an applicable income tax treaty.

      We believe we are not and do not anticipate becoming a "United States real property holding corporation" for United States federal
income tax purposes although no assurance can be given in this regard as the determination of whether we are a "United States real property
holding corporation" is fact-specific and depends on the composition of our assets. If, contrary to our belief, we are or become a "United States
real property holding corporation," so long as our common stock continues to be regularly traded on an established securities market (such as
the NYSE), only a non-U.S. holder who holds or held (at any time during the shorter of the five year period preceding the date of disposition or
the holder's holding period) more than 5% of our common stock will be subject to United States federal income tax on the disposition of our
common stock.

                                                                        101
Federal Estate Tax

     Common stock held by an individual non-U.S. holder at the time of death will be included in such holder's gross estate for United States
federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.

Information Reporting and Backup Withholding

     We must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to such holder and the
tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such
dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the
provisions of an applicable income tax treaty.

     A non-U.S. holder will be subject to backup withholding for dividends paid to such holder unless such holder certifies under penalty of
perjury that it is a non-U.S. holder, and the payor does not have actual knowledge or reason to know that such holder is a United States person
as defined under the Code, or such holder otherwise establishes an exemption.

     Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale of our common stock
within the United States or conducted through certain United States-related financial intermediaries, unless the beneficial owner certifies under
penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a
United States person as defined under the Code) or such owner otherwise establishes an exemption.

     Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's United
States federal income tax liability provided the required information is furnished to the Internal Revenue Service.

                                                                       102
                                                               UNDERWRITING

     Under the terms of an underwriting agreement, which will be filed as an exhibit to the registration statement of which this prospectus
forms a part, each of the underwriters named below, for whom Lehman Brothers Inc., Credit Suisse First Boston LLC and Morgan Stanley &
Co. Incorporated are acting as representatives, have severally agreed to purchase from us and the selling stockholder the respective number of
shares of common stock opposite their names below:

                                                                                                                           Number of
                   Underwriters                                                                                             Shares

                   Lehman Brothers Inc.
                   Credit Suisse First Boston LLC
                   Morgan Stanley & Co. Incorporated


                   Total                                                                                                   12,500,000

     The underwriting agreement provides that the underwriters' obligations to purchase shares of common stock depends on the satisfaction of
the conditions contained in the underwriting agreement, including:

     •
            the obligation to purchase all of the shares of common stock offered hereby if any of the shares are purchased;

     •
            the representations and warranties made by us to the underwriters are true;

     •
            there is no material change in the financial markets; and

     •
            we deliver customary closing documents to the underwriters.

Option to Purchase Additional Shares

     The selling stockholder has granted the underwriters an option exercisable for 30 days after the date of the underwriting agreement, to
purchase, from time to time, in whole or in part, up to an aggregate of 1,875,000 shares at the public offering price less underwriting discounts
and commissions. This option may be exercised if the underwriters sell more than 12,500,000 shares in connection with this offering. To the
extent that this option is exercised, each underwriter will be obligated, subject to certain conditions, to purchase its pro rata portion of these
additional shares based on the underwriter's percentage underwriting commitment in this offering as indicated in the table above.

Commissions and Expenses

    The following table summarizes the underwriting discounts and commissions that we and the selling stockholder will pay to the
underwriters. The amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase up to an additional
1,875,000 shares from the selling stockholder. The underwriting fee is the difference between the public offering price and the amount the
underwriters pay to purchase the shares from us or the selling stockholder, as the case may be.

                                                                                         No Exercise       Full Exercise

Per share                                                                            $                 $
Total                                                                                $                 $

      The underwriters have advised us that they propose to offer the shares of common stock directly to the public at the public offering price
presented on the cover page of this prospectus, and to selected dealers, who may include the underwriters, at the public offering price less a
selling concession

                                                                        103
not in excess of $        per share. The underwriters may allow, and the selected dealers may reallow, a concession not in excess of
$        per share to brokers and dealers. After this offering, the underwriters may change the offering price and other selling terms.

      We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting
expenses, but excluding the underwriting discounts and commissions, will be approximately $3.7 million. We will pay all costs and expenses
of this offering.

Offering Price Determination

     Prior to this offering, there has been no public market of our common stock. The initial public offering price will be negotiated between
the representatives, the selling stockholder and us. In determining the initial public offering price of our common stock, the representatives will
consider:

     •
             prevailing market conditions;

     •
             our historical performance and capital structure;

     •
             estimates of our business potential and earnings prospects;

     •
             an overall assessment of our management; and

     •
             the consideration of these factors in relation to market valuation of companies in related businesses.

Lock-Up Agreements

     We, all of our directors and executive officers and the selling stockholder have agreed that, without the prior written consent of Lehman
Brothers Inc., we and they will not, directly or indirectly, offer, pledge, announce the intention to sell, sell, contract to sell, sell an option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of
any common stock or any securities which may be converted into or exchanged for any common stock or enter into any swap or other
agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock for a period of 180 days
from the date of this prospectus other than permitted transfers. Pursuant to the terms of the Management Stockholder's Agreements, each
Management Stockholder has agreed to be subject to a similar 180-day restriction on sales of his or her shares.

Indemnification

    We and the selling stockholder have agreed to indemnify the underwriters against liabilities relating to this offering, including liabilities
under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.

Directed Share Program

     At our request, the underwriters have reserved for sale at the initial public offering price up to 625,000 shares offered hereby for officers,
directors, employees and certain other persons associated with us. The number of shares available for sale to the general public will be reduced
to the extent such persons purchase such reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the
general public on the same basis as the other shares offered hereby. We have agreed to indemnify the underwriters against certain liabilities and
expenses, including liabilities under the Securities Act, in connection with the sales of the reserved shares.

                                                                         104
Stabilization, Short Positions and Penalty Bids

      The representatives may engage in over-allotment, stabilizing transactions, syndicate covering transactions, and penalty bids or purchases
for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Securities
Exchange Act of 1934, as amended:

     •
            Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified
            maximum;

     •
            Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been
            completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the
            underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the
            price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be
            covered by the over-allotment option, a naked short position, the position can be closed out only by buying shares in the open
            market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward
            pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in this
            offering; and

     •
            Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally
            sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price
of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of the common stock
may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE or otherwise and,
if commenced, may be discontinued at any time.

     Neither we nor the selling stockholder nor any of the underwriters make any representation or prediction as to the direction or magnitude
of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor the selling
stockholder nor any of the underwriters make representations that the representatives will engage in these stabilizing transactions or that any
transaction, once commenced, will not be discontinued without notice.

Listing

      We will apply to list our common stock on the New York Stock Exchange under the symbol "ITC." In connection with that listing, the
underwriters will undertake to sell the minimum number of shares to the minimum number of beneficial owners necessary to meet the NYSE
listing requirements.

Stamp Taxes

     If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the
laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

Discretionary Sales

     The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total number of
shares offered by them.

                                                                      105
Electronic Distribution

      A prospectus in electronic format may be made available on Internet sites or through other online services maintained by one or more of
the underwriters and/or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may
view the preliminary prospectus and the final prospectus online and, depending upon the particular underwriter or selling group member,
prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for
sale to online brokerage account holders. Any such allocation for online distributions will be made by the representatives on the same basis as
other allocations. In addition, one or more of the underwriters participating in this offering may distribute prospectuses electronically.

     Other than the prospectus in electronic format, information on any underwriter's or selling group member's website and any information
contained in any other website maintained by an underwriter or selling group member is not part of this prospectus or the registration statement
of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter or selling group member in its capacity
as underwriter or selling group member and should not be relied on by investors.

Other Relationships

      Some of the underwriters have performed and may in the future perform investment banking and advisory services for us from time to
time for which they have received or may in the future receive customary fees and expenses. Credit Suisse First Boston LLC, or CSFB, is an
affiliate of one of the lenders under the revolving credit facilities of both ITC Holdings' and ITC. In July 2003, CSFB was the initial purchaser
of ITC Holdings' Senior Notes and ITC's Mortgage Bonds. CSFB also acted as a financial advisor to DTE Energy in connection with our
acquisition of ITC in February 2003.

                                                                       106
                                                             LEGAL MATTERS

      Dykema Gossett PLLC will pass upon the validity of the issuance of our common stock and as to certain matters of Michigan law. Certain
legal matters will be passed upon for us by Simpson Thacher & Bartlett LLP, New York, New York. Certain legal matters will be passed upon
for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. In addition, Stuntz, Davis & Staffier, P.C.,
Washington, D.C. is advising us on matters relating to the FERC and PUHCA. Simpson Thacher & Bartlett LLP is relying upon the opinion of
Dykema Gossett PLLC as to certain matters of Michigan law. Certain partners of Simpson Thacher & Bartlett LLP, members of their families,
related persons and others have an indirect interest, through limited partnerships, who are investors in KKR Millennium Fund, L.P., in less than
1% of the common stock of ITC Holdings.


                                                                  EXPERTS

     The financial statements of ITC Holdings Corp. and subsidiaries as of December 31, 2004 and 2003, and for the year ended December 31,
2004 and the period February 28, 2003 (Date of Acquisition) through December 31, 2003, and the financial statements of International
Transmission Company, LLC (Predecessor ITC) for the two-month period ended February 28, 2003 and the year ended December 31, 2002,
included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their
reports appearing herein, and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and
auditing.


                                        WHERE YOU CAN FIND ADDITIONAL INFORMATION

      We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the issuance of shares of our
common stock being offered hereby. This prospectus, which forms a part of the registration statement, does not contain all of the information
set forth in the registration statement. For further information with respect to us and the shares of our common stock, reference is made to the
registration statement. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily
complete, and, where such contract or other document is an exhibit to the registration statement, each such statement is qualified by the
provisions in such exhibit, to which reference is hereby made. We are not currently subject to the informational requirements of the Exchange
Act. As a result of this offering of the shares of our common stock, we will become subject to the informational requirements of the Exchange
Act, and, in accordance therewith, will file periodic reports and other information with the SEC. The registration statement, such reports and
other information can be inspected and copied at the Public Reference Room of the SEC located at 100 F Street, N.E., Room 1580, Washington
D.C. 20549. Copies of such materials, including copies of all or any portion of the registration statement, can be obtained from the Public
Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public
Reference Room. Such materials may also be accessed electronically by means of the SEC's home page on the Internet ( http://www.sec.gov ).

                                                                      107
                                             ITC HOLDINGS CORP. AND SUBSIDIARIES

                                                INDEX TO FINANCIAL STATEMENTS

PREDECESSOR INTERNATIONAL TRANSMISSION COMPANY, LLC

Report of Independent Registered Public Accounting Firm                                            F-2

Statements of Operations for the Year Ended December 31, 2002 and the Two-Month Period Ended
February 28, 2003                                                                                  F-3

Statement of Member's Interest/Stockholders' Equity for the Year Ended December 31, 2001 and
2002 and the Two-Month Period Ended February 28, 2003                                              F-4

Statements of Cash Flows for the Year Ended December 31, 2002 and the Two-Month Period Ended
February 28, 2003                                                                                  F-5

Notes to Financial Statements                                                                      F-6

ITC HOLDINGS CORP. AND SUBSIDIARIES

Report of Independent Registered Public Accounting Firm                                           F-12

Consolidated Statements of Financial Position at December 31, 2003 and 2004                       F-13

Consolidated Statements of Operations for the Period February 28, 2003 (Date of Acquisition)
through December 31, 2003 and the Year Ended December 31, 2004                                    F-14

Consolidated Statement of Changes in Stockholders' Equity and Comprehensive Income (Loss) for
the Period February 28, 2003 (Date of Acquisition) through December 31, 2003 and the Year Ended
December 31, 2004                                                                                 F-15

Consolidated Statements of Cash Flows for the Period February 28, 2003 (Date of Acquisition)
through December 31, 2003 and the Year Ended December 31, 2004                                    F-16

Notes to Consolidated Financial Statements                                                        F-17

Condensed Consolidated Statements of Financial Position at March 31, 2005 (unaudited)             F-42

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2004 and
2005 (unaudited)                                                                                  F-43

Condensed Consolidated Statement of Changes in Stockholders' Equity for the Three Months Ended
March 31, 2005 (unaudited)                                                                        F-44

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and
2005 (unaudited)                                                                                  F-45

Notes to Condensed Consolidated Financial Statements (unaudited)                                  F-46

                                                                    F-1
                              REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
International Transmission Company, LLC
Detroit, Michigan

     We have audited the balance sheets of International Transmission Company, LLC (the "Company," formerly International Transmission
Company) as of February 28, 2003 and December 31, 2002 (not presented separately herein), and the related statements of operations,
member's interest/stockholder's equity and cash flows for the two-month period ended February 28, 2003 and the year ended December 31,
2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, such financial statements present fairly, in all material respects, the results of operations and cash flows of International
Transmission Company, LLC for the two-month period ended February 28, 2003 and the year ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

Detroit, Michigan
May 28, 2003

                                                                        F-2
                                        INTERNATIONAL TRANSMISSION COMPANY, LLC

                                              STATEMENTS OF OPERATIONS
                                            YEAR ENDED DECEMBER 31, 2002 AND
                                        TWO-MONTH PERIOD ENDED FEBRUARY 28, 2003

                                                         (in thousands)

                                                                                                              Two-month
                                                                                      Year ended             period ended
                                                                                     December 31,            February 28,
                                                                                         2002                    2003

OPERATING REVENUES:                                                           $             137,535      $            20,936

OPERATING EXPENSES:
  Operation and maintenance                                                                   34,699                   5,675
  Depreciation and amortization                                                               21,996                   3,665
  Taxes other than income taxes                                                               15,776                   4,298

     Total operating expenses                                                                 72,471                  13,638


OPERATING INCOME                                                                              65,064                   7,298


INTEREST EXPENSE AND OTHER:
  Interest expense                                                                                58                          —
  Other income                                                                                (1,720 )                      (147 )
  Other expense                                                                                  245                          45

     Total interest expense and other                                                         (1,417 )                      (102 )


INCOME BEFORE INCOME TAXES                                                                    66,481                   7,400

PROVISION FOR INCOME TAXES                                                                    23,268                   3,915


NET INCOME                                                                    $               43,213     $             3,485


                                                See notes to financial statements.

                                                               F-3
                                  INTERNATIONAL TRANSMISSION COMPANY, LLC

                          STATEMENT OF MEMBER'S INTEREST/STOCKHOLDERS' EQUITY
                                   YEAR ENDED DECEMBER 31, 2001 AND 2002
                             AND THE TWO-MONTH PERIOD ENDED FEBRUARY 28, 2003

                                                      (in thousands)

                                                     Common Stock

                                                                                  Retained           Member's
                                                                                  Earnings            Interest

                                            Shares              Amount                                                   Total

BALANCE, DECEMBER 31, 2001                   60,000       $         326,383   $       13,194     $               —   $    339,577
Net income                                       —                       —            43,213                     —         43,213

BALANCE, DECEMBER 21, 2002                   60,000 $                326,383 $        56,407 $               — $          382,790
Net income                                       —                        —            3,485                 —              3,485
Change in legal status (Note 1)             (60,000 )               (326,383 )       (59,892 )          386,275                —
Member distribution (Note 4)                     —                        —               —             (36,766 )         (36,766 )
Member contribution (Note 4)                     —                        —               —               1,406             1,406

BALANCE, FEBRUARY 28, 2003                           —    $              —    $              —   $      350,915      $    350,915


                                          See notes to financial statements.

                                                              F-4
                                          INTERNATIONAL TRANSMISSION COMPANY, LLC

                                                STATEMENTS OF CASH FLOWS
                                              YEAR ENDED DECEMBER 31, 2002 AND
                                          TWO-MONTH PERIOD ENDED FEBRUARY 28, 2003

                                                                   (in thousands)

                                                                                              Year ended        Two-month period
                                                                                             December 31,        ended February
                                                                                                 2002               28, 2003

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                             $         43,213       $         3,485
  Adjustments to reconcile net income to net cash provided by operating
  activities:
      Depreciation and amortization                                                                21,996                 3,665
      Deferred income taxes                                                                           646                  (827 )
      Change in operating assets and liabilities:
          Accounts receivable                                                                     (51,347 )            106,523
          Inventory                                                                                  (190 )               (450 )
          Regulatory assets                                                                        (2,469 )               (105 )
          Accounts payable and other current liabilities                                           59,862             (124,235 )
          Income taxes payable and deferred income taxes                                           20,031              (18,041 )

              Net cash provided by operating activities                                            91,742               (29,985 )

CASH FLOWS FROM INVESTING ACTIVITIES:
  Change in affiliated note receivable                                                            (72,355 )              72,355
  Proceeds from sales of assets                                                                       304                    12
  Expenditures for property, plant and equipment                                                  (13,901 )              (3,099 )
  Costs of removal                                                                                 (1,459 )              (2,517 )

      Net cash used in investing activities                                                       (87,411 )              66,751

CASH FLOWS FROM FINANCING ACTIVITIES
  Cash effect of assets and liabilities transferred to DTE Energy                                       —               (36,766 )
  Net short-term borrowings from DTE Energy                                                         (4,339 )                 —

      Net cash used in financing activities                                                         (4,339 )            (36,766 )


NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                 (8 )                 —

CASH AND CASH EQUIVALENTS—Beginning of period                                                               8                —


CASH AND CASH EQUIVALENTS—End of period                                                  $              —       $            —


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest                                                                 $              58      $            —

   Cash paid to DTE Energy for federal income taxes                                      $          2,838       $            —


                                                          See notes to financial statements.

                                                                         F-5
                                           INTERNATIONAL TRANSMISSION COMPANY, LLC

                                               NOTES TO FINANCIAL STATEMENTS
                                               YEAR ENDED DECEMBER 31, 2002 AND
                                           TWO-MONTH PERIOD ENDED FEBRUARY 28, 2003

1. ORGANIZATION AND BASIS OF PRESENTATION

      As of February 28, 2003, International Transmission Company, LLC (the "Company," formerly International Transmission Company)
was a wholly owned subsidiary of DTE Energy Company ("DTE Energy"). In December 2002, DTE Energy entered into a definitive
agreement with ITC Holdings Corp., an entity that was then affiliated with each of Kohlberg Kravis Roberts & Co. L.P. and Trimaran Fund
Management, L.L.C., which agreement provided for the sale of the Company for approximately $610 million in cash (the "Stock Purchase
Agreement"). Following receipt of regulatory approvals and resolution of other contingencies, the sale closed on February 28, 2003. The
Company is regulated by the Federal Energy Regulatory Commission (the "FERC") for rates, conditions of service and operations relating to
the transmission of electricity.

     Effective February 28, 2003, International Transmission Company, a Michigan corporation, changed its legal structure to a Michigan
limited liability company. In conjunction with the change in legal structure to a limited liability company, the Company elected to retain its
federal tax status.

     These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.
These financial statements were prepared prior to the closing of sale transaction and do not give effect to the change in basis relative to the sale
transaction.

      The Company's electricity transmission system is operated pursuant to an arrangement established by the Midwest Independent
Transmission System Operator ("MISO") (see Note 3). MISO, a FERC-approved regional transmission organization ("RTO"), which has
responsibility for the oversight and coordination of transmission service for a substantial portion of the midwestern United States and
Manitoba, Canada. MISO establishes regional operating and market practices and scheduling protocols. It also administers the transmission
tariff under which all customers procure transmission service. ITC coordinates with MISO with respect to ITC's operations, as well as the need
for capital investment in its electricity transmission system. Prior to June 1, 2002, The Detroit Edison Company ("Detroit Edison"), an affiliate
of the Company, billed and collected revenues from its retail customers as then authorized in its bundled rates approved by the Michigan Public
Service Commission ("MPSC"). These bundled rates included a transmission component. The Company received transmission revenues from
Detroit Edison and other wholesale customers based on FERC-approved rates. Beginning June 1, 2002, MISO as billing agent for the Company
bills and collects revenues from wholesale customers, including Detroit Edison, at FERC-approved rates. These revenues are then remitted to
the Company. In an order issued February 20, 2003 authorizing DTE Energy to transfer the Company's transmission facilities to the purchaser,
the FERC accepted a rate level of $1.075 per kilowatt ("kW")/month through December 31, 2004. Thereafter, rates will be derived in
accordance with Attachment O of the MISO transmission tariff.

2. SIGNIFICANT ACCOUNTING POLICIES

     Cash Equivalents —The Company considers all unrestricted highly liquid temporary investments with an original maturity of three
months or less at the date of purchase to be cash equivalents.

      Inventories —Materials and supplies inventories are valued at average cost.

     Property, Plant and Equipment —Property, plant and equipment ("PP&E"), is stated at original cost. The cost of properties retired is
charged to accumulated depreciation. The composite depreciation rate

                                                                        F-6
was 2.8% for the year ended December 31, 2002 and for the two-month period ended February 28, 2003, which includes depreciation primarily
on transmission station equipment, towers and overhead and underground lines that have a useful life ranging from 36 to 43 years. Depreciation
is computed over the estimated useful lives of the assets using the straight-line method for financial reporting purposes and accelerated methods
for income tax reporting purposes, as approved by MPSC and as approved by the FERC effective when ITC became a subsidiary of DTE
Energy.

      Revenues —Revenues from deliveries of electricity are recognized as services are provided. The Company accrues revenues for
transmission services provided but unbilled at month-end.

    Income Taxes —DTE Energy and subsidiaries file a consolidated federal income tax return. Income taxes are computed as if the
Company were filing on a stand-alone basis. As discussed in Note 1, in connection with the change in legal structure to a limited liability
company, the Company filed an election with the Internal Revenue Service to be classified as a taxable entity.

      Use of Estimates —The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

       New Accounting Pronouncement —In July 2001, the Financial Accounts Standards Board issued Statement of Financial Accounting
Standards No. 143 ("SFAS 143"), "Accounting for Asset Retirement Obligations." SFAS 143 requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its then present value, and the
capitalization cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation
for its recorded amount or incurs a gain or loss upon settlement. SFAS 143 is effective for fiscal years beginning after June 15, 2002. There was
no net impact to the Company's financial statements upon adoption on January 1, 2003.

3. REGULATORY MATTERS

       Regulation —The Company is subject to the regulatory jurisdiction of the FERC, which issues orders pertaining to rates, recovery of
certain costs, including the costs of transmission assets and regulatory assets, conditions of service, accounting and operating-related matters,
the issuance of securities and the direct or indirect change of control over ITC and its transmission facilities.

     The transmission operations of the Company meet the criteria of Statement of Financial Accounting Standards ("SFAS") No. 71,
"Accounting for the Effects of Certain Types of Regulation." This accounting standard recognizes the cost-based rate setting process, which
results in differences in the application of generally accepted accounting principles between regulated and non-regulated businesses. SFAS
No. 71 requires the recording of regulatory assets and liabilities for certain transactions that would have been treated as revenue and expense in
non-regulated businesses.

                                                                         F-7
Regulatory assets represent costs that will probably be recovered from customers through the rate setting process. Continued applicability of
SFAS No. 71 requires that rates be designed to recover specific costs of providing regulated services and can be charged to and collected from
customers. Management believes that currently available facts support the continued application of SFAS No. 71. Future regulatory changes or
changes in the competitive environment could result in the Company discontinuing the application of SFAS No. 71 and require the write-off of
the portion of any regulatory asset or liability that was no longer probable of recovery through regulated rates.

       Regulatory Assets —Regulatory assets recorded at February 28, 2003 and December 31, 2002 include costs incurred related to Regional
Transmission Organization ("RTO") dues and consulting costs associated with the implementation and structuring of the Company to comply
with FERC requirements and Michigan Public Act 141 of 2000 ("PA 141"). Management believes these types of costs are probable of recovery
in future MISO transmission rates as prudently incurred costs based on FERC Docket No. RT01-88-000.

     During 2001, the Company paid Alliance RTO start-up costs of $2.5 million in exchange for promissory notes due in 2002. The first
payment due in March 2002 has not yet been received. In the event the amounts are not collected from Alliance RTO or its successor, these
costs are expected to be recovered through the FERC rate setting process as an RTO start-up expense. Accordingly, the amounts have been
presented as regulatory assets. In accordance with the terms of the Stock Purchase Agreement, any future recovery of this regulatory asset
would be remitted to DTE Energy.

       Regional Transmission Organization —PA 141 and Public Act 142 of 2000 were passed by the State of Michigan and among other
things, required Detroit Edison to have its transmission assets operated independently by joining a FERC-approved RTO or divesting its
interest in transmission to an independent transmission owner by December 31, 2001. During 2001, the Company was formed and
subsequently joined the Alliance RTO. On August 31, 2001, in Docket Nos. ER01-3000, EC01-137 and RT01-101, the Company informed the
FERC that it was withdrawing from the Alliance RTO under the terms of the Alliance RTO Transmission Owners' Agreement. In the same
filing, the Company sought FERC approval of an agreement between the Company and MISO to become an independent transmission
company under the MISO structure. On January 31, 2002, the Company obtained FERC approval of its request in Docket No. EC02-28 to
transfer its obligations under the Joint Open Access Transmission Tariff ("JOATT") to MISO. Subsequently, on February 20, 2003 in Docket
Nos. ER03-366-000 and ER03-368-000, the FERC conditionally approved conforming the JOATT to the MISO Open Access Transmission
Tariff ("OATT") and in Docket No. ER03-368-000, the FERC approved the cancellation of the JOATT. The MISO OATT specifies the rates
and terms for transmission service on the Company's transmission system.

      Tariff Rates —The Company's initial transmission tariff was approved as a Detroit Edison Open Access Transmission Tariff by the
FERC in Docket No. OA96-78-000 on July 15, 1999. This tariff resulted in approximately $93 million of revenue per year. Detroit Edison
requested FERC approval to transfer its OATT to the Company on May 26, 2000 in Docket No. ER00-2622 and the FERC authorized this
transfer on July 6, 2000.

                                                                     F-8
     The Detroit Edison and Consumer Energy Company individual OATT tariff rates were incorporated in the JOATT, a transmission tariff
that was accepted by the FERC in Docket Nos. OA97-249 and ER97-1166 on February 28, 1997 and became effective on March 1, 1997 that
covers service of both Detroit Edison and Consumers Energy Company, a neighboring utility. Detroit Edison requested the FERC to transfer its
portion of the JOATT to the Company on July 7, 2000 in Docket No. ER00-3094. The FERC accepted this transfer on September 5, 2000.

      On July 28, 2000, the Company filed a new tariff at FERC, in Docket No. ER00-3295, which requested the approval of an innovative rate
that would have resulted in approximately $138 million of revenue per year. On September 28, 2000, the FERC conditionally accepted this rate
filing. However, this rate was not implemented. On September 10, 2001, the Company requested FERC approval to suspend the
implementation of the innovative rate until the Company became a part of an RTO and independent of any market participant.

      The transmission rates of certain transmission owners participating in the MISO are established using a FERC-approved rate setting
formula set forth in Attachment O of the MISO's OATT. These rates are calculated primarily using information in each respective transmission
owner's annual FERC Form No. 1 Report ("FERC Form 1"). On May 31, 2002, the MISO submitted a filing ("May 31 Filing") containing
certain specific and limited adjustments to the Company's Attachment O inputs based on 2001 FERC Form 1 data. On July 19, 2002, the FERC
issued an order accepting the May 31 Filing, suspending the proposed revisions to the Company's Attachment O inputs, subject to refund, and
establishing hearing and settlement procedures for the establishment of the Company's transmission rates. This proceeding is currently still in
settlement discussions. However, during this time, the rate charged for transmission service was $1.075 per kW/month. The Company does not
expect the resolution to have a materially adverse affect on the financial statements.

4. RELATED PARTY TRANSACTIONS

      The Company and Detroit Edison have entered into a Master Services Agreement (the "Agreement") whereby Detroit Edison performs
maintenance, asset construction and day-to-day management of transmission operations and administration on behalf of the Company. Detroit
Edison receives compensation for the wages and benefits for employees performing work on behalf of the Company and for costs of
construction or maintenance directly related to the Company. Amounts incurred related to the Agreement totaled $50 million and $11.1 million
for the year ended December 31, 2002 and for the two-month period ended February 28, 2003, respectively, a portion of which was capitalized
in PP&E.

     The current Agreement provides generally for all required services and that consideration for the services shall include a 25% overhead
fee as a percentage of the charges specified in the Detroit Edison Accounting Policies and Guidelines for 2002 and 2003 ("Charges"). In
addition, the Agreement provides for an additional 9.5% fee as a percentage of the sum of Charges and overhead fee in 2003.

     The Company's transmission services are primarily provided to Detroit Edison for retail customers, and Detroit Edison in turn invoices the
end user of the electricity. Revenues earned from Detroit Edison totaled $118 million and $17.9 million for the year ended December 31, 2002
and for the

                                                                      F-9
two-month period ended February 28, 2003, respectively. Detroit Edison is the Company's largest customer, comprising the majority of its
revenue. Accounts receivable also includes amounts that were collected on the Company's behalf by Detroit Edison and not yet remitted to the
Company, via MISO.

      The Company's property taxes are currently combined with Detroit Edison's when assessed by taxing authorities. The Company's share of
all property taxes assessed to Detroit Edison is calculated by and remitted to Detroit Edison for ultimate payment to those taxing authorities.
The Company's share of personal property taxes for the year ended December 31, 2002 and for the two-month period ended February 28, 2003,
was determined to be approximately 7% and 11.8%, respectively, calculated as the Company's weighted average percentage of Detroit Edison's
total personal and real property balances. The Company's share of real property taxes for the two-month period ended February 28, 2003, was
determined by specifically identifying the taxes assessed on the Company's real property. All property tax amounts billed to the Company prior
to February 28, 2003 were paid to Detroit Edison as of February 28, 2003.

     The Company is allocated certain overhead charges from DTE Energy relating to DTE Energy's corporate expenses. The amounts
included in operation and maintenance for these charges are $11 million and $0.9 million for the year ended December 31, 2002 and for the
two-month period ended February 28, 2003, respectively.

      On February 28, 2003, prior to the sale of the Company, all DTE Energy affiliate receivable and payable balances and current federal and
state taxes, were settled with or assigned to DTE Energy. As such, all amounts were recorded as a member distribution of $36.8 million. For
the year ended December 31, 2002, the Company had outstanding trade accounts receivable and accounts payable with DTE Energy and
affiliates totaling $94 million and $121 million, respectively.

     The Company has a working capital loan/investing agreement with DTE Energy. The maximum amount of borrowings permitted by the
Company under this agreement is $17.0 million. Variable interest rates on the receivables and payables were 1.21% and 1.16% at
December 31, 2002 and February 28, 2003, respectively. At December 31, 2002, the Company had a receivable balance of $72 million. This
agreement was terminated on February 28, 2003.

     On February 28, 2003, prior to the sale of the Company, DTE Energy made a non-cash contribution of certain internally-developed
software assets necessary to the operations of the Company. The software assets were transferred at their net book value of approximately
$1.4 million.

5. INCOME TAXES

     The Company establishes deferred tax assets and liabilities, as appropriate, for all temporary differences. As the temporary differences
reverse, the related accumulated deferred income taxes are reversed. The Company has an income tax sharing arrangement with DTE Energy.
Under this arrangement, DTE Energy is responsible for payment of all federal and state income taxes. Income tax liabilities paid by DTE
Energy on behalf of the Company are repaid to DTE Energy. The Company's deferred income tax liability at December 31, 2002 and
February 28, 2003 relates to depreciation of PP&E, property taxes and regulatory assets.

                                                                     F-10
    The effective tax rate varied from the statutory federal income tax rate due to the following

                                                                                                                         Two-month
                                                                                    Year ended                          period ended
                                                                                 December 31, 2002                    February 28, 2003

                                                                                          (in thousands, except tax rates)


              Federal income tax effective rate                                                   35.0 %                               52.9 %
              Income tax expense at 35% statutory rate                       $                  23,268 $                              2,590
              Adjustment for property-related differences                                           —                                 1,325

              Total                                                          $                  23,268        $                       3,915


     Federal income tax expense is as follows:

                                                                                                                         Two-month
                                                                                    Year ended                          period ended
                                                                                 December 31, 2002                    February 28, 2003

                                                                                                     (in thousands)


              Current income taxes                                           $                   22,622       $                           4,742
              Deferred income taxes                                                                 646                                    (827 )

              Total                                                          $                   23,268       $                           3,915


6. MICHIGAN ELECTRIC COORDINATED SYSTEM

     The Company and Consumers Energy Company have maintained their existing interconnections and continue to offer joint transmission
service on their respective transmission systems pursuant to the terms of a JOATT, and to operate their interconnected transmission systems as
a single electric control area, known as the Michigan Electric Coordinated System, pursuant to the Michigan Electric Coordinated Systems
Transmission Interconnection and Control Area Operating Agreement, between Consumers Energy Company and ITC, dated February 7, 2001.
The Company earned $2 million and $0.3 million in rental income from Consumers Energy Company for operation of the joint control area for
the year ended December 31, 2002 and for the two-month period ended February 28, 2003, respectively, which is recorded in Operating
Revenues.

7. COMMITMENT AND CONTINGENCY

    The Company is involved in routine litigation in the normal course of its business. Such proceedings are not expected to have a material
adverse impact on the Company's results of operations, financial position or liquidity.

                                                                      F-11
The accompanying consolidated financial statements give effect to (1) a 3.34-for-one split of the outstanding common stock of ITC Holdings
Corp., that will be effected immediately prior to the completion of the offering, (2) the adjustment of the number of shares authorized under the
Amended and Restated 2003 Stock Purchase and Option Plan for Key Employees of ITC Holdings Corp. and its Subsidiaries, as well as the
share amounts of stock grants under such plan and the number of options and exercise prices of options under such plan as a result of the
3.34-for-one stock split, which will be effected immediately prior to the completion of the offering, and (3) the Amended and Restated Articles
of Incorporation, which will authorize 100 million shares of common stock prior to the completion of the offering. The following report is in
the form which will be furnished by Deloitte & Touche LLP, an independent registered public accounting firm, upon the effective dates of the
stock split of the Company's outstanding common stock, the Amended and Restated 2003 Stock Purchase and Option Plan for Key Employees
of ITC Holdings Corp. and its Subsidiaries, and the Amended and Restated Articles of Incorporation, all as described in Note 18 to the
consolidated financial statements and assuming that from March 21, 2005 to the dates of such completion no other material events have
occurred that would affect the accompanying consolidated financial statements or required disclosure therein.


                              REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

"To the Board of Directors and Stockholders of
ITC Holdings Corp.
Novi, Michigan

     We have audited the accompanying consolidated statements of financial position of ITC Holdings Corp. and subsidiaries (the "Company")
as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders' equity and comprehensive income
(loss), and cash flows for the year ended December 31, 2004 and the period from February 28, 2003 (date of acquisition) through December 31,
2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of ITC Holdings Corp.
and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for the year ended December 31,
2004 and the period from February 28, 2003 (date of acquisition) through December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.

Detroit, Michigan
March 21, 2005 (June , 2005 as to the effects of the stock split, the Amended and Restated 2003 Stock Purchase and Option Plan for Key
Employees of ITC Holdings Corp. and its Subsidiaries and the Amended and Restated Articles of Incorporation, described in Note 18)"

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Detroit, Michigan
June 9, 2005

                                                                       F-12
                             ITC HOLDINGS CORP. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                  DECEMBER 31, 2003 AND 2004

                                                                                 2003                        2004

                                                                              (in thousands, except number of shares)


ASSETS
Current assets
  Cash and cash equivalents                                               $          8,139             $        14,074
  Accounts receivable                                                               15,936                      15,614
  Inventory                                                                          8,045                      13,785
  Other                                                                                885                         954

           Total current assets                                                     33,005                      44,427
Property, plant and equipment (net of accumulated depreciation and
amortization of $388,271 and $402,026, respectively)                               459,393                     513,684
Other assets
   Goodwill                                                                        178,414                     176,039
   Regulatory assets—acquisition adjustment                                         58,077                      55,047
   Other regulatory assets                                                           9,986                       8,053
   Deferred financing fees (net of accumulated amortization of $330
   and $1,294, respectively)                                                         6,215                        6,058
   Deferred income taxes                                                             4,306                        2,871
   Other                                                                             2,261                        2,668

           Total other assets                                                      259,259                     250,736

TOTAL ASSETS                                                              $        751,657             $       808,847

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable                                                        $         19,738             $        29,788
  Accrued interest                                                                  10,198                      10,294
  Accrued taxes                                                                      5,909                      12,831
  Point-to-point revenue due to customers                                            9,907                      12,903
  Other                                                                              4,886                       5,728

          Total current liabilities                                                 50,638                      71,544
Accrued pension liability                                                            2,708                       3,783
Accrued postretirement liability                                                     1,960                       2,338
Deferred compensation liability                                                      1,744                       2,329
Regulatory liabilities                                                              46,411                      43,941
Deferred payables                                                                    6,197                       4,887
Long-term debt                                                                     450,753                     483,423
STOCKHOLDERS' EQUITY
Common stock, without par value, 100,000,000 shares authorized,
30,457,037 and 30,679,240 shares issued and outstanding, respectively              200,956                     203,459
Unearned compensation—restricted stock                                              (1,656 )                    (1,411 )
Accumulated deficit                                                                 (8,054 )                    (5,446 )

Total stockholders' equity                                                         191,246                     196,602

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $        751,657             $       808,847


                                 See notes to consolidated financial statements.

                                                      F-13
                                           ITC HOLDINGS CORP. AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                  FOR THE PERIOD FEBRUARY 28, 2003 (DATE OF ACQUISITION)
                                             THROUGH DECEMBER 31, 2003 AND
                                          FOR THE YEAR ENDED DECEMBER 31, 2004

                                                                                           2003                                          2004

                                                                                                 (in thousands, except per share data)


OPERATING REVENUES                                                                $                102,362                $                     126,449
OPERATING EXPENSES
  Operation and maintenance                                                                          22,902                                      24,552
  General and administrative                                                                         26,342                                      24,412
  Depreciation and amortization                                                                      21,463                                      29,480
  Taxes other than income taxes                                                                      11,499                                      20,840

         Total operating expenses                                                                    82,206                                      99,284


OPERATING INCOME                                                                                     20,156                                      27,165


OTHER EXPENSES (INCOME)
  Interest expense                                                                                   21,630                                      25,585
  Allowance for equity funds used in construction                                                      (322 )                                    (1,691 )
  Loss on extinguishment of debt                                                                     11,378                                          —
  Other income                                                                                         (197 )                                    (1,289 )
  Other expense                                                                                          27                                         283

         Total other expenses                                                                        32,516                                      22,888


INCOME (LOSS) BEFORE INCOME TAXES                                                                   (12,360 )                                     4,277

INCOME TAX PROVISION (BENEFIT)                                                                       (4,306 )                                     1,669


NET INCOME (LOSS)                                                                 $                  (8,054 )             $                       2,608


Weighted average common shares outstanding—basic                                                29,339,394                                 30,183,886
Net income (loss) per share—basic                                                 $                  (0.27 )              $                      0.09

Weighted average common shares outstanding—diluted                                              29,339,394                                 30,899,548
Net income (loss) per share—diluted                                               $                  (0.27 )              $                      0.08

                                              See notes to consolidated financial statements.

                                                                   F-14
                                       ITC HOLDINGS CORP. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                        AND COMPREHENSIVE INCOME (LOSS)
                              FOR THE PERIOD FEBRUARY 28, 2003 (DATE OF ACQUISITION)
                                         THROUGH DECEMBER 31, 2003 AND
                                        THE YEAR ENDED DECEMBER 31, 2004

                                                                                                        Accumu-
                                                                                                          lated
                                                                                                          other
                                                                                                        compre-
                                                                                                         hensive
                                                                                                         income
                                                                                                          (loss)

                                                                    Unearned
                                                                     compen-
                                                                      sation
                                                                    restricted
                                                                       stock

                                                                                                                                       Compre-
                                                                                                                                       hensive
                                                                                                                                        income
                                        Common Stock                                                                                     (loss)

                                                                                       Accumu-
                                                                                         lated
                                                                                        deficit

                                    Shares         Amount                                                                Total

                                                                   (in thousands, except number of shares)


 INITIAL CAPITAL
CONTRIBUTION AT
FEBRUARY 28, 2003:
   Common stock                     28,216,729 $       211,000 $              — $                 — $              — $    211,000 $               —
   Restricted stock                     53,491             400              (400 )                —                —           —                  —


BALANCE, FEBRUARY 28,
2003                                28,270,220         211,400              (400 )             —                   —      211,000             —
  Net loss                                  —               —                 —            (8,054 )                —       (8,054 )       (8,054 )
  Issuance of common stock           1,031,763           7,675                —                —                   —        7,675             —
  Conversion of subordinated
  notes to common stock               803,060            6,005               —                    —                —         6,005                —
  Issuance of restricted stock        351,994            2,434           (1,505 )                 —                —           929                —
  Amortization of restricted
  stock                                      —              —                249                  —                —          249                 —
  Distribution to stockholders               —         (27,095 )              —                   —                —      (27,095 )               —
  Other                                      —             537                —                   —                —          537                 —
  Unrealized losses on cash flow
  hedge, net of tax of $914                  —              —                    —                —          (1,698 )            —        (1,698 )
  Reclassification of unrealized
  loss on cash flow hedge to
  other regulatory assets, net of
  tax of $914                                —              —                    —                —          1,698               —         1,698

  Comprehensive loss                         —              —                    —                —                —             — $      (8,054 )


BALANCE, DECEMBER 31,
2003                                30,457,037 $       200,956 $         (1,656 ) $        (8,054 )                — $    191,246             —
  Net income                                                —                —              2,608                  —        2,608          2,608
  Issuance of common stock            155,065            1,020               —                 —                   —        1,020             —
 Issuance of restricted stock        70,482         521             (506 )          —        —         15      —
 Forfeiture of restricted stock      (3,343 )       (22 )             22            —        —         —       —
 Amortization of restricted
 stock                                   —           —               729            —        —        729      —
 Other                                   —          984               —             —        —        984      —

 Comprehensive income                    —           —                 —            —        —         — $   2,608


BALANCE, DECEMBER 31,
2004                              30,679,240 $   203,459 $         (1,411 ) $   (5,446 ) $   — $   196,602


                                                            F-15
                                          ITC HOLDINGS CORP. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 FOR THE PERIOD FEBRUARY 28, 2003 (DATE OF ACQUISITION)
                                            THROUGH DECEMBER 31, 2003 AND
                                         FOR THE YEAR ENDED DECEMBER 31, 2004

                                                                                                      2003                    2004

                                                                                                             (in thousands)


CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net income (loss)                                                                                 $          (8,054 ) $              2,608
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
  Depreciation and amortization expense                                                                      21,463              29,480
  Amortization of deferred financing fees and discount                                                        1,695               1,094
  Stock-based compensation expense                                                                            1,056               1,262
  Loss on extinguishment of debt                                                                             11,378                  —
  Deferred income taxes                                                                                      (4,306 )             1,435
  Deferred payables                                                                                           6,197              (1,309 )
  Accrued pension and postretirement liabilities                                                              1,042               1,453
  Regulatory assets                                                                                           6,769               1,933
  Allowance for equity funds used in construction                                                              (322 )            (1,691 )
  Other                                                                                                      (2,706 )              (257 )
  Changes in current assets and liabilities, exclusive of changes shown separately (Note 2)                  18,664              13,638

  Net cash provided by operating activities                                                                  52,876              49,646
CASH FLOWS FROM INVESTING ACTIVITIES
  Expenditures for property, plant and equipment                                                         (26,805 )              (76,779 )
  Acquisition of ITC                                                                                    (618,306 )                   —
  ITC Acquisition-related transaction fees                                                               (15,698 )                   —
  Bridge loan to Conjunction                                                                              (1,100 )                   —
  Other                                                                                                     (900 )                  308

          Net cash used in investing activities                                                         (662,809 )              (76,471 )
CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of long-term debt                                                                             891,593                     46
  Repayment of long-term debt                                                                           (435,000 )                   —
  Borrowings under revolving credit facilities                                                                —                  54,500
  Repayments of revolving credit facilities                                                                   —                 (22,000 )
  Distributions to stockholders                                                                          (27,095 )                   —
  Acquisition-related debt issuance costs                                                                (20,878 )                   —
  Other debt issuance costs                                                                               (6,611 )                 (806 )
  Interest rate swap termination cost                                                                     (2,612 )                   —
  Issuance of common stock                                                                               218,675                  1,020

          Net cash provided by financing activities                                                      618,072                 32,760

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                     8,139                  5,935
CASH AND CASH EQUIVALENTS—Beginning of period                                                                    —                   8,139

CASH AND CASH EQUIVALENTS—End of period                                                           $           8,139     $        14,074


                                                See notes to consolidated financial statements.

                                                                     F-16
                                               ITC HOLDINGS CORP. AND SUBSIDIARIES

                                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               FOR THE PERIOD FEBRUARY 28, 2003 (DATE OF ACQUISITION)
                           THROUGH DECEMBER 31, 2003 AND THE YEAR ENDED DECEMBER 31, 2004

1.   ORGANIZATION

      ITC Holdings Corp. ("Holdings") was incorporated for the purpose of acquiring International Transmission Company, LLC ("Predecessor
ITC") from DTE Energy Company ("DTE Energy"). Following the approval of the transaction by the Federal Energy Regulatory Commission
(the "FERC"), Holdings acquired the outstanding ownership interests of Predecessor ITC (the "Acquisition") under the terms of the Stock
Purchase Agreement (the "Stock Purchase Agreement") for $610.0 million in cash plus direct transaction costs on February 28, 2003.
Immediately following the Acquisition, Predecessor ITC was merged with and into ITC Holdings Merger Sub, Inc., an entity formed by
Holdings, and ITC Holdings Merger Sub, Inc. was then renamed International Transmission Company ("ITC"). ITC was the surviving entity
following the merger. The financial information presented herein for Holdings and its consolidated subsidiaries ("ITC Holdings Corp.," "we,"
"our," and "us") includes results of operations for the period from February 28, 2003 through December 31, 2003 (the "2003 Period"), the
initial period of operations of ITC as a subsidiary of Holdings. The 2003 Period is a ten-month period and therefore not directly comparable to
the results of operations for the year ended December 31, 2004.

     ITC is an independently-owned electricity transmission company with assets located in southeastern Michigan. ITC is regulated by the
FERC for rates, conditions of service, and electricity transmission operations, among other aspects of the business. The Midwest Independent
System Operator ("MISO") bills and collects revenues from ITC's customers at FERC-approved rates.

2.   SIGNIFICANT ACCOUNTING POLICIES

      Principles of Consolidation —Holdings consolidates majority owned subsidiaries and investments in entities for which it has effective
management control, which consists of ITC and New York Transmission Holdings Corporation ("NYTHC") as of December 31, 2003 and
2004. We eliminate all intercompany balances and transactions.

      Accounts Receivable —We recognize losses for uncollectible accounts based on specific identification of any such items. We did not
have an accounts receivable reserve balance at December 31, 2003 or 2004.

      Inventories —Materials and supplies inventories are valued at average cost.

      Property, Plant and Equipment —Property, plant and equipment ("PP&E"), is stated at its original cost when first placed in service. The
gross book value of assets retired less salvage proceeds is charged to accumulated depreciation. Depreciation is computed over the estimated
useful lives of the assets using the straight-line method for financial reporting purposes and accelerated methods for income tax reporting
purposes. Our composite depreciation rate was 2.8% and 3.1% for the 2003 Period and 2004, respectively, which includes depreciation
primarily on transmission station equipment, towers and overhead and underground lines that have a useful life ranging from 36 to 43 years.
Depreciation and amortization expense relating to PP&E was $18.9 million and $26.4 million for the 2003 Period and 2004, respectively. The
portion of depreciation expense related to asset removal costs is credited to regulatory liabilities. ITC capitalizes an allowance for the cost of
equity and borrowings used during construction in accordance with FERC regulations. The allowance for the cost of borrowed funds of
$0.1 million and $0.4 million for the 2003 Period and 2004, respectively, was credited to interest

                                                                       F-17
expense. The allowance for the cost of equity funds of $0.3 million and $1.7 million for the 2003 Period and 2004, respectively, was credited to
other income.

       Software Costs —We capitalize the costs associated with computer software we develop or obtain for use in our business which is
included in PP&E. We amortize computer software costs on a straight-line basis over the expected period of benefit once the installed software
is ready for its intended use.

      Long-Lived Assets —Long-lived assets that we own are reviewed for impairment whenever events or changes in circumstances indicate
the carrying amount of an asset may not be recoverable. If the carrying amount of the asset exceeds the expected future cash flows generated by
the asset, an impairment loss is recognized resulting in the asset being written down to its estimated fair value.

       Regulation —ITC is subject to the regulatory jurisdiction of the FERC, which issues orders pertaining to rates, recovery of certain costs,
including the costs of transmission assets and regulatory assets, conditions of service, accounting, financing authorization and operating-related
matters. The electricity transmission operations of ITC meet the criteria of Statement of Financial Accounting Standards ("SFAS") 71,
"Accounting for the Effects of Certain Types of Regulation." This accounting standard recognizes the cost-based rate setting process, which
results in differences in the application of generally accepted accounting principles between regulated and non-regulated businesses. SFAS 71
requires the recording of regulatory assets and liabilities for certain transactions that would have been treated as revenue and expense in
non-regulated businesses. Regulatory assets represent costs that will be included as a component of tariff rates and regulatory liabilities
represent estimated asset removal costs to be incurred in the future or amounts to be refunded to customers. The financial statements include
assumptions for the regulatory treatment of certain matters that are subject to review by the FERC and would be adjusted in the period where a
different regulatory treatment is required.

     The Michigan Public Service Commission does not have jurisdiction over ITC's rates or terms and conditions of service, but it continues
to maintain jurisdiction over siting of new transmission lines. Pursuant to Michigan Public Acts 197 and 198 of 2004, ITC has the right as an
independent transmission company to condemn property in the State of Michigan for the purposes of building new transmission facilities.

     Cash and Cash Equivalents —We consider all unrestricted highly liquid temporary investments with an original maturity of three
months or less at the date of purchase to be cash equivalents.

                                                                      F-18
Consolidated Statements of Cash Flows

                                   Cash flows for the period February 28, 2003 through December 31, 2003
                                                    and the year ended December 31, 2004

                                                                                                                   2003                    2004

                                                                                                                          (in thousands)


Change in current assets and liabilities, exclusive of changes shown separately:
  Accounts receivable                                                                                        $       (6,472 ) $                 322
  Inventory                                                                                                          (3,189 )                (5,739 )
  Other current assets                                                                                                 (885 )                   (75 )
  Accounts payable                                                                                                   11,544                  12,387
  Accrued interest                                                                                                   10,198                      96
  Accrued taxes                                                                                                      (1,192 )                 6,922
  Point-to-point revenue due to customers                                                                             9,907                   2,996
  Other current liabilities                                                                                          (1,247 )                (3,271 )

Total change in current assets and liabilities                                                               $       18,664        $         13,638

Supplementary cash flow information—
  Interest paid (excluding interest capitalized)                                                             $            8,852    $         22,403

Noncash investing and financing activities:
  Conversion of restricted stock to Holdings' common stock                                                                —                      943
  Conversion of Holdings debt to Holdings' common stock                                                                6,005                      —
  Conversion of Conjunction loan to Class B units in Conjunction                                                      (1,100 )                    —
  ITC purchase price adjustment resulting in reduced PP&E                                                                 —                   (1,431 )

      Revenues —Revenues from transmission of electricity are recognized as services are provided. ITC's revenues consist primarily of
network revenues, which are calculated monthly by multiplying 1) the peak network load achieved during any one hour each month by 2) the
appropriate tariff rate as calculated under the MISO rate setting mechanism, known as Attachment O ("Attachment O") by 3) the number of
days in that month divided by the number of days in the year by 4) 12.

      Property Taxes —We use a calendar year method of accounting for property taxes. Property tax expense is accrued on a straight-line
basis over the calendar year immediately following the tax lien date of December 31 of each year.

      Deferred Financing Fees —The costs related to the issuance of long-term debt are deferred and amortized over the life of the debt issue.
In accordance with FERC regulations, the unamortized discount, premium and expense related to debt redeemed with a refinancing at ITC are
amortized over the remainder of the original life of the issue retired, and the unamortized amounts are classified as other regulatory assets. For
Holdings, unamortized discount, premium and expense related to debt redeemed with a refinancing are recorded as expense. Amortization of
deferred financing fees for the 2003 Period and 2004 of $1.6 million and $1.0 million, respectively, was recorded in interest expense.

       Goodwill —We comply with SFAS 142, "Goodwill and Other Intangible Assets," which addresses the financial accounting and reporting
standards for goodwill and other intangible assets subsequent to their acquisition. This accounting standard requires that goodwill be reviewed
at least annually for

                                                                      F-19
impairment. We completed our annual goodwill impairment test as of October 1, 2004 and determined that no impairment exists.

      Stock-Based Compensation —We have a stock-based compensation plan under which we make various stock-based awards, including
options and restricted stock. Stock-based awards are accounted for under the recognition and measurement principles of SFAS 123,
"Accounting for Stock-Based Compensation." Compensation expense for employees is recorded for stock options and restricted stock awards
based on their fair value at the grant date, and is amortized over the expected vesting period. The grant date is the date at which our
commitment to issue stock awards to the employee arises, which is generally the later of the board approval date, the date of hire of the
employee or the date of the employee's compensation agreement which contains the commitment to issue the award. For non-employees,
expense is recognized based on the fair value of the options at each financial reporting date until the related services are completed upon
vesting of the options. The effect of forfeitures on unvested awards is recognized in the period they occur.

      Comprehensive Income —Comprehensive income is the change in common stockholders' equity during a period arising from
transactions and events from non-owner sources, including net income. Amounts recorded as other comprehensive income during the 2003
Period consisted of unrealized losses associated with cash flow hedging activities and the reclassification of those unrealized losses to other
regulatory assets upon termination of the hedge.

       Income Taxes —Deferred income taxes are recognized for the expected future tax consequences of events that have been recognized in
the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the differences between the financial
statement and tax bases of various assets and liabilities using the tax rates in effect for the year in which the differences are expected to reverse.

       Use of Estimates —The preparation of the consolidated financial statements in accordance with accounting principles generally accepted
in the United States of America ("GAAP") requires us to make estimates and assumptions that impact the reported amounts of assets, liabilities,
revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from these estimates.

      Reclassifications —We reclassified certain prior year balances to match the current year's financial statement presentation, primarily to
separately present amounts that had been previously combined in one financial statement line item.

      Other accounting policies impacting our financial statements —See the following notes for other accounting policies impacting our
financial statements:

Note 7                Long-Term Debt
Note 11               Retirement Benefits and Assets Held in Trust
Note 12               Deferred Compensation Plans

                                                                        F-20
3.   RECENT ACCOUNTING PRONOUNCEMENTS

Share-based Payment

     SFAS 123R, "Share-Based Payment" requires all entities to recognize compensation expense in an amount equal to the fair value of
share-based payments made to employees, among other requirements. SFAS 123R is effective in the first reporting period beginning after
June 15, 2005. We have already adopted the expense recognition provisions of SFAS 123 for our stock-based compensation and have not
concluded whether the transition to SFAS 123R will have a material effect on our consolidated financial statements.

Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity

     SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" establishes standards for
how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS 150 requires that
certain financial instruments be classified as liabilities that were previously considered equity. The adoption of this standard as of July 1, 2003,
as required, had no impact on our consolidated financial statements.

4.   ACQUISITIONS AND DISPOSITIONS

      Acquisition of ITC —On February 28, 2003, Holdings acquired all of Predecessor ITC's outstanding ownership interests from DTE
Energy for $610.0 million in cash plus direct transaction costs. Prior to the Acquisition, Holdings had no operations. In accordance with
provisions of the Stock Purchase Agreement the agreement that sets various terms and conditions of the Acquisition, the purchase price was
adjusted based on a closing balance sheet of Predecessor ITC at February 28, 2003. Holdings paid $8.3 million in additional consideration for
the Acquisition during the 2003 Period, primarily relating to incremental PP&E balances of Predecessor ITC at February 28, 2003 compared
with the preliminary PP&E balances estimated at the time of the closing of the Acquisition. During 2004, Holdings and DTE Energy negotiated
additional PP&E, inventory, and other closing balance sheet items relating to the Acquisition. These negotiations are not final; however,
Holdings' best estimate of the outcome has been recorded resulting in an increase in the purchase price of $1.4 million. There may be additional
purchase price adjustments as Holdings and DTE Energy finalize their negotiations or continue to identify differences from the closing balance
sheet at February 28, 2003.

      Holdings accounted for the Acquisition using the purchase method. The excess purchase price, including transaction costs, over the fair
value of net assets acquired was classified as goodwill. The Acquisition was treated as a taxable transaction, adjusting the tax basis of the assets
acquired to fair value pursuant to an election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended. The goodwill
amount of $176.0 million is expected to be deductible for federal income tax purposes, with the majority of the goodwill being amortized over
fifteen years for federal income tax purposes.

                                                                        F-21
    The following table summarizes the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed in the
Acquisition:

(in thousands)
Current assets                                                                                                               $         14,449
Property, plant and equipment (net)(a)                                                                                                433,536
Other regulatory assets                                                                                                                 5,883
Regulatory assets—acquisition adjustment                                                                                               60,602

Total assets acquired                                                                                                                 514,470


Current liabilities                                                                                                                      (231 )
Regulatory liabilities                                                                                                                (45,227 )
Other liabilities                                                                                                                     (11,775 )

Total liabilities assumed                                                                                                             (57,233 )

Net assets acquired                                                                                                                   457,237
Goodwill(a)                                                                                                                           176,039

Acquisition price, including transaction costs                                                                               $        633,276



(a)
       Includes purchase price adjustments recorded during 2004 relating to PP&E.



      Conjunction —We acquired a majority membership interest in Conjunction LLC ("Conjunction") in the 2003 Period, subsequent to
approval by the FERC, through our newly-formed wholly-owned subsidiary, NYTHC. The majority interest was acquired in October 2003 for
$2.0 million, consisting of the conversion of a loan receivable to membership interest of $1.1 million, cash of $0.9 million and direct
transaction costs of $0.3 million. Additional membership interests were acquired in December 2003 for cash of $1.0 million. The investment in
Conjunction was used to fund initial planning and development of a 130-mile high-voltage direct current transmission line to be built within
New York State to transmit power to the metropolitan New York City area. On July 16, 2004, the Conjunction agreement was amended in
several respects, including providing substantial participating rights to the minority membership interest holder of Conjunction. As a result,
NYTHC discontinued the application of consolidation accounting for Conjunction and prospectively began to apply equity method accounting
in July 2004. Conjunction had goodwill of $3.8 million, accounts payable of $3.9 million and other current liabilities of $0.3 million that were
no longer included in the consolidated statement of financial position beginning in July 2004 due to the discontinuation of consolidation
accounting for Conjunction. The impact from Conjunction for the 2003 Period resulted in losses of $1.6 million ($1.0 million after tax). The net
impact from Conjunction for 2004 resulted in losses of $1.7 million ($1.1 million after tax), comprised of general and administrative expenses
of $2.4 million offset by the reversal of previously recognized losses upon application of the equity method of $0.7 million recorded in other
income. In November 2004, Conjunction announced that the development of the proposed transmission line had been terminated. We have no
remaining investment balance relating to Conjunction at December 31, 2004 and therefore no equity method losses to record prospectively.

                                                                      F-22
      Goodwill —The following table summarizes the changes in the carrying amount of goodwill during the 2003 Period and 2004:

                                                                                              2003                    2004

                                                                                                     (in thousands)


Goodwill balance, beginning of period                                                   $      170,171        $        178,414
Changes to goodwill:
  Acquisition of Conjunction                                                                         3,806                   —
  ITC purchase price adjustments                                                                     4,437                1,431
  Deconsolidation of Conjunction                                                                        —                (3,806 )

Goodwill balance, end of period                                                         $      178,414        $        176,039


5.   REGULATORY MATTERS

       Regulatory Assets—Acquisition Adjustment —The regulatory assets-acquisition adjustment balance at December 31, 2004 of
$55.1 million is the remaining unamortized balance of the portion of the ITC purchase price in excess of the fair value of net assets acquired
approved for inclusion in future rates by the FERC. ITC earns a return on the remaining unamortized balance of the regulatory asset-acquisition
adjustment. The FERC based the original amount on the accumulated deferred income taxes recorded by Predecessor ITC at February 28,
2003, the benefit of which remained with DTE. The original amount recorded for this regulatory asset of $60.6 million is being recognized in
rates and amortized on straight-line basis over 20 years. ITC recorded amortization expense of $2.5 million and $3.0 million during the 2003
Period and 2004, respectively, which is included in depreciation and amortization.

       Other Regulatory Assets —During the 2003 Period, ITC amortized $4.9 million of regulatory assets relating to MISO and ITC start-up
activities to general and administrative expense. Additionally, during the 2003 Period, approximately $1.0 million of costs previously deferred
as regulatory assets relating to MISO Integrated Control Center System were reimbursed by MISO. There was no remaining balance for this
regulatory asset at December 31, 2003.

     In July 2003, unamortized debt expense of $10.9 million related to ITC debt redeemed with the July 2003 refinancing was reclassified
from deferred financing fees to other regulatory assets. ITC amortized $0.9 million and $1.9 million of this regulatory asset to interest expense
during the 2003 Period and 2004, respectively. The balance of this regulatory asset at December 31, 2004 was $8.1 million. ITC does not earn a
return on this regulatory asset, and the amounts are amortized on a straight-line basis through February 2009.

      Regulatory Liabilities —At December 31, 2004, we had recorded an estimated $43.9 million for accrued asset removal costs related to
ITC, included in regulatory liabilities. Removal expenditures incurred are charged to regulatory liabilities.

      Tariff Rates/Attachment O —ITC's transmission rates are regulated by the FERC. On February 20, 2003, the FERC issued an order
authorizing the Acquisition and approving transmission rates for ITC, including a fixed transmission rate of $1.075 per kilowatt ("kW") per
month through December 31,

                                                                      F-23
2004 (the "Freeze Period"). This fixed rate was less than the rate that would otherwise have applied upon closing of the Acquisition if rates had
reflected ITC's FERC-approved capital structure, rate base and other components of revenue requirements under Attachment O.

      Attachment O is a FERC-approved cost of service formula rate template that is completed annually by all transmission-owning members
of the MISO, except for members who have alternative rate structures approved by the FERC. Under Attachment O, transmission rates are
determined annually based on an allowed rate of return on rate base (weighted average cost of capital), network load, operating expenses
(including taxes) and depreciation and amortization, among other components. The financial information used to complete ITC's Attachment O
filing is taken primarily from ITC's most recently completed FERC Form 1. In its February 20, 2003 order, the FERC accepted ITC's proposed
return of 13.88% on the equity portion of its capital structure. ITC's proposed capital structure targeting 60% equity and 40% debt was also
accepted by the FERC although Attachment O uses ITC's actual capital structure from its FERC Form 1. Since Attachment O is a
FERC-approved rate formula, no FERC filing is required to put the calculated rates into effect.

     During the Freeze Period, the difference between the revenue ITC would have been entitled to collect under Attachment O and the actual
revenue ITC received based on the fixed transmission rate in effect during the Freeze Period (the "Revenue Deferral") will not be recognized as
revenue until billed. The cumulative Revenue Deferral at December 31, 2004 was $59.7 million ($38.8 million net of tax). At the end of each
year, the cumulative Revenue Deferral, net of taxes, will be included in rate base on Attachment O to determine ITC's annual revenue
requirement. The Revenue Deferral will be included ratably in rates over the five-year period beginning June 1, 2006. The Revenue Deferral
and related taxes are not reflected as an asset or as revenue in the 2003 or 2004 consolidated financial statements, because the Revenue Deferral
does not meet the criteria to be recorded as a regulatory asset in accordance with SFAS 71.

    The February 20, 2003 order required ITC to submit a compliance filing explaining the Attachment O deferral calculation and its proposed
accounting for the Acquisition. On March 24, 2003, ITC submitted its compliance filing. On July 2, 2003 the FERC issued an order that
accepted the March 24, 2003 compliance filing but deferred action on ITC's proposed accounting.

     On April 29, 2004, the FERC issued an order accepting in part and modifying in part ITC's proposed accounting and related rate setting
items contained in its March 24, 2003 compliance filing and directed ITC to make a further compliance filing to revise its Attachment O tariff
sheets in accordance with the accounting items. On May 28, 2004, ITC submitted its compliance filing in response to the April 29, 2004 order.
On July 14, 2004 the FERC accepted ITC's May 28, 2004 compliance filing. On September 16, 2004, and as amended on September 20, 2004,
MISO and ITC submitted a joint filing to incorporate the tariff revisions accepted on July 14, 2004 into the MISO Open Access Transmission
Tariff. On November 16, 2004, the FERC accepted the submittals for filing.

     Beginning January 1, 2005, ITC began to charge a rate of $1.587 per kW/month as calculated under the Attachment O formula based
primarily on FERC Form 1 data for the year ended December 31, 2003. Beginning June 1, 2005, and each June 1 thereafter, ITC will charge
rates based primarily on data from the previous year's FERC Form 1. ITC's rates beginning June 1, 2006 will be

                                                                      F-24
based primarily on FERC Form 1 data for the year ended December 31, 2005 and will also include recovery of a portion of the Revenue
Deferral. ITC's rates will be based on Attachment O through January 31, 2008, subject to further extension by the FERC.

      Other —On September 4, 2003, ITC was represented and testimony was submitted in hearings before the Energy and Commerce
Committee of the United States House of Representatives investigating the August 14, 2003 electrical blackout. These hearings together with
other investigations may result in further regulatory proceedings and initiatives that would affect the operations of the transmission grid.

    On September 15, 2003, the FERC issued an order authorizing an increase in the aggregate amount of long-term debt securities that ITC
may issue from $200 million to $210 million subject to various conditions.

    On February 13, 2004, ITC filed an application with the FERC to issue additional debt and/or equity securities in an aggregate amount of
$50 million. On March 10, 2004, the FERC issued a letter order authorizing the issuance of such securities subject to various terms and
conditions.

      On July 13, 2004, Michigan Public Acts 197 and 198 were signed. This legislation clarifies that independent transmission companies such
as ITC may use the eminent domain procedures, where necessary and appropriate, to site new transmission lines. This legislation updated
existing Michigan statutes to ensure independent transmission companies have the same eminent domain authority possessed by traditional
utilities. It allows independent transmission companies to gain siting approval for new transmission facilities from the Michigan Public Service
Commission.

     On October 29, 2004, MISO and certain MISO transmission owners, other than ITC, filed revisions to their Attachment O tariff sheets
with respect to the treatment of long-term interest on advances from associated companies. Under the previous version of Attachment O,
long-term interest on advances from associated companies was not included as a component of revenue requirements. The revision, as filed,
would have allowed ITC to include long-term interest on advances from associated companies in its weighted average cost of borrowings and
therefore, such interest would be a component of revenue requirements. On November 1, 2004, ITC and MISO filed a corresponding revision
to ITC's Attachment O tariff sheet. In December 2004, the FERC accepted this filing. This Attachment O revision did not have an impact on
ITC in 2004.

     ITC is actively involved in numerous other FERC proceedings either directly or jointly with MISO as part of its ongoing operations.

6.   PROPERTY, PLANT AND EQUIPMENT

     PP&E-net consisted of the following at December 31, 2003 and 2004:

                                                                                               2003                    2004

                                                                                                      (in thousands)


Property, plant and equipment
  Transmission plant in service                                                           $      821,839       $        886,918
  Construction work in progress                                                                   17,851                 20,568
  Other                                                                                            7,974                  8,224

Total                                                                                            847,664                915,710
Less accumulated depreciation and amortization                                                  (388,271 )             (402,026 )

Property, plant and equipment-net                                                         $      459,393       $        513,684


                                                                      F-25
 7.   LONG-TERM DEBT

      The following amounts were outstanding at December 31, 2003 and 2004:

                                                                                                                  2003                      2004

                                                                                                                         (in thousands)


Holdings 5.25% Senior Notes due July 15, 2013 (net of discount of $1,134 and $1,015, respectively)         $        265,866       $            265,985
ITC 4.45% First Mortgage Bonds Series A due July 15, 2013 (net of discount of $113 and $101,
respectively)                                                                                                       184,887                    184,899
Holdings revolving credit facility                                                                                       —                       7,500
ITC revolving credit facility                                                                                            —                      25,000
Other                                                                                                                    —                          46

                                                                                                                    450,753                    483,430
Less amounts due within one year                                                                                         —                           7

                                                                                                           $        450,753       $            483,423

      The annual maturities of long-term debt as of December 31, 2004 are as follows:

                                                                                                                                      (in thousands)
2005                                                                                                                     $                           7
2006                                                                                                                                            25,007
2007                                                                                                                                             7,507
2008                                                                                                                                                 7
2009                                                                                                                                                 5
2010 and thereafter                                                                                                                            450,897

Total long-term debt                                                                                                     $                     483,430

      On February 28, 2003, Holdings and ITC borrowed funds in order to partially finance the Acquisition. On July 16, 2003, those variable
rate term loans were refinanced with ITC's issuance of $185 million 4.45% First Mortgage Bonds Series A due July 15, 2013 (the "ITC
Mortgage Bonds"). The bonds are issued under ITC's First Mortgage and Deed of Trust, and therefore have the benefit of a first mortgage lien
on substantially all of ITC's property. Holdings issued $267 million unsecured 5.25% Senior Notes due July 15, 2013 (the "Holdings Senior
Notes") and used a portion of the proceeds to make a $27.1 million distribution to its stockholders in August 2003. Holdings recorded a loss on
extinguishment of debt of $11.4 million in connection with the July refinancing.

     We are in compliance with our debt covenants under the ITC Mortgage Bonds and Holdings Senior Notes. Additionally, in order to incur
additional indebtedness at Holdings or any of its Subsidiaries the Holdings Senior Notes require that we maintain a funds from operations to
interest ratio of 2.0 to 1.0 after including the effect of the new indebtedness. Funds from operations is computed using operating cash flows less
the change in working capital plus cash paid for interest.

    Based on the borrowing rates currently available to us for loans with similar terms and average maturities, the fair value of the ITC
Mortgage Bonds and Holdings Senior Notes is $443.0 million at

                                                                      F-26
December 31, 2004. The total book value of the ITC Mortgage Bonds and Holdings Senior Notes is $450.9 million at December 31, 2004. Our
other long-term debt of $32.5 million included in total long-term debt is comprised of variable rate instruments the fair value of which
approximates book value.

     In July 2003, a convertible variable rate loan of $5.9 million obtained as part of the Acquisition financing and accrued interest of
$0.1 million were converted into 803,060 shares of Holdings' common stock.

     ITC had $25.0 million outstanding under its revolving credit facility at December 31, 2004 with a variable weighted-average interest rate
of 3.66% and a maturity date of February 28, 2006. The commitment under this facility was $25.0 million at December 31, 2004.

     In January 2005, ITC amended and restated its revolving credit facility to increase the total commitment thereunder to $65.0 million with
an option to increase the commitments to $75.0 million, subject to ITC's ability to obtain the agreement of willing lenders. The maturity date
was amended to March 19, 2007. ITC's revolving credit facility is supported by the issuance of $75.0 million of ITC's Series B Mortgage
Bonds, which in turn are supported by a first mortgage lien on substantially all of ITC's property. ITC must not exceed a total debt to total
capital ratio of 60% under its revolving credit facility.

     Holdings had borrowings of $7.5 million under its revolving credit facility at December 31, 2004 with a variable weighted-average
interest rate of 3.91% and a maturity date of March 19, 2007. The commitment under this facility was $40.0 million at December 31, 2004.

     In January 2005, Holdings amended and restated its revolving credit facility to increase the total commitments thereunder to $47.5 million,
with an option to increase the commitments to $50.0 million, subject to Holdings' ability to obtain the agreement of willing lenders. We must
not exceed a debt to total capital ratio of 85% under Holdings' revolving credit facility. Holdings' revolving credit facility is secured by a
perfected first priority pledge of 158 of the 1,000 outstanding shares of common stock of ITC.

      Interest Rate Swap — On March 31, 2003, ITC entered into an interest rate swap to limit sensitivity to market interest rate risk associated
with the variable rate term loan that ITC obtained to partially finance the Acquisition. The interest rate swap was designated as a cash flow
hedge under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities." The fixed rate under the swap agreement was 5.41%
with an original notional of $185 million and a maturity date of March 30, 2007. On July 16, 2003, the interest rate swap was terminated in
conjunction with the refinancing of ITC's long-term debt. The termination cost of the cash flow hedge of $2.6 million was reclassified to other
regulatory assets.

8.   EARNINGS PER SHARE

      We report both basic and diluted earnings per share. Basic earnings (loss) per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share assumes the issuance of potentially
dilutive shares of

                                                                       F-27
common stock during the period resulting from the exercise of common stock options and vesting of restricted stock awards. A reconciliation
of both calculations for the 2003 Period and 2004 is presented in the following table:

                                                                                                      2003                               2004

                                                                                                      (in thousands, except shares outstanding
                                                                                                              and per share amounts)


Basic earnings (loss) per Share
  Weighted average common shares outstanding                                                             29,339,394                          30,183,886
  Net income (loss)                                                                         $                (8,054 )        $                    2,608

   Earnings (loss) per share of common stock based on number of shares outstanding          $                    (0.27 )     $                     0.09

Diluted earnings (loss) per Share
   Weighted average common shares outstanding                                                            29,339,394                          30,183,886
   Incremental shares of stock-based awards                                                                      —                              715,662
   Average number of dilutive shares outstanding                                                         29,339,394                          30,899,548
   Net income (loss)                                                                        $                (8,054 )        $                    2,608

   Earnings (loss) per share of common stock assuming issuance of incremental
   shares                                                                                   $                    (0.27 )     $                     0.08

     Diluted earnings (loss) per share for the 2003 Period has been corrected subsequent to the original issuance of these financial statements to
exclude the 274,388 incremental shares of stock-based awards and the 328,391 incremental shares for assumed conversion of debt that were
anti-dilutive in accordance with GAAP.

     Compensation arrangements for certain employees and non-employees included a commitment by each of these individuals to purchase a
stated number of shares of common stock of Holdings. Prior to the actual purchase of such shares, the commitment is treated as a stock
subscription, and because such shares effectively participate in dividends, share amounts of 66,125 and 82,858 for the 2003 Period and 2004,
respectively, have been included in the weighted average common shares outstanding used to determine both basic and diluted earnings per
share.

     Basic net income (loss) per share excludes 405,485 and 337,273 shares of restricted common stock at December 31, 2003 and 2004,
respectively, that were issued and outstanding, but had not yet vested as of such dates.

     Options to purchase approximately 2.0 million shares of common stock at December 31, 2003 were not included in the computation of
diluted earnings per share because the options' exercise price was greater than the average fair value of the shares of common stock during the
respective periods, making them anti-dilutive.

                                                                      F-28
9.    INCOME TAXES

     Our effective tax rate varied from the statutory federal income tax rate due to permanent differences between the book and tax treatment of
various transactions as follows:

                                                                                                                              2003                    2004

                                                                                                                                     (in thousands)


Income tax expense (benefit) at 35% statutory rate                                                                    $          (4,326 ) $              1,497
Lobbying expenses not deductible                                                                                                     46                    147
Other—net                                                                                                                           (26 )                   25

Deferred income tax provision (benefit)                                                                               $          (4,306 ) $              1,669

      Deferred income tax assets (liabilities) consisted of the following at December 31, 2003 and 2004:

                                                                                                           2003                              2004

                                                                                                                     (in thousands)


Property, plant and equipment                                                                   $                 (4,346 )       $                  (21,948 )
Tax loss carryforward                                                                                             10,390                             26,161
Goodwill                                                                                                          (3,527 )                           (6,279 )
Debt issue costs                                                                                                  (3,495 )                           (2,819 )
Property taxes                                                                                                     3,666                              5,264
Other—net                                                                                                          1,618                              2,492

                                                                                                $                   4,306        $                    2,871

Deferred income tax liabilities                                                                 $                 (11,368 )      $                  (31,994 )
Deferred income tax assets                                                                                         15,674                            34,865

Net deferred tax assets                                                                         $                   4,306        $                    2,871


     We have federal income tax operating loss carryforwards of $74.7 million as of December 31, 2004 that we expect to use within the next
several years. The tax loss carryforwards of $36.1 million and $38.6 million relating to the 2003 Period and 2004, respectively, expire in 2023
and 2024, respectively.

10.   LEASES

     ITC has operating lease agreements for office space rental which expire in May 2008. ITC has two successive one-year options to renew a
portion of the leased premises upon expiration solely at ITC's discretion. Additionally, ITC has operating leases for office equipment and
storage facilities. Rent expense during the 2003 Period and 2004 was $0.3 million and $0.5 million, respectively, recorded in general and
administrative expenses.

                                                                      F-29
      Future minimum lease payments under the leases at December 31, 2004 were:

                                                                                                                                (in thousands)

2005                                                                                                                      $                       771
2006                                                                                                                                              823
2007                                                                                                                                              836
2008                                                                                                                                              351
2009 and thereafter                                                                                                                                —

Total minimum lease payments                                                                                              $                      2,781

11.     RETIREMENT BENEFITS AND ASSETS HELD IN TRUST

Retirement Plan Benefits

     We have a defined benefit retirement plan for eligible employees, comprised of a traditional final average pay plan and a cash balance
plan. The defined benefit retirement plan is noncontributory, covers substantially all employees, and provides retirement benefits based on the
employees' years of benefit service. The traditional final average pay plan benefits factor average final compensation and age at retirement in
determining retirement benefits provided. The cash balance plan benefits are based on annual employer contributions and interest credits. We
have also established two supplemental nonqualified, noncontributory, unfunded retirement benefit plans for selected management employees.
The plans provide for benefits that supplement those provided by our other retirement plans.

    Our policy is to fund the defined benefit retirement plan by contributing the minimum amount required by the Employee Retirement
Income Security Act of 1974, as amended, and additional amounts deemed appropriate. We expect to contribute $1.6 million to the defined
benefit retirement plan relating to 2004 in 2005. The minimum funding requirement relating to 2004 is $0.8 million.

    As outlined in the Stock Purchase Agreement, we assumed certain retirement benefit obligations from DTE Energy as part of the
Acquisition and the parties agreed that DTE Energy would transfer $3.6 million into our pension trust. The transfer occurred on December 29,
2003. The plan assets consisted of the following at September 30, 2003 and 2004:

                                                                                                                   2003                 2004

Asset Category

Receivable from DTE Energy pension                                                                                    100.0 %                 —
Fixed income securities                                                                                                  —                  59.5 %
Equity securities                                                                                                        —                  40.5 %

Total                                                                                                                 100.0 %              100.0 %


     The investment objective of the retirement benefit plan is to maximize total return with moderate tolerance for risk. Targeted asset
allocation is equally weighted between equity and fixed income securities. Management believes that this strategy will provide flexibility for
liquidity purposes but also

                                                                      F-30
establishes some investment for growth. We began implementing this strategy in July 2004. As of September 30, 2004, this strategy had not yet
been fully implemented as the plan was in the process of gradually transferring its investments from guaranteed deposits to equity and fixed
income securities.

     We had an initial measurement date of February 28, 2003 to determine the pension benefit obligation recorded at the date of Acquisition
and have an annual measurement date of September 30.

     Net pension cost for the 2003 Period and 2004 includes the following components:

                                                                                                                     2003                      2004

                                                                                                                             (in thousands)


Service cost                                                                                              $                  474         $              769
Interest cost                                                                                                                398                        511
Expected return on plan assets                                                                                              (211 )                     (254 )
Amortization of prior service cost                                                                                           445                        533
Amortization of actuarial gain                                                                                                —                          (3 )

Net pension cost                                                                                          $                 1,106        $            1,556


     The following table reconciles the obligations, assets and funded status of the plans as well as the amounts recognized as pension liability
in the consolidated statement of financial position as of the measurement date of September 30:

                                                                                                              2003                            2004

                                                                                                                        (in thousands)


Accumulated benefit obligation September 30                                                          $                5,005          $                7,000

Projected benefit obligation February 28, 2003 and
October 1, 2003, respectively                                                                        $                7,650          $                8,517
Service cost                                                                                                            288                             769
Interest cost                                                                                                           285                             511
Actuarial net loss                                                                                                      294                             324
Plan amendments                                                                                                          —                              (82 )

Projected benefit obligation September 30                                                            $                8,517          $               10,039

Plan assets at fair value February 28, 2003 and
October 1, 2003, respectively                                                                                         3,628                           3,628
Actual return on plan assets                                                                                             —                              148
Employer contributions                                                                                                   —                              250

Plan assets at fair value September 30                                                               $                3,628          $                4,026

Funded status                                                                                        $               (4,889 )        $               (6,013 )
Unrecognized prior service cost                                                                                       2,491                           1,875
Unrecognized actuarial net loss                                                                                         206                             640

Prepaid (accrued) cost                                                                               $               (2,192 )        $               (3,498 )


                                                                      F-31
     We recognized an additional minimum pension liability as required under SFAS 87, "Employers' Accounting for Pensions." An additional
pension liability may be required when the accumulated benefit obligation of the plan exceeds the fair value of plan assets. Under SFAS 87, we
recorded an additional minimum pension liability and recorded an intangible pension asset of $0.5 million and $0.3 million in other assets as of
December 31, 2003 and 2004, respectively, in our consolidated statement of financial position.

     Actuarial assumptions used to determine the benefit obligation are listed below:

                                                             February 28, 2003             September 30, 2003             September 30, 2004
                                                             Benefit Obligation            Benefit Obligation             Benefit Obligation

Discount rate                                                                     6.25 %                        6.0 %                          5.75 %
Annual rate of salary increases                                                    3.5 %                        3.5 %                           3.5 %

     Actuarial assumptions used to determine the benefit cost for the 2003 Period and 2004 are listed below:

                                                                                                                        2003              2004

Discount rate                                                                                                             6.25 %                   6%
Annual rate of salary increases                                                                                            3.5 %                 3.5 %
Expected long-term rate of return on plan assets                                                                             7%                    7%

     The expected long-term rate of return was estimated using market benchmarks for equities and bonds applied to the plan's target asset
allocation. The expected return on plan assets component of net pension cost was determined based on the expected long-term rate of return on
plan assets and the fair value of plan assets.

     At December 31, 2004, the projected benefit payments for the defined benefit retirement plan are $75,000 in 2005, $110,000 in 2006,
$151,000 in 2007, $3.8 million in 2008, $493,000 in 2009 and a total of $3.6 million for 2010 through 2014. The projected payments were
calculated using the same assumptions as those used to calculate the benefit obligations described above.

      We also sponsor a defined contribution retirement savings plan. Participation in this plan is available to substantially all employees. We
match employee contributions up to certain predefined limits based upon eligible compensation and the employee's contribution rate. The cost
of this plan was $0.4 million and $0.6 million for the 2003 Period and 2004, respectively.

Other Postretirement Benefits

     We provide certain postretirement health care, dental, and life insurance benefits for employees who may become eligible for these
benefits. We had an initial measurement date of February 28, 2003 to determine the benefit obligation recorded at the date of Acquisition.
Annual measurement dates are September 30 of each year. We made our initial contribution to the plan in September 2004 and expect to
contribute $0.6 million to the plan in first quarter 2005. The plan assets consisted exclusively of fixed income securities at September 30, 2004.

     The investment objective for the postretirement benefit plan is to maximize total return with moderate tolerance for risk. Targeted asset
allocation is equally weighted between equity and fixed income securities. This strategy will provide flexibility for liquidity purposes but also
establishes some investment for growth. As of September 30, 2004, this strategy had not yet been implemented as we made our initial
contribution to the plan on September 15, 2004.

                                                                        F-32
     On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act") was signed into law. In
accordance with FASB Staff Position No. 106-2, ITC's measurement of the accumulated postretirement benefit obligation as of September 30,
2004 reflects amounts associated with the expected subsidies under the Act because we have concluded that the benefits provided by the plan
are actuarially equivalent to Medicare Part D under the Act.

     Net postretirement cost for the 2003 Period and 2004 includes the following components:

                                                                                                                             2003                      2004

                                                                                                                                    (in thousands)


Service cost                                                                                                        $               192        $              498
Interest cost                                                                                                                        88                       118

Net postretirement cost                                                                                             $               280        $              616

     The following table reconciles the obligations, assets and funded status of the plans as well as the amounts recognized as accrued
postretirement liability in the consolidated statement of financial position as of the measurement date of September 30:

                                                                                                                  2003                          2004

                                                                                                                           (in thousands)


Accumulated postretirement obligation February 28, 2003
and October 1, 2003, respectively                                                                        $               (1,680 )      $               (1,971 )
Service cost                                                                                                               (111 )                        (498 )
Interest cost                                                                                                               (85 )                        (118 )
Actuarial loss                                                                                                              (95 )                        (995 )
Effect of Medicare Part D 28% Subsidy                                                                                        —                            394

Accumulated postretirement obligation September 30                                                       $               (1,971 )      $               (3,188 )

Plan assets at fair value February 28, 2003 and October 1, 2003, respectively                            $                   —         $                  —
Actual return on plan assets                                                                                                 —                            —
Employer contributions                                                                                                       —         $                 237

Plan assets at fair value September 30                                                                   $                   —         $                 237


Funded status                                                                                            $               (1,971 )      $               (2,951 )
Unrecognized prior service cost                                                                                              —                             —
Unrecognized actuarial net loss                                                                                              11                           613

Prepaid (accrued) cost                                                                                   $               (1,960 )      $               (2,338 )


     Actuarial assumptions used to determine the benefit obligation are as follows:

                                                                                      February 28,           September 30,                 September 30,
                                                                                         2003                    2003                          2004

Discount rate                                                                                   6.25 %                      6.0 %                        5.75 %
Annual rate of salary increases                                                                  3.5 %                      3.5 %                         3.5 %
Health care cost trend rate assumed for next year                                                 10 %                       10 %                          11 %
Rate to which the cost trend rate is assumed to decline                                            5%                         5%                            5%
Year that the rate reaches the ultimate trend rate                                              2013                      2013                          2014
Annual rate of increase in dental benefit costs                                                    4%                         4%                            5%

                                                                      F-33
      Actuarial assumptions used to determine the benefit cost for the 2003 Period and 2004 are as follows:

                                                                                                    2003                      2004
                                                                                                 Benefit Cost              Benefit Cost

               Discount rate                                                                                  6.25 %                  6.0 %
               Annual rate of salary increases                                                                 3.5 %                  3.5 %
               Health care cost trend rate assumed for next year                                                10 %                   10 %
               Rate to which the cost trend rate is assumed to decline                                           5%                     5%
               Year that the rate reaches the ultimate trend rate                                            2013                   2013

    At December 31, 2004, the projected benefit payments for the postretirement benefit plan, net of the Medicare subsidy, are $22,000 in
2005, $25,000 in 2006, $40,000 in 2007, $72,000 in 2008, $145,000 in 2009 and a total of $1.6 million for 2010 through 2014. The projected
payments were calculated using the same assumptions as those used to calculate the benefit obligations listed above.

     Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point
increase and decrease in assumed health care cost trend rates would have the following effects on costs for the 2004 and benefit obligation at
September 30, 2004:

                                                                                    One-percentage-                    One-percentage-
                                                                                     point increase                     point decrease

                                                                                                      (in thousands)


             Effect on total of service and interest cost                       $                      110      $                         (84 )
             Effect on postretirement benefit obligation                        $                      487      $                        (398 )

12.   DEFERRED COMPENSATION PLANS

     Certain of our employees participate in our deferred compensation plan (the "Deferred Compensation Plan"). The investments in the
Deferred Compensation Plan trust of $0.4 million at December 31, 2004 are included in other assets with the corresponding liability in
Deferred compensation liability. We account for the assets contributed under the Deferred Compensation Plan and held in a trust as trading
securities under SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities". Accordingly, gains or losses on the
investments, for which the employees are at risk for the investment returns, are recorded as investment income or loss with an offsetting
amount recorded to compensation expense. Total compensation expense for 2004, including investment earnings, was $0.4 million recorded in
general and administrative expense.

     We have a Dividend Equivalents Rights Plan (the "Dividend Plan") that is accounted for as a deferred compensation plan. Participants in
the Dividend Plan are our employees with Holdings' stock options. Awards under the Dividend Plan are recognized on the record date of any
dividend declared on the outstanding shares of common stock of Holdings and contributed to a trust. The investments in the Dividend Plan trust
of $1.9 million at December 31, 2004 are included in other assets with the corresponding liability in deferred compensation liability. We
account for the assets contributed under the Dividend Plan and held in a trust as trading securities under SFAS 115. Accordingly, gains or
losses

                                                                         F-34
on the investments are recorded as investment income or loss with an offsetting amount recorded to compensation expense. Total compensation
expense for the 2003 Period and 2004 was $1.7 million and $0.2 million, respectively, recorded in general and administrative expense.

13.   STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

Common Stock

      Our authorized capital stock consists of 100 million shares of Holdings common stock, without par value.

      Voting Rights —Each holder of Holdings common stock, including holders of restricted stock awards, is entitled to cast one vote for
each share held of record on all matters submitted to a vote of stockholders, including the election of directors. Holders of Holdings common
stock have no cumulative voting rights.

       Dividends —Holders of Holdings common stock, including holders of restricted stock, are entitled to receive dividends or other
distributions declared by the board of directors. The right of the board of directors to declare dividends is subject to the right of any holders of
our preferred stock, to the extent that any preferred stock is authorized and issued, and the availability under the Michigan Business
Corporation Act of sufficient funds to pay dividends. We have not issued any preferred stock.

      Liquidation Rights —If we are dissolved, the holders of Holdings common stock will share ratably in the distribution of all assets that
remain after we pay all of our liabilities and satisfy our obligations to the holders of any of our preferred stock, to the extent that any preferred
stock is authorized and issued.

      Preemptive and Other Rights —Holders of Holdings common stock have no preemptive rights to purchase or subscribe for any of our
stock or other securities, and there are no conversion rights or redemption or sinking fund provisions with respect to our common stock.

Stock-based compensation

     Our stock-based compensation plan permits the awarding of various stock awards to employees and non-employees, including options to
purchase Holdings' common stock and restricted stock of Holdings. The number of shares authorized for grant under the plan is 3,343,214
shares of Holdings common stock after giving effect to the adjustment of the number of shares authorized under the Amended and Restated
2003 Stock Purchase and Option Plan for Key Employees of ITC Holdings Corp. and its Subsidiaries.

Options

     During the 2003 Period and 2004, we granted options with vesting schedules of 20% each over a five-year period beginning on
February 28, 2004 or February 28, 2005. The exercise price for all options is $7.48 per share. The options have a term of 10 years subsequent
to the grant date, with a remaining

                                                                        F-35
weighted average contract life of approximately 8.5 years. Stock option activity for the 2003 Period and 2004 was as follows:

                                                                                                          Number of options

                     Outstanding at February 28, 2003                                                                    —
                       Granted                                                                                    2,014,621


                     Outstanding at December 31, 2003
                     (none exercisable)                                                                           2,014,621
                        Granted                                                                                      97,622
                        Cancelled                                                                                   (80,237 )


                     Outstanding at December 31, 2004
                     (121,960 exercisable)                                                                        2,032,006


     Based on the fair value of the options at the grant dates for employees, and the fair value of the options as the related services are
completed at each vesting date and as valued at each financial reporting date through the vesting date for non-employees, ITC recognized
approximately $0.5 million and $0.6 million of compensation expense for the 2003 Period and 2004, respectively. Fair value of the stock
options was determined using a Black-Scholes option pricing model. The following assumptions were used in determining the weighted
average fair value per option of $1.68 and $4.42 in the 2003 Period and 2004, respectively:

                                                                                                          2003                      2004
                                                                                                         Awards                    Awards

Weighted average expected volatility                                                                    21.3%                      28.1%
Weighted average risk-free interest rate                                                                 2.9%                       3.2%
Weighted average expected life                                                                         4.8 years                  3.4 years
Range of estimated fair values of underlying shares                                                   $6.58-$7.48               $6.58-$11.90

Restricted Stock Awards

     Holders of restricted stock awards have all the rights of a holder of common stock of Holdings, including dividend and voting rights. The
holder becomes vested as a result of certain events, but not longer than five years after the grant date. The average expected remaining vesting
period at December 31, 2004 is 3.2 years. Restricted stockholders may not sell, transfer, or pledge their shares.

    Restricted stock awards are recorded at fair value at the date of grant. Awards that were granted for future services are accounted for as
unearned compensation, with amounts amortized over the

                                                                      F-36
vesting period. Awards that were granted as a signing bonus have been expensed at the grant date. Restricted stock award activity for the 2003
Period and 2004 is as follows:

                                                                                              2003              2004

                    Restricted stock awarded                                                    405,485           70,482
                    Restricted stock forfeited                                                       —            (3,343 )
                    Weighted average fair value of shares awarded                        $         6.99    $        7.39
                    Compensation expense recognized (in millions)                        $          0.5    $         0.6

14.   RELATED-PARTY TRANSACTIONS

      We pay consulting fees, including out-of-pocket expenses, to certain of our stockholders (and affiliates of their partners) for ongoing
management and administration services. Additionally, we pay insurance premiums to certain of our stockholders (and affiliates of their
partners). During the 2003 Period and 2004, we incurred $1.2 and $1.5 million for these services, respectively, which were recorded in general
and administrative expenses. The consulting fees are generally paid at the end of each quarter and the insurance premiums are paid in advance
for a twelve-month period.

15.   JOINTLY OWNED UTILITY PLANT/COORDINATED SERVICES

      The Michigan Public Power Agency ("MPPA") has a 50.41% ownership interest in ITC's Greenwood-St. Clair-Jewell-Stephens
Transmission Line and Monroe-Wayne-Coventry-Majestic Transmission Line. ITC had $21.4 million of gross transmission plant in service
relating to its ownership interest of 49.59% at December 31, 2004. An Ownership and Operating Agreement provides ITC with authority for
construction of capital improvements and for the operation and management of the transmission lines. MPPA is responsible for the capital and
operating and maintenance costs allocable to their ownership interest. There was no jointly-owned plant under construction at December 31,
2004.

      ITC and the Michigan Electric Transmission Company ("METC") operate their interconnected transmission systems as a single control
area from the Michigan Electric Power Coordination Center ("MEPCC") which is owned by ITC. ITC and METC are each responsible for 50%
of all costs, obligations and liabilities incurred by either party in connection with the operation and maintenance of the MEPCC, including the
monthly fixed charges on the investment made by ITC in the MEPCC. The monthly fixed charges totaling $1.4 million and $1.8 million for the
2003 Period and 2004, respectively, is recorded in operating revenues.

16.   COMMITMENTS AND CONTINGENCIES

Litigation

    We are involved in routine litigation in the normal course of our business. Such proceedings are not expected to have a material adverse
impact on our results of operations, financial position or liquidity.

                                                                     F-37
MPPA Accounts Receivable

     ITC has billed MPPA $2.1 million under the Ownership and Operating Agreement, which is included in accounts receivable as of
December 31, 2004. MPPA has withheld payment of the amount as a setoff to revenues for which it believes ITC should have provided them
through a recovery mechanism. MPPA has not disputed that it is obligated to reimburse ITC under the terms of the Ownership and Operating
Agreement. However, MPPA has asserted that ITC should have executed a revenue distribution mechanism with MPPA that would enable
MPPA to establish a revenue requirement to be collected by MISO from customers in ITC's service territory. ITC believes it has no obligation
to unilaterally impose such a revenue requirement on these customers and accordingly it believes the assertion made by MPPA is not
supportable. ITC will seek legal remedies should the amounts continue to be unpaid. ITC has not recorded any reserves relating to this matter
as of December 31, 2004 because it believes collection of the receivable is probable.

     Beginning January 2005, the rate charged by MISO to customers in ITC's service territory includes an amount relating to MPPA's revenue
requirements allocable to their ownership interest. These amounts are not included in ITC's Attachment O, but currently are expected to be
collected by MISO, paid to ITC, and remitted by ITC to MPPA.

Thumb Loop Project

     ITC currently is upgrading its electric transmission facilities in Lapeer County, Michigan (the "Thumb Loop Project"). As part of the
Thumb Loop Project, ITC is replacing existing H-frame transmission poles with single steel poles and replacing a single circuit transmission
line with a double circuit transmission line. Certain property owners along the Thumb Loop have alleged that ITC's facilities upgrades
overburden ITC's easement rights, and in part have alleged trespass. Litigation regarding the property owners' claims is being held in abeyance
and, accordingly, remains in its early stages. We cannot predict the final disposition of such proceedings. The legal costs incurred relating to
the Thumb Loop Project are included as a cost of the project and are recorded in PP&E. Additionally, any damages that result from these
proceedings would be included in PP&E. The legal costs incurred as of December 31, 2004 were not material.

Personal Property Taxes

     The Detroit Edison Company ("Detroit Edison"), a subsidiary of DTE Energy, was responsible for paying property taxes for combined
DTE Energy distribution and transmission properties prior to the Acquisition. The property tax valuation tables established by the Michigan
State Tax Commission ("STC") are used to determine the taxable value of personal property based on the property's age. In November 1999,
the STC approved new valuation tables that more accurately recognize the value of a utility's personal property. The new valuation tables
became effective in 2000 and are currently used to calculate property tax expense. However, several local taxing jurisdictions have taken legal
action attempting to prevent the STC from implementing the new valuation tables and have continued to prepare assessments based on the
superseded valuation tables or their own tables. The legal actions regarding the appropriateness of the new valuation tables were before the
Michigan Tax Tribunal ("MTT") which, in April 2002, issued its decision essentially affirming the validity of the STC's new valuation tables.
In June 2002, petitioners in the case filed an appeal of the MTT's decision with the

                                                                      F-38
Michigan Court of Appeals. On January 20, 2004, the Michigan Court of Appeals upheld the validity of the new valuation tables.

     Predecessor ITC had recorded property tax expense based on the new valuation tables prior to the Acquisition, and ITC continued to
record property tax expense based on the new valuation tables. Property taxes for lien dates December 31, 2002 and prior periods were billed to
Predecessor ITC or ITC by Detroit Edison, as the taxable value of PP&E for Predecessor ITC or ITC was included in Detroit Edison's property
tax values. Beginning with property taxes for lien date December 31, 2003, ITC is billed directly by municipalities. In the event that lien date
December 31, 2001 or 2002 property tax assessments are further appealed by the petitioners in the case, ITC may be required to pay additional
amounts or may be refunded amounts paid relating to these years.

     Numerous municipalities have applied their own valuation tables in assessing the value of ITC's personal property subsequent to the
Acquisition, rather than the valuation tables approved by the STC. ITC has filed tax appeals and is in the process of discussing lien date
December 31, 2003 tax assessments with various municipalities, which are the basis for 2004 property tax expense. ITC has developed an
appeal strategy and filed formal appeals with the MTT for the municipalities that did not utilize the STC tax tables. Until this issue is resolved,
ITC is making property tax payments based on the valuation tables approved by the STC, while continuing to expense the full amounts billed
by the municipalities in applying their own valuation tables. Tax assessments of certain real property have also been appealed. Property taxes
accrued for 2004 are based on a total annual liability of $20.3 million from the 2004 tax statements received from the municipalities. In the
event that there are changes to the estimated real or personal property tax values based on negotiations with municipalities or through appeals
with the MTT, any adjustments to ITC's property tax expense would be recorded at that time.

Service Level Agreement

      During 2003 and through April 2004, ITC and Detroit Edison had operated under a construction and maintenance, engineering, and
system operations service level agreement (the "SLA") whereby Detroit Edison performs maintenance, asset construction, and certain aspects
of transmission operations and administration (the "SLA Activities") on our behalf. The original term of the SLA was for periods ranging from
two to six years from the Acquisition date. During 2003, the FERC required ITC to transition the SLA Activities from Detroit Edison to ITC on
an accelerated basis to promote the transition to an independent transmission operator. The SLA, as amended and accepted by the FERC in
March 2003, had a revised term ending on February 29, 2004. The SLA was further amended and accepted by the FERC in April 2004 to
extend certain services under the SLA through April 30, 2004, as necessary.

     Detroit Edison receives compensation for the wages and benefits of its employees performing work on behalf of ITC and for costs of
construction or maintenance directly related to ITC. Under the SLA, as amended, ITC utilizes Detroit Edison or other vendors for the services
specified. When other vendors are used, ITC is required to pay Detroit Edison 100% of the operation and maintenance expenditure markup fees
and 50% of the capital expenditure markup fees specified in the SLA. The amount expensed during the 2003 Period for these markup fees
when other vendors were used was $0.4 million and were recorded in operation and maintenance expenses.

                                                                       F-39
     Operation and maintenance expenses incurred by ITC under the SLA that exceeded $15.9 million during 2003 were recognized as expense
but are deferred as a long-term payable and will be paid to Detroit Edison in equal annual installments over a five-year period beginning
June 1, 2005. As of December 31, 2004, ITC has deferred the payment of $6.1 million of SLA expenses that exceeded the 2003 threshold, with
$1.2 million recorded in other current liabilities and $4.9 million recorded in deferred payables. There is no payment deferral for construction
expenditures.

     In August 2003, ITC entered into an Operation and Maintenance Agreement with its primary maintenance contractor and a Supply Chain
Management Agreement with its primary purchasing and inventory management contractor to replace the services that Detroit Edison has
provided under the SLA. ITC is not obligated to take any specified amount of services under the terms of the Operation and Maintenance
Agreement or the Supply Chain Management Agreement, which have a five-year term ending August 28, 2008.

Put Agreement

     Certain officers and employees of Holdings (the "Management Stockholders") have purchased or acquired shares of common stock of
Holdings. In connection with this investment in Holdings, CIBC, Inc., a bank affiliated with one of the limited partners of our parent company,
and a non-affiliated bank (together, the "Banks"), provided some of the Management Stockholders with loans to acquire shares of Holdings'
common stock. The loans are evidenced by notes made by such Management Stockholders and require a pledge of their common stock of
Holdings. As a condition to making such loans, Holdings entered into put agreements with the Banks pursuant to which Holdings agreed that
upon the occurrence of certain events, Holdings would be assigned the note and pledge and would either pay the Banks the aggregate principal
amount outstanding of the note plus interest thereon or execute a demand promissory note in a principal amount equal to the aggregate
principal amount outstanding of the note plus interest thereon. The maximum potential amount of future payments for Holdings under the put
agreements was approximately $2.0 million at December 31, 2004. The fair value of this liability at inception and as of December 31, 2004 was
not material.

      After December 31, 2004, Holdings and the non-affiliated Bank terminated the put agreement between them. The put agreement with the
affiliated Bank shall remain in effect until the date when the Holdings obligations under the agreement are satisfied or when any amounts
outstanding under the notes have been paid in full. The put agreement with the affiliated Bank is only applicable to loans made to Management
Stockholders who are not executive officers of Holdings.

Concentration of credit risk

     Our credit risk is primarily with Detroit Edison, which is responsible for approximately 68% of total operating revenue for the year ended
December 31, 2004. Any financial difficulties experienced by Detroit Edison could negatively impact our business. MISO, as ITC's billing
agent, bills Detroit Edison and other ITC customers on a monthly basis and collects fees for use of ITC's transmission system. MISO has
implemented credit policies for its members, including ITC's customers, in general, if these customers do not maintain their credit rating or
have a history of late payments, MISO may require them to provide MISO with a letter of credit or cash deposit equal to the highest monthly
invoiced amount over the previous twelve months.

                                                                     F-40
17.    SEGMENT INFORMATION

     Our business segments consist of ITC and NYTHC. ITC is a regulated enterprise. NYTHC is a subsidiary that invests in non-regulated
ventures, which consisted exclusively of Conjunction during the 2003 Period and 2004. Holdings' activities include general corporate expenses
and interest expense. Holdings has no revenue generating activities.

                                                                                            Holdings, Reconciliations
                                                                                                      and
2003                                                          ITC              NYTHC              Eliminations          Total

                                                                                       (in thousands)


Operating revenues                                       $     102,362     $         — $                        — $      102,362
Depreciation and amortization                                   21,463               —                          —         21,463
Interest expense                                                 9,218               —                      12,412        21,630
Income taxes                                                     4,887             (561 )                   (8,632 )      (4,306 )
Net income (loss)                                                9,018           (1,041 )                  (16,031 )      (8,054 )
Total assets                                                   744,045            4,135                      3,477       751,657
Goodwill                                                       174,608            3,806                         —        178,414
Capital expenditures                                            26,802                3                         —         26,805
                                                                                            Holdings, Reconciliations
                                                                                                      and
2004                                                           ITC             NYTHC              Eliminations          Total

                                                                                       (in thousands)


Operating revenues                                       $     126,449     $         — $                         — $     126,449
Depreciation and amortization                                   29,480               —                           —        29,480
Interest expense                                                10,759               —                       14,826       25,585
Income taxes                                                     7,713             (601 )                    (5,443 )      1,669
Net income (loss)                                               13,859           (1,117 )                   (10,134 )      2,608
Total assets                                                   801,815               —                        7,032      808,847
Goodwill                                                       176,039               —                           —       176,039
Capital expenditures                                            76,779               —                           —        76,779

18.    SUBSEQUENT EVENT

      Holdings has filed a registration statement under the Securities Act of 1933 to sell common stock. Immediately prior to the completion of
this offering, Holdings expects to effect a 3.34-for-one stock split and adjust the number of shares authorized under the Amended and Restated
2003 Stock Purchase Option Plan for Key Employees of ITC Holdings Corp. and its Subsidiaries, as well as the share amounts of stock grants
under the plan and the number of options and exercise prices of options under the plan as a result of the 3.34-for-one stock split. Additionally,
Holdings' Articles of Incorporation are expected to be amended to authorize 100 million shares of common stock. All numbers of common
shares and per share data in the accompanying consolidated financial statements and related notes have been retroactively adjusted to give
effect to the stock split and the changes to the Amended and Restated 2003 Stock Purchase and Option Plan for Key Employees of ITC
Holdings Corp. and its Subsidiaries and the Amended and Restated Articles of Incorporation of Holdings.

                                                                      F-41
                                   ITC HOLDINGS CORP. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
                                             MARCH 31, 2005

                                                                                                       2005

                                                                                                   (in thousands,
                                                                                                 except share data)


ASSETS
Current assets
  Cash and cash equivalents                                                                      $         3,863
  Accounts receivable                                                                                     19,204
  Inventory                                                                                               15,702
  Other                                                                                                    2,935

         Total current assets                                                                             41,704
Property, plant and equipment (net of accumulated depreciation and amortization of
$408,117)                                                                                                543,251
Other assets
   Goodwill                                                                                              174,569
   Regulatory assets-acquisition adjustment                                                               54,289
   Other regulatory assets                                                                                 7,570
   Deferred financing fees (net of accumulated amortization of $1,625)                                     6,399
   Deferred income taxes                                                                                   2,871
   Other                                                                                                   5,305

         Total other assets                                                                              248,132

TOTAL ASSETS                                                                                     $       833,087

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable                                                                               $        27,581
  Accrued interest                                                                                         5,126
  Accrued taxes                                                                                            9,785
  Point-to-point revenue due to customers                                                                    131
  Other                                                                                                    5,951

         Total current liabilities                                                                        48,574
Accrued pension liability                                                                                  4,202
Accrued postretirement liability                                                                           2,639
Deferred compensation liability                                                                            2,306
Deferred income taxes                                                                                      1,449
Regulatory liabilities                                                                                    44,428
Deferred payables                                                                                          4,887
Long-term debt                                                                                           519,756
STOCKHOLDERS' EQUITY
Common stock, without par value, 100,000,000 shares authorized, 30,686,595 shares
issued and outstanding at March 31, 2005                                                                 203,848
Unearned compensation-restricted stock                                                                    (1,426 )
Accumulated (deficit) earnings                                                                             2,424

         Total stockholders' equity                                                                      204,846

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                       $       833,087


                                      See notes to condensed consolidated financial statements (unaudited).

                                                                      F-42
                                            ITC HOLDINGS CORP. AND SUBSIDIARIES

                        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                 FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2005

                                                                                  2004                      2005

                                                                                 (in thousands, except share data)


OPERATING REVENUES                                                         $             27,544     $              42,460
OPERATING EXPENSES
 Operation and maintenance                                                                6,394                      6,522
 General and administrative                                                               6,448                      5,286
 Depreciation and amortization                                                            6,966                      8,018
 Taxes other than income taxes                                                            5,424                      4,299

    Total operating expenses                                                             25,232                    24,125
OPERATING INCOME                                                                          2,312                    18,335

OTHER EXPENSES (INCOME)
 Interest expense                                                                         6,291                      6,854
 Allowance for equity funds used in construction                                           (318 )                     (580 )
 Other income                                                                               (12 )                     (305 )
 Other expense                                                                               37                        176

       Total other expenses (income)                                                      5,998                      6,145

INCOME (LOSS) BEFORE INCOME TAXES                                                        (3,686 )                  12,190
INCOME TAX PROVISION (BENEFIT)                                                           (1,268 )                   4,320

NET INCOME (LOSS)                                                          $             (2,418 ) $                  7,870

Basic earnings (loss) per common share                                     $           (0.08 ) $                  0.26
Diluted earnings (loss) per common share                                   $           (0.08 ) $                  0.25
Weighted-average basic common shares                                              30,159,066                30,341,967
Weighted-average diluted common shares                                            30,159,066                31,140,306

                                   See notes to condensed consolidated financial statements (unaudited).

                                                                   F-43
                                     ITC HOLDINGS CORP. AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED STATEMENT OF CHANGES
                                    IN STOCKHOLDERS' EQUITY (UNAUDITED)
                                 FOR THE THREE MONTHS ENDED MARCH 31, 2005

                                                                                        Unearned
                                                                                      compensation
                                                                                        restricted
                                                  Common stock                            stock

                                                                                                                    Accumulated
                                                                                                                      (deficit)
                                                                                                                      earnings

                                             Shares              Amount                                                                  Total

                                                                          (in thousands, except number of shares)


BALANCE, DECEMBER 31, 2004                  30,679,240 $           203,459 $                     (1,411 ) $                 (5,446 ) $    196,602
Net income                                          —                   —                            —                       7,870          7,870
Issuance of restricted stock                    10,030                 151                         (151 )                       —              —
Forfeiture of restricted stock                  (2,675 )               (18 )                         18                         —              —
Amortization of restricted stock                    —                   —                           118                         —             118
Other                                               —                  256                           —                          —             256

BALANCE, MARCH 31, 2005                     30,686,595     $       203,848       $               (1,426 ) $                  2,424   $    204,846

                               See notes to condensed consolidated financial statements (unaudited).

                                                                 F-44
                                      ITC HOLDINGS CORP. AND SUBSIDIARIES
                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                               FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2005

                                                                                  2004                    2005

                                                                                         (in thousands)


CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                                            $       (2,418 ) $              7,870
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
    Depreciation and amortization expense                                             6,966                  8,018
    Amortization of deferred financing fees and discount                                226                    363
    Stock-based compensation expense                                                    263                    283
    Deferred income taxes                                                            (1,269 )                4,320
    Accrued pension and postretirement liabilities                                      544                    720
    Other regulatory assets                                                             483                    483
    Allowance for equity funds used in construction                                    (318 )                 (580 )
    Other                                                                              (380 )                 (226 )
    Changes in current assets and liabilities, exclusive of changes shown
    separately (Note 1)                                                              (7,789 )              (31,063 )

        Net cash used in operating activities                                        (3,692 )               (9,812 )
CASH FLOWS FROM INVESTING ACTIVITIES
  Expenditures for property, plant and equipment                                   (21,549 )               (36,112 )
  Other                                                                                 —                      229

         Net cash used in investing activities                                     (21,549 )               (35,883 )
CASH FLOWS FROM FINANCING ACTIVITIES
  Borrowings under revolving credit facilities                                      21,500                  51,000
  Repayments of revolving credit facilities                                             —                  (14,700 )
  Debt issuance costs                                                                 (355 )                  (671 )
  Issuance of common stock                                                             264                      —
  S-1 filing costs                                                                      —                     (145 )

          Net cash provided by financing activities                                 21,409                  35,484

NET DECREASE IN CASH AND CASH EQUIVALENTS                                            (3,832 )              (10,211 )
CASH AND CASH EQUIVALENTS—Beginning of period                                         8,139                 14,074

CASH AND CASH EQUIVALENTS—End of period                                      $       4,307        $          3,863


                                     See notes to condensed consolidated financial statements (unaudited).

                                                                     F-45
                                                  ITC HOLDINGS CORP. AND SUBSIDIARIES

                        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                      FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2005

1.    GENERAL

     These condensed consolidated financial statements for ITC Holdings Corp. and Subsidiaries ("we," "our" and "us") should be read in
conjunction with the notes to the consolidated financial statements as of and for the period ended December 31, 2004.

      The accompanying consolidated financial statements are prepared using accounting principles generally accepted in the United States of
America ("GAAP"). These accounting principles require us to use estimates and assumptions that impact the reported amounts of assets,
liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from our estimates.

      The consolidated financial statements are unaudited, but in our opinion include all adjustments necessary for a fair statement of the results
for the interim period. Financial results for this interim period are not necessarily indicative of results that may be expected for any other
interim period or the fiscal year. International Transmission Company's ("ITC") revenues are dependent on the monthly peak loads and
regulated transmission rates. Electric transmission is generally a seasonal business since demand for electricity largely depends on weather
conditions. Revenues and operating income are higher in the summer months when cooling demand is high.

Condensed Consolidated Statements of Cash Flows

                                                                                         Three months                       Three months
                                                                                        ended March 31,                    ended March 31,
                                                                                             2004                               2005

                                                                                                          (in thousands)


Change in current assets and liabilities,
exclusive of changes shown separately:
   Accounts receivable                                                            $                     655 $                           (3,590 )
       Inventory                                                                                        213                             (1,917 )
       Other current liabilities                                                                      2,719                             (2,021 )
       Point-to-point revenue due to customers                                                       (6,990 )                          (12,772 )
       Accounts payable                                                                               3,280                               (568 )
       Accrued taxes                                                                                   (484 )                           (3,046 )
       Accrued interest                                                                              (5,474 )                           (5,168 )
       Other current assets                                                                          (1,708 )                           (1,981 )

     Total change in current assets and liabilities                               $                  (7,789 ) $                        (31,063 )

Supplementary cash flows information—Interest paid (excluding interest
capitalized)                                                                      $                  11,137        $                    11,175

      S-1 Filing —On March 29, 2005, we filed a Form S-1 with the Securities and Exchange Commission ("SEC") to register common stock
of ITC Holdings Corp. ("Holdings"). We have incurred professional services in connection with the filing and the related anticipated initial
public offering and we recorded an estimate for these services of $2.7 million in other assets and $2.5 million in other current liabilities for the
amounts that had not been paid as of March 31, 2005 in the consolidated statements of financial position. These amounts will be recorded as a
reduction in stockholders' equity if a portion of the proposed public offering includes the issuance of new shares of common stock or will be
recorded as general and administrative expense if the proposed public offering consists entirely of selling existing shares of common stock.

                                                                        F-46
2.   NEW ACCOUNTING PRONOUNCEMENTS

Share-based Payment

     Statement of Financial Accounting Standards ("SFAS") 123R, "Share-Based Payment", as interpreted by Securities and Exchange
Commission Staff Accounting Bulletin 107, requires all entities to recognize compensation expense in an amount equal to the fair value of
share-based payments made to employees, among other requirements. SFAS 123R is effective for us on January 1, 2006. We have already
adopted the expense recognition provisions of SFAS 123 for our stock-based compensation and have not concluded whether the transition to
SFAS 123R will have a material effect on our consolidated financial statements.

Accounting for Conditional Asset Retirement Obligations

      Financial Accounting Standards Board Interpretation 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47") is an
interpretation of SFAS 143, "Accounting for Asset Retirement Obligations". FIN 47 clarifies that the term "conditional asset retirement
obligation" as used in SFAS 143, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of
settlement are conditional on a future event that may or may not be within the control of the entity. An entity is required to recognize a liability
for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. FIN 47 is effective for
us on December 31, 2005. We have not concluded whether FIN 47 will have a material effect on our consolidated financial statements.

3.   ACQUISITIONS

       Acquisition of ITC —In accordance with provisions of the Stock Purchase Agreement, the agreement that sets various terms and
conditions of the Acquisition, the purchase price was adjusted based on a closing balance sheet of International Transmission Company, LLC
("Predecessor ITC") at February 28, 2003. Holdings paid $8.3 million in additional consideration for the Acquisition during 2003, primarily
relating to incremental PP&E balances of Predecessor ITC at February 28, 2003 compared with the preliminary PP&E balances estimated at
the time of the closing of the Acquisition. During the three months ended March 31, 2005, Holdings and DTE Energy Company ("DTE
Energy") negotiated additional PP&E, inventory, and other closing balance sheet items relating to the Acquisition. These negotiations are not
final; however, Holdings' best estimate of the outcome has been recorded resulting in a decrease in the purchase price of $1.5 million during the
three months ended March 31, 2005. There may be additional purchase price adjustments as Holdings and DTE Energy finalize their
negotiations or continue to identify differences from the closing balance sheet at February 28, 2003. The following table summarizes the
changes in the carrying amount of goodwill during the three months ended March 31, 2005:

                                                                                                                     (in thousands)

               Goodwill balance, December 31, 2004                                                               $            176,039
               Changes to goodwill:
                  ITC purchase price adjustments                                                                                (1,470 )

               Goodwill balance, March 31, 2005                                                                  $            174,569

                                                                         F-47
4.   REGULATORY MATTERS

       Tariff Rates/Attachment O —ITC's transmission rates are regulated by the Federal Energy Regulatory Commission ("FERC"). On
February 20, 2003, the FERC issued an order authorizing the Acquisition and approving transmission rates for ITC, including a fixed
transmission rate of $1.075 per kilowatt ("kW") per month through December 31, 2004 (the "Freeze Period"). This fixed rate was less than the
rate that would otherwise have applied upon closing of the Acquisition if rates had reflected ITC's FERC-approved capital structure, rate base
and other components of revenue requirements under Attachment O.

     Attachment O is a FERC-approved cost of service formula rate template that is completed annually by all transmission-owning members
of the Midwest Independent Transmission System Operator, Inc. ("MISO,") except for members who have alternative rate structures approved
by the FERC. Under Attachment O, transmission rates are determined annually based on an allowed rate of return on rate base (weighted
average cost of capital), network load, operating expenses (including taxes) and depreciation and amortization, among other components. The
financial information used to complete ITC's Attachment O filing is taken primarily from ITC's most recently completed FERC Form 1. In its
February 20, 2003 order, the FERC accepted ITC's proposed return of 13.88% on the equity portion of its capital structure. ITC's proposed
capital structure targeting 60% equity and 40% debt was also accepted by the FERC although Attachment O uses ITC's actual capital structure
from its FERC Form 1. Since Attachment O is a FERC-approved rate formula, no FERC filing is required to put the calculated rates into effect.

     During the Freeze Period, the difference between the revenue ITC would have been entitled to collect under Attachment O and the actual
revenue ITC received based on the fixed transmission rate in effect during the Freeze Period (the "Revenue Deferral") will not be recognized as
revenue until billed. The final Revenue Deferral at December 31, 2004 as established during the Freeze Period was $59.7 million
($38.8 million net of tax). At the end of each year, the cumulative Revenue Deferral, net of taxes, will be included in rate base on Attachment
O to determine ITC's annual revenue requirement. The Revenue Deferral will be included ratably in rates over the five-year period beginning
June 1, 2006. The Revenue Deferral and related taxes are not reflected as an asset or as revenue in the 2004 or 2005 consolidated financial
statements, because the Revenue Deferral does not meet the criteria to be recorded as a regulatory asset in accordance with SFAS 71.

     Beginning January 1, 2005, ITC began to charge a rate of $1.587 per kW/month as calculated under the Attachment O formula based
primarily on FERC Form 1 data for the year ended December 31, 2003. Beginning June 1, 2005, and each June 1 thereafter, ITC will charge
rates based primarily on data from the previous year's FERC Form 1. ITC's rates beginning June 1, 2006 will be based primarily on FERC
Form 1 data for the year ended December 31, 2005 and will also include recovery of a portion of the Revenue Deferral. ITC's rates will be
based on Attachment O through January 31, 2008, subject to further extension by the FERC.

       Holdings' Initial Public Offering —On March 30, 2005, we filed a Joint Application for Authorization of an Indirect Disposition of
Jurisdicitional Facilities Under Section 203 of the Federal Power Act and Notification of Change in Ownership Structure with the FERC. The
filing contemplates the public offering of Holdings common stock, including an initial public offering and future public offerings. The FERC
approved the application in its order issued on May 5, 2005 and, in doing so, authorized this

                                                                     F-48
offering, as well as potential future public offerings of ITC Holdings' common stock occurring within two years of May 5, 2005.

       Redirected Transmission Service —In January and February 2005 in FERC Docket EL05-55 and EL05-63, transmission customers filed
complaints against MISO claiming that MISO is charging excessive rates for redirected transmission service. In April 2005, FERC ordered
MISO to refund, with interest, excess amounts charged to all affected transmission customers. ITC earns revenues based on an allocation from
MISO for this redirected transmission service and is obligated to refund the excess amounts charged to all affected transmission customers. We
had not accrued any amounts relating to this proceeding as of March 31, 2005 based on our assessment of the likelihood of any refunds
resulting from these complaints at that date. Based on the April 2005 order, we will be required to refund amounts relating to redirected
transmission service upon completion of the refund calculations by MISO, which MISO expects to complete during second quarter 2005. We
cannot estimate the amount of the refund until the calculations are completed.

       Long Term Pricing —In November 2004 in FERC Docket EL02-111 et al., the FERC approved a pricing structure to facilitate seamless
trading of electricity between MISO and PJM Interconnection. The order establishes a Seams Elimination Cost Adjustment (SECA), as set
forth in previous Commission orders, to take effect December 1, 2004, and remain in effect through March 31, 2006 as a transitional pricing
mechanism. The SECA revenues are subject to refund and will be litigated in a contested hearing before the FERC with a final order expected
in 2006. We cannot anticipate whether any refunds of amounts earned by ITC will result from this hearing and has not accrued any amounts
relating to this proceeding. Through March 31, 2005, ITC has recorded $0.7 million of SECA revenue.

       Elimination of Transmission Rate Discount —Several energy marketers filed a complaint against MISO in February 2005 in FERC
Docket EL05-66 asserting that MISO improperly eliminated a rate discount that had previously been effective for transmission service at the
Michigan-Ontario Independent Electric System Operator interface. Since the complaints have been filed, MISO has held amounts in escrow
that it has collected for the difference between the discounted tariff rate and the full tariff rate. FERC has not yet acted on this complaint. ITC
has recorded revenues based only on the amounts collected by MISO and remitted to ITC. These amounts do not include the amounts held in
escrow by MISO of $0.6 million as of March 31, 2005.

5.   LONG TERM DEBT—REVOLVING CREDIT FACILITIES

     In January 2005, ITC amended and restated its revolving credit facility to increase the total commitment thereunder to $65.0 million with
an option to increase the commitments to $75.0 million, subject to ITC's ability to obtain the agreement of willing lenders. The maturity date
was amended to March 19, 2007. ITC's revolving credit facility is supported by the issuance of $75.0 million of ITC's Series B Mortgage
Bonds, which in turn are supported by a first mortgage lien on substantially all of ITC's property. ITC must not exceed a total debt to total
capital ratio of 60% under its revolving credit facility. At March 31, 2005, ITC had $54.5 million outstanding under its revolving credit facility.

     In January 2005, Holdings amended and restated its revolving credit facility to increase the total commitments thereunder to $47.5 million,
with an option to increase the commitments to $50.0 million,

                                                                        F-49
subject to Holdings' ability to obtain the agreement of willing lenders. We must not exceed a debt to total capital ratio of 85% under Holdings'
revolving credit facility. Holdings' revolving credit facility is secured by a perfected first priority pledge of 158 of the 1,000 outstanding shares
of common stock of ITC. ITC Holdings' revolving credit agreement contains a $10.0 million letter of credit sub-facility. At March 31, 2005,
Holdings had $14.3 million outstanding under its revolving credit facility. There were no amounts outstanding under the letter of credit.

6.   EARNINGS PER SHARE

     We report both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share assumes the issuance of
potentially dilutive shares of common stock during the period resulting from the exercise of common stock options and vesting of restricted
stock awards. A reconciliation of both calculations for the three months ended March 31, 2004 and 2005 is presented in the following table:

                                                                                                  2004                          2005

                                                                                            (in thousands, except share and per share data)


              Basic earnings (loss) per share:
                 Net income (loss)                                                      $              (2,418 )       $               7,870
                 Weighted-average common shares outstanding                                        30,159,066                    30,341,967

                  Earnings (loss) per share- basic                                      $                  (0.08 )    $                   0.26

              Diluted earnings (loss) per share:
                 Net income (loss)                                                      $              (2,418 )       $               7,870
                 Weighted-average common shares outstanding                                        30,159,066                    30,341,967
                 Incremental shares of stock-based awards                                                  —                        798,339

                  Weighted-average number of dilutive shares outstanding                           30,159,066                    31,140,306

                  Earnings (loss) per share- diluted                                    $                  (0.08 )    $                   0.25

     Basic earnings (loss) per share excludes 438,523 and 344,629 shares of restricted common stock at March 31, 2004 and 2005,
respectively, that were issued and outstanding, but had not yet vested as of such dates.

     Diluted earnings (loss) per share for the three months ended March 31, 2004 has been corrected subsequent to the original issuance of
these financial statements to exclude the 428,008 incremental shares of stock-based awards that were anti-dilutive in accordance with GAAP.

    Compensation arrangements for certain employees and non-employees included a commitment by the individual to purchase a stated
number of shares of stock of Holdings. Prior to the actual purchase of such shares, the commitment is treated as a stock subscription, and
because such shares effectively participate in dividends, share amounts of 84,590 for the three months ended March 31, 2004 have

                                                                        F-50
been included in the weighted average common shares outstanding used to determine both basic and diluted earnings per share.

7.   RETIREMENT BENEFITS AND ASSETS HELD IN TRUST

Pension Benefits

     We have a defined benefit retirement plan for eligible employees, comprised of a traditional final average pay plan and a cash balance
plan. The defined benefit retirement plan is noncontributory, covers substantially all employees, and provides retirement benefits based on the
employees' years of benefit service. The traditional final average pay plan benefits factor average final compensation and age at retirement in
determining retirement benefits provided. The cash balance plan benefits are based on annual employer contributions and interest credits. We
have also established two supplemental nonqualified, noncontributory, unfunded retirement benefit plans for selected management employees.
The plans provide for benefits that supplement those provided by our other retirement plans.

     Net pension cost for the three months ended March 31, 2004 and 2005 includes the following components:

                                                                                                        2004                2005

                                                                                                           (in thousands)


              Service cost                                                                          $          193     $           225
              Interest cost                                                                                    128                 144
              Expected return on plan assets                                                                   (64 )               (72 )
              Amortization of prior service cost                                                               133                 122
              Amortization of unrecognized (gain)/loss                                                          (1 )                (1 )

              Net pension cost                                                                      $          389     $           418


Other Postretirement Benefits

    We provide certain postretirement health care, dental, and life insurance benefits for employees who may become eligible for these
benefits. Net postretirement cost for the three months ended March 31, 2004 and 2005 includes the following components:

                                                                                                        2004                2005

                                                                                                           (in thousands)


              Service cost                                                                          $          124     $           250
              Interest cost                                                                                     30                  46
              Expected return on plan assets                                                                    —                   (3 )
              Amortization of actuarial loss                                                                    —                    8

              Net postretirement cost                                                               $          154     $           301


                                                                     F-51
Defined Contribution Plans

      We also sponsor a defined contribution retirement savings plan. Participation in this plan is available to substantially all employees. We
match employee contributions up to certain predefined limits based upon eligible compensation and the employee's contribution rate. The cost
of this plan was $0.2 million and $0.3 million for the three months ended March 31, 2004 and 2005, respectively.

8.   CONTINGENCIES

Litigation

    We are involved in routine litigation in the normal course of our business. Such proceedings are not expected to have a material adverse
impact on our results of operations, financial position or liquidity.

Reactive Power Service

     In April 2005, ITC received an invoice from an electricity generating company (the "Generator") for charges for reactive power in the
amount of $0.5 million for services from October 2004 through March 2005. The Generator has stated that it is invoicing ITC pursuant to its
Tariff for Sales of Ancillary Services and Interconnected Operations Services. ITC does not believe it is obligated to pay for any reactive power
service beyond service provided in an emergency condition. The Generator has not suggested that any reactive power service was provided
under an emergency condition. We have not recorded an accrual for this matter based on our assessment of the likelihood of any liabilities
resulting from these claims.

Michigan Electric Coordinated Systems Bonus Payments

      ITC received an invoice from the Consumers Energy Company ("Consumers"), the previous owner of the Michigan Electric Transmission
Company, which stated that ITC owes $0.7 million for ITC's share of the bonus payments paid by Consumers to its employees for the operation
of the Michigan Electric Coordinated Systems pool center in 2002. We have not recorded an accrual for this matter based on our assessment of
the likelihood of any liabilities resulting from these claims.

MPPA Accounts Receivable

     ITC has billed MPPA $2.8 million under the Ownership and Operating Agreement, which is included in accounts receivable as of
March 31, 2005. MPPA has withheld payment of the amount as a setoff to revenues for which it believes ITC should have provided them
through a recovery mechanism. MPPA has not disputed that it is obligated to reimburse ITC under the terms of the Ownership and Operating
Agreement. However, MPPA has asserted that ITC should have executed a revenue distribution mechanism with MPPA that would enable
MPPA to establish a revenue requirement to be collected by MISO from customers in ITC's service territory. ITC believes it has no obligation
to unilaterally impose such a revenue requirement on these customers and accordingly it believes the assertion made by MPPA is not
supportable. ITC will seek legal remedies should the amounts continue

                                                                      F-52
to be unpaid. ITC has not recorded any reserves relating to this matter as of December 31, 2004 because it believes collection of the receivable
is probable.

     Beginning January 2005, the rate charged by MISO to customers in ITC's service territory includes an amount relating to MPPA's revenue
requirements allocable to their ownership interest. These amounts are not included in ITC's Attachment O, but currently are expected to be
collected by MISO, paid to ITC, and remitted by ITC to MPPA.

Thumb Loop Project

     ITC currently is upgrading its electric transmission facilities in Lapeer County, Michigan (the "Thumb Loop Project"). As part of the
Thumb Loop Project, ITC is replacing existing H-frame transmission poles with single steel poles and replacing a single circuit transmission
line with a double circuit transmission line. Certain property owners along the Thumb Loop have alleged that ITC's facilities upgrades
overburden ITC's easement rights, and in part have alleged trespass. Litigation regarding the property owners' claims is being held in abeyance
and, accordingly, remains in its early stages. We cannot predict the final disposition of such proceedings. The legal costs incurred relating to
the Thumb Loop Project are recorded in PP&E and totaled $0.1 million as of March 31, 2005. Additionally, any damages that result from these
proceedings would be included in PP&E.

Property Taxes

     Numerous municipalities applied their own valuation tables in assessing the value of ITC's personal property at December 31, 2003 rather
than the valuation tables approved by the STC. ITC has filed tax appeals and is in the process of discussing lien date December 31, 2003 tax
assessments with various municipalities, which are the basis for 2004 property tax expense. ITC has developed an appeal strategy and filed
formal appeals with the Michigan Tax Tribunal ("MTT") for the municipalities that did not utilize the STC tax tables. Until this issue is
resolved, ITC made property tax payments based on the valuation tables approved by the STC, while continuing to expense the full amounts
billed by the municipalities in applying their own valuation tables. Tax assessments of certain real property have also been appealed. Property
taxes accrued for 2004 are based on a total annual liability of $20.3 million from the 2004 tax statements received from the municipalities. In
the event that there are changes to the estimated real or personal property tax values based on negotiations with municipalities or through
appeals with the MTT, any adjustments to ITC's property tax expense would be recorded at that time.

     The December 31, 2004 tax assessments received from the municipalities that are the basis for 2005 property taxes use the STC-approved
valuation tables. Property taxes accrued during 2005 are based on a total estimated annual liability of $16.7 million.

9.   SEGMENT INFORMATION

     Our business segments consisted of ITC and NYTHC in 2004. ITC is a regulated enterprise. NYTHC is a subsidiary that invests in
non-regulated ventures, which consisted exclusively of

                                                                      F-53
Conjunction during 2004. There was no activity in the NYTHC segment in 2005. Holdings' activities include general corporate expenses and
interest expense. Holdings has no revenue generating activities.

                                                                                                    Three months ended March 31, 2004

                                                                                                                          Holdings,
                                                                                                                        Reconciliations
                                                                                                                             and
                                                                             ITC                    NYTHC                Eliminations                Total

                                                                                                              (in thousands)


Operating revenues                                               $             27,544       $              — $                           — $            27,544
Net income (loss)                                                                 675                    (613 )                      (2,480 )           (2,418 )
Total assets                                                                  752,777                       9                         1,712            754,498
                                                                                                     Three months ended March 31, 2005

                                                                                                                            Holdings,
                                                                                                                          Reconciliations
                                                                                                                               and
                                                                              ITC                    NYTHC                 Eliminations               Total

                                                                                                               (in thousands)


Operating revenues                                                   $          42,460          $            —      $                         — $         42,460
Net income (loss)                                                               10,503                       —                            (2,633 )         7,870
Total assets                                                                   827,136                       —                             5,951         833,087

10.   SUBSEQUENT EVENT

      Holdings has filed a registration statement under the Securities Act of 1933 to sell common stock. Immediately prior to the completion of
this offering, Holdings expects to effect a 3.34-for-one stock split and adjust the number of shares authorized under the Amended and Restated
2003 Stock Purchase and Option Plan for Key Employees of ITC Holdings Corp. and its Subsidiaries, as well as the share amounts of stock
grants under the plan and the number of options and exercise prices of options under the plan as a result of the 3.34-for-one stock split.
Additionally, Holdings' Articles of Incorporation are expected to be amended to authorize 100 million shares of common stock. All numbers of
common shares and per share data in the accompanying consolidated financial statements and related notes have been retroactively adjusted to
give effect to the stock split and the changes to the Amended and Restated 2003 Stock Purchase and Option Plan for Key Employees of ITC
Holdings Corp. and its Subsidiaries and the Amended and Restated Articles of Incorporation of Holdings.

                                                             *   *       *    *     *   *

                                                                         F-54
        12,500,000 Shares




       Common Stock

         PROSPECTUS
               , 2005


    LEHMAN BROTHERS
CREDIT SUISSE FIRST BOSTON
    MORGAN STANLEY
                                                                       PART II

                                             INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.   Other Expenses of Issuance and Distribution.

    The actual and estimated expenses in connection with this offering, all of which will be borne by ITC Holdings Corp., a Michigan
corporation (the "Registrant"), are as follows:

                   SEC registration fee                                                                          $         35,310
                   Printing and engraving expenses                                                                        425,000
                   Legal fees                                                                                           1,765,000
                   Accounting fees                                                                                      1,080,000
                   NYSE listing fees                                                                                      145,850
                   NASD filing fee                                                                                         30,500
                   Miscellaneous                                                                                          200,000

                   Total                                                                                         $      3,681,660

Item 14.   Indemnification of Directors and Officers

     As permitted by the Michigan Business Corporation Act, or MBCA, the Amended and Restated Articles of Incorporation of the Registrant
generally limit the personal liability of its directors to the Registrant and its stockholders for breach of their fiduciary duty. The Articles of
Incorporation, however, do not eliminate or limit the liability of a director for any of the following: (1) the amount of a financial benefit
received by a director to which he or she is not entitled; (2) intentional infliction of harm on the Registrant or its stockholders; (3) a violation of
the MBCA provision relating to unlawful distributions or loans; and (4) an intentional criminal act.

     Sections 561 through 571 of the MBCA authorize indemnification of directors and officers of Michigan corporations. The Registrant's
Articles of Incorporation and bylaws will be amended, prior to the completion of the offering, to require the Registrant to indemnify directors
and officers to the fullest extent permitted by the MBCA. Specifically, the Registrant's bylaws will require it to indemnify directors and officers
against expenses (including actual and reasonable attorneys' fees), judgments, penalties, fines, excise taxes and settlements actually and
reasonably incurred in connection with any threatened, pending or completed action or proceeding brought against a director or officer by
reason of the fact that the person is or was a director or officer of the Registrant or, while serving as a director or officer, is or was serving at
the request of the Registrant as a director, officer, member, partner, trustee, employee, fiduciary or agent of another enterprise to the maximum
extent permitted by the MBCA. The bylaws will further require the Registrant to indemnify officers and directors whose defense on the merits
or otherwise has been successful.

      Although the Registrant's bylaws will require indemnification in the situations described above, each request by an officer or director for
indemnification must be individually authorized upon a determination that indemnification is proper in the circumstances because the person
has met the applicable standard of conduct provided in the MBCA. The determination may be made in any one of the following ways: (1) by a
majority of a quorum of the board consisting of directors who are not parties or threatened to be made parties to the action, suit or proceeding;
(2) if the quorum in (1) is not obtainable, then by majority vote of a committee of at least two directors who are not at the time parties or
threatened to be made parties to the action, suit or proceeding; (3) by independent legal counsel in a written opinion; (4) the Registrant's
stockholders, other than directors, officers, employees or agents who are parties or threatened to be made parties; or (5) by all directors meeting
the MBCA definition of "independent director" who are not parties or threatened to be made parties to the action, suit or proceeding. However,
because the Registrant's Articles of Incorporation contain a

                                                                         II-1
provision limiting monetary liability of directors, the Registrant may indemnify a director without a determination that the applicable standard
of conduct has been met unless the director received a financial benefit to which he or she was not entitled, intentionally inflicted harm on the
Registrant or its stockholders, violated the MBCA provision relating to unlawful distributions or loans or intentionally violated criminal law.
The authorization of payment may be made in any one of the following ways: (1) if there are two or more directors who are not parties or
threatened to be made parties to the action, suit or proceeding, by a majority of all such directors or by majority vote of a committee of at least
two such directors; (2) by a majority vote of any directors of the Registrant meeting the MBCA definition of "independent director" who are
not parties or threatened to be made parties to the action, suit or proceeding; (3) if there are no "independent directors" and fewer than two
directors who are not parties or threatened to be made parties to the action, suit or proceeding, by majority vote of the board; or (4) the
Registrant's stockholders, other than directors, officers, employees or agents who are parties or threatened to be made parties. The bylaws also
will provide that indemnification is a contractual right between the Registrant and the officer or director, who may not be adversely affected by
a repeal of the indemnification provisions of the Registrant's bylaws.

     Section 567 of the MBCA and the Registrant's bylaws will authorize the Registrant to purchase and maintain insurance on behalf of a
person who is or was a director, officer, employee or agent of the Registrant or who serves at the request of the Registrant as a director, officer,
partner, trustee, employee or agent of another enterprise, whether or not the Registrant would have the power to indemnify him or her under the
bylaws or the laws of the State of Michigan. The Registrant intends to maintain a directors' and officers' insurance policy. The policy is
expected to insure directors and officers against unindemnified losses from certain wrongful acts in their capacities as directors and officers and
reimburse the Registrant for those losses for which the Registrant has lawfully indemnified the directors and officers. The policy will contain
various exclusions, none of which apply to this offering.

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to officers and directors pursuant to the
foregoing provisions, the Registrant has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Item 15.   Recent Sales of Unregistered Securities

     Since its inception, the Registrant has issued shares of its common stock, without par value (the "Common Stock") in the following
transactions, each of which was exempt from the registration requirements of the Securities Act of 1933, as amended, as transactions by an
issuer not involving any public offering thereunder. All of the below-referenced securities are deemed restricted securities for the purposes of
the Securities Act. No underwriters were involved in any of the below-referenced sales of securities. The number of shares of common stock
sold in each of the below-listed transactions gives retroactive effect to the 3.34-for-one stock split to be effected immediately prior to the
completion of this offering.

     On February 28, 2003 the Registrant sold 28,149,865 shares of its Common Stock to International Transmission Holdings Limited
Partnership in consideration for $210,500,000.

     On February 28, 2003 the Registrant sold 66,864 shares of its Common Stock to its President and Chief Executive Officer in consideration
for $500,000.

     On April 15, 2003 the Registrant sold 318,134 shares of its Common Stock to certain of its officers and employees for consideration of
$2,378,950.

     On July 3, 2003, the Registrant sold 803,060 shares of its Common Stock to International Transmission Holdings Limited Partnership in
consideration for converted debt of $6,005,150.

                                                                        II-2
     On August 13, 2003, the Registrant sold 668,643 shares of its Common Stock to International Transmission Holdings Limited Partnership
in consideration for $5,000,000.

     On November 25, 2003 the Registrant sold 18,241 shares of its Common Stock to certain of its officers and employees for consideration
of $120,032.

     On December 24, 2003 the Registrant sold 26,746 shares of its Common Stock to one of its officers in consideration for $176,000.

     On February 9, 2004 Registrant sold 40,119 shares of its Common Stock to one of its officers in consideration for $264,000.

     On November 30, 2004 the Registrant sold 114,946 shares of its Common Stock to certain of its officers and employees for consideration
of $756,404.

     The sales of the above securities were exempt from the registration requirements of the Securities Act, in reliance on Section 4(2) of the
Securities Act, Regulation D or Rule 701 promulgated thereunder, as transactions by an issuer not involving a public offering or transactions
pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701. There were no underwriters
involved in connection with the sale of the above securities.

     On July 16, 2003, the Registrant sold $267.0 million aggregate principal amount at maturity of 5.25% senior notes due July 15, 2013 (the
"Notes") to Credit Suisse First Boston LLC and CIBC World Markets Corp as initial purchasers for aggregate net proceeds of approximately
$264.1 million. The Notes were sold at a price of 99.555% resulting in an aggregate offering price of $265.8 million and the aggregate
underwriting discounts amounted to approximately $1.7 million. The sales of the Notes were exempt from the registration requirements of the
Securities Act in reliance on Rule 144A and Regulation S promulgated under the Securities Act as transactions by an issuer not involving a
public offering.

Item 16.     Exhibits and Financial Statement Schedules

     (a)
              Exhibit Index

     A list of exhibits filed with this registration statement on Form S-1 is set forth on the Exhibit Index and is incorporated in this Item 16(a)
by reference.

     (b)
              Financial Statement Schedules



     None.

Item 17.     Undertakings

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication of such issue.

                                                                         II-3
      (1) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

     (2) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared
effective.

      (3) For purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the securities offering therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

                                                                        II-4
                                                                SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, ITC Holdings Corp. has duly caused this amendment no. 2 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Novi, State of Michigan, on June 10, 2005.


                                                     ITC Holdings Corp.

                                                     By:      /s/ JOSEPH L. WELCH

                                                              Name: Joseph L. Welch
                                                              Title: Director, President, Chief Executive
                                                                    Officer and Treasurer

     Pursuant to the requirements of the Securities Act of 1933, this amendment no. 2 to the registration statement has been signed by the
following persons in the capacities indicated on June 10, 2005.

                                Signature                                                                    Title


                   /s/ JOSEPH L. WELCH                                       Director, President, Chief Executive Officer and Treasurer (Principal
                                                                             Executive Officer)
                            Joseph L. Welch

                                    *                                        Vice President-Finance and Chief Financial Officer (Principal
                                                                             Financial Officer and Principal Accounting Officer)
                         Edward M. Rahill

                                   *                                         Director

                        Lewis M. Eisenberg

*By:     /s/ JOSEPH L. WELCH

         Attorney-in-Fact

                                                                      II-5
                                                          EXHIBIT INDEX

Exhibit No.                                                         Description of Exhibit

        1.1*   Form of Underwriting Agreement

     2.1***    Stock Purchase Agreement by and between DTE Energy Company and the Registrant, dated December 3, 2002

        3.1*   Form of Amended and Restated Articles of Incorporation of the Registrant

       3.2**   Form of Amended and Restated Bylaws of the Registrant

        4.1*   Form of Certificate of Common Stock

     4.2***    Registration Rights Agreement, dated as of February 28, 2003, among the Registrant and International Transmission
               Holdings Limited Partnership

     4.3***    Indenture, dated as of July 16, 2003, between the Registrant and BNY Midwest Trust Company, as trustee

     4.4***    First Supplemental Indenture, dated as of July 16, 2003, supplemental to the Indenture dated as of July 16, 2003, between
               the Registrant and BNY Midwest Trust Company, as trustee

     4.5***    First Mortgage and Deed of Trust, dated as of July 15, 2003, between International Transmission Company and BNY
               Midwest Trust Company, as trustee

     4.6***    First Supplemental Indenture, dated as of July 15, 2003, supplementing the First Mortgage and Deed of Trust dated as of
               July 15, 2003, between International Transmission Company and BNY Midwest Trust Company, as trustee

     4.7***    Second Supplemental Indenture, dated as of July 15, 2003, supplementing the First Mortgage and Deed of Trust dated as of
               July 15, 2003, between International Transmission Company and BNY Midwest Trust Company, as trustee

       4.8**   Amendment to Second Supplemental Indenture, dated as of January 19, 2005, between International Transmission Company
               and BNY Midwest Trust Company, as trustee

        5.1*   Opinion of Dykema Gossett PLLC

       10.1*   Form of Amended and Restated Agreement of Limited Partnership of International Transmission Holdings Limited
               Partnership

     10.2**    Amended and Restated Management, Consulting and Financial Services Letter Agreement, dated June 1, 2005, among
               Kohlberg, Kravis Roberts & Co. L.P., International Transmission Holdings Limited Partnership and International
               Transmission Company

     10.3**    Amended and Restated Management, Consulting and Financial Services Letter Agreement, dated June 1, 2005, among
               Trimaran Fund Management, L.L.C., International Transmission Holdings Limited Partnership and International
               Transmission Company

     10.4**    Amended and Restated Management, Consulting and Financial Services Letter Agreement, dated June 1, 2005, among
               International Transmission Holdings Limited Partnership, ITC Holdings Corp. and International Transmission Company

    10.5***    Amended and Restated VCOC Rights Letter, dated February 25, 2003, among International Transmission Holdings Limited
               Partnership, the Registrant, International Transmission Company and KKR Millennium Fund, L.P.

    10.6***    Amended and Restated VCOC Rights Letter, dated February 25, 2003, among International Transmission Holdings Limited
               Partnership, the Registrant, International Transmission Company and Trimaran Fund II, L.L.C.

     10.7**    Forms of Management Stockholder's Agreements

       10.8*   Forms of First Amendment to Management Stockholder's Agreement
   10.9*   Forms of Waiver and Agreement for Executive Stockholders

  10.10*   Form of Waiver and Agreement for Non-Executive Stockholders

10.11***   Form of Sale Participation Agreement

10.12***   Put Agreement, dated as of February 28, 2003, by the Registrant in favor of CIBC, Inc., along with letter amendment
           thereto, dated March 4, 2005

  10.13*   Amended and Restated 2003 Stock Purchase and Option Plan for Key Employees of the Registrant and its Subsidiaries

  10.14*   Form of Special Bonus Plan of the Registrant

 10.15**   Form of Short Term Incentive Plan of the Registrant

  10.16*   Form of Deferred Compensation Plan

 10.17**   Management Supplemental Benefit Plan

10.18***   Revolving Credit Agreement, dated as of March 19, 2004, among the Registrant, as the Borrower, Various Financial
           Institutions and Other Persons from Time to Time Parties Hereto, as the Lenders, Canadian Imperial Bank of Commerce, as
           the Administrative Agent, Credit Suisse First Boston, Cayman Islands Branch, as the Documentation Agent and Joint Lead
           Arranger, and CIBC World Markets Corp., as the Joint Lead Arranger

10.19***   Pledge Agreement, dated as of March 19, 2004, between the Registrant and Canadian Imperial Bank of Commerce

10.20***   First Amended and Restated Revolving Credit Agreement, dated as of January 12, 2005, among ITC Holdings Corp., as the
           Borrower, Various Financial Institutions and Other Persons from Time to Time Parties Hereto, as the Lenders, Canadian
           Imperial Bank of Commerce, as the Administrative Agent, Credit Suisse First Boston, Cayman Islands Branch and CIBC
           World Markets, as the Joint Lead Arrangers, and Comerica Bank, as the Documentation Agent

10.21***   Amendment No. 1 to the Pledge Agreement, dated as of January 12, 2005, between the Registrant and Canadian Imperial
           Bank of Commerce

10.22***   Revolving Credit Agreement, dated as of July 16, 2003, among International Transmission Company, as the Borrower,
           Various Financial Institutions and Other Persons from Time to Time Parties Hereto, as the Lenders, Canadian Imperial Bank
           of Commerce, as the Administrative Agent, and Credit Suisse First Boston, Cayman Islands Branch, as the Documentation
           Agent and Arranger

10.23***   First Amended and Restated Revolving Credit Agreement, dated as of January 19, 2005, among International Transmission
           Company, as the Borrower, Various Financial Institutions and Other Persons from Time to Time Parties Hereto, as the
           Lenders, Canadian Imperial Bank of Commerce, as the Administrative Agent, Credit Suisse First Boston, Cayman Islands
           Branch and CIBC Inc., as the Joint Lead Arrangers, and Comerica Bank, as the Documentation Agent

 10.24**   Employment Agreement between the Registrant and Joseph L. Welch

 10.25**   Form of Employment Agreements between the Registrant and Edward M. Rahill, Linda H. Blair, Richard A. Schultz and
           Jon Jipping

 10.26**   Form of Employment Agreements between the Registrant and Daniel J. Oginsky,
           Jim D. Cyrulewski, Joseph R. Dudak and Larry Bruneel

   10.27   Reserved

10.28***   Service Level Agreement — Construction and Maintenance/Engineering/System Operations, dated February 28, 2003,
           between The Detroit Edison Company and International Transmission Company, LLC

 21.1***   List of Subsidiaries
        23.1*     Consent of Dykema Gossett PLLC (included as part of its opinion filed as Exhibit 5.1 hereto)

       23.2**     Consent of Deloitte & Touche LLP relating to International Transmission Company, LLC

       23.3**     Consent of Deloitte & Touche LLP relating to the Registrant and subsidiaries

      24.1***     Powers of Attorney of the directors and officers of the registrants (included in the signature pages to the registration
                  statement)


*
       To be filed by amendment.

**
       Filed herewith.

***
       Previously filed.
QuickLinks

 TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
 SUMMARY
Our Business
Ownership Structure
 The Offering
Risk Factors
Summary Historical Financial Data
 RISK FACTORS
 FORWARD-LOOKING STATEMENTS
 USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
SELECTED CONSOLIDATED FINANCIAL DATA
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 INDUSTRY OVERVIEW
RATE SETTING
 BUSINESS
 MANAGEMENT
 Summary Compensation Table
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
PENSION PLAN TABLE—ANNUAL PENSION BENEFIT (in Dollars)
 PRINCIPAL AND SELLING STOCKHOLDERS
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
 DESCRIPTION OF OUR INDEBTEDNESS
DESCRIPTION OF OUR CAPITAL STOCK
 SHARES ELIGIBLE FOR FUTURE SALE
CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS
 UNDERWRITING
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND ADDITIONAL INFORMATION
 ITC HOLDINGS CORP. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 INTERNATIONAL TRANSMISSION COMPANY, LLC STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2002 AND
TWO-MONTH PERIOD ENDED FEBRUARY 28, 2003 (in thousands)
INTERNATIONAL TRANSMISSION COMPANY, LLC STATEMENT OF MEMBER'S INTEREST/STOCKHOLDERS' EQUITY YEAR
ENDED DECEMBER 31, 2001 AND 2002 AND THE TWO-MONTH PERIOD ENDED FEBRUARY 28, 2003 (in thousands)
INTERNATIONAL TRANSMISSION COMPANY, LLC STATEMENTS OF CASH FLOWS YEAR ENDED DECEMBER 31, 2002 AND
TWO-MONTH PERIOD ENDED FEBRUARY 28, 2003 (in thousands)
 INTERNATIONAL TRANSMISSION COMPANY, LLC NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2002
AND TWO-MONTH PERIOD ENDED FEBRUARY 28, 2003
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 ITC HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2003
AND 2004
 ITC HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIOD FEBRUARY
28, 2003 (DATE OF ACQUISITION) THROUGH DECEMBER 31, 2003 AND FOR THE YEAR ENDED DECEMBER 31, 2004
 ITC HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY AND
COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD FEBRUARY 28, 2003 (DATE OF ACQUISITION) THROUGH DECEMBER
31, 2003 AND THE YEAR ENDED DECEMBER 31, 2004
 ITC HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIOD FEBRUARY
28, 2003 (DATE OF ACQUISITION) THROUGH DECEMBER 31, 2003 AND FOR THE YEAR ENDED DECEMBER 31, 2004
 ITC HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD
FEBRUARY 28, 2003 (DATE OF ACQUISITION) THROUGH DECEMBER 31, 2003 AND THE YEAR ENDED DECEMBER 31, 2004
 ITC HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED) MARCH 31, 2005
 ITC HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2005
 ITC HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2005
 ITC HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2005
 ITC HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2005
 PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
 EXHIBIT INDEX
                              Exhibit 3.2

AMENDED AND RESTATED BYLAWS

            OF

     ITC HOLDINGS CORP.
                                                   AMENDED AND RESTATED BYLAWS

                                                                         OF

                                                             ITC HOLDINGS CORP.

                                                            (THE “CORPORATION”)

                                                                    ARTICLE I

                                                                     OFFICES

          1.01          Principal Office . The principal office of the Corporation shall be at such place as the Board of Directors shall from
time to time determine.

        1.02           Other Offices . The Corporation also may have offices at such other places as the board of directors from time to time
determines or the business of the Corporation requires.

                                                                    ARTICLE II

                                                                       SEAL

         2.01           Seal . The Corporation may have a seal in the form that the board of directors may from time to time determine. The
seal may be used by causing it or a facsimile to be impressed, affixed or otherwise reproduced. Documents otherwise properly executed on
behalf of the corporation shall be valid and binding upon the corporation without a seal whether or not one is in fact designated by the Board of
Directors.

                                                                    ARTICLE III

                                                                 CAPITAL STOCK

        3.01            Issuance of Shares . The shares of capital stock of the Corporation shall be issued in the amounts, at the times, for the
consideration, and on the terms and conditions that the board of directors shall deem advisable, subject to the articles of incorporation and any
requirements of the laws of the state of Michigan.

          3.02            Certificates for Shares . The certificated shares of the Corporation shall be represented by certificates signed by the
chairperson of the board of directors, the president, or a vice president, and also may be signed by the treasurer, assistant treasurer, secretary, or
assistant secretary, and may be sealed with the seal of the Corporation, if any, or a facsimile of it. The signatures of the officers may be
facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the corporation itself or its employee. In
case an officer who has signed or whose facsimile signature has been placed upon a certificate ceases to be such officer before the certificate is
issued, it may be issued by the Corporation with the same effect as if he or she were such officer at the date of issuance. A certificate
representing shares shall
state on its face that the Corporation is formed under the laws of the state of Michigan and shall also state the name of the person to whom it is
issued, the number and class of shares and the designation of the series, if any, that the certificate represents, and any other provisions that may
be required by the laws of the state of Michigan. Notwithstanding the foregoing, the Board of Directors may authorize the issuance of some or
all of the shares without certificates to the fullest extent permitted by law. Within a reasonable time after the issuance or transfer of shares
without certificates, the Corporation shall send the shareholder a written statement of the information required on certificates by applicable law.

          3.03          Transfer of Shares . The certificated shares of the capital stock of the Corporation are transferable only on the books of
the Corporation upon surrender of the certificate for the shares, properly endorsed for transfer, and the presentation of the evidences of
ownership and validity of the assignment that the Corporation may require. Transfers of uncertificated shares shall be made by such written
instrument as the board of directors shall from time to time specify, together with such proof of the authenticity of signatures as the Corporation
or its agents may require.

         3.04            Registered Shareholders . The Corporation shall be entitled to treat the person in whose name any share of stock is
registered as the owner of it for the purpose of dividends and other distributions or for any recapitalization, merger, plan of share exchange,
reorganization, sale of assets, or liquidation, for the purpose of votes, approvals, and consents by shareholders, for the purpose of notices to
shareholders, and for all other purposes whatever, and shall not be bound to recognize any equitable or other claim to or interest in the shares
by any other person, whether or not the Corporation shall have notice of it, except as expressly required by the laws of the state of Michigan.

          3.05           Lost or Destroyed Certificates . On the presentation to the Corporation of a proper affidavit attesting to the loss,
destruction, or mutilation of any certificate or certificates for shares of stock of the Corporation and such other evidence as the Corporation or
its transfer agent may require, the board of directors shall direct the issuance of a new certificate or certificates to replace the certificates so
alleged to be lost, destroyed, or mutilated. The Corporation may require as a condition precedent to the issuance of new certificates a bond or
agreement of indemnity, in the form and amount and with or without sureties, as the board of directors may direct or approve.

          3.06            Transfer Agents and Registrars . The board of directors may, in its discretion, appoint one or more banks or trust
companies in the State of Michigan and in such other state or states (or countries) as the board of directors may deem advisable, from time to
time, to act as transfer agents and registrars of the shares of the Corporation; and upon such appointments being made, no certificate
representing shares shall be valid until countersigned by one of such transfer agents and registered by one of such registrars.

                                                                          2
                                                                    ARTICLE IV

                                          SHAREHOLDERS AND MEETINGS OF SHAREHOLDERS

         4.01            Place of Meetings . All meetings of shareholders shall be held at the principal office of the Corporation or at any other
place that shall be determined by the board of directors and stated in the meeting notice or, at the direction of the board of directors to the
extent permitted by applicable law, may be held by remote communication if stated in the meeting notice. The board of directors may allow
participation at any meeting of shareholders by remote communication.

         4.02           Annual Meeting . The annual meeting of the shareholders of the Corporation shall be held at such time as the board of
directors may select. Directors shall be elected at each annual meeting and such other business transacted as may come before the meeting.
The board of directors acting by resolution may postpone and reschedule any previously scheduled annual meeting of shareholders. Any
annual meeting of shareholders may be adjourned by the person presiding at the meeting or pursuant to a resolution of the board of directors.

         4.03            Special Meetings . Special meetings of shareholders may be called by the board of directors, the chairperson of the
board of directors (if the office is filled) or the president and shall be called by the president or secretary at the written request of shareholders
holding a majority of the outstanding shares of stock of the Corporation entitled to vote. The request shall state the purpose or purposes for
which the meeting is to be called.

          4.04           Notice of Meetings . Except as otherwise provided by statute, written notice of the time, place, if any, and purposes of
a shareholders meeting shall be given not less than 10 nor more than 60 days before the date of the meeting to each shareholder of record
entitled to vote at the meeting and also to each of KKR Millennium Fund L.P., a Delaware limited partnership, KKR Partners III, L.P., a
Delaware limited partnership, Trimaran Fund II, L.L.C., a Delaware limited liability company, Trimaran Parallel Fund II, L.P., a Delaware
limited partnership, Trimaran Capital, L.L.C., a Delaware limited liability company, CIBC Employee Private Equity Fund (Trimaran) Partners,
a New York general partnership, and CIBC MB Inc., a corporation organized under the laws of Delaware (collectively, the ―Original Limited
Partners‖), either personally or by mailing the notice to his or her last address as it appears on the books of the Corporation (or, in the case of an
Original Limited Partner, the address set forth on Schedule A attached hereto), or by a form of electronic transmission to which the shareholder
has consented. The notice shall include notice of proposals from shareholders that are proper subjects for shareholder action and are intended
to be presented by shareholders who have so notified the Corporation in accordance with applicable law. If a shareholder may be present and
vote at the meeting by remote communication, the means of remote communication allowed shall be included in the notice. No notice need be
given of an adjourned meeting of the shareholders provided that the time and place to which the meeting is adjourned are announced at the
meeting at which the adjournment is taken, and at the adjourned meeting the only business to be transacted is business that might have been
transacted at the original meeting. However, if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record entitled to notice on the new record date as provided in this bylaw. Each
Original Limited Partner shall have the right to have a

                                                                           3
representative attend all shareholder meetings; provided that such representatives shall have no right to vote at such meetings and attendance at
any such meeting shall not in any way affect any quorum requirements.

          4.05            Record Dates . The board of directors may fix in advance a record date for the purpose of determining shareholders
entitled to notice of and to vote at a meeting of shareholders or an adjournment of the meeting or to express consent to or to dissent from a
proposal without a meeting; for the purpose of determining shareholders entitled to receive payment of a dividend or an allotment of a right; or
for the purpose of any other action. The date fixed shall not be more than 60 nor less than 10 days before the date of the meeting, nor more
than 60 days before any other action. In such case only the shareholders that shall be shareholders of record on the date so fixed and that are
entitled to vote with respect to the matters to be considered at such meeting shall be entitled to notice of and to vote at the meeting or an
adjournment of the meeting or to express consent to or to dissent from the proposal; to receive payment of the dividend or the allotment of
rights; or to participate in any other action, notwithstanding any transfer of any stock on the books of the Corporation, after any such record
date. If a record date is not fixed, (a) the record date for determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be the close of business on the date on which notice is given, or, if no notice is given, the day next preceding the day on
which the meeting is held, and (b) the record date for determining shareholders for any purpose other than that specified in item (a) shall be the
close of business on the day on which the resolution of the board of directors relating thereto is adopted. Nothing in this bylaw shall affect the
rights of a shareholder and his or her transferee or transferor as between themselves.

           4.06         List of Shareholders . The secretary or the agent of the Corporation having charge of the stock transfer records for
shares of the Corporation shall make and certify a complete list of the shareholders entitled to vote at a shareholders meeting or any
adjournment of it. The list shall be arranged alphabetically within each class and series and include the address of, and the number of shares
held by, each shareholder; be produced at the time and place of the meeting; be subject to inspection by any shareholder during the whole time
of the meeting; and be prima facie evidence of which shareholders are entitled to examine the list or vote at the meeting. If the meeting is held
solely by means of remote communication, the list shall be open to the examination of any shareholder during the entire meeting by posting the
list on a reasonably accessible electronic network, and the information required to access the list shall be provided with the notice of the
meeting.

         4.07           Quorum; Adjournment; Attendance by Remote Communication .

                  (a)             Unless a greater or lesser quorum is required in the articles of incorporation or by the laws of the state of
                           Michigan, the shareholders present at a meeting in person or by proxy who, as of the record date for the meeting,
                           were holders of a majority of the outstanding shares of the Corporation entitled to vote at the meeting, shall
                           constitute a quorum at the meeting. When the holders of a class or series of shares are entitled to vote separately on
                           an item of business, this bylaw applies in determining the presence of a quorum of the class or series for transacting
                           the item of business. The shareholders present, in person or by proxy, at such

                                                                        4
                           meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to
                           have less than a quorum.

                  (b)            Whether or not a quorum is present, a meeting of shareholders may be adjourned by a vote of the shares
                           present in person or by proxy.

                  (c)            Subject to any guidelines and procedures adopted by the board of directors, shareholders and proxy holders
                           not physically present at a meeting of shareholders may participate in the meeting by means of remote
                           communication, are considered present in person for all relevant purposes, and may vote at the meeting if all of the
                           following conditions are satisfied: (1) the Corporation implements reasonable measures to verify that each person
                           considered present and permitted to vote at the meeting by means of remote communication is a shareholder or
                           proxy holder, (2) the Corporation implements reasonable measures to provide each shareholder and proxy holder
                           with a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders,
                           including an opportunity to read or hear the proceedings of the meeting substantially concurrently with the
                           proceedings, and (3) if any shareholder or proxy holder votes or takes other action at the meeting by means of
                           remote communication, a record of the vote or other action is maintained by the Corporation.

                  (d)            A shareholder or proxy holder may be present and vote at the adjourned meeting by means of remote
                           communication if he or she was permitted to be present and vote by that means of remote communication in the
                           original meeting notice.

          4.08           Proxies . A shareholder entitled to vote at a shareholders meeting or to express consent or to dissent without a meeting
may authorize other persons to act for the shareholder by proxy. A proxy shall be in writing and shall be signed by the shareholder or the
shareholder’s authorized agent or representative or shall be transmitted electronically to the person who will hold the proxy or to an agent fully
authorized by the person who will hold the proxy to receive that transmission and include or be accompanied by information from which it can
be determined that the electronic transmission was authorized by the shareholder. A complete copy, fax, or other reliable reproduction of the
proxy may be substituted or used in lieu of the original proxy for any purpose for which the original could be used. A proxy shall not be valid
after the expiration of three years from its date unless otherwise provided in the proxy. A proxy is revocable at the pleasure of the shareholder
executing it except as otherwise provided by the laws of the state of Michigan.

         4.09            Voting . Each outstanding share is entitled to one vote on each matter submitted to a vote, unless the articles of
incorporation provide otherwise. Votes may be cast orally or in writing, but if more than 25 shareholders of record are entitled to vote, then
votes shall be cast in writing signed by the shareholder or the shareholder’s proxy. When an action, other than the election of directors, is to be
taken by a vote of the shareholders, it shall be authorized by a majority of the votes cast by the holders of shares entitled to vote on it, unless a
greater vote is

                                                                         5
required by the articles of incorporation or by the laws of the state of Michigan. Except as otherwise provided by the articles of incorporation,
directors shall be elected by a plurality of the votes cast by holders of common stock of the Corporation at any election.

         4.10            Conduct of Meeting. At each meeting of shareholders, a chair shall preside. In the absence of a specific selection by
the board of directors, the chair shall be the Chairperson of the board of directors as provided in Section 8.01. The chair shall determine the
order of business and shall have the authority to establish rules for the conduct of the meeting which are fair to shareholders. The chair of the
meeting shall announce at the meeting when the polls close for each matter voted upon. If no announcement is made, the polls shall be
deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes, nor any revocations or
changes thereto may be accepted. If participation is permitted by remote communication, the names of the participants in the meeting shall be
divulged to all participants.

         4.11           Notice of Shareholder Business and Nominations .

                  (a)            Annual Meetings .

                  (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be
         considered by the shareholders may be made at an annual meeting of shareholders (A) pursuant to the Corporation’s notice of meeting
         (or any supplement thereto), (B) by or at the direction of the Chairman of the Board or the Board of Directors or (C) by any
         shareholder of the Corporation who is entitled to vote at the meeting that complied with the notice procedures set forth in paragraphs
         (a)(2) and (a)(3) of this Section 4.11 and who was a shareholder of record at the time such notice is delivered to the secretary of the
         Corporation.

                   (2) For any business to be properly brought before an annual meeting by a shareholder pursuant to clause (C) of paragraph
         (a)(1) of this Section 4,11, the shareholder must have given timely notice thereof in writing to the secretary of the Corporation, and
         any such proposed business other than nominations of persons for election to the Board of Directors must constitute a proper matter
         for shareholder action. To be timely, a shareholder’s notice shall be delivered to the secretary at the principal executive offices of the
         Corporation not less than 90 days nor more than 120 days prior to the first anniversary date of the preceding year’s annual meeting;
         provided, however, that in the event that the date of the annual meeting is more than 30 days before, or more than 70 days after such
         anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 120th day
         prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the
         tenth day following the day on which public announcement of the date of such meeting is first made. In no event shall the public
         announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for
         the giving of a shareholder’s notice as described above. Such shareholder’s notice shall set forth (A) as to each person whom the
         shareholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be
         disclosed in solicitations of proxies for election of directors

                                                                         6
        in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
        amended (the ―Exchange Act‖), including such person’s written consent to being named in the proxy statement as a nominee and to
        serving as a director if elected; (B) as to any other business that the shareholder proposes to bring before the meeting, a brief
        description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any
        resolutions proposed for consideration and in the event that such business includes a proposal to amend the By-laws of the
        Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material
        interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to the
        shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (I) the name and
        address of such shareholder, as they appear on the Corporation’s books and records, and of such beneficial owner, (II) the class and
        number of shares of capital stock of the Corporation which are owned beneficially and of record by such shareholder and such
        beneficial owner, (III) a representation that the shareholder is a holder of record of stock of the Corporation entitled to vote at such
        meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination and (IV) a representation
        whether the shareholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement
        and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt
        the proposal or elect the nominee and/or (y) otherwise to solicit proxies from shareholders in support of such proposal or nomination.
        The foregoing notice requirements shall be deemed satisfied by a shareholder if the shareholder has notified the Corporation of his or
        her intention to present a proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) promulgated under
        the Exchange Act and such shareholder’s proposal has been included in a proxy statement that has been prepared by the Corporation
        to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it
        may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

                  (3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 4.11 to the contrary, in the event that
        the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting is increased, and there is no
        public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the
        Corporation at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice required by
        this Section 4.11 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if
        it shall be delivered to the secretary at the principal executive offices of the Corporation not later than the close of business on the
        tenth day following the day on which such public announcement is first made by the Corporation.

                 (b)            Special Meetings . Only such business shall be conducted at a special meeting of shareholders as shall have
been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of
Directors

                                                                       7
may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or
at the direction of the Board of Directors or (ii) by any shareholder of the Corporation who is entitled to vote at the meeting, who complies with
the notice procedures set forth in this Section 4.11 and who is a shareholder of record at the time such notice is delivered to the secretary of the
Corporation. In the event the Corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the Board
of Directors, any such shareholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for
election to such position(s) as specified in the Corporation’s notice of meeting, if the shareholder’s notice as required by paragraph (a)(2) of
this Section 4.11 shall be delivered to the secretary at the principal executive offices of the Corporation not earlier than the close of business on
the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or
the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special
meeting commence a new time period (or extend any time period) for the giving of a shareholders’ notice as described above.

                  (c)             General .

                  (1) Only persons who are nominated in accordance with the procedures set forth in this Section 4.11 shall be eligible to serve
         as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in
         accordance with the procedures set forth in this Section 4.11. Except as otherwise provided by law, the articles of incorporation or
         these Bylaws, the chairman of the meeting shall have the power and duty (A) to determine whether a nomination or any business
         proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 4.11 and, if any
         proposed nomination or business is not in compliance with this Section 4.11, to declare that such defective nomination shall be
         disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 4.11, if
         the shareholder (or a qualified representative of the shareholder) does not appear at the annual or special meeting of shareholders of
         the Corporation to present a nomination or business, such nomination shall be disregarded and such proposed business shall not be
         transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

                  (2) For purposes of this Section 4.11, ―public announcement‖ shall mean disclosure in a press release reported by the Dow
         Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with
         the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

                  (3) Notwithstanding the foregoing provisions of this Section 4.11, a shareholder shall also comply with all applicable
         requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this
         Section 4.11. Nothing in this Section 4.11 shall be deemed to affect any rights of (A) shareholders to request inclusion of proposals in
         the Corporation’s proxy statement pursuant to Rule 14a-8 under

                                                                         8
         the Exchange Act or (B) of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the
         articles of incorporation.

         4.12            Inspectors of Election . The board of directors, or the chair presiding at any shareholders’ meeting, may appoint one or
more inspectors. If appointed, the inspectors shall determine the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum and the validity and effect of proxies, and shall receive votes, ballots or consents, hear
and determine challenges or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting, the inspectors shall make and execute a written report to the person presiding
at the meeting of any of the facts found by them and matters determined by them. The report shall be prima facie evidence of the facts stated
and of the vote as certified by the inspectors.

                                                                   ARTICLE V

                                                                  DIRECTORS

         5.01          Number . The business and affairs of the Corporation shall be managed by or under the direction of a board of not less
than two (2) nor more than eight (8) directors as shall be fixed from time to time by the board of directors. The directors need not be residents
of Michigan or shareholders of the Corporation.

          5.02            Election, Resignation, and Removal . Unless otherwise provided in the articles of incorporation, directors shall be
elected at each annual shareholders meeting, each director to hold office until the next annual shareholders meeting and until the director’s
successor is elected and qualified, or until the director’s resignation or removal. Unless otherwise provided in the articles of incorporation, a
director may resign by written notice to the Corporation. The resignation is effective on its receipt by the Corporation or at a subsequent time
as set forth in the notice of resignation. A director or the entire board of directors may be removed, with or without cause and at any time (with
or without a meeting), by vote of the holders of a majority of the shares entitled to vote at an election of directors.

         5.03            Vacancies . Vacancies in the board of directors occurring by reason of death, resignation, removal, increase in the
number of directors, or otherwise shall be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of
the board of directors, unless filled by proper action of the shareholders of the Corporation. Unless otherwise provided in the articles of
incorporation or elsewhere in these bylaws, each person so elected shall be a director for a term of office continuing only until the next election
of directors by the shareholders. A vacancy that will occur at a specific date, by reason of a resignation effective at a later date or otherwise,
may be filled before the vacancy occurs, but the newly elected director may not take office until the vacancy occurs.

         5.04           Annual Meeting . The board of directors shall meet each year immediately after the annual meeting of the shareholders,
or within three days of such time, excluding Sundays and legal holidays, if the later time is deemed advisable, at the place where the
shareholders meeting has been held or any other place that the board of directors may determine or by remote

                                                                         9
communication, for the purpose of electing officers and considering such business that may properly be brought before the meeting; provided
that, if less than a majority of the directors appear for an annual meeting of the board of directors, the holding of the annual meeting shall not
be required and the matters that might have been taken up in it may be taken up at any later regular, special or annual meeting, or by consent
resolution. Each Original Limited Partner shall have the right to have a representative attend all annual meetings of the board of directors;
provided that such representatives shall have no right to vote at such meetings and attendance at any such meeting shall not in any way affect
any quorum requirements.

         5.05            Regular and Special Meetings . Regular meetings of the board of directors may be held at the times and places (or by
remote communication) that the majority of the directors may from time to time determine at a prior meeting or as shall be directed or approved
by the vote or written consent of all the directors; provided that the board of directors shall meet no fewer than once per fiscal quarter. Special
meetings of the board of directors may be called by the chairperson of the board of directors (if the office is filled) or the president, and shall be
called by the president or secretary on the written request of any two directors. Each Original Limited Partner shall have the right to have a
representative attend all regular and special meetings of the board of directors; provided that such representatives shall have no right to vote at
such meetings and attendance at any such meeting shall not in any way affect any quorum requirements.

          5.06          Notices . No notice shall be required for annual or regular meetings of the board of directors or for adjourned meetings,
whether regular or special. Three days written notice, 24-hour telephonic notice, or 24-hour notice by electronic communication shall be given
for special meetings of the board of directors, and the notice shall state the time, place, and purpose or purposes of the meeting. Such notice
shall be given to each of the Original Partners in the same manner as that given to each director.

         5.07           Quorum . A majority of the board of directors then in office, or of the members of a board committee, constitutes a
quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which there is a quorum constitutes the
action of the board of directors or of the committee, except when a larger vote may be required by the laws of the state of Michigan. A
member of the board of directors or of a committee designated by the board of directors may participate in a meeting by conference telephone
or other means of remote communication through which all persons participating in the meeting can communicate with each
other. Participation in a meeting in this manner constitutes presence in person at the meeting.

         5.08            Dissents . A director who is present at a meeting of the board of directors, or a board committee of which the director is
a member, at which action on a corporate matter is taken, is presumed to have concurred in that action unless the director’s dissent is entered in
the minutes of the meeting or unless the director files a written dissent to the action with the person acting as secretary of the meeting before
the adjournment of it or forwards the dissent by registered mail to the secretary of the Corporation promptly after the adjournment of the
meeting. The right to dissent does not apply to a director who voted in favor of the action. A director who is absent from a meeting of the
board of directors or a board committee of which the director is a member, at which any such action is taken, is presumed to have concurred in
the

                                                                         10
action unless he or she files a written dissent with the secretary within a reasonable time after the director has knowledge of the action.

         5.09           Compensation . The board of directors, by affirmative vote of a majority of directors in office and irrespective of any
personal interest of any of them, may establish reasonable compensation of directors for services to the Corporation as directors, committee
members or officers. Nothing herein shall be construed to preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.

          5.10           Executive and Other Committees . The board of directors may, by resolution passed by a majority of the whole board of
directors, appoint three or more members of the board of directors as an executive committee to exercise all powers and authorities of the board
of directors in managing the business and affairs of the Corporation, except that the committee shall not have power or authority to (a) amend
the articles of incorporation, except that a committee may prescribe the relative rights and preferences of the shares of a series if the articles of
incorporation authorize the board of directors to do so; (b) adopt an agreement of merger or plan of share exchange; (c) recommend to
shareholders the sale, lease, or exchange of all or substantially all of the Corporation’s property and assets; (d) recommend to shareholders a
dissolution of the Corporation or revocation of a dissolution; (e) amend these bylaws; (f) fill vacancies in the board of directors; or (g) declare a
dividend or authorize the issuance of stock, unless expressly authorized by the board of directors.

         The board of directors from time to time may, by like resolution, appoint any other committees of one or more directors to have the
authority that shall be specified by the board of directors in the resolution making the appointments. Committees and committee members
serve as such at the pleasure of the board of directors. The board of directors may designate one or more directors as alternate members of any
committee to replace an absent or disqualified member at any committee meeting.

          5.11           Information Rights of Original Limited Partners . The representatives of the Original Limited Partners shall have the
right to receive copies of information provided to directors (including, without limitation, books and records and financial statements of the
Corporation (including those described in Section 10.1)), as if the Original Limited Partner were a director thereof.

                                                                   ARTICLE VI

                                      NOTICES, WAIVERS OF NOTICE, AND MANNER OF ACTING

         6.01           Notices . All notices of meetings required to be given to shareholders, directors, or any committee of directors may be
given personally or by mail, telecopy, or electronic transmission to any shareholder, director, or committee member at his or her last address as
it appears on the books of the Corporation or by electronic transmission, but in the case of shareholders, only in the form consented to by the
shareholder. The notice shall be deemed to be given at the time it is mailed or otherwise dispatched or, if given by electronic transmission,
when electronically transmitted to the person entitled to the notice, but in the case of

                                                                         11
shareholders only if sent in a manner authorized by the shareholder. Telephonic notice may be given for special meetings of the board of
directors as provided in Section 5.06.

         6.02          Waiver of Notice . Notice of the time, place, and purpose of any meeting of shareholders, directors, or committee of
directors may be waived by telecopy or other writing, or by electronic transmission, either before or after the meeting, or in any other manner
that may be permitted by the laws of the state of Michigan. Attendance of a person at any shareholders meeting, in person or by proxy, or at
any meeting of directors or of a committee of directors, constitutes a waiver of notice of the meeting except as follows:

                  (a)             In the case of a shareholder, unless the shareholder at the beginning of the meeting objects to holding the
                            meeting or transacting business at the meeting, or unless with respect to consideration of a particular matter at the
                            meeting that is not within the purpose or purposes described in the meeting notice, the shareholder objects to
                            considering the matter when it is presented; or

                  (b)             In the case of a director, unless he or she at the beginning of the meeting, or upon his or her arrival, objects to
                            the meeting or the transacting of business at the meeting and does not thereafter vote for or assent to any action
                            taken at the meeting.

A shareholder’s attendance at a meeting of shareholders, whether in person or by proxy, will constitute (1) waiver of any objection to lack of
notice or defective notice, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the
meeting, and (2) waiver of any objection to consideration of a particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

         6.03             Action Without a Meeting . Except as the articles of incorporation may otherwise provide for action to be taken by
shareholders, any action required or permitted at any meeting of shareholders, directors, or a committee of directors may be taken without a
meeting, without prior notice, and without a vote, if all of the shareholders, directors, or committee members entitled to vote on it consent to it
in writing or, to the extent permitted by law, by electronic transmission, before or after the action is taken; provided that no such consent shall
be valid unless a copy thereof is first provided to the Original Limited Partners. Such consents shall be filed with the minutes of the
proceedings of the shareholders, board, or committee, as applicable.

                                                                    ARTICLE VII

                                                                     OFFICERS

         7.01          Number . The board of directors shall elect or appoint a president, a secretary, and a treasurer, and may select a
chairperson of the board of directors and one or more vice presidents, assistant secretaries, or assistant treasurers, and other officers as it shall
deem appropriate. The president and chairperson of the board of directors, if any, shall be members of the board of directors. Any two or
more of the preceding offices, except those of president and

                                                                          12
vice president, may be held by the same person. No officer shall execute, acknowledge, or verify an instrument in more than one capacity if
the instrument is required by law, the articles of incorporation, or these bylaws to be executed, acknowledged, or verified by one or more
officers.

         7.02            Term of Office, Resignation, and Removal . An officer shall hold office for the term for which he or she is elected or
appointed and until his or her successor is elected or appointed and qualified, or until his or her resignation or removal. An officer may resign
by written notice to the Corporation. The resignation is effective on its receipt by the Corporation or at a subsequent time specified in the
notice of resignation. An officer may be removed by the board of directors with or without cause. The removal of an officer shall be without
prejudice to his or her contract rights, if any. The election or appointment of an officer does not of itself create contract rights.

         7.03           Vacancies . The board of directors may fill any vacancies in any office occurring for whatever reason.

        7.04         Authority . All officers, employees, and agents of the Corporation shall have the authority and perform the duties to
conduct and manage the business and affairs of the Corporation that may be designated by the board of directors and these bylaws.

                                                                  ARTICLE VIII

                                                             DUTIES OF OFFICERS

         8.01           Chairperson of the Board . The chairperson of the board of directors, if the office is filled, shall preside at all meetings
of the shareholders and of the board of directors at which the chairperson is present unless otherwise determined by the board of directors
pursuant to Section 4.10 of Article 4.

           8.02           President . The president shall be the chief executive officer of the Corporation. The president shall see that all orders
and resolutions of the board of directors are carried into effect, and the president shall have the general powers of supervision and management
usually vested in the chief executive officer of a corporation, including the authority to vote all securities of other corporations and business
organizations held by the Corporation. In the absence or disability of the chairperson of the board of directors, or if that office has not been
filled, the president also shall perform the duties of the chairperson of the board of directors as set forth in these bylaws.

         8.03          Vice Presidents . The vice presidents, in order of their seniority, shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president and shall perform any other duties that the board of directors or the president may
from time to time prescribe.

           8.04          Secretary . The secretary shall attend all meetings of the board of directors and shareholders and shall record all votes
and minutes of all proceedings in a book to be kept for that purpose; shall give or cause to be given notice of all meetings of the shareholders
and the board of directors; and shall keep in safe custody the seal of the Corporation, if any, and, when authorized by the board of directors,
affix it to any instrument requiring it, and when so affixed it

                                                                         13
shall be attested to by the signature of the secretary or by the signature of the treasurer or an assistant secretary. The secretary may delegate
any of the duties, powers, and authorities of the secretary to one or more assistant secretaries, unless the delegation is disapproved by the board
of directors.

          8.05           Treasurer . The treasurer shall have the custody of the corporate funds and securities, shall keep full and accurate
accounts of receipts and disbursements in the books of the Corporation, and shall deposit all moneys and other valuable effects in the name and
to the credit of the Corporation in the depositories that may be designated by the board of directors. The treasurer shall render to the president
and directors, whenever they may require it, an account of his or her transactions as treasurer and of the financial condition of the
Corporation. The treasurer may delegate any of his or her duties, powers, and authorities to one or more assistant treasurers unless the
delegation is disapproved by the board of directors.

          8.06           Assistant Secretaries and Treasurers . The assistant secretaries, in order of their seniority, shall perform the duties and
exercise the powers and authorities of the secretary in case of the secretary’s absence or disability. The assistant treasurers, in the order of their
seniority, shall perform the duties and exercise the powers and authorities of the treasurer in case of the treasurer’s absence or disability. The
assistant secretaries and assistant treasurers shall also perform the duties that may be delegated to them by the secretary and treasurer,
respectively, and also the duties that the board of directors may prescribe.

                                                                    ARTICLE IX

                                                          SPECIAL CORPORATE ACTS

         9.01           Orders for Payment of Money . All checks, drafts, notes, bonds, bills of exchange, and orders for payment of money of
the Corporation shall be signed by the officer or officers or any other person or persons that the board of directors may from time to time
designate.

          9.02          Contracts and Conveyances . The board of directors of the Corporation may in any instance designate the officer
and/or agent who shall have authority to execute any contract, conveyance, mortgage, or other instrument on behalf of the Corporation, or may
ratify or confirm any execution. When the execution of any instrument has been authorized without specification of the executing officers or
agents, the chairperson of the board of directors, the president or any vice president, and the secretary, assistant secretary, treasurer, or assistant
treasurer may execute the instrument in the name and on behalf of the Corporation and may affix the corporate seal, if any, to it. No officer
shall execute, acknowledge or verify an instrument in more than one capacity if the instrument is required by law, by the articles of
incorporation or by these bylaws to be executed, acknowledged or verified by two or more officers.

                                                                     ARTICLE X

                                                             BOOKS AND RECORDS

         10.01         Maintenance of Books and Records . The proper officers and agents of the Corporation shall keep and maintain the
books, records, and accounts of the Corporation’s

                                                                          14
business and affairs, minutes of the proceedings of its shareholders, board of directors, and committees, if any, and the stock ledgers and lists of
shareholders, as the board of directors shall deem advisable and as shall be required by the laws of the state of Michigan and other states or
jurisdictions empowered to impose such requirements. Books, records, and minutes may be kept within or without the state of Michigan in a
place that the board of directors shall determine.

          10.02        Reliance on Books and Records . In discharging his or her duties, a director or an officer of the Corporation, when
acting in good faith, may rely on information, opinions, reports, or statements, including financial statements and other financial data, if
prepared or presented by any of the following:

                  (a)             One or more directors, officers, or employees of the Corporation, or of a business organization under joint
                            control or common control, whom the director or officer reasonably believes to be reliable and competent in the
                            matters presented;

                  (b)             Legal counsel, public accountants, engineers, or other persons as to matters the director or officer reasonably
                            believes are within the person’s professional or expert competence; or

                  (c)             A committee of the board of directors of which he or she is not a member if the director or officer reasonably
                            believes the committee merits confidence.

         A director or officer is not entitled to rely on the information set forth above if he or she has knowledge concerning the matter in
question that makes reliance otherwise permitted unwarranted.

                                                                    ARTICLE XI

                                                               INDEMNIFICATION

         11.01           Indemnification. Subject to all of the other provisions of Article XI, the Corporation shall indemnify any person who
was or is a party to or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative and whether formal or informal (other than an action by or in the right of the Corporation), including
any appeal, by reason of the fact that the person is or was a director or officer of the Corporation, or, while serving as a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director, officer, member, partner, trustee, employee, fiduciary or agent of
another foreign or domestic corporation, partnership, limited liability company, joint venture, trust, or other enterprise, including service with
respect to employee benefit plans or public service or charitable organizations, against expenses (including actual and reasonable attorney fees
and disbursements), judgments, penalties, fines, excise taxes and amounts paid in settlement actually and incurred by him or her in connection
with such action, suit, or proceeding, to the maximum extent permitted by the MBCA. The termination of any action, suit, or proceeding by
judgment, order, settlement, conviction, or on a plea of nolo contendere or its equivalent, shall not, of itself, create a

                                                                          15
presumption that any person otherwise entitled to indemnification hereunder (i) did not act in good faith and in a manner that the person
reasonably believed to be in or not opposed to the best interests of the Corporation or its shareholders, (ii) with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her conduct was unlawful, or (iii) received a financial benefit to which he or she is not
entitled, intentionally inflicted harm on the corporation or its shareholders, violated Section 551 of the MBCA or intentionally committed a
criminal act.

          11.02         Expenses of Successful Defense . To the extent that a director or officer of the Corporation has been successful on the
merits or otherwise in defense of any action, suit, or proceeding referred to in Sections 11.01, or in defense of any claim, issue, or matter in the
action, suit, or proceeding, the director or officer shall be indemnified against actual and reasonable expenses (including attorney fees) incurred
by the person in connection with the action, suit, or proceeding and any action, suit, or proceeding brought to enforce the mandatory
indemnification provided by this Section 11.02.

         11.03          Definition . For the purposes of Sections 11.01, ―serving at the request of the Corporation‖ shall include any service as
a director, officer, employee, or agent of the Corporation that imposes duties on, or involves services by, the director or officer with respect to
an employee benefit plan, its participants, or its beneficiaries; and a person who acted in good faith and in a manner the person reasonably
believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be considered to have acted in a manner
―not opposed to the best interests of the Corporation or its shareholders‖ as referred to in Sections 11.01.

         11.04          Contract Right; Limitation on Indemnity . The right to indemnification conferred in Article XI shall be a contract right
and shall apply to services of a director or officer as an employee or agent of the Corporation as well as in the person’s capacity as a director or
officer. Except as otherwise expressly provided in this Article XI, the Corporation shall have no obligations under Article XI to indemnify any
person in connection with any proceeding, or part thereof, initiated by the person without authorization by the board of directors.

         11.05         Determination That Indemnification Is Proper . Any indemnification under Sections 11.01 (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the person is proper in the
circumstances because the person has met the applicable standard of conduct set forth in Sections 11.01, whichever is applicable, and upon an
evaluation of the reasonableness of expense and amounts paid in settlement. The determination and evaluation shall be made in any of the
following ways:

                  (a)            By a majority vote of a quorum of the board of directors consisting of directors who are not parties or
                           threatened to be made parties to the action, suit, or proceeding;

                  (b)            If the quorum described in clause (a) above is not obtainable, then by majority vote of a committee of directors
                           duly designated by the board of directors and consisting solely of two or more directors who are not at the

                                                                         16
                           time parties or threatened to be made parties to the action, suit, or proceeding;

                  (c)            By independent legal counsel in a written opinion, which counsel shall be selected in one of the following
                           ways: (i) by the board of directors or its committee in the manner prescribed in subparagraph (a) or (b); or (ii) if a
                           quorum of the board of directors cannot be obtained under subparagraph (a) and a committee cannot be designated
                           under subparagraph (b), by the board of directors; or

                  (d)            By the shareholders, but shares held by directors, officers, employees, or agents who are parties or threatened
                           to be made parties to the action, suit, or proceeding may not be voted.

                  (e)            By all independent directors (as defined by Section 107(3) of the Michigan Business Corporation Act) who
                           are not parties or threatened to be made parties to the action, suit, or proceeding.

If the articles of incorporation of this Corporation include a provision eliminating or limiting the liability of a director pursuant to Section 209
of the MBCA, the Corporation shall indemnify a director for the expenses and liabilities described below in this paragraph without a
determination that the director has met the standard of conduct set forth in the MBCA, but no indemnification may be made except to the extent
authorized in Section 564c of the MBCA, if the director received a financial benefit to which he or she was not entitled, intentionally inflicted
harm on the Corporation or its shareholders, violated Section 551 of the MBCA, or intentionally violated criminal law. In connection with an
action or suit by or in the right of the Corporation, indemnification may be for expenses, including attorneys’ fees, actually and reasonably
incurred. In connection with an action, suit or proceeding other than one by or in the right of the Corporation, indemnification may be for
expenses, including attorneys’ fees, actually and reasonably incurred, and for judgments, penalties, fines, and amounts paid in settlement
actually and reasonably incurred.

         11.06          Authorizations of Payment. Authorizations of payment under Sections 11.01 shall be made in any of the following
ways:

                           (a)             by the board of directors:

                                               (i)              if there are two or more directors who are not parties or threatened to be made
                                     parties to the action, suit or proceeding, by a majority vote of all such directors (a majority of whom shall
                                     for this purpose constitute a quorum)or by a majority of the members of a committee of two or more
                                     directors who are not parties or threatened to be made parties to the action, suit or proceeding;

                                              (ii)          if the Corporation has one or more independent directors who are not parties or
                                     threatened to be made parties to the

                                                                        17
                                     action, suit or proceeding, by a majority vote of all such directors (a majority of whom shall for this
                                     purpose constitute a quorum); or

                                               (iii)          if there are no independent directors and fewer than two directors who are not
                                     parties or threatened to be made parties to the action, suit or proceeding, by the vote necessary for action by
                                     the board of directors in accordance with Section 3.07, in which authorization all directors may participate;
                                     or

                           (b)             by the shareholders, but shares held by directors, officers, employees, or agents who are parties or
                                     threatened to be made parties to the action, suit, or proceeding may not be voted on the authorization.

         11.07         Proportionate Indemnity . If a person is entitled to indemnification under Sections 11.01 for a portion of expenses,
including attorney fees, judgments, penalties, fines, and amounts paid in settlement, but not for the total amount, the Corporation shall
indemnify the person for the portion of the expenses, judgments, penalties, fines, or amounts paid in settlement for which the person is entitled
to be indemnified.

          11.08         Expense Advance . The Corporation shall pay or reimburse the reasonable expenses incurred by a person referred to in
Sections 11.01 who is a party or threatened to be made a party to an action, suit, or proceeding in advance of final disposition of the proceeding
if the person furnishes the Corporation a written undertaking executed personally, or on his or her belief, to repay the advance if it is ultimately
determined that he or she did not meet the standard of conduct, if any, required by the MBCA for the indemnification of the person under the
circumstances. An evaluation of reasonableness under this Section 11.08 shall be made as specified in Section 11.05, and authorizations shall
be made in the manner specified in Section 11.06, unless the advance is mandatory. A provision in the articles of incorporation, these bylaws,
a resolution by the board of directors or the shareholders, or an agreement making indemnification mandatory shall also make advancement of
expenses mandatory unless the provision specifically provides otherwise.

         11.09          Non-Exclusivity of Rights . The indemnification or advancement of expenses provided under this article is not
exclusive of other rights to which a person seeking indemnification or advancement of expenses may be entitled under a contractual
arrangement with the Corporation. However, the total amount of expenses advanced or indemnified from all sources combined shall not exceed
the amount of actual expenses incurred by the person seeking indemnification or advancement of expenses.

          11.10        Indemnification of Employees and Agents of the Corporation . The Corporation may, to the extent authorized from
time to time by the board of directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the
Corporation to the fullest extent of the provisions of Article XI with respect to the indemnification and advancement of expenses of directors
and officers of the Corporation.

                                                                        18
         11.11          Former Directors and Officers . The indemnification provided in Article XI continues for a person who has ceased to be
a director or officer and shall inure to the benefit of the heirs, executors, and administrators of the person.

          11.12        Insurance . The Corporation may purchase and maintain insurance on behalf of any person who is or was a director,
officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, trustee,
employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against any liability asserted against the person
and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not the Corporation would have power to
indemnify the person against the liability under these bylaws or the laws of the state of Michigan. If the articles of incorporation of this
Corporation include a provision eliminating or limiting the liability of a director pursuant to Section 209(1)(c) of the MBCA, such insurance
may be purchased from an insurer owned by the Corporation, but such insurance may insure against monetary liability to the Corporation or its
shareholders only to the extent to which the Corporation could indemnify the director under Section 11.05.

          11.13         Changes in Michigan Law . If there is any change of the Michigan statutory provisions applicable to the Corporation
relating to the subject matter of Article XI, then the indemnification to which any person shall be entitled under this article shall be determined
by the changed provisions, but only to the extent that the change permits the Corporation to provide broader indemnification rights than the
provisions permitted the Corporation to provide before the change. Subject to Section 11.14, the board of directors is authorized to amend these
bylaws to conform to any such changed statutory provisions.

         11.14           Amendment or Repeal of Article XI . No amendment or repeal of Article XI shall apply to or have any effect on any
director or officer of the Corporation for or with respect to any acts or omissions of the director or officer occurring before the amendment or
repeal.

          11.15         Enforcement Of Rights . Any determination with respect to indemnification or payment in advance of final disposition
under this Article XI shall be made promptly, and in any event within 30 days, after written request to the corporation by the person seeking
such indemnification or payment. If it is determined that such indemnification or payment is proper and if such indemnification or payment is
authorized (to the extent such authorization is required) in accordance with this Article XI, then such indemnification or payment in advance of
final disposition under this Article XI shall be made promptly, and in any event within 30 days after such determination has been made, such
authorization that may be required has been given and any conditions precedent to such indemnification or payment set forth in this Article XI,
the articles of incorporation or applicable law have been satisfied. The rights granted by this Article XI shall be enforceable by such person in
any court of competent jurisdiction.

                                                                  ARTICLE XII

                                                                 AMENDMENTS

        12.01          Amendments . The bylaws of the Corporation may be amended, altered, or repealed, in whole or in part, by the
shareholders or by the board of directors at any meeting duly

                                                                         19
held in accordance with these bylaws, provided that notice of the meeting includes notice of the proposed amendment, alteration, or repeal.

                                                                ARTICLE XIII

                                                    CONTROL SHARE ACQUISITIONS

        13.01         Control Share Acquisitions . Chapter 7B of the MBCA shall not apply to control share acquisitions of shares of the
Corporation.

                                                                      20
                                                             Schedule A
                                                Addresses of Original Limited Partners

KKR Millennium Fund L.P.
9 West 57 th Street
New York, NY 10019

KKR Partners III, L.P.
9 West 57 th Street
New York, NY 10019

Trimaran Fund II, L.L.C.
c/o Trimaran Fund Management, L.L.C., its portfolio manager
425 Lexington Avenue
New York, New York 10017

Trimaran Parallel Fund II, L.P.
c/o Trimaran Fund Management, L.L.C., its portfolio manager
425 Lexington Avenue
New York, New York 10017

Trimaran Capital, L.L.C.
c/o Trimaran Fund Management, L.L.C., its portfolio manager
425 Lexington Avenue
New York, New York 10017

CIBC Employee Private Equity Fund (Trimaran) Partners
c/o Trimaran Fund Management, L.L.C., its portfolio manager
425 Lexington Avenue
New York, New York 10017

CIBC MB Inc.
c/o Trimaran Fund Management, L.L.C., its portfolio manager
425 Lexington Avenue
New York, New York 10017

                                                                 21




                                                                                         Exhibit 4.8




                                    AMENDMENT TO SECOND SUPPLEMENTAL INDENTURE


                                           INTERNATIONAL TRANSMISSION COMPANY


                                                                 TO


                                                 BNY MIDWEST TRUST COMPANY
                                                           Trustee


                                                        ____________________
                          Dated as of January 19, 2005


                            ____________________


               Supplementing the First Mortgage and Deed of Trust


                            Dated as of July 15, 2003


Amending the Second Supplemental Indenture and the First Mortgage Bonds, Series B
                                        TABLE OF CONTENTS

                                                                      Page

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION     2
     Section 101. Definitions                                           2
ARTICLE TWO AMENDMENTS                                                  2
     Section 201. Amendments to the Second Supplemental Indenture       2
     Section 202. Amendment to the First Mortgage Bonds, Series B       2
ARTICLE THREE MISCELLANEOUS PROVISIONS                                  2



                                                  i
                    AMENDMENT TO SECOND SUPPLEMENTAL INDENTURE, dated as of January 19, 2005, between International
Transmission Company, a corporation organized and existing under the laws of the State of Michigan (herein called the ― Company ‖), having
its principal office at 39500 Orchard Hill Place, Novi, MI 48375 and BNY MIDWEST TRUST COMPANY, a corporation duly organized and
existing under the laws of the State of Illinois, as Trustee (herein called the ― Trustee ‖), the office of the Trustee at which on the date hereof
its corporate trust business is principally administered being 2 N. LaSalle Street, Suite 1020, Chicago, Illinois 60630.

                                                        RECITALS OF THE COMPANY

                   WHEREAS, the Company has heretofore executed and delivered to the Trustee a First Mortgage and Deed of Trust dated as
of July 15, 2003 (the ― Original Indenture ‖) providing for the issuance by the Company from time to time of its bonds, notes and other
evidence of indebtedness to be issued in one or more series (in the Original Indenture and herein called the ― Securities ‖) and to provide
security for the payment of the principal of and premium, if any, and interest, if any, on the Securities; and

                  WHEREAS, the Company has heretofore executed and delivered to the Trustee a First Supplemental Indenture dated as of
July 15, 2003 (the ― First Supplemental Indenture ‖) to the Original Indenture providing for the issuance by the Company of $185,000,000
4.45% First Mortgage Bonds, Series A due July 15, 2013; and

                  WHEREAS, the Company has heretofore executed and delivered to the Trustee a Second Supplemental Indenture dated as of
July 15, 2003 (the ― Second Supplemental Indenture ‖) to the Original Indenture (the Original Indenture, as amended and supplemented by
the First Supplemental Indenture and the Second Supplemental Indenture, the ― Indenture ’) providing for the issuance by the Company of
First Mortgage Bonds, Series B, due February 28, 2006 (the ― First Mortgage Bonds, Series B ‖); and

                  WHEREAS, the Company, in the exercise of the power and authority conferred upon and reserved to it under the provisions
of the Original Indenture and pursuant to appropriate resolutions of the Board of Directors, has duly determined to make, execute and deliver to
the Trustee this Amendment to Second Supplemental Indenture (the ― Amendment to Second Supplemental Indenture ‖) in order to amend
the Second Supplemental Indenture and the First Mortgage Bonds, Series B as set forth in Article Two hereof; and

                 WHEREAS, all things necessary to make this Amendment to Second Supplemental Indenture a valid, binding and legal
agreement of the Company, have been done;

                  NOW, THEREFORE, THIS AMENDMENT TO SECOND SUPPLEMENTAL INDENTURE WITNESSETH that, in order
to amend the First Mortgage Bonds, Series B, established in the Second Supplemental Indenture, it is mutually covenanted and agreed as
follows:
                                                                ARTICLE ONE

                                                 DEFINITIONS AND OTHER PROVISIONS
                                                      OF GENERAL APPLICATION

Section 101.        Definitions . Each capitalized term that is used herein and is defined in the Original Indenture shall have the meaning
specified in the Original Indenture unless such term is otherwise defined herein.

                                                                ARTICLE TWO

                                                                AMENDMENTS

Section 201.        Amendments to the Second Supplemental Indenture .

         (a)       Section 201 of the Second Supplemental Indenture shall be amended to read as follows:

―Section 201. Title of the Series B Bonds . This Second Supplemental Indenture hereby creates a series of Securities designated as
the ―First Mortgage Bonds, Series B, due March 19, 2007‖ of the Company (the ― Series B Bonds ‖).‖

          (b)      Exhibit A of the Second Supplemental Indenture is amended by substituting ―March 19, 2007‖ for each reference
therein to ―February 28, 2006.‖

Section 202.        Amendment to the First Mortgage Bonds, Series B . Each of the First Mortgage Bonds, Series B heretofore issued and
outstanding on the date hereof shall be amended by substituting ―March 19, 2007‖ for each reference therein to ―February 28, 2006.‖


                                                               ARTICLE THREE

                                                      MISCELLANEOUS PROVISIONS

         The Trustee makes no undertaking or representations in respect of, and shall not be responsible in any manner whatsoever for and in
respect of, the validity or sufficiency of this Amendment to Second Supplemental Indenture or the proper authorization or the due execution
hereof by the company or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely
by the Company. The Trustee shall not be accountable for the use or the application by the Company of the Series B Bonds or the proceeds
thereof.

          Except as expressly amended and supplemented by the First Supplemental Indenture, by the Second Supplemental Indenture and by
this Amendment to Second Supplemental Indenture, the Original Indenture, the Second Supplemental Indenture and the First Mortgage Bonds,
Series B shall continue in full force and effect in accordance with the provisions thereof and the Original Indenture is in all respects hereby
ratified and confirmed. This Amendment to Second



                                                                        2
Supplemental Indenture and all of its provisions shall be deemed a part of the Original Indenture in the manner and to the extent herein and
therein provided.

         This Amendment to Second Supplemental Indenture shall be governed by and construed in accordance with the law of the State of
New York, except, if this Amendment to Second Supplemental Indenture shall become qualified and shall become subject to the Trust
Indenture Act, to the extent that the Trust Indenture Act shall be applicable, and except to the extent that the law of any jurisdiction wherein
any portion of the Mortgaged Property is located shall mandatorily govern the creation of a mortgage lien on and security interest in, or
perfection, priority or enforcement of the Lien of the Indenture or exercise of remedies with respect to, such portion of the Mortgaged Property.

        This Amendment to Second Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.



                                                                        3
         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Second Supplemental Indenture to be duly executed as
of the day and year first above written.


                           INTERNATIONAL TRANSMISSION COMPANY


                           By:
                                     Name: Edward M. Rahill
                                     Title: Vice President and CFO

                           BNY MIDWEST TRUST COMPANY, as Trustee

                           By:
                                     Name: Roxane Ellwanger
                                     Title: Assistant Vice President




                                                                                                                                      Exhibit 10.2

                                                     Kohlberg Kravis Roberts & Co. L.P.
                                                             9 West 57 th Street
                                                        New York, New York 10019


                                                                                     June 1, 2005


International Transmission Holdings Limited Partnership
c/o Ironhill Transmission, LLC
c/o Greenbaum Rowe Smith & Davis LLP
6 Becker Farm Road
Roseland, New Jersey 07068

ITC Holdings Corp. and International Transmission Company
39500 Orchard Hill Place
Novi, Michigan 48375

Ladies and Gentlemen:

                   Reference is made to that letter agreement (the ―Letter Agreement‖) dated February 28, 2003 among International
Transmission Holdings Limited Partnership (the ―Partnership‖), International Transmission Company (the ―Company‖) and Kohlberg, Kravis
Roberts & Co. L.P. concerning the engagement (the ―Engagement‖) of us by the Partnership and the Company to provide advisory, consulting
and financial services to the Partnership and the Company and to their respective divisions, subsidiaries and affiliates (collectively, ―ITC‖). In
exchange for our provision of services pursuant to the Engagement, the Company agreed to pay us an annual advisory fee equal to $700,000,
such fee to be increased at a rate of 7% annually, payable in quarterly installments in arrears at the end of each quarter.

                 The Partnership, ITC Holdings Corp. (―Holdings‖), the Company and we hereby agree to terminate the Engagement on the
following terms and conditions:

                  1.       Upon the completion of an initial public offering of equity securities by Holdings pursuant to an effective registration
statement, the Engagement shall automatically be terminated and we shall have no further obligations to provide ITC or the Partnership any
advisory, consulting or financial services.
                   2.      As compensation for our agreement to terminate the Engagement, Holdings agrees to pay us a one-time advisory fee
in a total amount equal to four million dollars ($4,000,000.00) upon the effectiveness of the termination of the Engagement.

                    3.       In connection with any future advisory, consulting or financial services (―Additional Retentions‖) that we, or any of
our affiliates or partners, perform at ITC’s request after the termination of the Engagement, we may invoice Holdings or the Company
for fees that are mutually agreed upon in advance of the Additional Retention for which Holdings or the Company is invoiced.

                  4.      In addition to any fees that may be payable to us under the Engagement or any Additional Retention, the Partnership
and the Company each also agree to reimburse us and our affiliates, from time to time upon request, for all reasonable out-of-pocket expenses
incurred, including unreimbursed expenses incurred to the date hereof, in connection with the Engagement or any Additional Retention,
including travel expenses and expenses of our counsel.

                      5.      Holdings and the Company each agree to indemnify and hold us, our affiliates (including, without limitation,
affiliated investment entities) and their and our respective partners, executives, officers, directors, employees, agents and controlling persons
(each such person, including us, being an ―Indemnified Party‖) harmless from and against (i) any and all losses, claims, damages and liabilities
(including, without limitation, losses, claims, damages and liabilities arising from or in connection with legal actions brought by or on behalf of
the holders or future holders of the outstanding securities of Holdings or the Company or creditors or future creditors of Holdings or the
Company), joint, several or otherwise, to which such Indemnified Party may become subject under any applicable federal or state law, or
otherwise, related to or arising out of any activity contemplated by the Letter Agreement, this agreement, the Engagement or any Additional
Retention, and our or our affiliates’ performance of any services contemplated by the foregoing and (ii) any and all losses, claims, damages and
liabilities, joint, several or otherwise, related to or arising out of any action or omission or alleged action or omission related to the Partnership,
the Company, International Transmission Company, LLC and Holdings or any of their respective direct or indirect subsidiaries or the securities
or obligations of any such entities. Holdings and the Company will further, subject to the proviso to the immediately preceding sentence,
reimburse any Indemnified Party for all expenses (including counsel fees and disbursements) upon request as they are incurred in connection
with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising from any of the
foregoing, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by the
Partnership; provided , however , that neither Holdings nor the Company will be liable under the foregoing indemnification provision (and
amounts previously paid that are determined not required to be paid by Holdings or the Company pursuant to the terms of this paragraph shall
be repaid promptly) to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court to have resulted from
our willful misconduct, bad faith or gross negligence. Holdings and the Company each agree that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to Holdings or the Company related to or arising out of the Letter Agreement, this
agreement, the Engagement or any Additional Retention, or our affiliates’ performance of any services contemplated by the foregoing, except
to the extent that any loss, claim, damage, liability or expense is found in a final, non-appealable judgment by a court to have resulted from our
willful misconduct, bad faith or gross negligence.

                  Holdings and the Company each also agree that, without the prior written consent of each of us, they will not settle,
compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding to which an Indemnified Party is
an actual or potential party and in respect of which indemnification could be sought under the indemnification provision in the immediately
preceding paragraph, unless such settlement,

                                                                           2
compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action or
proceeding.

                   Promptly after receipt by an Indemnified Party of notice of any suit, action, proceeding or investigation with respect to which
an Indemnified Party may be entitled to indemnification hereunder, such Indemnified Party will notify each of Holdings and the Company in
writing of the assertion of such claim or the commencement of such suit, action, proceeding or investigation, but the failure so to notify
Holdings or the Company shall not relieve Holdings or the Company from any liability which it may have hereunder, except to the extent that
such failure has materially prejudiced Holdings or the Company. If Holdings or the Company elects within a reasonable time after receipt of
such notice, Holdings or the Company may participate at its own expense in the defense of such suit, action, proceeding or investigation. Each
Indemnified Party may employ separate counsel to represent it or defend it in any such suit, action, proceeding or investigation in which it may
become involved or is named as a defendant and, in such event, the reasonable fees and expense of such counsel shall be borne by Holdings or
the Company; provided , however , that neither Holdings nor the Company will be required in connection with any such suit, action,
proceeding or investigation, or separate but substantially similar actions arising out of the same general allegations or circumstances, to pay the
fees and disbursements of more than one separate counsel (other than local counsel) for all Indemnified Parties in any single action or
proceeding. Whether or not Holdings or the Company participates in the defense of any claim, all of Holdings, the Company and we shall
cooperate in the defense thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may be reasonably requested in connection therewith.

                    If the indemnification provided for in clause (i) of the first sentence of this paragraph 5 is finally judicially determined by a
court of competent jurisdiction to be unavailable to an Indemnified Party, or insufficient to hold any Indemnified Party harmless, in respect of
any losses, claims, damages or liabilities (other than any losses, claims, damages or liabilities found in a final judgment by a court to have
resulted from our willful misconduct, bad faith or gross negligence), then Holdings and the Company, on the one hand, in lieu of indemnifying
such Indemnified Party, and we, on the other hand, will contribute to the amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received, or sought to be received, by
Holdings and the Company on the one hand and us, solely in our capacity as an advisor under the Letter Agreement or this agreement, as
applicable, on the other hand in connection with the transactions to which such indemnification, contribution or reimbursement is sought, or (ii)
if (but only if) the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) but also the relative fault of Holdings and the Company on the one hand and us on the other,
as well as any other relevant equitable considerations; provided , however , that in no event shall our aggregate contribution hereunder exceed
the amount of fees actually received by us in respect of the transaction at issue pursuant to the Letter Agreement or this agreement, as
applicable. The amount paid or payable by a party as a result of the losses, claims, damages and liabilities referred to above will be deemed to
include any legal or other fees or expenses reasonably incurred in defending any action or claim. Holdings, the Company and we agree that it
would not be just and equitable if

                                                                           3
contribution pursuant to this paragraph were determined by pro rata allocation or by any other method which does not take into account the
equitable considerations referred to in this paragraph. The indemnity, contribution and expense reimbursement obligations that each of
Holdings and the Company has under this letter shall be in addition to any liability Holdings, the Company or ITC may have, and
notwithstanding any other provision of this letter, shall survive the termination of the Engagement or any Additional Retention pursuant to the
Letter Agreement or this agreement, as applicable.

                   6.      Any advice or opinions provided by us may not be disclosed or referred to publicly or to any third party (other than
Holdings’ legal, tax, financial or other advisors), except in accordance with our prior written consent.

                   7.      In connection with any Additional Retention, we shall act as an independent contractor, with duties solely to
ITC. The provisions hereof shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and
assigns. Nothing in this agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective
successors and assigns, and, to the extent expressly set forth herein, the Indemnified Parties, any rights or remedies under or by reason of this
agreement. Without limiting the generality of the foregoing, the parties acknowledge that nothing in this agreement, expressed or implied, is
intended to confer on any present or future holders of any securities of Holdings or its subsidiaries or affiliates, or any present or future creditor
of Holdings or its subsidiaries or affiliates, any rights or remedies under or by reason of this agreement or any performance hereunder.

                   8.       This agreement shall be governed by and construed in accordance with the laws of New York without regard to
principles of conflicts of law.

                 9.       Each party hereto represents and warrants that the execution and delivery of this agreement by such party has been
duly authorized by all necessary action of such party.

                   10.    If any term or provision of this agreement or the application thereof shall, in any jurisdiction and to any extent, be
invalid and unenforceable, such term or provision shall be ineffective, as to such jurisdiction, solely to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable any remaining terms or provisions hereof or affecting the validity or enforceability
of such term or provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto waive any provision of law
that renders any term or provision of this agreement invalid or unenforceable in any respect.

                    11.    Each party hereto waives all right to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) related to or arising out of our retention pursuant to, or our performance of the services contemplated by this
agreement.

                  12.     It is expressly understood that the foregoing paragraphs 2-6, 10 and 11 in their entirety, survive any termination of
this agreement.

                                                                          4
                 If the foregoing sets forth the understanding between us, please so indicate on the enclosed signed copy of this letter in the
space provided therefor and return it to us, whereupon this letter shall constitute a binding agreement among us.


                                                                         Very truly yours,

                                                                         Kohlberg Kravis Roberts & Co. L.P.

                                                                         By:
                                                                                Authorized Signatory


AGREED TO AND ACCEPTED

International Transmission Holdings Limited Partnership

By: Ironhill Transmission, LLC

      By:
            Name: Lewis Eisenberg
            Title: Manager


ITC Holdings Corp.

By:
        Name:
        Title:


International Transmission Company

By:
        Name:
        Title:




                                                                                                                                     Exhibit 10.3

                                                     Trimaran Fund Management, L.L.C.
                                                             622 Third Avenue
                                                        New York, New York 10017


                                                                                     June 1, 2005


International Transmission Holdings Limited Partnership
c/o Ironhill Transmission, LLC
c/o Greenbaum Rowe Smith & Davis LLP
6 Becker Farm Road
Roseland, New Jersey 07068

ITC Holdings Corp. and International Transmission Company
39500 Orchard Hill Place
Novi, Michigan 48375
Ladies and Gentlemen:

                  Reference is made to that letter agreement (the ―Letter Agreement‖) dated February 28, 2003 among International
Transmission Holdings Limited Partnership (the ―Partnership‖), International Transmission Company (the ―Company‖) and Trimaran Fund
Management, L.L.C. concerning the engagement (the ―Engagement‖) of us by the Partnership and the Company to provide advisory,
consulting and financial services to the Partnership and the Company and to their respective divisions, subsidiaries and affiliates (collectively,
―ITC‖). In exchange for our provision of services pursuant to the Engagement, the Company agreed to pay us an annual advisory fee equal to
$300,000, such fee to be increased at a rate of 7% annually, payable in quarterly installments in arrears at the end of each quarter.

                 The Partnership, ITC Holdings Corp. (―Holdings‖), the Company and we hereby agree to terminate the Engagement on the
following terms and conditions:

                  1.       Upon the completion of an initial public offering of equity securities by Holdings pursuant to an effective registration
statement, the Engagement shall automatically be terminated and we shall have no further obligations to provide ITC or the Partnership any
advisory, consulting or financial services.

                   2.      As compensation for our agreement to terminate the Engagement, Holdings agrees to pay us a one-time advisory fee
in a total amount equal to one million, seven hundred and twenty-five thousand dollars ($1,725,000.00) upon the effectiveness of the
termination of the Engagement.

                    3.       In connection with any future advisory, consulting or financial services (―Additional Retentions‖) that we, or any of
our affiliates or partners, perform at ITC’s request after the termination of the Engagement, we may invoice Holdings or the Company
for fees that are mutually agreed upon in advance of the Additional Retention for which Holdings or the Company is invoiced.

                  4.      In addition to any fees that may be payable to us under the Engagement or any Additional Retention, the Partnership,
Holdings and the Company each also agree to reimburse us and our affiliates, from time to time upon request, for all reasonable out-of-pocket
expenses incurred, including unreimbursed expenses incurred to the date hereof, in connection with the Engagement or any Additional
Retention, including travel expenses and expenses of our counsel.

                      5.      Holdings and the Company each agree to indemnify and hold us, our affiliates (including, without limitation,
affiliated investment entities) and their and our respective partners, executives, officers, directors, employees, agents and controlling persons
(each such person, including us, being an ―Indemnified Party‖) harmless from and against (i) any and all losses, claims, damages and liabilities
(including, without limitation, losses, claims, damages and liabilities arising from or in connection with legal actions brought by or on behalf of
the holders or future holders of the outstanding securities of Holdings or the Company or creditors or future creditors of Holdings or the
Company), joint, several or otherwise, to which such Indemnified Party may become subject under any applicable federal or state law, or
otherwise, related to or arising out of any activity contemplated by the Letter Agreement, this agreement, the Engagement or any Additional
Retention, and our or our affiliates’ performance of any services contemplated by the foregoing and (ii) any and all losses, claims, damages and
liabilities, joint, several or otherwise, related to or arising out of any action or omission or alleged action or omission related to the Partnership,
the Company, International Transmission Company, LLC and Holdings or any of their respective direct or indirect subsidiaries or the securities
or obligations of any such entities. Holdings and the Company will further, subject to the proviso to the immediately preceding sentence,
reimburse any Indemnified Party for all expenses (including counsel fees and disbursements) upon request as they are incurred in connection
with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising from any of the
foregoing, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by the
Partnership; provided , however , that neither Holdings nor the Company will be liable under the foregoing indemnification provision (and
amounts previously paid that are determined not required to be paid by Holdings or the Company pursuant to the terms of this paragraph shall
be repaid promptly) to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court to have resulted from
our willful misconduct, bad faith or gross negligence. Holdings and the Company each agree that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to Holdings or the Company related to or arising out of the Letter Agreement, this
agreement, the Engagement or any Additional Retention, or our affiliates’ performance of any services contemplated by the foregoing, except
to the extent that any loss, claim, damage, liability or expense is found in a final, non-appealable judgment by a court to have resulted from our
willful misconduct, bad faith or gross negligence.

                  Holdings and the Company each also agree that, without the prior written consent of each of us, they will not settle,
compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding to which an Indemnified Party is
an actual or potential party and in respect of which indemnification could be sought under the indemnification provision in the immediately
preceding paragraph, unless such settlement,

                                                                           2
compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action or
proceeding.

                   Promptly after receipt by an Indemnified Party of notice of any suit, action, proceeding or investigation with respect to which
an Indemnified Party may be entitled to indemnification hereunder, such Indemnified Party will notify each of Holdings and the Company in
writing of the assertion of such claim or the commencement of such suit, action, proceeding or investigation, but the failure so to notify
Holdings or the Company shall not relieve Holdings or the Company from any liability which it may have hereunder, except to the extent that
such failure has materially prejudiced Holdings or the Company. If Holdings or the Company elects within a reasonable time after receipt of
such notice, Holdings or the Company may participate at its own expense in the defense of such suit, action, proceeding or investigation. Each
Indemnified Party may employ separate counsel to represent it or defend it in any such suit, action, proceeding or investigation in which it may
become involved or is named as a defendant and, in such event, the reasonable fees and expense of such counsel shall be borne by Holdings or
the Company; provided , however , that neither Holdings nor the Company will be required in connection with any such suit, action,
proceeding or investigation, or separate but substantially similar actions arising out of the same general allegations or circumstances, to pay the
fees and disbursements of more than one separate counsel (other than local counsel) for all Indemnified Parties in any single action or
proceeding. Whether or not Holdings or the Company participates in the defense of any claim, all of Holdings, the Company and we shall
cooperate in the defense thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may be reasonably requested in connection therewith.

                    If the indemnification provided for in clause (i) of the first sentence of this paragraph 5 is finally judicially determined by a
court of competent jurisdiction to be unavailable to an Indemnified Party, or insufficient to hold any Indemnified Party harmless, in respect of
any losses, claims, damages or liabilities (other than any losses, claims, damages or liabilities found in a final judgment by a court to have
resulted from our willful misconduct, bad faith or gross negligence), then Holdings and the Company, on the one hand, in lieu of indemnifying
such Indemnified Party, and we, on the other hand, will contribute to the amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received, or sought to be received, by
Holdings and the Company on the one hand and us, solely in our capacity as an advisor under the Letter Agreement or this agreement, as
applicable, on the other hand in connection with the transactions to which such indemnification, contribution or reimbursement is sought, or (ii)
if (but only if) the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) but also the relative fault of Holdings and the Company on the one hand and us on the other,
as well as any other relevant equitable considerations; provided , however , that in no event shall our aggregate contribution hereunder exceed
the amount of fees actually received by us in respect of the transaction at issue pursuant to the Letter Agreement or this agreement, as
applicable. The amount paid or payable by a party as a result of the losses, claims, damages and liabilities referred to above will be deemed to
include any legal or other fees or expenses reasonably incurred in defending any action or claim. Holdings, the Company and we agree that it
would not be just and equitable if

                                                                           3
contribution pursuant to this paragraph were determined by pro rata allocation or by any other method which does not take into account the
equitable considerations referred to in this paragraph. The indemnity, contribution and expense reimbursement obligations that each of
Holdings and the Company has under this letter shall be in addition to any liability Holdings, the Company or ITC may have, and
notwithstanding any other provision of this letter, shall survive the termination of the Engagement or any Additional Retention pursuant to the
Letter Agreement or this agreement, as applicable.

                   6.      Any advice or opinions provided by us may not be disclosed or referred to publicly or to any third party (other than
Holdings’ legal, tax, financial or other advisors), except in accordance with our prior written consent.

                   7.      In connection with any Additional Retention, we shall act as an independent contractor, with duties solely to
ITC. The provisions hereof shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and
assigns. Nothing in this agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective
successors and assigns, and, to the extent expressly set forth herein, the Indemnified Parties, any rights or remedies under or by reason of this
agreement. Without limiting the generality of the foregoing, the parties acknowledge that nothing in this agreement, expressed or implied, is
intended to confer on any present or future holders of any securities of Holdings or its subsidiaries or affiliates, or any present or future creditor
of Holdings or its subsidiaries or affiliates, any rights or remedies under or by reason of this agreement or any performance hereunder.

                   8.       This agreement shall be governed by and construed in accordance with the laws of New York without regard to
principles of conflicts of law.

                 9.       Each party hereto represents and warrants that the execution and delivery of this agreement by such party has been
duly authorized by all necessary action of such party.

                   10.    If any term or provision of this agreement or the application thereof shall, in any jurisdiction and to any extent, be
invalid and unenforceable, such term or provision shall be ineffective, as to such jurisdiction, solely to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable any remaining terms or provisions hereof or affecting the validity or enforceability
of such term or provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto waive any provision of law
that renders any term or provision of this agreement invalid or unenforceable in any respect.

                    11.    Each party hereto waives all right to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) related to or arising out of our retention pursuant to, or our performance of the services contemplated by this
agreement.

                  12.     It is expressly understood that the foregoing paragraphs 2-6, 10 and 11 in their entirety, survive any termination of
this agreement.

                                                                          4
                 If the foregoing sets forth the understanding between us, please so indicate on the enclosed signed copy of this letter in the
space provided therefor and return it to us, whereupon this letter shall constitute a binding agreement among us.


                                                                       Very truly yours,

                                                                       Trimaran Fund Management, L.L.C.

                                                                       By:
                                                                               Authorized Signatory


AGREED TO AND ACCEPTED

International Transmission Holdings Limited Partnership

By:      Ironhill Transmission, LLC

By:
         Name: Lewis Eisenberg
         Title: Manager


ITC Holdings Corp.

By:
         Name:
         Title:


International Transmission Company

By:
         Name:
         Title:




                                                                                                                                     Exhibit 10.4

                                                     International Transmission Holdings
                                                              Limited Partnership
                                                        c/o Ironhill Transmission, LLC
                                                          c/o 99 Wood Avenue South
                                                                 P.O. Box 5600
                                                        Woodbridge, New Jersey 07095

                                                                                            June 1, 2005

ITC Holdings Corp. and International Transmission Company
39500 Orchard Hill Place
Novi, Michigan 48375

Ladies and Gentlemen:

                 Reference is made to that letter agreement (the ―Letter Agreement‖) dated February 28, 2003 among ITC Holdings Corp.
(―ITCH‖) and International Transmission Company (the ―Company‖) and International Transmission Holdings Limited Partnership concerning
the engagement (the ―Engagement‖) of us by ITCH and the Company to provide advisory, consulting and financial services to ITCH and the
Company and to their respective divisions, subsidiaries and affiliates (collectively, ―ITC‖). In exchange for our provision of services pursuant
to the Engagement, ITC and ITCH agreed to pay us annual fees equal to $150,000 and $50,000, payable by the Company and ITCH,
respectively, to us in arrears within 30 days of the end of each year.

                  The Company, ITCH and we hereby agree to terminate the Engagement on the following terms and conditions:

                  1.       Upon the completion of an initial public offering of equity securities by ITCH pursuant to an effective registration
statement, the Engagement shall automatically be terminated and we shall have no further obligations to provide ITC or ITCH any advisory,
consulting or financial services.

                 2.       As compensation for our agreement to terminate the Engagement, ITCH agrees to pay us (or our designee) a
one-time advisory fee in a total amount equal to one million dollars ($1,000,000.00) payable upon the effectiveness of the termination of the
Engagement.

                    3.       In connection with any future advisory, consulting or financial services (―Additional Retentions‖) that we, or any of
our affiliates or partners, perform at ITC’s request after the termination of the Engagement, we may invoice ITCH or the Company for fees that
are mutually agreed upon in advance of the Additional Retention for which ITCH or the Company is invoiced.
                 4.      In addition to any fees that may be payable to us under the Engagement or any Additional Retention, ITCH and the
Company each also agree to reimburse us and our affiliates, from time to time upon request, for all reasonable out-of-pocket expenses incurred,
including unreimbursed expenses incurred to the date hereof, in connection with the Engagement or any Additional Retention, including travel
expenses and expenses of our counsel.

                   5.       ITCH and the Company each agree to indemnify and hold us, our affiliates (including, without limitation, our
partners and affiliated investment entities) and their and our respective partners, executives, officers, directors, employees, agents and
controlling persons (each such person, including us, being an ―Indemnified Party‖) harmless from and against (i) any and all losses, claims,
damages and liabilities (including, without limitation, losses, claims, damages and liabilities arising from or in connection with legal actions
brought by or on behalf of the holders or future holders of the outstanding securities of ITC or creditors or future creditors of ITC), joint,
several or otherwise, to which such Indemnified Party may become subject under any applicable federal or state law, or otherwise, related to or
arising out of any activity contemplated by the Letter Agreement, this agreement, the Engagement or any Additional Retention, and our or our
affiliates’ performance of any services contemplated by the foregoing and (ii) any and all losses, claims, damages and liabilities, joint, several
or otherwise, related to or arising out of any action or omission or alleged action or omission related to ITCH, the Company or International
Transmission Company, LLC or any of their respective direct or indirect subsidiaries or the securities or obligations of any such
entities. ITCH and the Company will further, subject to the proviso to the immediately preceding sentence, reimburse any Indemnified Party
for all expenses (including counsel fees and disbursements) upon request as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action or proceeding arising from any of the foregoing, whether or not
such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by ITCH; provided , however , that
neither ITCH nor the Company will be liable under the foregoing indemnification provision (and amounts previously paid that are determined
not required to be paid by ITCH or the Company pursuant to the terms of this paragraph shall be repaid promptly) to the extent that any loss,
claim, damage, liability or expense is found in a final judgment by a court to have resulted from our willful misconduct, bad faith or gross
negligence. ITCH and the Company each agree that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort
or otherwise) to ITC related to or arising out of the Letter Agreement, this agreement, the Engagement or any Additional Retention, or our
affiliates’ performance of any services contemplated by the foregoing, except to the extent that any loss, claim, damage, liability or expense is
found in a final, non-appealable judgment by a court to have resulted from our willful misconduct, bad faith or gross negligence.

                   ITCH and the Company each also agree that, without the prior written consent of us, they will not settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action or proceeding to which an Indemnified Party is an actual or
potential party and in respect of which indemnification could be sought under the indemnification provision in the immediately preceding
paragraph, unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising
out of such claim, action or proceeding.

                                                                        2
                   Promptly after receipt by an Indemnified Party of notice of any suit, action, proceeding or investigation with respect to which
an Indemnified Party may be entitled to indemnification hereunder, such Indemnified Party will notify each of ITCH and the Company in
writing of the assertion of such claim or the commencement of such suit, action, proceeding or investigation, but the failure so to notify ITCH
or the Company shall not relieve ITCH or the Company from any liability which it may have hereunder, except to the extent that such failure
has materially prejudiced either ITCH or the Company. If either ITCH or the Company so elects within a reasonable time after receipt of such
notice, ITCH or the Company, respectively, may participate at its own expense in the defense of such suit, action, proceeding or
investigation. Each Indemnified Party may employ separate counsel to represent it or defend it in any such suit, action, proceeding or
investigation in which it may become involved or is named as a defendant and, in such event, the reasonable fees and expense of such counsel
shall be borne by ITCH or the Company; provided , however , that neither ITCH nor the Company will be required in connection with any such
suit, action, proceeding or investigation, or separate but substantially similar actions arising out of the same general allegations or
circumstances, to pay the fees and disbursements of more than one separate counsel (other than local counsel) for all Indemnified Parties in any
single action or proceeding. Whether or not ITCH or the Company participates in the defense of any claim, all of ITCH, the Company and we
shall cooperate in the defense thereof and shall furnish such records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith.

                   If the indemnification provided for in clause (i) of the first sentence of this paragraph 5 is finally judicially determined by a
court of competent jurisdiction to be unavailable to an Indemnified Party, or insufficient to hold any Indemnified Party harmless, in respect of
any losses, claims, damages or liabilities (other than any losses, claims, damages or liabilities found in a final judgment by a court to have
resulted from our willful misconduct, bad faith or gross negligence), then ITCH and the Company, on the one hand, in lieu of indemnifying
such Indemnified Party, and we, on the other hand, will contribute to the amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received, or sought to be received, by
ITC on the one hand and us, solely in our capacity as an advisor under the Letter Agreement or this agreement, as applicable, on the other hand
in connection with the transactions to which such indemnification, contribution or reimbursement is sought, or (ii) if (but only if) the allocation
provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of ITC on the one hand and us on the other, as well as any other relevant equitable
considerations; provided , however , that in no event shall our aggregate contribution hereunder exceed the amount of fees actually received by
us in respect of the transaction at issue pursuant to the Letter Agreement or this agreement, as applicable. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to above will be deemed to include any legal or other fees or expenses
reasonably incurred in defending any action or claim. ITCH, the Company and we agree that it would not be just and equitable if contribution
pursuant to this paragraph were determined by pro rata allocation or by any other method which does not take into account the equitable
considerations referred to in this paragraph. The indemnity, contribution and expense reimbursement obligations that each of ITCH and the
Company has under this letter shall be in addition to any liability ITCH, the Company or ITC may have, and

                                                                           3
notwithstanding any other provision of this letter, shall survive the termination of the Engagement or any Additional Retention pursuant to the
Letter Agreement or this agreement, as applicable.

                   6.       Any advice or opinions provided by us may not be disclosed or referred to publicly or to any third party (other than
ITC’s legal, tax, financial or other advisors), except in accordance with our prior written consent.

                  7.       In connection with any Additional Retention, we shall act as an independent contractor, with duties solely to
ITC. The provisions hereof shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and
assigns. Nothing in this agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective
successors and assigns, and, to the extent expressly set forth herein, the Indemnified Parties, any rights or remedies under or by reason of this
agreement. Without limiting the generality of the foregoing, the parties acknowledge that nothing in this agreement, expressed or implied, is
intended to confer on any present or future holders of any securities of ITCH or the Company or their respective subsidiaries or affiliates, or
any present or future creditor of ITCH or the Company or their subsidiaries or affiliates, any rights or remedies under or by reason of this
agreement or any performance hereunder.

                   8.       This agreement shall be governed by and construed in accordance with the laws of New York without regard to
principles of conflicts of law.

                 9.       Each party hereto represents and warrants that the execution and delivery of this agreement by such party has been
duly authorized by all necessary action of such party.

                   10.    If any term or provision of this agreement or the application thereof shall, in any jurisdiction and to any extent, be
invalid and unenforceable, such term or provision shall be ineffective, as to such jurisdiction, solely to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable any remaining terms or provisions hereof or affecting the validity or enforceability
of such term or provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto waive any provision of law
that renders any term or provision of this agreement invalid or unenforceable in any respect.

                    11.    Each party hereto waives all right to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) related to or arising out of our retention pursuant to, or our performance of the services contemplated by this
agreement.

                  12.     It is expressly understood that the foregoing paragraphs 2-6, 10 and 11 in their entirety, survive any termination of
this agreement.

                                                                         4
                 If the foregoing sets forth the understanding between us, please so indicate on the enclosed signed copy of this letter in the
space provided therefor and return it to us, whereupon this letter shall constitute a binding agreement among us.


                                                                       Very truly yours,


                                                                       International Transmission Holdings
                                                                       Limited Partnership

                                                                       By: Ironhill Transmission, LLC


                                                                            By:
                                                                                   Name: Lewis Eisenberg
                                                                                   Title: Manager

AGREED TO AND ACCEPTED

ITC Holdings Corp.


By:
       Name:
       Title:


International Transmission Company


By:
       Name:
       Title:




                                                                                                                                     Exhibit 10.7

                                                                                                                            EXECUTION COPY

                                                               FORM OF
                                             MANAGEMENT STOCKHOLDER’S AGREEMENT
                                                  ( Purchased Stock and Options Only )

                  This Management Stockholder’s Agreement (this ― Agreement ‖) is entered into as of [DATE], 2003 (the ― Effective Date ‖)
between ITC Holdings Corp., a Michigan corporation (the ― Company ‖), and the undersigned person (the ― Management Stockholder ‖) (the
Company and the Management Stockholder being hereinafter collectively referred to as the ― Parties ‖). All capitalized terms not immediately
defined are hereinafter defined in Section 7(b) of this Agreement.

                 WHEREAS, on December 3, 2002, DTE Energy Company, a Michigan corporation and the Company entered into a Stock
Purchase Agreement (the ― Acquisition Agreement ‖). Pursuant to the Acquisition Agreement, the Company acquired all of the issued and
outstanding shares in the capital of International Transmission Company, a Michigan corporation (― ITC ‖), as further specified in the
Acquisition Agreement (the ― Acquisition ‖) (the date of such Acquisition, the ― Closing Date ‖).

                   WHEREAS, in connection with the Acquisition, Management Stockholder has been selected by the Company to be permitted
to contribute to the Company cash in exchange for shares of common stock of the Company (such common stock, together with any securities
issued in respect thereof or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification,
reorganization, merger, consolidation, exchange or other similar reorganization, the ― Common Stock ‖);
                  WHEREAS, Management Stockholder has been selected by the Company, as of the date hereof, to receive an option to
purchase shares of Common Stock (the ― Option ‖) pursuant to the terms set forth below and the terms of the 2003 Stock Purchase and Option
Plan for Key Employees of the Company and Its Subsidiaries (the ― Option Plan ‖) and the Stock Option Agreement dated as of even date
herewith, entered into by and between the Company and the Management Stockholder (the ― Stock Option Agreement ‖); and

                 WHEREAS, this Agreement is one of several other agreements (― Other Management Stockholders’ Agreements ‖) which
have been, or which in the future will be, entered into between the Company and other individuals who are or will be key employees of the
Company or one of its subsidiaries (collectively, the ― Other Management Stockholders ‖).

                  NOW THEREFORE, to implement the foregoing and in consideration of the grant of Options and of the mutual agreements
contained herein, the Parties agree as follows:

                  1.        Purchased Shares; Issuance of Options .

                   (a)        The Management Stockholder hereby subscribes for and shall purchase, as of the Effective Date, and the Company
shall issue and deliver to the Management Stockholder as of the Effective Date, [NUMBER] shares of Common Stock, at a per share purchase
price of $25.00 (the ― Base Price ‖), which price is equal to the effective per share purchase price paid by the Company for the shares of ITC in
the Acquisition (all such shares acquired by the Management Stockholder, the ― Purchased Stock ‖). The aggregate purchase price for all
shares of the Purchased Stock is $[AMOUNT].
                  (b)        Subject to the terms and conditions hereinafter set forth and as set forth in the Option Plan, and upon receipt by the
Company of the Management Stockholder’s subscription price set forth in Section 1(a), as of the Effective Date the Company shall issue to the
Management Stockholder an Option to acquire [NUMBER] shares of Common Stock, at an exercise price of $25.00 per share, and the Parties
shall execute and deliver to each other copies of the Stock Option Agreement concurrently with the issuance of the Option.

                    (c)        The Company shall have no obligation to sell any Purchased Stock to any person who (i) is a resident or citizen of
a state or other jurisdiction in which the sale of the Common Stock to him or her would constitute a violation of the securities or ―blue sky‖
laws of such jurisdiction or (ii) is not an employee of the Company or any of its subsidiaries on the date hereof.

                  2.         Management Stockholder’s Representations, Warranties and Agreements .

                  (a) The Management Stockholder agrees and acknowledges that he will not, except to the extent necessary in connection
with any loan to the Management Stockholder to purchases of the Purchased Stock, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (except, if applicable, in favor of CIBC, INC. pursuant to that certain Pledge Agreement entered into by
the Management Stockholder and the CIBC, INC. dated as of [DATE], 2003 in respect of the Promissory Note executed by the Management
Stockholder in favor of CIBC, INC. dated [DATE], 2003) (any of the foregoing acts being referred to herein as a ―transfer‖) any shares of
Purchased Stock and, at the time of exercise, the Common Stock issuable upon exercise of the Options (― Option Stock ‖; together with all
Purchased Stock and any other Common Stock otherwise acquired and/or held by the Management Stockholder Entities, ― Stock ‖), except as
otherwise provided for herein. If the Management Stockholder is a Rule 405 Affiliate, the Management Stockholder also agrees and
acknowledges that he will not transfer any shares of the Stock unless:

                  (i) the transfer is pursuant to an effective registration statement under the Securities Act of 1933, as amended, and the rules
         and regulations in effect thereunder (the ― Act ‖), and in compliance with applicable provisions of state securities laws or

                  (ii) (A) counsel for the Management Stockholder (which counsel shall be reasonably acceptable to the Company) shall have
         furnished the Company with an opinion, satisfactory in form and substance to the Company, that no such registration is required
         because of the availability of an exemption from registration under the Act and (B) if the Management Stockholder is a citizen or
         resident of any country other than the United States, or the Management Stockholder desires to effect any transfer in any such country,
         counsel for the Management Stockholder (which counsel shall be reasonably satisfactory to the Company) shall have furnished the
         Company with an opinion or other advice reasonably satisfactory in form and substance to the Company to the effect that such transfer
         will comply with the securities laws of such jurisdiction.

Notwithstanding the foregoing, the Company acknowledges and agrees that any of the following transfers are deemed to be in compliance with
the Act and this Agreement and no opinion of counsel is required in connection therewith: (x) a transfer made pursuant to Sections 3, 4, 5 or 6
hereof, (y) a transfer upon the death or Permanent Disability of the Management Stockholder to the Management Stockholder’s Estate or a
transfer to the
executors, administrators, testamentary trustees, legatees or beneficiaries of a person who has become a holder of Stock in accordance with the
terms of this Agreement, provided that it is expressly understood that any such transferee shall be bound by the provisions of this Agreement,
and (z) a transfer made after the Effective Date in compliance with the federal securities laws to a Management Stockholder’s Trust, provided
that such transfer is made expressly subject to this Agreement and that the transferee agrees in writing to be bound by the terms and conditions
hereof.

                  (b)       The certificate (or certificates) representing the Stock shall bear the following legend:

                  ―THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
                  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT,
                  PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
                  MANAGEMENT STOCKHOLDER’S AGREEMENT DATED AS OF [DATE], 2003 BETWEEN ITC HOLDINGS CORP.
                  (THE ―COMPANY‖) AND THE MANAGEMENT STOCKHOLDER NAMED ON THE FACE HEREOF (A COPY OF
                  WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY).‖

                   (c)        The Management Stockholder acknowledges that he has been advised that (i) a restrictive legend in the form
heretofore set forth shall be placed on the certificates representing the Stock and (ii) a notation shall be made in the appropriate records of the
Company indicating that the Stock is subject to restrictions on transfer and appropriate stop transfer restrictions will be issued to the
Company’s transfer agent with respect to the Stock. If the Management Stockholder is a Rule 405 Affiliate, the Management Stockholder also
acknowledges that (1) the Stock must be held indefinitely and the Management Stockholder must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the Act or an exemption from such registration is available, (2) when and if
shares of the Stock may be disposed of without registration in reliance on Rule 144 of the rules and regulations promulgated under the Act,
such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule and (3) if the Rule 144
exemption is not available, public sale without registration will require compliance with some other exemption under the Act.

                  (d)       If any shares of the Stock are to be disposed of in accordance with Rule 144 under the Act or otherwise, the
Management Stockholder shall promptly notify the Company of such intended disposition and shall deliver to the Company at or prior to the
time of such disposition such documentation as the Company may reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy of any notice on Form 144 required to be filed with the SEC.

                    (e)       The Management Stockholder agrees that, if any shares of the Stock are offered to the public pursuant to an
effective registration statement under the Act (other than registration of securities issued under an employee plan), the Management
Stockholder will not effect any public sale or distribution of any shares of the Stock not covered by such registration statement from the time of
the receipt of a notice from the Company that the
Company has filed or imminently intends to file such registration statement to, or within 180 days after, the effective date of such registration
statement, unless otherwise agreed to in writing by the Company.

                   (f)       The Management Stockholder represents and warrants that (i) with respect to the Stock he has received and
reviewed the available information relating to the Stock and (ii) he has been given the opportunity to obtain any additional information or
documents and to ask questions and receive answers about such information, the Company and the business and prospects of the Company
which he deems necessary to evaluate the merits and risks related to his investment in the Stock and to verify the information contained in the
information received as indicated in this Section 2(f), and he has relied solely on such information. In addition, if the Management
Stockholder is an Ontario, Canada resident, the Management Stockholder represents and warrants that he (A) is entitled under Ontario
securities laws to purchase the shares of Stock without the benefit of a prospectus qualified under the securities laws; (B) is basing his
investment decision solely on the Private Placement Memorandum and not on any other information concerning the Company and its
subsidiaries; (C) has reviewed Section 6 of this Agreement containing resale restrictions and acknowledges and agrees that the shares of Stock
purchased under this Agreement are subject to resale restrictions under applicable securities legislation as well as under Section 6 of this
Agreement containing resale restrictions; (D) is an officer or employee of the Company or a subsidiary of the Company; and (E) is purchasing
shares of Stock as principal for its own account.

                   (g)       The Management Stockholder further represents and warrants that (i) his financial condition is such that he can
afford to bear the economic risk of holding the Stock for an indefinite period of time and has adequate means for providing for his current
needs and personal contingencies, (ii) he can afford to suffer a complete loss of his or her investment in the Stock, (iii) he understands and has
taken cognizance of all risk factors related to the purchase of the Stock and (iv) his knowledge and experience in financial and business matters
are such that he is capable of evaluating the merits and risks of his purchase of the Stock as contemplated by this Agreement.

                   3.        Transferability of Stock . The Management Stockholder agrees that he will not transfer any shares of the Stock at
any time during the period commencing on the Effective Date and ending on the fifth anniversary of the Effective Date; provided , however ,
that the Management Stockholder may transfer shares of Stock during such time pursuant to one of the following exceptions: (a) transfers
permitted by clauses (x), (y) and (z) of Section 2(a); and/or (b) a sale of shares of Common Stock pursuant to an effective registration statement
under the Act filed by the Company (excluding any registration on Form S-8, S-4 or any successor or similar form) pursuant to Section 10 of
this Agreement; and/or (c) transfers permitted pursuant to the Sale Participation Agreement (as defined in Section 7). No transfer of any such
shares in violation hereof shall be made or recorded on the books of the Company and any such transfer shall be void ab initio and of no
effect. Notwithstanding anything in this Agreement to the contrary, this Section 3 shall terminate and be of no further force or effect upon the
occurrence of a Change of Ownership.

                  4.         Right of First Refusal . (a) If, at any time after the fifth anniversary of the Effective Date and prior to the date of
consummation of a Qualified Public Offering, the Management Stockholder receives a bona fide offer to purchase any or all of his Stock (the ―
Third Party Offer ‖) from a third party (the ― Offeror ‖), which the Management Stockholder wishes to accept, the Management Stockholder
shall cause the Third Party Offer to be
reduced to writing and shall notify the Company in writing of his wish to accept the Third Party Offer. The Management Stockholder’s notice
to the Company shall contain an irrevocable offer to sell such Stock to the Company (in the manner set forth below) at a purchase price equal to
the price contained in, and on the same terms and conditions of, the Third Party Offer, and shall be accompanied by a copy of the Third Party
Offer (which shall identify the Offeror). At any time within 30 days after the date of the receipt by the Company of the Management
Stockholder’s notice, the Company shall have the right and option to purchase, or to arrange for a third party to purchase, all of the shares of
Stock covered by the Offer, pursuant to Section 4(b).

                   (b)        The Company shall have the right and option to purchase, or to arrange for a third party to purchase, all of the
shares of Stock covered by the Third Party Offer at the same price and on substantially the same terms and conditions as the Third Party Offer
(or, if the Third Party Offer includes any consideration other than cash, then at the sole option of the Company, at the equivalent all cash price,
determined in good faith by the Company’s Board), by delivering a certified bank check or checks in the appropriate amount (or by wire
transfer of immediately available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) (and any
such non-cash consideration to be paid) to the Management Stockholder at the principal office of the Company against delivery of certificates
or other instruments representing the shares of Stock so purchased, appropriately endorsed by the Management Stockholder. If at the end of
the 30-day period, the Company has not tendered the purchase price for such shares in the manner set forth above, the Management
Stockholder may, during the succeeding 60-day period, sell not less than all of the shares of Stock covered by the Third Party Offer, to the
Offeror on terms no less favorable to the Management Stockholder than those contained in the Third Party Offer. Promptly after such sale, the
Management Stockholder shall notify the Company of the consummation thereof and shall furnish such evidence of the completion and time of
completion of such sale and of the terms thereof as may reasonably be requested by the Company. If, at the end of 60 days following the
expiration of the 30-day period during which the Company is entitled hereunder to purchase the Stock, the Management Stockholder has not
completed the sale of such shares of the Stock as aforesaid, all of the restrictions on sale, transfer or assignment contained in this Agreement
shall again be in effect with respect to such shares of the Stock.

                   (c)      Notwithstanding anything in this Agreement to the contrary, this Section 4 shall terminate and be of no further
force or effect upon the occurrence of a Change of Ownership.

                  5.        The Management Stockholder’s Right to Resell Stock and Options to the Company .

                    (a)        Except as otherwise provided herein, if, prior to the fifth anniversary of the Effective Date, the Management
Stockholder is still in the employ of the Company (and/or, if applicable, its subsidiaries) and the Management Stockholder’s employment is
terminated as a result of the death or Permanent Disability of the Management Stockholder, then the applicable Management Stockholder
Entity, shall, for sixty (60) days (the ― Put Period ‖) following the date of such death or Permanent Disability, have the right to:

                  (i) With respect to the Stock, sell to the Company, and the Company shall be required to purchase, on one occasion, all of
         the shares of Stock then held by the
         applicable Management Stockholder Entities, at a per share price equal to the Fair Market Value Per Share (the ― Section 5
         Repurchase Price ‖); and

                   (ii) With respect to any outstanding Options, sell to the Company, and the Company shall be required to purchase, on one
         occasion, all of the exercisable Options then held by the applicable Management Stockholder Entities, at a price equal to the product
         of (x) the excess, if any, of the Section 5 Repurchase Price over the Option Exercise Price and (y) the number of Exercisable Option
         Shares in respect of the termination of all or any portion of the outstanding exercisable Options held by the applicable Management
         Stockholder Entity. In the event the foregoing Option Excess Price is zero or a negative number, all outstanding exercisable stock
         options granted to the Management Stockholder under the Option Plan shall be automatically terminated without any payment in
         respect thereof. In the event that the Management Stockholder Entities do not exercise the foregoing rights, all exercisable but
         unexercised Options shall terminate pursuant to the terms of Section 3.2(b) of the Stock Option Agreement. All unexercisable
         Options held by the applicable Management Stockholder Entities shall terminate without payment immediately upon termination of
         employment.

                   (b)        In the event the applicable Management Stockholder Entities intend to exercise their rights pursuant to
Section 5(a), such Entities shall send written notice to the Company, at any time during the Put Period, of their intention to sell shares of Stock
in exchange for the payment referred in Section 5(a)(i) and/or to terminate such Options in exchange for the payment referred to in
Section 5(a)(ii) and shall indicate the number of shares of Stock to be sold and the number of Options to be terminated with payment in respect
thereof (the ― Redemption Notice ‖). The completion of the purchases shall take place at the principal office of the Company on the tenth
business day after the giving of the Redemption Notice. The applicable Repurchase Price and any payment with respect to the Options as
described above shall be paid by delivery to the applicable Management Stockholder Entities, of a certified bank check or checks in the
appropriate amount payable to the order of each of the applicable Management Stockholder Entities (or by wire transfer of immediately
available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions), against delivery of certificates or
other instruments representing the Stock so purchased and appropriate documents cancelling the Options so terminated appropriately endorsed
or executed by the applicable Management Stockholder Entities or any duly authorized representative.

                   (c)       Notwithstanding anything in Section 5(a) to the contrary and subject to Section 11(a), if there exists and is
continuing a default or an event of default on the part of the Company or any subsidiary of the Company under any loan, guarantee or other
agreement under which the Company or any subsidiary of the Company has borrowed money or if the repurchase referred to in Section 5(a)
would result in a default or an event of default on the part of the Company or any subsidiary of the Company under any such agreement or if a
repurchase would not be permitted under the Michigan Business Corporation Act (the ― MBCA ‖) or would otherwise violate the MBCA (or if
the Company reincorporates in another state, the business corporation law of such state) (each such occurrence being an ― Event ‖), the
Company shall not be obligated to repurchase any of the Stock or the Options from the applicable Management Stockholder Entities, until the
first business day which is 10 calendar days after all of the foregoing Events have ceased to exist (the ― Repurchase Eligibility Date ‖);
provided , however , that (i) the number of shares of Stock subject to
repurchase under this Section 5(c) shall be that number of shares of Stock, and (ii) in the case of a repurchase pursuant to Section 5(a)(ii), the
number of Exercisable Option Shares for purposes of calculating the Option Excess Price payable under this Section 5(c) shall be the number
of Exercisable Option Shares, specified in the Redemption Notice and held by the applicable Management Stockholder Entities, at the time of
delivery of a Redemption Notice in accordance with Section 5(b) hereof. All Options exercisable as of the date of a Redemption Notice, in the
case of a repurchase pursuant to Section 5(a), shall continue to be exercisable until the repurchase of such Options pursuant to such
Redemption Notice, provided that to the extent any Options are exercised after the date of such Redemption Notice, the number of Exercisable
Option Shares for purposes of calculating the Option Excess Price shall be reduced accordingly.

                   (d)        Effect of Change of Ownership . Notwithstanding anything in this Agreement to the contrary, except for any
payment obligation of the Company, which has arisen prior to such termination pursuant to this Agreement, this Section 5 shall terminate and
be of no further force or effect upon the occurrence of a Change of Ownership.

                  6.        The Company’s Option to Purchase Stock and Options of Management Stockholder Upon Certain Terminations of
                           Employment .

                    (a)       Termination for Cause by the Company, Termination without Good Reason by the Management Stockholder and
other Call Events . Except as otherwise provided herein, if, prior to the fifth anniversary of the Effective Date, (i) the Management
Stockholder’s active employment with the Company (and/or, if applicable, its subsidiaries) is terminated by the Company (and/or, if applicable,
its subsidiaries) for Cause, (ii) the Management Stockholder’s active employment with the Company (and/or, if applicable, its subsidiaries) is
terminated by the Management Stockholder without Good Reason, (iii) the beneficiaries of a Management Stockholder’s Trust shall include
any person or entity other than the Management Stockholder, his spouse (or ex-spouse) or his lineal descendants (including adopted children),
(iv) the Management Stockholder shall otherwise effect a transfer of any of the Stock other than as permitted in this Agreement (other than as
may be required by applicable law or an order of a court having competent jurisdiction) after notice from the Company of such impermissible
transfer and a reasonable opportunity to cure such transfer (each, a ― Section 6(a) Call Event ‖):

                          (A)        With respect to the Stock, the Company may purchase all or any portion of the shares of the Stock then
held by the applicable Management Stockholder Entities at a per share purchase price equal to the lesser of (x) the Base Price and (y) the Book
Value Per Share before a Public Offering (after a Public Offering, the Fair Market Value Per Share) (any such applicable repurchase price, the
― Section 6(a) Repurchase Price ‖); and

                       (B)         With respect to the Options, all Options (whether or not then exercisable) held by the applicable
Management Stockholder Entities will terminate immediately without payment in respect thereof.

                   (b)        Termination for Good Reason by Management Stockholder or without Cause by the Company . Except as
otherwise provided herein, if, prior to the fifth anniversary of the Effective Date, the Management Stockholder’s employment is terminated as a
result of a termination (i) by the Management Stockholder with Good Reason or (ii) by the Company (and/or, if applicable, its subsidiaries)
without Cause (each, a ― Section 6(b) Call Event ‖), then the Company may:
                          (A)        With respect to the Stock, purchase all or any portion of the shares of Stock then held by the applicable
Management Stockholder Entities at a per share purchase price equal to: (x) before a Public Offering, (I) in the event of the Management
Stockholder’s termination for Good Reason, the Book Value Per Share and (II) in the event of the Management Stockholder’s termination by
the Company (and/or, if applicable, any Subsidiary) without Cause, the Fair Market Value Per Share or (y) after a Public Offering, the Fair
Market Value Per Share (any such applicable repurchase price, the ― Section 6(b) Repurchase Price ‖); and

                           (B)       With respect to the Options, purchase all or any portion of the exercisable Options held by the applicable
Management Stockholder Entities for an amount equal to the product of (x) the excess, if any, of the Section 6(b) Repurchase Price over the
Option Exercise Price and (y) the number of Exercisable Option Shares in respect of the termination of all or any portion of the outstanding
exercisable Options held by the applicable Management Stockholder Entity. In the event the foregoing Option Excess Price is zero or a
negative number, all outstanding exercisable stock options granted to the Management Stockholder under the Option Plan shall be
automatically terminated without any payment in respect thereof. In the event that the Company does not exercise the foregoing rights all
exercisable but unexercised Options shall terminate pursuant to the terms of Section 3.2(d) of the Stock Option Agreement. All unexercisable
Options held by the applicable Management Stockholder Entities shall also terminate without payment immediately upon termination of
employment, pursuant to the Stock Option Agreement.

                  (c)      Termination for Death or Disability . Except as otherwise provided herein, if, prior to the fifth anniversary of the
Effective Date, the Management Stockholder’s employment with the Company (and/or, if applicable, its subsidiaries) is terminated as a result
of the death or Permanent Disability of the Management Stockholder (each a ― Section 6(c) Call Event ‖), then the Company may:

                       (A)         With respect to the Stock, purchase all or any portion of the shares of Stock then held by the applicable
Management Stockholder Entities, at a per share price equal the Section 5 Repurchase Price; and

                            (B)         With respect to the Options, purchase all or any portion of the exercisable Options for an amount equal to
the product of (x) the excess, if any, of the Section 5 Repurchase Price over the Option Exercise Price and (y) the number of Exercisable
Option Shares in respect of the termination of all or any portion of the outstanding exercisable Options held by the applicable Management
Stockholder Entity. In the event the foregoing Option Excess Price is zero or a negative number, all outstanding exercisable stock options
granted to the Management Stockholder under the Option Plan shall be automatically terminated without any payment in respect thereof. In
the event that the Company does not exercise the foregoing rights all exercisable but unexercised Options shall terminate pursuant to the terms
of Section 3.2(b) of the Stock Option Agreement. All unexercisable Options held by the applicable Management Stockholder Entities shall also
terminate without payment immediately upon termination of employment, pursuant to the Stock Option Agreement.

                   (d)       Call Notice . The Company shall have a period of sixty (60) days from the date of any Call Event (or, if later, with
respect to a Section 6(a) Call Event, the date after discovery of, and the applicable cure period for, an impermissible transfer constituting a
Section 6(a) Call Event), in which to give notice in writing to the Management Stockholder of its election to exercise its rights and obligations
pursuant to this Section 6 (― Repurchase
Notice ‖). The completion of the purchases pursuant to the foregoing shall take place at the principal office of the Company on the tenth
business day after the giving of the Call Notice. The applicable Repurchase Price and any payment with respect to the Options as described in
this Section 6 shall be paid by delivery to the applicable Management Stockholder Entities of a certified bank check or checks in the
appropriate amount payable to the order of each of the applicable Management Stockholder Entities (or by wire transfer of immediately
available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) against delivery of certificates or
other instruments representing the Stock so purchased and appropriate documents cancelling the Options so terminated, appropriately endorsed
or executed by the applicable Management Stockholder Entities or its authorized representative.

                    (e)       Delay of Call . Notwithstanding any other provision of this Section 6 to the contrary and subject to Section 11(a),
if there exists and is continuing any Event, the Company shall delay the repurchase of any of the Stock or the Options (pursuant to a Call
Notice timely given in accordance with Section 6(d) hereof) from the applicable Management Stockholder Entities until the Repurchase
Eligibility Date; provided , however , that (i) the number of shares of Stock subject to repurchase under this Section 6 shall be that number of
shares of Stock, and (ii) in the case of a repurchase pursuant to Section 6(b) or Section 6(c), the number of Exercisable Option Shares for
purposes of calculating the Option Excess Price payable under this Section 6 shall be the number of Exercisable Option Shares, held by the
applicable Management Stockholder Entities at the time of delivery of a Call Notice in accordance with Section 6(d) hereof. All Options
exercisable as of the date of a Repurchase Notice, in the case of a repurchase pursuant to Section 6(b) or 6(c), shall continue to be exercisable
until the repurchase of such Options pursuant to such Call Notice, provided that to the extent that any Options are exercised after the date of
such Call Notice, the number of Exercisable Option Shares for purposes of calculating the Option Excess Price shall be reduced accordingly.

                  (f)       Effect of Change of Ownership . Notwithstanding anything in this Agreement to the contrary, this Section 6 shall
terminate and be of no further force or effect upon the occurrence of a Change of Ownership.

                  7.        Adjustment of Repurchase Price; Definitions .

                  (a)       Adjustment of Repurchase Price . In determining the applicable repurchase price of the Stock and Options, as
provided for in Sections 5 and 6, above, appropriate adjustments shall be made for any stock dividends, splits, combinations, recapitalizations
or any other adjustment in the number of outstanding shares of Stock in order to maintain, as nearly as practicable, the intended operation of the
provisions of Sections 5 and 6.

                  (b)       Definitions . All capitalized terms used in this Agreement and not defined herein shall have such meaning as such
terms are defined in the Option Plan. Terms used herein and as listed below shall be defined as follows:

         ―Act‖ shall have the meaning set forth in Section 2(a)(i) hereof.

         ―Agreement‖ shall have the meaning set forth in the introductory paragraph.

         ―Base Price‖ shall have the meaning set forth in Section 1(a) hereof.
         ―Board‖ shall mean the board of directors of the Company.

         ―Book Value Per Share‖ shall mean the quotient of (a) (i) $25.00 plus (ii) the aggregate net income of the Company from and after the
Closing Date (as decreased by any net losses from and after the Closing Date) excluding any one time costs and expenses charged to income
associated with the Acquisition and any related transactions plus (iii) the aggregate dollar amount contributed to (or credited to common
stockholders’ equity of) the Company after the Closing Date as equity of the Company (including consideration that would be received upon
the exercise of all outstanding stock options and other rights to acquire Common Stock and the conversion of all securities convertible into
Common Stock and other stock equivalents) plus (iv) to the extent reflected as deductions to Book Value Per Share in clause (ii) above,
unusual or other items recognized by the Company (including, without limitation, extraordinary charges, and one time or accelerated write-offs
of good will, net of the related impact on the provision for income taxes), in each case, if and to the extent determined in good faith by the
Board, plus (v) the amortization of purchase accounting adjustments occurring as a result of the Acquisition, minus (vi) to the extent reflected
as additions to Book Value Per Share in clause (ii) above, unusual or other items recognized by the Company, in each case, if and to the extent
determined in good faith by the Board, minus (vii) the aggregate dollar amount of any dividends paid by the Company after the Closing Date,
divided by (b) the sum of the number of shares of Common Stock then outstanding and the number of shares of Common Stock issuable upon
the exercise of all outstanding stock options and other rights to acquire Common Stock. The items referred to in the calculations set forth in
clauses (a)(ii) through (vii) of the immediately preceding sentence shall be determined in good faith, and to the extent possible, in accordance
with generally accepted accounting principles applied on a basis consistent with any prior periods as reflected in the consolidated financial
statements of the Company,

         ―Call Events‖ shall mean, collectively, Section 6(a) Call Events, Section 6(b) Call Events, and Section 6(c) Call Events.

         ―Call Notice‖ shall have the meaning set forth in Section 6(d) hereof.

         ―Cause‖ shall mean ―Cause‖ as such term may be defined in any employment agreement between the Management Stockholder and
the Company or any of its Subsidiaries or Affiliates, or, if there is no such employment agreement, ―Cause‖ shall mean (i) the Management
Stockholder’s continued failure substantially to perform Management Stockholder’s duties with the Company (or any Subsidiary of the
Company) (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 Company (or any Subsidiary of the Company) to the Management Stockholder of such failure, (ii) dishonesty in the performance of the
Management Stockholder’s duties with the Company (or any Subsidiary of the Company), (iii) the Management Stockholder’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, (iv) the Management Stockholder’s willful malfeasance or willful misconduct in connection with the Management
Stockholder’s duties with the Company (or any Subsidiary of the Company) or any act or omission which is injurious to the financial condition
or business reputation of the Company or its Affiliates or (v) the Management Stockholder’s breach of the provisions of Section 25 of this
Agreement.

          ―Change of Ownership‖ means (i) the sale of all or substantially all of the assets of the Company or ITC to an Unaffiliated Person; (ii)
a sale resulting in more than 50% of the
voting stock of the Company or ITC being held by an Unaffiliated Person; (iii) a merger, consolidation, recapitalization or reorganization of the
Company or ITC with or into another Unaffiliated Person; if and only if any such event listed in clauses (i) through (iii) above results in the
inability of ITH LP, Ironhill, the Limited Partner Group, or any member or members of the Limited Partner Group, to designate or elect a
majority of the Board (or the board of directors of the resulting entity or its parent company). For purposes of this definition, the term ―
Unaffiliated Person ‖ means any Person or Group who is not (x) ITH LP, Ironhill, the Limited Partner Group or any member of the Limited
Partner Group, (y) an Affiliate of ITH LP, Ironhill, the Limited Partner Group or any member of the Limited Partner Group, or (z) an entity in
which ITH LP, Ironhill, the Limited Partner Group, or any member of the Limited Partner Group holds, directly or indirectly, a majority of the
economic interests in such entity.

         ―Closing Date‖ shall have the meaning set forth in the first ―whereas‖ paragraph.

         ―Common Stock‖ shall have the meaning set forth in the second ―whereas‖ paragraph.

         ―Company‖ shall have the meaning set forth in the introductory paragraph.

          ―Confidential Information‖ shall mean all non-public information concerning trade secret, know-how, software, developments,
inventions, processes, technology, designs, the financial data, strategic business plans or any proprietary or confidential information, documents
or materials in any form or media, including any of the foregoing relating to research, operations, finances, current and proposed products and
services, vendors, customers, advertising and marketing, and other non-public, proprietary, and confidential information of the Restricted
Group.

         ―Custody Agreement and Power of Attorney‖ shall have the meaning set forth in Section 10 hereof.

         ―Event‖ shall have the meaning set forth in Section 5(c) hereof.

         ―Exchange Act‖ shall mean the Securities Exchange Act of 1934, as amended (or any successor section thereto).

        ―Exercisable Option Shares‖ shall mean the shares of Common Stock that, at the Repurchase Calculation Date, could be purchased by
the Management Stockholder upon exercise of his or her outstanding and exercisable Options.

          ―Fair Market Value Per Share‖ shall mean, on the Repurchase Calculation Date, the price per share equal to (i) the average of the last
sale price of the Common Stock for the five trading days ending on the Repurchase Calculation Date on each stock exchange on which the
Common Stock may at the time be listed or, (ii) if there shall have been no sales on any such exchanges on the Repurchase Calculation Date on
any given day, the average of the closing bid and asked prices on each such exchange for the five trading days ending on the Repurchase
Calculation Date or, (iii) if there is no such bid and asked price on the Repurchase Calculation Date, on the next preceding date when such bid
and asked price occurred or, (iv) if the Common Stock shall not be so listed, the average of the closing sales prices as reported by NASDAQ for
the five trading days ending on the Repurchase Calculation Date in the over-the-counter market or, (v) if there have been no such sales, bid
or asked prices, or if there has been no Public Offering, the fair market value of the Common Stock as determined in the good faith discretion
of the Board.

         ―Good Reason‖ shall mean ―Good Reason‖ as defined in any employment agreement between the Management Stockholder and the
Company or any of its Subsidiaries or Affiliates, or, if there is no such employment agreement, ―Good Reason‖ shall mean (i) a substantial
reduction in the total value of the Management Stockholder’s rate of annual base salary, target annual bonus, and the aggregate employee
benefits provided to the Management Stockholder by the Company or its Subsidiaries; (ii) the Management Stockholder’s job responsibility
and authority are substantially diminished; and (iii) the Management Stockholder’s work location is relocated to more than fifty (50) miles
from Detroit, Michigan or Ann Arbor, Michigan; and provided , further , that ―Good Reason‖ shall cease to exist for an event on the 60 th day
following the later of its occurrence or the Management Stockholder’s knowledge thereof, unless the Management Stockholder has given the
Company written notice thereof prior to such date.

         ―Group‖ shall mean ―group,‖ as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act.

        ―Ironhill‖ means Ironhill Transmission LLC, which is the general partner of ITH LP, of which the Company is a majority-owned
Subsidiary.

         ―ITH LP‖ means International Transmission Holdings Limited Partnership, a Michigan limited partnership.

         ―Limited Partner Group‖ shall mean the KKR Millennium Fund L.P., KKR Partners III, L.P. and Trimaran Capital Partners,
collectively.

         ―Management Stockholder‖ shall have the meaning set forth in the introductory paragraph.

       ―Management Stockholder Entities‖ shall mean the Management Stockholder’s Trust, the Management Stockholder and the
Management Stockholder’s Estate, collectively.

         ―Management Stockholder’s Estate‖ shall mean the conservators, guardians, executors, administrators, testamentary trustees, legatees
or beneficiaries of the Management Stockholder.

           ―Management Stockholder’s Trust‖ shall mean a limited partnership, limited liability company, trust or custodianship, the
beneficiaries of which may include only the Management Stockholder, his spouse (or ex-spouse) or his lineal descendants (including adopted)
or, if at any time after any such transfer there shall be no then living spouse or lineal descendants, then to the ultimate beneficiaries of any such
trust or to the estate of a deceased beneficiary.

         ―Maximum Repurchase Amount‖ shall have the meaning set forth in Section 11(a) hereof.

         ―MBCA‖ shall have the meaning set forth in Section 5(c) hereof.

         ―Notice‖ shall have the meaning set forth in Section 10(b) hereof.
         ―Offeror‖ shall have the meaning set forth in Section 4 hereof.

         ―Option Excess Price‖ shall mean the aggregate amount paid by the Company in respect of Exercisable Option Shares pursuant to
Section 5 or 6, as applicable.

         ―Option Exercise Price‖ shall mean the exercise price of the shares of Common Stock covered by the applicable Option.

         ―Option‖ shall have the meaning set forth in the third ―whereas‖ paragraph.

         ―Option Plan‖ shall have the meaning set forth in the third ―whereas‖ paragraph.

         ―Option Stock‖ shall have the meaning set forth in Section 2(a) hereof.

         ―Other Management Stockholders‖ shall have the meaning set forth in the fourth ―whereas‖ paragraph.

         ―Other Management Stockholders’ Agreements‖ shall have the meaning set forth in the fourth ―whereas‖ paragraph.

         ―Parties‖ shall have the meaning set forth in the introductory paragraph.

          ―Permanent Disability‖ shall mean the Management Stockholder becomes physically or mentally incapacitated and is therefore unable
for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period, to perform
the Management Stockholder’s duties with the Company or any Subsidiary or Affiliate thereof. Any question as to the existence of the
Permanent Disability of the Management Stockholder as to which the Management Stockholder and the Company cannot agree shall be
determined in writing by a qualified independent physician mutually acceptable to the Management Stockholder and the Company. If the
Management Stockholder and the Company 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 Permanent Disability made in writing
to the Company and the Management Stockholder shall be final and conclusive for all purposes of this Agreement (such inability is hereinafter
referred to as ―Permanent Disability‖).

         ―Person‖ shall mean ―person,‖ as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act.

         ―Proposed Registration‖ shall have the meaning set forth in Section 10(b) hereof.

          ―Public Offering‖ shall mean the sale of shares of Common Stock to the public subsequent to the date hereof pursuant to a registration
statement under the Act which has been declared effective by the SEC (other than a registration statement on Form S-4, Form S-8 or any other
similar form).

         ―Purchased Stock‖ shall have the meaning set forth in Section 1(a) hereof.

         ―Qualified Public Offering‖ shall mean a Public Offering, which results in an active trading market of 25% or more of the Common
Stock.
          ―Repurchase Calculation Date‖ shall mean the last day of the month preceding the later of (i) the month in which the event giving rise
to the right to repurchase occurs and (ii) the month in which the Repurchase Eligibility Date occurs.

         ―Repurchase Eligibility Date‖ shall have the meaning set forth in Section 5(c) hereof.

         ―Repurchase Price‖ shall mean the amount to be paid in respect of the Stock and Options to be purchased by the Company pursuant to
Section 5(a), Section 6(a), 6(b), or 6(c), as applicable.

         ―Request‖ shall have the meaning set forth in Section 10(b) hereof.

         ―Restricted Group‖ shall mean, collectively, the Company, its Subsidiaries, the members of the Limited Partner Group and their
respective Affiliates.

         ―Rule 405 Affiliate‖ shall mean an affiliate of the Company as defined under Rule 405 of the rules and regulations promulgated under
the Act, and as interpreted by the Board.

        ―Sale Participation Agreement‖ shall mean that certain sale participation agreement entered into by and between the Management
Stockholder and ITH L.P. dated as of the date hereof.

         ―SEC‖ shall mean the Securities and Exchange Commission.

         ―Stock‖ shall have the meaning set forth in Section 2(a) hereof.

         ―Stock Option Agreement‖ shall have the meaning set forth in the third ―whereas‖ paragraph.

         ―Third Party Offer‖ shall have the meaning set forth in Section 4(a) hereof.

       ―Trimaran Capital Partners‖ means, collectively, Trimaran Fund II, L.L.C., Trimaran Parallel Fund II, L.P., Trimaran Capital, L.L.C.,
CIBC Employee Private Equity Fund (Trimaran) Partners and CIBC World Markets Ireland Limited.

                  8.        The Company’s Representations and Warranties .

                  (a)      The Company represents and warrants to the Management Stockholder that (i) this Agreement has been duly
authorized, executed and delivered by the Company and is enforceable against the Company in accordance with its terms and (ii) the Stock,
when issued and delivered in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable.

                    (b)       If the Company becomes subject to the reporting requirements of Section 12 of the Exchange Act, the Company
will file the reports required to be filed by it under the Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder,
to the extent required from time to time to enable the Management Stockholder to sell shares of Stock without registration under the Exchange
Act within the limitations of the exemptions provided by (A) Rule 144 under the Act, as such Rule may be amended from time to time, or (B)
any similar rule or regulation hereafter adopted by the SEC, subject to the transfer restrictions set forth in Section 3. Notwithstanding anything
contained in this Section 9(b), the Company may de-register under Section 12 of the Exchange Act if it is then
permitted to do so pursuant to the Exchange Act and the rules and regulations thereunder and, in such circumstances, shall not be required
hereby to file any reports which may be necessary in order for Rule 144 or any similar rule or regulation under the Act to be
available. Nothing in this Section 8(b) shall be deemed to limit in any manner the restrictions on sales of Stock contained in this Agreement.

                   9.         ―Piggyback‖ Registration Rights . Until the later of (i) the first occurrence of a Qualified Public Offering and (ii)
the fifth anniversary of the Effective Date:

                   (a)       The Management Stockholder hereby agrees to be bound by all of the terms, conditions and obligations of the
Registration Rights Agreement entered into by and among the Company and International Transmission Holdings Limited Partnership (the ―
Registration Rights Agreement ‖), as in effect on the date hereof (subject to any amendments thereto to which the Management Stockholder has
agreed to be bound), and shall have all of the rights and privileges of the Registration Rights Agreement, in each case as if the Management
Stockholder were an original party (other than the Company) thereto, subject to applicable and customary underwriter restrictions; provided ,
however , that at no time shall the Management Stockholder have any rights to request registration under Section 3 of the Registration Rights
Agreement; and provided further , that the Management Stockholder shall not be bound by any amendments to the Registration Rights
Agreement unless the Management Stockholder consents thereto provided that such consent will not be unreasonably withheld. All Stock
purchased or held by the applicable Management Stockholder Entities pursuant to this Agreement shall be deemed to be ―Registrable
Securities‖ as defined in the Registration Rights Agreement.

                   (b)       In the event of a sale of Common Stock by the Limited Partner Group in accordance with the terms of the
Registration Rights Agreement, the Company will promptly notify the Management Stockholder in writing (a ― Notice ‖) of any proposed
registration (a ― Proposed Registration ‖). If within 15 days of the receipt by the Management Stockholder of such Notice, the Company
receives from the applicable Management Stockholder Entities a written request (a ― Request ‖) to register shares of Stock held by the
applicable Management Stockholder Entities (which Request will be irrevocable unless otherwise mutually agreed to in writing by the
Management Stockholder and the Company), shares of Stock will be so registered as provided in this Section 10; provided , however , that for
each such registration statement only one Request, which shall be executed by the applicable Management Stockholder Entities, may be
submitted for all Registrable Securities held by the applicable Management Stockholder Entities.

                    (c)       The maximum number of shares of Stock which will be registered pursuant to a Request will be the lowest of (i)
the number of shares of Stock then held by the Management Stockholder Entities, including all shares of Stock which the Management
Stockholder Entities are then entitled to acquire under an unexercised Option to the extent then exercisable, multiplied by a fraction, the
numerator of which is the number of shares of Stock being sold by the Limited Partner Group and any investment partnerships and investment
limited liability companies affiliated with the Limited Partner Group and the denominator of which is the aggregate number of shares of Stock
owned by the Limited Partner Group and any investment partnerships and investment limited liability companies affiliated with the Limited
Partner Group or (ii) the maximum number of shares of Stock which the Company can register in the Proposed Registration without adverse
effect on the offering in the view of the managing underwriters (reduced pro rata with all Other Management Stockholders) as more fully
described in subsection (d) of this Section 10 or
(iii) the maximum number of shares which the Management Stockholder (pro rata based upon the aggregate number of shares of Stock the
Management Stockholder and all Other Management Stockholders have requested to be registered) is permitted to register under the
Registration Rights Agreement.

                    (d)        If a Proposed Registration involves an underwritten offering and the managing underwriter advises the Company in
writing that, in its opinion, the number of shares of Stock requested to be included in the Proposed Registration exceeds the number which can
be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of the shares of Stock offered in such
Public Offering as contemplated by the Company, then the Company will include in the Proposed Registration (i) first, 100% of the shares of
Stock the Company proposes to sell and (ii) second, to the extent of the number of shares of Stock requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having the adverse effect referred to above, the number of shares of
Stock which the ―Holders‖ (as defined in the Registration Rights Agreement), including, without limitation, the Management Stockholder, and
all Other Management Stockholders have requested to be included in the Proposed Registration, such amount to be allocated pro rata among all
requesting Holders on the basis of the relative number of shares of Stock then held by each such Holder (including the exercisable Options)
(provided that any shares thereby allocated to any such Holder that exceed such Holder’s request will be reallocated among the remaining
requesting Holders in like manner).

                    (e)        Upon delivering a Request the Management Stockholder will, if requested by the Company, execute and deliver a
custody agreement and power of attorney in form and substance satisfactory to the Company with respect to the shares of Stock to be registered
pursuant to this Section 10 (a ― Custody Agreement and Power of Attorney ‖). The Custody Agreement and Power of Attorney will provide,
among other things, that the Management Stockholder will deliver to and deposit in custody with the custodian and attorney-in-fact named
therein a certificate or certificates representing such shares of Stock (duly endorsed in blank by the registered owner or owners thereof or
accompanied by duly executed stock powers in blank) and irrevocably appoint said custodian and attorney-in-fact as the Management
Stockholder’s agent and attorney-in-fact with full power and authority to act under the Custody Agreement and Power of Attorney on the
Management Stockholder’s behalf with respect to the matters specified therein.

                 (f)         The Management Stockholder agrees that he or she will execute such other agreements as the Company may
reasonably request to further evidence the provisions of this Section.

                   10.         Pro Rata Repurchases; Dividends . (a) Notwithstanding anything to the contrary contained in Section 4, 5 or 6, if
at any time consummation of any purchase or payment to be made by the Company pursuant to this Agreement and the Other Management
Stockholders Agreements would result in an Event, then the Company shall make purchases from, and payments to, the Management
Stockholder and Other Management Stockholders pro rata (on the basis of the proportion of the number of shares of Stock each such
Management Stockholder and all Other Management Stockholders have elected or are required to sell to the Company) for the maximum
number of shares of Stock permitted without resulting in an Event (the ― Maximum Repurchase Amount ‖). The provisions of Section 5(c) and
6(e) shall apply in their entirety to payments and repurchases with respect to shares of Stock which may not be made due to the limits imposed
by the Maximum Repurchase Amount under this Section 11(a). Until all of such Stock is purchased and paid
for by the Company, the Management Stockholder and the Other Management Stockholders whose Stock is not purchased in accordance with
this Section 11(a) shall have priority, on a pro rata basis, over other purchases of Stock by the Company pursuant to this Agreement and Other
Management Stockholders’ Agreements.

                  (b)       In the event any dividends are paid with respect to the Stock, the Management Stockholder will be treated pari
passu with all Other Management Stockholders with respect to shares of Stock then owned by the Management Stockholder, and, with respect
to any Options held by the Management Stockholder, in accordance, as applicable, with Section 2.4 of the Stock Option Agreement.

                  11.       Rights to Negotiate Repurchase Price . Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing, redeeming or otherwise acquiring for value shares of Stock or Options from the Management Stockholder, at any
time, upon such terms and conditions, and for such price, as may be mutually agreed upon between the Parties, whether or not at the time of
such purchase, redemption or acquisition circumstances exist which specifically grant the Company the right to purchase shares of Stock or any
Options under the terms of this Agreement, provided that no such purchase, redemption or acquisition shall be consummated, and no agreement
with respect to any such purchase, redemption or acquisition shall be entered into, without the prior written consent of the Board.

                  12.        Covenant Regarding 83(b) Election . Except as the Company may otherwise agree in writing, the Management
Stockholder hereby covenants and agrees that he will make an election provided pursuant to Treasury Regulation 1.83-2 with respect to the
Stock, including without limitation, the Stock to be acquired pursuant to Section 1(a), the Stock to be acquired upon each exercise of the
Management Stockholder’s Options and any grant of restricted Stock; and Management Stockholder further covenants and agrees that he will
furnish the Company with copies of the forms of election the Management Stockholder files within 30 days after the date hereof, and within 30
days after each exercise of Management Stockholder’s Options and with evidence that each such election has been filed in a timely manner.

                  13.         Notice of Change of Beneficiary . Immediately prior to any transfer of Stock to a Management Stockholder’s
Trust, the Management Stockholder shall provide the Company with a copy of the instruments creating the Management Stockholder’s Trust
and with the identity of the beneficiaries of the Management Stockholder’s Trust. The Management Stockholder shall notify the Company as
soon as practicable prior to any change in the identity of any beneficiary of the Management Stockholder’s Trust.

                   14.       Recapitalizations, etc. The provisions of this Agreement shall apply, to the full extent set forth herein with
respect to the Stock or the Options, to any and all shares of capital stock of the Company or any capital stock, partnership units or any other
security evidencing ownership interests in any successor or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for, or substitution of the Stock or the Option, by reason of any stock dividend, split,
reverse split, combination, recapitalization, liquidation, reclassification, merger, consolidation or otherwise.

                 15.        Management Stockholder’s Employment by the Company . Nothing contained in this Agreement or in any other
agreement entered into by the Company and the
Management Stockholder contemporaneously with the execution of this Agreement (subject to the applicable provisions of any offer letter or
letter of employment provided to the Management Stockholder by the Company or any employment agreement entered by and between the
Management Stockholder and the Company) (i) obligates the Company or any subsidiary of the Company to employ the Management
Stockholder in any capacity whatsoever or (ii) prohibits or restricts the Company (or any such subsidiary) from terminating the employment of
the Management Stockholder at any time or for any reason whatsoever, with or without Cause, and the Management Stockholder hereby
acknowledges and agrees that neither the Company nor any other person has made any representations or promises whatsoever to the
Management Stockholder concerning the Management Stockholder’s employment or continued employment by the Company or any subsidiary
of the Company.

                   16.       State Securities Laws . The Company hereby agrees to use its reasonable best efforts to comply with all state
securities or ―blue sky‖ laws that might be applicable to the sale of the Stock and the issuance of the Option to the Management Stockholder.

                   17.        Binding Effect . The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and assigns. In the case of a transferee permitted under Section 2(a) or
Section 3 hereof, such transferee shall be deemed the Management Stockholder hereunder; provided , however , that no transferee (including
without limitation, transferees referred to in Section 2(a) or Section 3 hereof) shall derive any rights under this Agreement unless and until such
transferee has delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement.

                  18.        Amendment . This Agreement may be amended only by a written instrument signed by the Parties hereto.

                   19.         Closing . Except as otherwise provided herein, the closing of each purchase and sale of shares of Stock, pursuant
to this Agreement shall take place at the principal office of the Company on the tenth business day following delivery of the notice by either
Party to the other of its exercise of the right to purchase or sell such Stock hereunder.

                  20.        Applicable Law; Jurisdiction; Arbitration; Legal Fees .

                (a)        The laws of the State of Michigan shall govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under principles of conflicts of law.

                  (b)         In the event of any controversy among the parties hereto arising out of, or relating to, this Agreement which cannot
be settled amicably by the parties, such controversy shall be finally, exclusively and conclusively settled by mandatory arbitration conducted
expeditiously in accordance with the American Arbitration Association rules, by a single independent arbitrator. Such arbitration process shall
take place within 100 miles of the Detroit, Michigan metropolitan area. The decision of the arbitrator shall be final and binding upon all
parties hereto and shall be rendered pursuant to a written decision, which contains a detailed recital of the arbitrator’s reasoning. Judgment
upon the award rendered may be entered in any court having jurisdiction thereof.
                   (c)      Notwithstanding the foregoing, the Management Stockholder acknowledges and agrees that the Company, its
Subsidiaries, any member of the Limited Partner Group and any of their respective Affiliates shall be entitled to injunctive or other relief in
order to enforce the covenant not to compete, covenant not to solicit and/or confidentiality covenants as set forth in Section 25(a) of this
Agreement.

                   (d)       In the event of any arbitration or other disputes with regard to this Agreement or any other document or agreement
referred to herein, each Party that shall pay its own legal fees and expenses, unless otherwise determined by the arbitrator.

                   21.        Assignability of Certain Rights by the Company . The Company shall have the right to assign any or all of its
rights or obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6 hereof.

                  22.        Miscellaneous .

                  (a)      In this Agreement all references to ―dollars‖ or ―$‖ are to United States dollars and the masculine pronoun shall
include the feminine and neuter, and the singular the plural, where the context so indicates

                    (b)       If any provision of this Agreement shall be declared illegal, void or unenforceable by any court of competent
jurisdiction, the other provisions shall not be affected, but shall remain in full force and effect.

                  23.        Withholding . The Company or its Subsidiaries shall have the right to deduct from any cash payment made under
this Agreement to the applicable Management Stockholder Entities any minimum federal, state or local income or other taxes required by law
to be withheld with respect to such payment.

                  24.        Notices . All notices and other communications provided for herein shall be in writing and shall be deemed to
have been duly given if delivered by hand (whether by overnight courier or otherwise) or sent by registered or certified mail, return receipt
requested, postage prepaid, or by overnight delivery or telecopy, to the Party to whom it is directed:

                  (a)       If to the Company, to it at the following address:

                             ITC Holdings Corp.
                             1901 South Wagner
                             Ann Arbor, Michigan 48105
                             Attention:      John Flynn, Esq.

                             with a copy to:

                             Simpson Thacher & Bartlett
                             425 Lexington Avenue
                             New York, New York 10017
                             Attention:     David J. Sorkin, Esq.
                                            Alvin H. Brown, Esq.
                             Telecopy:      (212) 455-2502
                  (b)        If to the Management Stockholder, to him at the address set forth below under his signature;

or at such other address as either party shall have specified by notice in writing to the other.

                  25.        Confidential Information; Covenant Not to Compete .

                   (a)       In consideration of the Company entering into this Agreement with the Management Stockholder, the Management
Stockholder hereby agrees effective as of the date of the Management Stockholder’s commencement of employment with the Company or its
Subsidiaries, without the Company’s prior written consent, the Management Stockholder shall not, directly or indirectly, (i) at any time during
or after the Management Stockholder’s employment with the Company or its Subsidiaries, disclose any Confidential Information pertaining to
the business of the Company or any of its Subsidiaries, except when required to perform his or her duties to the Company or one of its
Subsidiaries, by law or judicial process; or (ii) at any time during the Management Stockholder’s employment with the Company or its
Subsidiaries and for one year thereafter, directly or indirectly (A) be engaged in or have financial interest (other than an ownership position of
less than 5% in any company whose shares are publicly traded or any non-voting non-convertible debt securities in any company) in any
business which competes with any business of the Company or any of its Subsidiaries, (B) solicit customers or clients of the Company or any
of its Subsidiaries to terminate their relationship with the Company or any of its Subsidiaries or otherwise solicit such customers or clients to
compete with any business of the Company or any of its Subsidiaries or (C) solicit or offer employment to any person who has been employed
by the Company or any of its Subsidiaries at any time during the twelve months immediately preceding the termination of the Management
Stockholder’s employment. If the Management Stockholder is bound by any other agreement with the Company regarding the use or
disclosure of confidential information, the provisions of this Agreement shall be read in such a way as to further restrict and not to permit any
more extensive use or disclosure of confidential information.

                   (b)        Notwithstanding clause (a) above, if at any time a court holds that the restrictions stated in such clause (a) are
unreasonable or otherwise unenforceable under circumstances then existing, the parties hereto agree that the maximum period, scope or
geographic area determined to be reasonable under such circumstances by such court will be substituted for the stated period, scope or
area. Because the Management Stockholder’s services are unique and because the Management Stockholder has had access to Confidential
Information, the parties hereto agree that money damages will be an inadequate remedy for any breach of this Agreement. In the event of a
breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing
in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive relief in order to enforce, or prevent any
violations of, the provisions hereof (without the posting of a bond or other security).

                                                             [ Signatures on next page .]
                  IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

                                                               ITC HOLDINGS CORP.


                                                               By:

                                                               Name:

                                                               Title:


                                                               MANAGEMENT STOCKHOLDER:


                                                               [NAME]


                                                               ADDRESS:




                                                                                                                          EXECUTION COPY

                                                         FORM OF
                                            MANAGEMENT STOCKHOLDER’S AGREEMENT

                  This Management Stockholder’s Agreement (this ― Agreement ‖) is entered into as of [DATE], 2003 (the ― Effective Date ‖)
between ITC Holdings Corp., a Michigan corporation (the ― Company ‖), and the undersigned person (the ― Management Stockholder ‖) (the
Company and the Management Stockholder being hereinafter collectively referred to as the ― Parties ‖). All capitalized terms not immediately
defined are hereinafter defined in Section 7(b) of this Agreement.

                 WHEREAS, on December 3, 2002, DTE Energy Company, a Michigan corporation and the Company entered into a Stock
Purchase Agreement (the ― Acquisition Agreement ‖). Pursuant to the Acquisition Agreement, the Company acquired all of the issued and
outstanding shares in the capital of International Transmission Company, a Michigan corporation (― ITC ‖), as further specified in the
Acquisition Agreement (the ― Acquisition ‖) (the date of such Acquisition, the ― Closing Date ‖).

                   WHEREAS, in connection with the Acquisition, Management Stockholder has been selected by the Company to be permitted
to contribute to the Company cash in exchange for shares of common stock of the Company (such common stock, together with any securities
issued in respect thereof or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification,
reorganization, merger, consolidation, exchange or other similar reorganization, the ― Common Stock ‖);

                  WHEREAS, Management Stockholder has been selected by the Company, as of the date hereof, to receive an option to
purchase shares of Common Stock (the ― Option ‖) pursuant to the terms set forth below and the terms of the 2003 Stock Purchase and Option
Plan for Key Employees of the Company and Its Subsidiaries (the ― Option Plan ‖) and the Stock Option Agreement dated as of even date
herewith, entered into by and between the Company and the Management Stockholder (the ― Stock Option Agreement ‖); and

                   WHEREAS, Management Stockholder has been selected by the Company, as of the date hereof, to receive a grant of
restricted shares of Common Stock (the ― Restricted Stock ‖) pursuant to the terms set forth below, the terms of the Option Plan, and the terms
of the Restricted Stock Award Agreement dated as of even date herewith, entered into by and between the Company and the Management
Stockholder (the ― Restricted Stock Agreement ‖); and
                 WHEREAS, this Agreement is one of several other agreements (― Other Management Stockholders’ Agreements ‖) which
have been, or which in the future will be, entered into between the Company and other individuals who are or will be key employees of the
Company or one of its subsidiaries (collectively, the ― Other Management Stockholders ‖).

                  NOW THEREFORE, to implement the foregoing and in consideration of the grant of Options and of the mutual agreements
contained herein, the Parties agree as follows:

                 1.        Purchased Shares; Issuance of Options .

                   (a)        The Management Stockholder hereby subscribes for and shall purchase, as of the Effective Date, and the Company
shall issue and deliver to the
Management Stockholder as of the Effective Date, FIELD 4 shares of Common Stock, at a per share purchase price of $25.00 (the ― Base Price
‖), which price is equal to the effective per share purchase price paid by the Company for the shares of ITC in the Acquisition (all such shares
acquired by the Management Stockholder, the ― Purchased Stock ‖). The aggregate purchase price for all shares of the Purchased Stock is $
FIELD 3 .

                  (b)        Subject to the terms and conditions hereinafter set forth and as set forth in the Option Plan, and upon receipt by the
Company of the Management Stockholder’s subscription price set forth in Section 1(a), as of the Effective Date the Company shall issue to the
Management Stockholder an Option to acquire FIELD 5 shares of Common Stock, at an exercise price of $25.00 per share, and the Parties
shall execute and deliver to each other copies of the Stock Option Agreement concurrently with the issuance of the Option.

                (c)     Subject to the terms and conditions hereinafter set forth and as set forth in the Option Plan, and upon receipt by the
Company of the Management Stockholder’s subscription price set forth in Section 1(a), as of the Effective Date the Company shall issue to the
Management Stockholder FIELD 2 shares of Restricted Stock, and the Parties shall execute and deliver to each other copies of the Restricted
Stock Award Agreement concurrently with the issuance of the Restricted Stock.

                    (d)        The Company shall have no obligation to sell any Purchased Stock to any person who (i) is a resident or citizen of
a state or other jurisdiction in which the sale of the Common Stock to him or her would constitute a violation of the securities or ―blue sky‖
laws of such jurisdiction or (ii) is not an employee of the Company or any of its subsidiaries on the date hereof.

                  2.         Management Stockholder’s Representations, Warranties and Agreements .

                  (a) The Management Stockholder agrees and acknowledges that he will not, except to the extent necessary in connection
with any loan to the Management Stockholder to purchases of the Purchased Stock, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (except, if applicable, in favor of CIBC, INC. pursuant to that certain Pledge Agreement entered into by
the Management Stockholder and the CIBC, INC. dated as of [DATE], 2003 in respect of the Promissory Note executed by the Management
Stockholder in favor of CIBC, INC. dated [DATE], 2003) (any of the foregoing acts being referred to herein as a ―transfer‖) any shares of
Purchased Stock, Restricted Stock and, at the time of exercise, the Common Stock issuable upon exercise of the Options (― Option Stock ‖;
together with all Purchased Stock, Restricted Stock and any other Common Stock otherwise acquired and/or held by the Management
Stockholder Entities, ― Stock ‖), except as otherwise provided for herein. If the Management Stockholder is a Rule 405 Affiliate, the
Management Stockholder also agrees and acknowledges that he will not transfer any shares of the Stock unless:

                  (i)        the transfer is pursuant to an effective registration statement under the Securities Act of 1933, as amended, and the
         rules and regulations in effect thereunder (the ― Act ‖), and in compliance with applicable provisions of state securities laws or

                  (ii)      (A) counsel for the Management Stockholder (which counsel shall be reasonably acceptable to the Company) shall
         have furnished the Company with an opinion, satisfactory in form and substance to the Company, that no such registration
         is required because of the availability of an exemption from registration under the Act and (B) if the Management Stockholder is a
         citizen or resident of any country other than the United States, or the Management Stockholder desires to effect any transfer in any
         such country, counsel for the Management Stockholder (which counsel shall be reasonably satisfactory to the Company) shall have
         furnished the Company with an opinion or other advice reasonably satisfactory in form and substance to the Company to the effect
         that such transfer will comply with the securities laws of such jurisdiction.

Notwithstanding the foregoing, the Company acknowledges and agrees that any of the following transfers are deemed to be in compliance with
the Act and this Agreement and no opinion of counsel is required in connection therewith: (x) a transfer made pursuant to Sections 3, 4, 5 or 6
hereof, (y) a transfer upon the death or Permanent Disability of the Management Stockholder to the Management Stockholder’s Estate or a
transfer to the executors, administrators, testamentary trustees, legatees or beneficiaries of a person who has become a holder of Stock in
accordance with the terms of this Agreement, provided that it is expressly understood that any such transferee shall be bound by the provisions
of this Agreement, and (z) a transfer made after the Effective Date in compliance with the federal securities laws to a Management
Stockholder’s Trust, provided that such transfer is made expressly subject to this Agreement and that the transferee agrees in writing to be
bound by the terms and conditions hereof.

                  (b)       The certificate (or certificates) representing the Stock shall bear the following legend:

                  ―THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
                  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT,
                  PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
                  MANAGEMENT STOCKHOLDER’S AGREEMENT DATED AS OF [DATE], 2003 BETWEEN ITC HOLDINGS CORP.
                  (THE ―COMPANY‖) AND THE MANAGEMENT STOCKHOLDER NAMED ON THE FACE HEREOF (A COPY OF
                  WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY).‖

                   (c)        The Management Stockholder acknowledges that he has been advised that (i) a restrictive legend in the form
heretofore set forth shall be placed on the certificates representing the Stock and (ii) a notation shall be made in the appropriate records of the
Company indicating that the Stock is subject to restrictions on transfer and appropriate stop transfer restrictions will be issued to the
Company’s transfer agent with respect to the Stock. If the Management Stockholder is a Rule 405 Affiliate, the Management Stockholder also
acknowledges that (1) the Stock must be held indefinitely and the Management Stockholder must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the Act or an exemption from such registration is available, (2) when and if
shares of the Stock may be disposed of without registration in reliance on Rule 144 of the rules and regulations promulgated under the Act,
such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule and (3) if
the Rule 144 exemption is not available, public sale without registration will require compliance with some other exemption under the Act.

                  (d)       If any shares of the Stock are to be disposed of in accordance with Rule 144 under the Act or otherwise, the
Management Stockholder shall promptly notify the Company of such intended disposition and shall deliver to the Company at or prior to the
time of such disposition such documentation as the Company may reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy of any notice on Form 144 required to be filed with the SEC.

                   (e)        The Management Stockholder agrees that, if any shares of the Stock are offered to the public pursuant to an
effective registration statement under the Act (other than registration of securities issued under an employee plan), the Management
Stockholder will not effect any public sale or distribution of any shares of the Stock not covered by such registration statement from the time of
the receipt of a notice from the Company that the Company has filed or imminently intends to file such registration statement to, or within 180
days after, the effective date of such registration statement, unless otherwise agreed to in writing by the Company.

                   (f)       The Management Stockholder represents and warrants that (i) with respect to the Stock he has received and
reviewed the available information relating to the Stock and (ii) he has been given the opportunity to obtain any additional information or
documents and to ask questions and receive answers about such information, the Company and the business and prospects of the Company
which he deems necessary to evaluate the merits and risks related to his investment in the Stock and to verify the information contained in the
information received as indicated in this Section 2(f), and he has relied solely on such information. In addition, if the Management
Stockholder is an Ontario, Canada resident, the Management Stockholder represents and warrants that he (A) is entitled under Ontario
securities laws to purchase the shares of Stock without the benefit of a prospectus qualified under the securities laws; (B) is basing his
investment decision solely on the Private Placement Memorandum and not on any other information concerning the Company and its
subsidiaries; (C) has reviewed Section 6 of this Agreement containing resale restrictions and acknowledges and agrees that the shares of Stock
purchased under this Agreement are subject to resale restrictions under applicable securities legislation as well as under Section 6 of this
Agreement containing resale restrictions; (D) is an officer or employee of the Company or a subsidiary of the Company; and (E) is purchasing
shares of Stock as principal for its own account.

                   (g)       The Management Stockholder further represents and warrants that (i) his financial condition is such that he can
afford to bear the economic risk of holding the Stock for an indefinite period of time and has adequate means for providing for his current
needs and personal contingencies, (ii) he can afford to suffer a complete loss of his or her investment in the Stock, (iii) he understands and has
taken cognizance of all risk factors related to the purchase of the Stock and (iv) his knowledge and experience in financial and business matters
are such that he is capable of evaluating the merits and risks of his purchase of the Stock as contemplated by this Agreement.

                  3.        Transferability of Stock . The Management Stockholder agrees that he will not transfer any shares of the Stock at
any time during the period commencing on the Effective Date and ending on the fifth anniversary of the Effective Date; provided , however ,
that the Management Stockholder may transfer shares of Stock during such time pursuant to one of the following exceptions: (a) transfers
permitted by clauses (x), (y) and (z) of Section 2(a); and/or (b) a sale of shares of Common Stock pursuant to an effective registration statement
under the Act filed by the Company (excluding any registration on Form S-8, S-4 or any successor or similar form) pursuant to Section 10 of
this Agreement; and/or (c) transfers permitted pursuant to the Sale Participation Agreement (as defined in Section 7). No transfer of any such
shares in violation hereof shall be made or recorded on the books of the Company and any such transfer shall be void ab initio and of no
effect. Notwithstanding anything in this Agreement to the contrary, this Section 3 shall terminate and be of no further force or effect upon the
occurrence of a Change of Ownership.

                   4.         Right of First Refusal . (a) If, at any time after the fifth anniversary of the Effective Date and prior to the date of
consummation of a Qualified Public Offering, the Management Stockholder receives a bona fide offer to purchase any or all of his Stock (the ―
Third Party Offer ‖) from a third party (the ― Offeror ‖), which the Management Stockholder wishes to accept, the Management Stockholder
shall cause the Third Party Offer to be reduced to writing and shall notify the Company in writing of his wish to accept the Third Party
Offer. The Management Stockholder’s notice to the Company shall contain an irrevocable offer to sell such Stock to the Company (in the
manner set forth below) at a purchase price equal to the price contained in, and on the same terms and conditions of, the Third Party Offer, and
shall be accompanied by a copy of the Third Party Offer (which shall identify the Offeror). At any time within 30 days after the date of the
receipt by the Company of the Management Stockholder’s notice, the Company shall have the right and option to purchase, or to arrange for a
third party to purchase, all of the shares of Stock covered by the Offer, pursuant to Section 4(b).

                   (b)        The Company shall have the right and option to purchase, or to arrange for a third party to purchase, all of the
shares of Stock covered by the Third Party Offer at the same price and on substantially the same terms and conditions as the Third Party Offer
(or, if the Third Party Offer includes any consideration other than cash, then at the sole option of the Company, at the equivalent all cash price,
determined in good faith by the Company’s Board), by delivering a certified bank check or checks in the appropriate amount (or by wire
transfer of immediately available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) (and any
such non-cash consideration to be paid) to the Management Stockholder at the principal office of the Company against delivery of certificates
or other instruments representing the shares of Stock so purchased, appropriately endorsed by the Management Stockholder. If at the end of
the 30-day period, the Company has not tendered the purchase price for such shares in the manner set forth above, the Management
Stockholder may, during the succeeding 60-day period, sell not less than all of the shares of Stock covered by the Third Party Offer, to the
Offeror on terms no less favorable to the Management Stockholder than those contained in the Third Party Offer. Promptly after such sale, the
Management Stockholder shall notify the Company of the consummation thereof and shall furnish such evidence of the completion and time of
completion of such sale and of the terms thereof as may reasonably be requested by the Company. If, at the end of 60 days following the
expiration of the 30-day period during which the Company is entitled hereunder to purchase the Stock, the Management Stockholder has not
completed the sale of such shares of the Stock as aforesaid, all of the restrictions on sale, transfer or assignment contained in this Agreement
shall again be in effect with respect to such shares of the Stock.
                   (c)      Notwithstanding anything in this Agreement to the contrary, this Section 4 shall terminate and be of no further
force or effect upon the occurrence of a Change of Ownership.

                  5.         The Management Stockholder’s Right to Resell Stock and Options to the Company .

                    (a)        Except as otherwise provided herein, if, prior to the fifth anniversary of the Effective Date, the Management
Stockholder is still in the employ of the Company (and/or, if applicable, its subsidiaries) and the Management Stockholder’s employment is
terminated as a result of the death or Permanent Disability of the Management Stockholder, then the applicable Management Stockholder
Entity, shall, for sixty (60) days (the ― Put Period ‖) following the date of such death or Permanent Disability, have the right to:

                  (i) With respect to the Stock, sell to the Company, and the Company shall be required to purchase, on one occasion, all of
         the shares of Stock then held by the applicable Management Stockholder Entities, at a per share price equal to the Fair Market Value
         Per Share (the ― Section 5 Repurchase Price ‖); and

                   (ii) With respect to any outstanding Options, sell to the Company, and the Company shall be required to purchase, on one
         occasion, all of the exercisable Options then held by the applicable Management Stockholder Entities, at a price equal to the product
         of (x) the excess, if any, of the Section 5 Repurchase Price over the Option Exercise Price and (y) the number of Exercisable Option
         Shares in respect of the termination of all or any portion of the outstanding exercisable Options held by the applicable Management
         Stockholder Entity. In the event the foregoing Option Excess Price is zero or a negative number, all outstanding exercisable stock
         options granted to the Management Stockholder under the Option Plan shall be automatically terminated without any payment in
         respect thereof. In the event that the Management Stockholder Entities do not exercise the foregoing rights, all exercisable but
         unexercised Options shall terminate pursuant to the terms of Section 3.2(b) of the Stock Option Agreement. All unexercisable
         Options held by the applicable Management Stockholder Entities shall terminate without payment immediately upon termination of
         employment.

                   (b)        In the event the applicable Management Stockholder Entities intend to exercise their rights pursuant to
Section 5(a), such Entities shall send written notice to the Company, at any time during the Put Period, of their intention to sell shares of Stock
in exchange for the payment referred in Section 5(a)(i) and/or to terminate such Options in exchange for the payment referred to in
Section 5(a)(ii) and shall indicate the number of shares of Stock to be sold and the number of Options to be terminated with payment in respect
thereof (the ― Redemption Notice ‖). The completion of the purchases shall take place at the principal office of the Company on the tenth
business day after the giving of the Redemption Notice. The applicable Repurchase Price and any payment with respect to the Options as
described above shall be paid by delivery to the applicable Management Stockholder Entities, of a certified bank check or checks in the
appropriate amount payable to the order of each of the applicable Management Stockholder Entities (or by wire transfer of immediately
available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions), against delivery of certificates or
other instruments representing the Stock so purchased and appropriate documents cancelling the Options so
terminated appropriately endorsed or executed by the applicable Management Stockholder Entities or any duly authorized representative.

                    (c)       Notwithstanding anything in Section 5(a) to the contrary and subject to Section 11(a), if there exists and is
continuing a default or an event of default on the part of the Company or any subsidiary of the Company under any loan, guarantee or other
agreement under which the Company or any subsidiary of the Company has borrowed money or if the repurchase referred to in Section 5(a)
would result in a default or an event of default on the part of the Company or any subsidiary of the Company under any such agreement or if a
repurchase would not be permitted under the Michigan Business Corporation Act (the ― MBCA ‖) or would otherwise violate the MBCA (or if
the Company reincorporates in another state, the business corporation law of such state) (each such occurrence being an ― Event ‖), the
Company shall not be obligated to repurchase any of the Stock or the Options from the applicable Management Stockholder Entities, until the
first business day which is 10 calendar days after all of the foregoing Events have ceased to exist (the ― Repurchase Eligibility Date ‖);
provided , however , that (i) the number of shares of Stock subject to repurchase under this Section 5(c) shall be that number of shares of Stock,
and (ii) in the case of a repurchase pursuant to Section 5(a)(ii), the number of Exercisable Option Shares for purposes of calculating the Option
Excess Price payable under this Section 5(c) shall be the number of Exercisable Option Shares, specified in the Redemption Notice and held by
the applicable Management Stockholder Entities, at the time of delivery of a Redemption Notice in accordance with Section 5(b) hereof. All
Options exercisable as of the date of a Redemption Notice, in the case of a repurchase pursuant to Section 5(a), shall continue to be exercisable
until the repurchase of such Options pursuant to such Redemption Notice, provided that to the extent any Options are exercised after the date of
such Redemption Notice, the number of Exercisable Option Shares for purposes of calculating the Option Excess Price shall be reduced
accordingly.

                   (d)        Effect of Change of Ownership . Notwithstanding anything in this Agreement to the contrary, except for any
payment obligation of the Company, which has arisen prior to such termination pursuant to this Agreement, this Section 5 shall terminate and
be of no further force or effect upon the occurrence of a Change of Ownership.

                  6.        The Company’s Option to Purchase Stock and Options of Management Stockholder Upon Certain Terminations of
                           Employment .

                   (a)         Termination for Cause by the Company, Termination without Good Reason by the Management Stockholder and
other Call Events . Except as otherwise provided herein or in the Restricted Stock Agreement, if, prior to the fifth anniversary of the Effective
Date, (i) the Management Stockholder’s active employment with the Company (and/or, if applicable, its subsidiaries) is terminated by the
Company (and/or, if applicable, its subsidiaries) for Cause, (ii) the Management Stockholder’s active employment with the Company (and/or, if
applicable, its subsidiaries) is terminated by the Management Stockholder without Good Reason, (iii) the beneficiaries of a Management
Stockholder’s Trust shall include any person or entity other than the Management Stockholder, his spouse (or ex-spouse) or his lineal
descendants (including adopted children), (iv) the Management Stockholder shall otherwise effect a transfer of any of the Stock other than as
permitted in this Agreement (other than as may be required by applicable law or an order of a court having competent jurisdiction) after notice
from the Company of such impermissible transfer and a reasonable opportunity to cure such transfer (each, a ― Section 6(a) Call Event ‖):
                          (A)        With respect to the Stock, the Company may purchase all or any portion of the shares of the Stock then
held by the applicable Management Stockholder Entities at a per share purchase price equal to the lesser of (x) the Base Price and (y) the Book
Value Per Share before a Public Offering (after a Public Offering, the Fair Market Value Per Share) (any such applicable repurchase price, the
― Section 6(a) Repurchase Price ‖); and

                       (B)         With respect to the Options, all Options (whether or not then exercisable) held by the applicable
Management Stockholder Entities will terminate immediately without payment in respect thereof.

                   (b)        Termination for Good Reason by Management Stockholder or without Cause by the Company . Except as
otherwise provided herein, if, prior to the fifth anniversary of the Effective Date, the Management Stockholder’s employment is terminated as a
result of a termination (i) by the Management Stockholder with Good Reason or (ii) by the Company (and/or, if applicable, its subsidiaries)
without Cause (each, a ― Section 6(b) Call Event ‖), then the Company may:

                          (A)        With respect to the Stock, purchase all or any portion of the shares of Stock then held by the applicable
Management Stockholder Entities at a per share purchase price equal to: (x) before a Public Offering, (I) in the event of the Management
Stockholder’s termination for Good Reason, the Book Value Per Share and (II) in the event of the Management Stockholder’s termination by
the Company (and/or, if applicable, any Subsidiary) without Cause, the Fair Market Value Per Share or (y) after a Public Offering, the Fair
Market Value Per Share (any such applicable repurchase price, the ― Section 6(b) Repurchase Price ‖); and

                           (B)       With respect to the Options, purchase all or any portion of the exercisable Options held by the applicable
Management Stockholder Entities for an amount equal to the product of (x) the excess, if any, of the Section 6(b) Repurchase Price over the
Option Exercise Price and (y) the number of Exercisable Option Shares in respect of the termination of all or any portion of the outstanding
exercisable Options held by the applicable Management Stockholder Entity. In the event the foregoing Option Excess Price is zero or a
negative number, all outstanding exercisable stock options granted to the Management Stockholder under the Option Plan shall be
automatically terminated without any payment in respect thereof. In the event that the Company does not exercise the foregoing rights all
exercisable but unexercised Options shall terminate pursuant to the terms of Section 3.2(d) of the Stock Option Agreement. All unexercisable
Options held by the applicable Management Stockholder Entities shall also terminate without payment immediately upon termination of
employment, pursuant to the Stock Option Agreement.

                  (c)      Termination for Death or Disability . Except as otherwise provided herein, if, prior to the fifth anniversary of the
Effective Date, the Management Stockholder’s employment with the Company (and/or, if applicable, its subsidiaries) is terminated as a result
of the death or Permanent Disability of the Management Stockholder (each a ― Section 6(c) Call Event ‖), then the Company may:

                       (A)         With respect to the Stock, purchase all or any portion of the shares of Stock then held by the applicable
Management Stockholder Entities, at a per share price equal the Section 5 Repurchase Price; and
                            (B)         With respect to the Options, purchase all or any portion of the exercisable Options for an amount equal to
the product of (x) the excess, if any, of the Section 5 Repurchase Price over the Option Exercise Price and (y) the number of Exercisable
Option Shares in respect of the termination of all or any portion of the outstanding exercisable Options held by the applicable Management
Stockholder Entity. In the event the foregoing Option Excess Price is zero or a negative number, all outstanding exercisable stock options
granted to the Management Stockholder under the Option Plan shall be automatically terminated without any payment in respect thereof. In
the event that the Company does not exercise the foregoing rights all exercisable but unexercised Options shall terminate pursuant to the terms
of Section 3.2(b) of the Stock Option Agreement. All unexercisable Options held by the applicable Management Stockholder Entities shall also
terminate without payment immediately upon termination of employment, pursuant to the Stock Option Agreement.

                    (d)       Call Notice . The Company shall have a period of sixty (60) days from the date of any Call Event (or, if later, with
respect to a Section 6(a) Call Event, the date after discovery of, and the applicable cure period for, an impermissible transfer constituting a
Section 6(a) Call Event), in which to give notice in writing to the Management Stockholder of its election to exercise its rights and obligations
pursuant to this Section 6 (― Repurchase Notice ‖). The completion of the purchases pursuant to the foregoing shall take place at the principal
office of the Company on the tenth business day after the giving of the Call Notice. The applicable Repurchase Price and any payment with
respect to the Options as described in this Section 6 shall be paid by delivery to the applicable Management Stockholder Entities of a certified
bank check or checks in the appropriate amount payable to the order of each of the applicable Management Stockholder Entities (or by wire
transfer of immediately available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) against
delivery of certificates or other instruments representing the Stock so purchased and appropriate documents cancelling the Options so
terminated, appropriately endorsed or executed by the applicable Management Stockholder Entities or its authorized representative.

                    (e)       Delay of Call . Notwithstanding any other provision of this Section 6 to the contrary and subject to Section 11(a),
if there exists and is continuing any Event, the Company shall delay the repurchase of any of the Stock or the Options (pursuant to a Call
Notice timely given in accordance with Section 6(d) hereof) from the applicable Management Stockholder Entities until the Repurchase
Eligibility Date; provided , however , that (i) the number of shares of Stock subject to repurchase under this Section 6 shall be that number of
shares of Stock, and (ii) in the case of a repurchase pursuant to Section 6(b) or Section 6(c), the number of Exercisable Option Shares for
purposes of calculating the Option Excess Price payable under this Section 6 shall be the number of Exercisable Option Shares, held by the
applicable Management Stockholder Entities at the time of delivery of a Call Notice in accordance with Section 6(d) hereof. All Options
exercisable as of the date of a Repurchase Notice, in the case of a repurchase pursuant to Section 6(b) or 6(c), shall continue to be exercisable
until the repurchase of such Options pursuant to such Call Notice, provided that to the extent that any Options are exercised after the date of
such Call Notice, the number of Exercisable Option Shares for purposes of calculating the Option Excess Price shall be reduced accordingly.

                  (f)       Effect of Change of Ownership . Notwithstanding anything in this Agreement to the contrary, this Section 6 shall
terminate and be of no further force or effect upon the occurrence of a Change of Ownership.
                  7.        Adjustment of Repurchase Price; Definitions .

                  (a)       Adjustment of Repurchase Price . In determining the applicable repurchase price of the Stock and Options, as
provided for in Sections 5 and 6, above, appropriate adjustments shall be made for any stock dividends, splits, combinations, recapitalizations
or any other adjustment in the number of outstanding shares of Stock in order to maintain, as nearly as practicable, the intended operation of the
provisions of Sections 5 and 6.

                  (b)       Definitions . All capitalized terms used in this Agreement and not defined herein shall have such meaning as such
terms are defined in the Option Plan. Terms used herein and as listed below shall be defined as follows:

         ―Act‖ shall have the meaning set forth in Section 2(a)(i) hereof.

         ―Agreement‖ shall have the meaning set forth in the introductory paragraph.

         ―Base Price‖ shall have the meaning set forth in Section 1(a) hereof.

         ―Board‖ shall mean the board of directors of the Company.

         ―Book Value Per Share‖ shall mean the quotient of (a) (i) $25.00 plus (ii) the aggregate net income of the Company from and after the
Closing Date (as decreased by any net losses from and after the Closing Date) excluding any one time costs and expenses charged to income
associated with the Acquisition and any related transactions plus (iii) the aggregate dollar amount contributed to (or credited to common
stockholders’ equity of) the Company after the Closing Date as equity of the Company (including consideration that would be received upon
the exercise of all outstanding stock options and other rights to acquire Common Stock and the conversion of all securities convertible into
Common Stock and other stock equivalents) plus (iv) to the extent reflected as deductions to Book Value Per Share in clause (ii) above,
unusual or other items recognized by the Company (including, without limitation, extraordinary charges, and one time or accelerated write-offs
of good will, net of the related impact on the provision for income taxes), in each case, if and to the extent determined in good faith by the
Board, plus (v) the amortization of purchase accounting adjustments occurring as a result of the Acquisition, minus (vi) to the extent reflected
as additions to Book Value Per Share in clause (ii) above, unusual or other items recognized by the Company, in each case, if and to the extent
determined in good faith by the Board, minus (vii) the aggregate dollar amount of any dividends paid by the Company after the Closing Date,
divided by (b) the sum of the number of shares of Common Stock then outstanding and the number of shares of Common Stock issuable upon
the exercise of all outstanding stock options and other rights to acquire Common Stock. The items referred to in the calculations set forth in
clauses (a)(ii) through (vii) of the immediately preceding sentence shall be determined in good faith, and to the extent possible, in accordance
with generally accepted accounting principles applied on a basis consistent with any prior periods as reflected in the consolidated financial
statements of the Company,

         ―Call Events‖ shall mean, collectively, Section 6(a) Call Events, Section 6(b) Call Events, and Section 6(c) Call Events.

         ―Call Notice‖ shall have the meaning set forth in Section 6(d) hereof.
         ―Cause‖ shall mean ―Cause‖ as such term may be defined in any employment agreement between the Management Stockholder and
the Company or any of its Subsidiaries or Affiliates, or, if there is no such employment agreement, ―Cause‖ shall mean (i) the Management
Stockholder’s continued failure substantially to perform Management Stockholder’s duties with the Company (or any Subsidiary of the
Company) (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 Company (or any Subsidiary of the Company) to the Management Stockholder of such failure, (ii) dishonesty in the performance of the
Management Stockholder’s duties with the Company (or any Subsidiary of the Company), (iii) the Management Stockholder’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, (iv) the Management Stockholder’s willful malfeasance or willful misconduct in connection with the Management
Stockholder’s duties with the Company (or any Subsidiary of the Company) or any act or omission which is injurious to the financial condition
or business reputation of the Company or its Affiliates or (v) the Management Stockholder’s breach of the provisions of Section 25 of this
Agreement.

          ―Change of Ownership‖ means (i) the sale of all or substantially all of the assets of the Company or ITC to an Unaffiliated Person; (ii)
a sale resulting in more than 50% of the voting stock of the Company or ITC being held by an Unaffiliated Person; (iii) a merger,
consolidation, recapitalization or reorganization of the Company or ITC with or into another Unaffiliated Person; if and only if any such event
listed in clauses (i) through (iii) above results in the inability of ITH LP, Ironhill, the Limited Partner Group, or any member or members of the
Limited Partner Group, to designate or elect a majority of the Board (or the board of directors of the resulting entity or its parent
company). For purposes of this definition, the term ― Unaffiliated Person ‖ means any Person or Group who is not (x) ITH LP, Ironhill, the
Limited Partner Group or any member of the Limited Partner Group, (y) an Affiliate of ITH LP, Ironhill, the Limited Partner Group or any
member of the Limited Partner Group, or (z) an entity in which ITH LP, Ironhill, the Limited Partner Group, or any member of the Limited
Partner Group holds, directly or indirectly, a majority of the economic interests in such entity.

         ―Closing Date‖ shall have the meaning set forth in the first ―whereas‖ paragraph.

         ―Common Stock‖ shall have the meaning set forth in the second ―whereas‖ paragraph.

         ―Company‖ shall have the meaning set forth in the introductory paragraph.

          ―Confidential Information‖ shall mean all non-public information concerning trade secret, know-how, software, developments,
inventions, processes, technology, designs, the financial data, strategic business plans or any proprietary or confidential information, documents
or materials in any form or media, including any of the foregoing relating to research, operations, finances, current and proposed products and
services, vendors, customers, advertising and marketing, and other non-public, proprietary, and confidential information of the Restricted
Group.

         ―Custody Agreement and Power of Attorney‖ shall have the meaning set forth in Section 10 hereof.

         ―Event‖ shall have the meaning set forth in Section 5(c) hereof.
         ―Exchange Act‖ shall mean the Securities Exchange Act of 1934, as amended (or any successor section thereto).

        ―Exercisable Option Shares‖ shall mean the shares of Common Stock that, at the Repurchase Calculation Date, could be purchased by
the Management Stockholder upon exercise of his or her outstanding and exercisable Options.

          ―Fair Market Value Per Share‖ shall mean, on the Repurchase Calculation Date, the price per share equal to (i) the average of the last
sale price of the Common Stock for the five trading days ending on the Repurchase Calculation Date on each stock exchange on which the
Common Stock may at the time be listed or, (ii) if there shall have been no sales on any such exchanges on the Repurchase Calculation Date on
any given day, the average of the closing bid and asked prices on each such exchange for the five trading days ending on the Repurchase
Calculation Date or, (iii) if there is no such bid and asked price on the Repurchase Calculation Date, on the next preceding date when such bid
and asked price occurred or, (iv) if the Common Stock shall not be so listed, the average of the closing sales prices as reported by NASDAQ for
the five trading days ending on the Repurchase Calculation Date in the over-the-counter market or, (v) if there have been no such sales, bid or
asked prices, or if there has been no Public Offering, the fair market value of the Common Stock as determined in the good faith discretion of
the Board.

         ―Good Reason‖ shall mean ―Good Reason‖ as defined in any employment agreement between the Management Stockholder and the
Company or any of its Subsidiaries or Affiliates, or, if there is no such employment agreement, ―Good Reason‖ shall mean (i) a substantial
reduction in the total value of the Management Stockholder’s rate of annual base salary, target annual bonus, and the aggregate employee
benefits provided to the Management Stockholder by the Company or its Subsidiaries; (ii) the Management Stockholder’s job responsibility
and authority are substantially diminished; and (iii) the Management Stockholder’s work location is relocated to more than fifty (50) miles
from Detroit, Michigan or Ann Arbor, Michigan; and provided , further , that ―Good Reason‖ shall cease to exist for an event on the 60 th day
following the later of its occurrence or the Management Stockholder’s knowledge thereof, unless the Management Stockholder has given the
Company written notice thereof prior to such date.

         ―Group‖ shall mean ―group,‖ as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act.

        ―Ironhill‖ means Ironhill Transmission LLC, which is the general partner of ITH LP, of which the Company is a majority-owned
Subsidiary.

         ―ITH LP‖ means International Transmission Holdings Limited Partnership, a Michigan limited partnership.

         ―Limited Partner Group‖ shall mean the KKR Millennium Fund L.P., KKR Partners III, L.P. and Trimaran Capital Partners,
collectively.

         ―Management Stockholder‖ shall have the meaning set forth in the introductory paragraph.

       ―Management Stockholder Entities‖ shall mean the Management Stockholder’s Trust, the Management Stockholder and the
Management Stockholder’s Estate, collectively.
         ―Management Stockholder’s Estate‖ shall mean the conservators, guardians, executors, administrators, testamentary trustees, legatees
or beneficiaries of the Management Stockholder.

           ―Management Stockholder’s Trust‖ shall mean a limited partnership, limited liability company, trust or custodianship, the
beneficiaries of which may include only the Management Stockholder, his spouse (or ex-spouse) or his lineal descendants (including adopted)
or, if at any time after any such transfer there shall be no then living spouse or lineal descendants, then to the ultimate beneficiaries of any such
trust or to the estate of a deceased beneficiary.

         ―Maximum Repurchase Amount‖ shall have the meaning set forth in Section 11(a) hereof.

         ―MBCA‖ shall have the meaning set forth in Section 5(c) hereof.

         ―Notice‖ shall have the meaning set forth in Section 10(b) hereof.

         ―Offeror‖ shall have the meaning set forth in Section 4 hereof.

         ―Option Excess Price‖ shall mean the aggregate amount paid by the Company in respect of Exercisable Option Shares pursuant to
Section 5 or 6, as applicable.

         ―Option Exercise Price‖ shall mean the exercise price of the shares of Common Stock covered by the applicable Option.

         ―Option‖ shall have the meaning set forth in the third ―whereas‖ paragraph.

         ―Option Plan‖ shall have the meaning set forth in the third ―whereas‖ paragraph.

         ―Option Stock‖ shall have the meaning set forth in Section 2(a) hereof.

         ―Other Management Stockholders‖ shall have the meaning set forth in the fourth ―whereas‖ paragraph.

         ―Other Management Stockholders’ Agreements‖ shall have the meaning set forth in the fourth ―whereas‖ paragraph.

         ―Parties‖ shall have the meaning set forth in the introductory paragraph.

          ―Permanent Disability‖ shall mean the Management Stockholder becomes physically or mentally incapacitated and is therefore unable
for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period, to perform
the Management Stockholder’s duties with the Company or any Subsidiary or Affiliate thereof. Any question as to the existence of the
Permanent Disability of the Management Stockholder as to which the Management Stockholder and the Company cannot agree shall be
determined in writing by a qualified independent physician mutually acceptable to the Management Stockholder and the Company. If the
Management Stockholder and the Company 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 Permanent Disability made in writing
to
the Company and the Management Stockholder shall be final and conclusive for all purposes of this Agreement (such inability is hereinafter
referred to as ―Permanent Disability‖).

         ―Person‖ shall mean ―person,‖ as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act.

         ―Proposed Registration‖ shall have the meaning set forth in Section 10(b) hereof.

          ―Public Offering‖ shall mean the sale of shares of Common Stock to the public subsequent to the date hereof pursuant to a registration
statement under the Act which has been declared effective by the SEC (other than a registration statement on Form S-4, Form S-8 or any other
similar form).

         ―Purchased Stock‖ shall have the meaning set forth in Section 1(a) hereof.

         ―Qualified Public Offering‖ shall mean a Public Offering, which results in an active trading market of 25% or more of the Common
Stock.

          ―Repurchase Calculation Date‖ shall mean the last day of the month preceding the later of (i) the month in which the event giving rise
to the right to repurchase occurs and (ii) the month in which the Repurchase Eligibility Date occurs.

         ―Repurchase Eligibility Date‖ shall have the meaning set forth in Section 5(c) hereof.

         ―Repurchase Price‖ shall mean the amount to be paid in respect of the Stock and Options to be purchased by the Company pursuant to
Section 5(a), Section 6(a), 6(b), or 6(c), as applicable.

         ―Request‖ shall have the meaning set forth in Section 10(b) hereof.

         ―Restricted Group‖ shall mean, collectively, the Company, its Subsidiaries, the members of the Limited Partner Group and their
respective Affiliates.

         ―Rule 405 Affiliate‖ shall mean an affiliate of the Company as defined under Rule 405 of the rules and regulations promulgated under
the Act, and as interpreted by the Board.

        ―Sale Participation Agreement‖ shall mean that certain sale participation agreement entered into by and between the Management
Stockholder and ITH L.P. dated as of the date hereof.

         ―SEC‖ shall mean the Securities and Exchange Commission.

         ―Stock‖ shall have the meaning set forth in Section 2(a) hereof.

         ―Stock Option Agreement‖ shall have the meaning set forth in the third ―whereas‖ paragraph.

         ―Third Party Offer‖ shall have the meaning set forth in Section 4(a) hereof.

       ―Trimaran Capital Partners‖ means, collectively, Trimaran Fund II, L.L.C., Trimaran Parallel Fund II, L.P., Trimaran Capital, L.L.C.,
CIBC Employee Private Equity Fund (Trimaran) Partners and CIBC World Markets Ireland Limited.
                  8.         The Company’s Representations and Warranties .

                  (a)      The Company represents and warrants to the Management Stockholder that (i) this Agreement has been duly
authorized, executed and delivered by the Company and is enforceable against the Company in accordance with its terms and (ii) the Stock,
when issued and delivered in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable.

                    (b)       If the Company becomes subject to the reporting requirements of Section 12 of the Exchange Act, the Company
will file the reports required to be filed by it under the Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder,
to the extent required from time to time to enable the Management Stockholder to sell shares of Stock without registration under the Exchange
Act within the limitations of the exemptions provided by (A) Rule 144 under the Act, as such Rule may be amended from time to time, or (B)
any similar rule or regulation hereafter adopted by the SEC, subject to the transfer restrictions set forth in Section 3. Notwithstanding anything
contained in this Section 9(b), the Company may de-register under Section 12 of the Exchange Act if it is then permitted to do so pursuant to
the Exchange Act and the rules and regulations thereunder and, in such circumstances, shall not be required hereby to file any reports which
may be necessary in order for Rule 144 or any similar rule or regulation under the Act to be available. Nothing in this Section 8(b) shall be
deemed to limit in any manner the restrictions on sales of Stock contained in this Agreement.

                   9.         ―Piggyback‖ Registration Rights . Until the later of (i) the first occurrence of a Qualified Public Offering and (ii)
the fifth anniversary of the Effective Date:

                   (a)       The Management Stockholder hereby agrees to be bound by all of the terms, conditions and obligations of the
Registration Rights Agreement entered into by and among the Company and International Transmission Holdings Limited Partnership (the ―
Registration Rights Agreement ‖), as in effect on the date hereof (subject to any amendments thereto to which the Management Stockholder has
agreed to be bound), and shall have all of the rights and privileges of the Registration Rights Agreement, in each case as if the Management
Stockholder were an original party (other than the Company) thereto, subject to applicable and customary underwriter restrictions; provided ,
however , that at no time shall the Management Stockholder have any rights to request registration under Section 3 of the Registration Rights
Agreement; and provided further , that the Management Stockholder shall not be bound by any amendments to the Registration Rights
Agreement unless the Management Stockholder consents thereto provided that such consent will not be unreasonably withheld. All Stock
purchased or held by the applicable Management Stockholder Entities pursuant to this Agreement shall be deemed to be ―Registrable
Securities‖ as defined in the Registration Rights Agreement.

                   (b)      In the event of a sale of Common Stock by the Limited Partner Group in accordance with the terms of the
Registration Rights Agreement, the Company will promptly notify the Management Stockholder in writing (a ― Notice ‖) of any proposed
registration (a ― Proposed Registration ‖). If within 15 days of the receipt by the Management Stockholder of such Notice, the Company
receives from the applicable Management Stockholder Entities a written request (a ― Request ‖) to register shares of Stock held by the
applicable Management Stockholder Entities (which Request will be irrevocable unless otherwise mutually agreed to in writing by the
Management Stockholder and the Company), shares of Stock will be so registered as provided in this Section 10; provided , however , that
for each such registration statement only one Request, which shall be executed by the applicable Management Stockholder Entities, may be
submitted for all Registrable Securities held by the applicable Management Stockholder Entities.

                    (c)       The maximum number of shares of Stock which will be registered pursuant to a Request will be the lowest of (i)
the number of shares of Stock then held by the Management Stockholder Entities, including all shares of Stock which the Management
Stockholder Entities are then entitled to acquire under an unexercised Option to the extent then exercisable, multiplied by a fraction, the
numerator of which is the number of shares of Stock being sold by the Limited Partner Group and any investment partnerships and investment
limited liability companies affiliated with the Limited Partner Group and the denominator of which is the aggregate number of shares of Stock
owned by the Limited Partner Group and any investment partnerships and investment limited liability companies affiliated with the Limited
Partner Group or (ii) the maximum number of shares of Stock which the Company can register in the Proposed Registration without adverse
effect on the offering in the view of the managing underwriters (reduced pro rata with all Other Management Stockholders) as more fully
described in subsection (d) of this Section 10 or (iii) the maximum number of shares which the Management Stockholder (pro rata based upon
the aggregate number of shares of Stock the Management Stockholder and all Other Management Stockholders have requested to be registered)
is permitted to register under the Registration Rights Agreement.

                    (d)        If a Proposed Registration involves an underwritten offering and the managing underwriter advises the Company in
writing that, in its opinion, the number of shares of Stock requested to be included in the Proposed Registration exceeds the number which can
be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of the shares of Stock offered in such
Public Offering as contemplated by the Company, then the Company will include in the Proposed Registration (i) first, 100% of the shares of
Stock the Company proposes to sell and (ii) second, to the extent of the number of shares of Stock requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having the adverse effect referred to above, the number of shares of
Stock which the ―Holders‖ (as defined in the Registration Rights Agreement), including, without limitation, the Management Stockholder, and
all Other Management Stockholders have requested to be included in the Proposed Registration, such amount to be allocated pro rata among all
requesting Holders on the basis of the relative number of shares of Stock then held by each such Holder (including the exercisable Options)
(provided that any shares thereby allocated to any such Holder that exceed such Holder’s request will be reallocated among the remaining
requesting Holders in like manner).

                    (e)        Upon delivering a Request the Management Stockholder will, if requested by the Company, execute and deliver a
custody agreement and power of attorney in form and substance satisfactory to the Company with respect to the shares of Stock to be registered
pursuant to this Section 10 (a ― Custody Agreement and Power of Attorney ‖). The Custody Agreement and Power of Attorney will provide,
among other things, that the Management Stockholder will deliver to and deposit in custody with the custodian and attorney-in-fact named
therein a certificate or certificates representing such shares of Stock (duly endorsed in blank by the registered owner or owners thereof or
accompanied by duly executed stock powers in blank) and irrevocably appoint said custodian and attorney-in-fact as the Management
Stockholder’s agent and attorney-in-fact with full power and authority to
act under the Custody Agreement and Power of Attorney on the Management Stockholder’s behalf with respect to the matters specified therein.

                 (f)         The Management Stockholder agrees that he or she will execute such other agreements as the Company may
reasonably request to further evidence the provisions of this Section.

                   10.         Pro Rata Repurchases; Dividends . (a) Notwithstanding anything to the contrary contained in Section 4, 5 or 6, if
at any time consummation of any purchase or payment to be made by the Company pursuant to this Agreement and the Other Management
Stockholders Agreements would result in an Event, then the Company shall make purchases from, and payments to, the Management
Stockholder and Other Management Stockholders pro rata (on the basis of the proportion of the number of shares of Stock each such
Management Stockholder and all Other Management Stockholders have elected or are required to sell to the Company) for the maximum
number of shares of Stock permitted without resulting in an Event (the ― Maximum Repurchase Amount ‖). The provisions of Section 5(c) and
6(e) shall apply in their entirety to payments and repurchases with respect to shares of Stock which may not be made due to the limits imposed
by the Maximum Repurchase Amount under this Section 11(a). Until all of such Stock is purchased and paid for by the Company, the
Management Stockholder and the Other Management Stockholders whose Stock is not purchased in accordance with this Section 11(a) shall
have priority, on a pro rata basis, over other purchases of Stock by the Company pursuant to this Agreement and Other Management
Stockholders’ Agreements.

                  (b)       In the event any dividends are paid with respect to the Stock, the Management Stockholder will be treated pari
passu with all Other Management Stockholders with respect to shares of Stock then owned by the Management Stockholder, and, with respect
to any Options held by the Management Stockholder, in accordance, as applicable, with Section 2.4 of the Stock Option Agreement.

                  11.       Rights to Negotiate Repurchase Price . Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing, redeeming or otherwise acquiring for value shares of Stock or Options from the Management Stockholder, at any
time, upon such terms and conditions, and for such price, as may be mutually agreed upon between the Parties, whether or not at the time of
such purchase, redemption or acquisition circumstances exist which specifically grant the Company the right to purchase shares of Stock or any
Options under the terms of this Agreement, provided that no such purchase, redemption or acquisition shall be consummated, and no agreement
with respect to any such purchase, redemption or acquisition shall be entered into, without the prior written consent of the Board.

                   12.         Covenant Regarding 83(b) Election . Except as set forth in the Restricted Stock Agreement or as the Company
may otherwise agree in writing, the Management Stockholder hereby covenants and agrees that he will make an election provided pursuant to
Treasury Regulation 1.83-2 with respect to the Stock, including without limitation, the Stock to be acquired pursuant to Section 1(a), the Stock
to be acquired upon each exercise of the Management Stockholder’s Options and any grant of restricted Stock; and Management Stockholder
further covenants and agrees that he will furnish the Company with copies of the forms of election the Management Stockholder files within 30
days after the date hereof, and within 30 days after each exercise of Management Stockholder’s Options and with evidence that each such
election has been filed in a timely manner.
                  13.         Notice of Change of Beneficiary . Immediately prior to any transfer of Stock to a Management Stockholder’s
Trust, the Management Stockholder shall provide the Company with a copy of the instruments creating the Management Stockholder’s Trust
and with the identity of the beneficiaries of the Management Stockholder’s Trust. The Management Stockholder shall notify the Company as
soon as practicable prior to any change in the identity of any beneficiary of the Management Stockholder’s Trust.

                   14.       Recapitalizations, etc. The provisions of this Agreement shall apply, to the full extent set forth herein with
respect to the Stock or the Options, to any and all shares of capital stock of the Company or any capital stock, partnership units or any other
security evidencing ownership interests in any successor or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for, or substitution of the Stock or the Option, by reason of any stock dividend, split,
reverse split, combination, recapitalization, liquidation, reclassification, merger, consolidation or otherwise.

                  15.        Management Stockholder’s Employment by the Company . Nothing contained in this Agreement or in any other
agreement entered into by the Company and the Management Stockholder contemporaneously with the execution of this Agreement (subject to
the applicable provisions of any offer letter or letter of employment provided to the Management Stockholder by the Company or any
employment agreement entered by and between the Management Stockholder and the Company) (i) obligates the Company or any subsidiary
of the Company to employ the Management Stockholder in any capacity whatsoever or (ii) prohibits or restricts the Company (or any such
subsidiary) from terminating the employment of the Management Stockholder at any time or for any reason whatsoever, with or without Cause,
and the Management Stockholder hereby acknowledges and agrees that neither the Company nor any other person has made any
representations or promises whatsoever to the Management Stockholder concerning the Management Stockholder’s employment or continued
employment by the Company or any subsidiary of the Company.

                   16.       State Securities Laws . The Company hereby agrees to use its reasonable best efforts to comply with all state
securities or ―blue sky‖ laws that might be applicable to the sale of the Stock and the issuance of the Option to the Management Stockholder.

                   17.        Binding Effect . The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and assigns. In the case of a transferee permitted under Section 2(a) or
Section 3 hereof, such transferee shall be deemed the Management Stockholder hereunder; provided , however , that no transferee (including
without limitation, transferees referred to in Section 2(a) or Section 3 hereof) shall derive any rights under this Agreement unless and until such
transferee has delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement.

                  18.        Amendment . This Agreement may be amended only by a written instrument signed by the Parties hereto.

                 19.         Closing . Except as otherwise provided herein, the closing of each purchase and sale of shares of Stock, pursuant
to this Agreement shall take place at the
principal office of the Company on the tenth business day following delivery of the notice by either Party to the other of its exercise of the right
to purchase or sell such Stock hereunder.

                  20.        Applicable Law; Jurisdiction; Arbitration; Legal Fees .

                (a)        The laws of the State of Michigan shall govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under principles of conflicts of law.

                  (b)         In the event of any controversy among the parties hereto arising out of, or relating to, this Agreement which cannot
be settled amicably by the parties, such controversy shall be finally, exclusively and conclusively settled by mandatory arbitration conducted
expeditiously in accordance with the American Arbitration Association rules, by a single independent arbitrator. Such arbitration process shall
take place within 100 miles of the Detroit, Michigan metropolitan area. The decision of the arbitrator shall be final and binding upon all
parties hereto and shall be rendered pursuant to a written decision, which contains a detailed recital of the arbitrator’s reasoning. Judgment
upon the award rendered may be entered in any court having jurisdiction thereof.

                   (c)      Notwithstanding the foregoing, the Management Stockholder acknowledges and agrees that the Company, its
Subsidiaries, any member of the Limited Partner Group and any of their respective Affiliates shall be entitled to injunctive or other relief in
order to enforce the covenant not to compete, covenant not to solicit and/or confidentiality covenants as set forth in Section 25(a) of this
Agreement.

                   (d)       In the event of any arbitration or other disputes with regard to this Agreement or any other document or agreement
referred to herein, each Party that shall pay its own legal fees and expenses, unless otherwise determined by the arbitrator.

                   21.        Assignability of Certain Rights by the Company . The Company shall have the right to assign any or all of its
rights or obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6 hereof.

                  22.        Miscellaneous .

                  (a)      In this Agreement all references to ―dollars‖ or ―$‖ are to United States dollars and the masculine pronoun shall
include the feminine and neuter, and the singular the plural, where the context so indicates

                    (b)       If any provision of this Agreement shall be declared illegal, void or unenforceable by any court of competent
jurisdiction, the other provisions shall not be affected, but shall remain in full force and effect.

                  23.        Withholding . The Company or its Subsidiaries shall have the right to deduct from any cash payment made under
this Agreement to the applicable Management Stockholder Entities any minimum federal, state or local income or other taxes required by law
to be withheld with respect to such payment.

                 24.         Notices . All notices and other communications provided for herein shall be in writing and shall be deemed to
have been duly given if delivered by hand (whether by overnight courier or otherwise) or sent by registered or certified mail, return receipt
requested, postage prepaid, or by overnight delivery or telecopy, to the Party to whom it is directed:

                  (a)        If to the Company, to it at the following address:

                              ITC Holdings Corp.
                              1901 South Wagner
                              Ann Arbor, Michigan 48105
                              Attention:      John Flynn, Esq.

                              with a copy to:

                              Simpson Thacher & Bartlett
                              425 Lexington Avenue
                              New York, New York 10017
                              Attention:     David J. Sorkin, Esq.
                                             Alvin H. Brown, Esq.
                              Telecopy:      (212) 455-2502

                  (b)        If to the Management Stockholder, to him at the address set forth below under his signature;

or at such other address as either party shall have specified by notice in writing to the other.

                  25.        Confidential Information; Covenant Not to Compete .

                   (a)       In consideration of the Company entering into this Agreement with the Management Stockholder, the Management
Stockholder hereby agrees effective as of the date of the Management Stockholder’s commencement of employment with the Company or its
Subsidiaries, without the Company’s prior written consent, the Management Stockholder shall not, directly or indirectly, (i) at any time during
or after the Management Stockholder’s employment with the Company or its Subsidiaries, disclose any Confidential Information pertaining to
the business of the Company or any of its Subsidiaries, except when required to perform his or her duties to the Company or one of its
Subsidiaries, by law or judicial process; or (ii) at any time during the Management Stockholder’s employment with the Company or its
Subsidiaries and for one year thereafter, directly or indirectly (A) be engaged in or have financial interest (other than an ownership position of
less than 5% in any company whose shares are publicly traded or any non-voting non-convertible debt securities in any company) in any
business which competes with any business of the Company or any of its Subsidiaries, (B) solicit customers or clients of the Company or any
of its Subsidiaries to terminate their relationship with the Company or any of its Subsidiaries or otherwise solicit such customers or clients to
compete with any business of the Company or any of its Subsidiaries or (C) solicit or offer employment to any person who has been employed
by the Company or any of its Subsidiaries at any time during the twelve months immediately preceding the termination of the Management
Stockholder’s employment. If the Management Stockholder is bound by any other agreement with the Company regarding the use or
disclosure of confidential information, the provisions of this Agreement shall be read in such a way as to further restrict and not to permit any
more extensive use or disclosure of confidential information.
                   (b)        Notwithstanding clause (a) above, if at any time a court holds that the restrictions stated in such clause (a) are
unreasonable or otherwise unenforceable under circumstances then existing, the parties hereto agree that the maximum period, scope or
geographic area determined to be reasonable under such circumstances by such court will be substituted for the stated period, scope or
area. Because the Management Stockholder’s services are unique and because the Management Stockholder has had access to Confidential
Information, the parties hereto agree that money damages will be an inadequate remedy for any breach of this Agreement. In the event of a
breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing
in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive relief in order to enforce, or prevent any
violations of, the provisions hereof (without the posting of a bond or other security).

                                                           [ Signatures on next page .]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

                                          ITC HOLDINGS CORP.


                                          By:

                                          Name:

                                          Title:
                                                                      MANAGEMENT STOCKHOLDER:


                                                                      FIELD 1


                                                                      ADDRESS:




                                                                                                                        EXECUTION COPY

                                                          FORM OF
                                           MANAGEMENT STOCKHOLDER’S AGREEMENT
                                                    (Restricted Stock Only)

                  This Management Stockholder’s Agreement (this ― Agreement ‖) is entered into as of [DATE], 2003 (the ― Effective Date ‖)
between ITC Holdings Corp., a Michigan corporation (the ― Company ‖), and the undersigned person (the ― Management Stockholder ‖) (the
Company and the Management Stockholder being hereinafter collectively referred to as the ― Parties ‖). All capitalized terms not immediately
defined are hereinafter defined in Section 7(b) of this Agreement.

                 WHEREAS, on December 3, 2002, DTE Energy Company, a Michigan corporation, and the Company entered into a Stock
Purchase Agreement (the ― Acquisition Agreement ‖). Pursuant to the Acquisition Agreement, the Company acquired all of the issued and
outstanding shares in the capital of International Transmission Company, a Michigan corporation (― ITC ‖), as further specified in the
Acquisition Agreement (the ― Acquisition ‖) (the date of such Acquisition, the ― Closing Date ‖).

                   WHEREAS, in connection with the Acquisition, Management Stockholder has been selected by the Company to be permitted
to contribute to the Company cash in exchange for shares of common stock of the Company (such common stock, together with any securities
issued in respect thereof or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification,
reorganization, merger, consolidation, exchange or other similar reorganization, the ― Common Stock ‖);

                   WHEREAS, Management Stockholder has been selected by the Company, as of the date hereof, to receive a grant of 1,000
restricted shares of Common Stock (the ― Restricted Stock ‖) pursuant to the terms set forth below and the terms of the 2003 Stock Purchase
and Option Plan for Key Employees of the Company and Its Subsidiaries (the ― Option Plan ‖) and the Restricted Stock Award Agreement
dated as of even date herewith, entered into by and between the Company and the Management Stockholder (the ― Restricted Stock Agreement
‖); and

                 WHEREAS, this Agreement is one of several other agreements (― Other Management Stockholders’ Agreements ‖) which
have been, or which in the future will be, entered into between the Company and other individuals who are or will be key employees of the
Company or one of its subsidiaries (collectively, the ― Other Management Stockholders ‖); and

                 WHEREAS, this Agreement is intended to apply to any shares of Common Stock hereinafter acquired by the Management
Stockholder, whether by subscription (any such stock, ― Purchased Stock ‖) at $25.00 per share (the ― Base Price ‖) or otherwise, whether
shares of Common Stock are acquired by the exercise of any stock option (any such stock, ― Option Stock ‖) that may hereinafter be granted to
the Management Stockholder by the Company (an ― Option ‖) or otherwise.

                  NOW THEREFORE, to implement the foregoing and in consideration of the grant of Options and of the mutual agreements
contained herein, the Parties agree as follows:
                  1.              Purchase of Common Stock; Other Acquisition of Common Stock .

                  (a)            Any Purchased Stock that the Management Stockholder subscribes for the Management Stockholder shall
purchase at such per share purchase price as the Company and the Management Stockholder shall agree, and the Company shall issue and
deliver to the Management Stockholder, upon receipt by the Company from the Management Stockholder of the aggregate purchase price of
any such stock, such number of shares of Purchased Stock for which the Management Stockholder has subscribed.

                    (b)             The Company shall have no obligation to sell any Purchased Stock to any person who (i) is a resident or
citizen of a state or other jurisdiction in which the sale of the Common Stock to him or her would constitute a violation of the securities or
―blue sky‖ laws of such jurisdiction or (ii) is not an employee of the Company or any of its subsidiaries on the date hereof.

                  (c)             Any shares of Common Stock that the Management Stockholder otherwise acquires, pursuant to the Restricted
Stock Award Agreement or otherwise, shall be issued to the Management Stockholder by the Company after all conditions contained in the
Restricted Stock Award Agreement (or other agreement between the Company and the Management Stockholder in respect of any such
acquisition) have been satisfied and otherwise in accordance with the terms of any such agreements, and shall be subject to the terms of this
Agreement as set forth below.

                  2.              Management Stockholder’s Representations, Warranties and Agreements .

                  (a)            The Management Stockholder agrees and acknowledges that he will not, except to the extent necessary in
connection with any loan to the Management Stockholder to purchases of the Purchased Stock, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of (any such act being referred to herein as a ―transfer‖) any shares of Restricted Stock,
Purchased Stock and, at the time of exercise, (the Restricted Stock, together with any Purchased Stock, Option Stock, and any other Common
Stock otherwise acquired and/or held by the Management Stockholder Entities, ― Stock ‖), except as otherwise provided for herein. If the
Management Stockholder is a Rule 405 Affiliate, the Management Stockholder also agrees and acknowledges that he will not transfer any
shares of the Stock unless:

                  (i)             the transfer is pursuant to an effective registration statement under the Securities Act of 1933, as amended,
         and the rules and regulations in effect thereunder (the ― Act ‖), and in compliance with applicable provisions of state securities laws or

                   (ii)            (A) counsel for the Management Stockholder (which counsel shall be reasonably acceptable to the Company)
         shall have furnished the Company with an opinion, satisfactory in form and substance to the Company, that no such registration is
         required because of the availability of an exemption from registration under the Act and (B) if the Management Stockholder is a
         citizen or resident of any country other than the United States, or the Management Stockholder desires to effect any transfer in any
         such country, counsel for the Management Stockholder (which counsel shall be reasonably

                                                                         2
         satisfactory to the Company) shall have furnished the Company with an opinion or other advice reasonably satisfactory in form and
         substance to the Company to the effect that such transfer will comply with the securities laws of such jurisdiction.

Notwithstanding the foregoing, the Company acknowledges and agrees that any of the following transfers are deemed to be in compliance with
the Act and this Agreement and no opinion of counsel is required in connection therewith: (x) a transfer made pursuant to Sections 3, 4, 5 or 6
hereof, (y) a transfer upon the death or Permanent Disability of the Management Stockholder to the Management Stockholder’s Estate or a
transfer to the executors, administrators, testamentary trustees, legatees or beneficiaries of a person who has become a holder of Stock in
accordance with the terms of this Agreement, provided that it is expressly understood that any such transferee shall be bound by the provisions
of this Agreement, and (z) a transfer made after the Effective Date in compliance with the federal securities laws to a Management
Stockholder’s Trust, provided that such transfer is made expressly subject to this Agreement and that the transferee agrees in writing to be
bound by the terms and conditions hereof.

                  (b)            The certificate (or certificates) representing the Stock shall bear the following legend:

         ―THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
         HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
         HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE MANAGEMENT
         STOCKHOLDER’S AGREEMENT DATED AS OF [DATE], 2003 BETWEEN ITC HOLDINGS CORP. (THE ―COMPANY‖)
         AND THE MANAGEMENT STOCKHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE WITH THE
         SECRETARY OF THE COMPANY).

                   (c)             The Management Stockholder acknowledges that he has been advised that (i) a restrictive legend in the form
heretofore set forth shall be placed on the certificates representing the Stock and (ii) a notation shall be made in the appropriate records of the
Company indicating that the Stock is subject to restrictions on transfer and appropriate stop transfer restrictions will be issued to the
Company’s transfer agent with respect to the Stock. If the Management Stockholder is a Rule 405 Affiliate, the Management Stockholder also
acknowledges that (1) the Stock must be held indefinitely and the Management Stockholder must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the Act or an exemption from such registration is available, (2) when and if
shares of the Stock may be disposed of without registration in reliance on Rule 144 of the rules and regulations promulgated under the Act,
such disposition can be made only in limited amounts in accordance with the terms and conditions of such Rule and (3) if the Rule 144
exemption is not available, public sale without registration will require compliance with some other exemption under the Act.

               (d)            If any shares of the Stock are to be disposed of in accordance with Rule 144 under the Act or otherwise, the
Management Stockholder shall promptly notify the Company of such intended disposition and shall deliver to the Company at or prior to the
time of such

                                                                         3
disposition such documentation as the Company may reasonably request in connection with such sale and, in the case of a disposition pursuant
to Rule 144, shall deliver to the Company an executed copy of any notice on Form 144 required to be filed with the SEC.

                    (e)            The Management Stockholder agrees that, if any shares of the Stock are offered to the public pursuant to an
effective registration statement under the Act (other than registration of securities issued under an employee plan), the Management
Stockholder will not effect any public sale or distribution of any shares of the Stock not covered by such registration statement from the time of
the receipt of a notice from the Company that the Company has filed or imminently intends to file such registration statement to, or within 180
days after, the effective date of such registration statement, unless otherwise agreed to in writing by the Company.

                   (f)             The Management Stockholder represents and warrants that (i) with respect to the Stock he has received and
reviewed the available information relating to the Stock and (ii) he has been given the opportunity to obtain any additional information or
documents and to ask questions and receive answers about such information, the Company and the business and prospects of the Company
which he deems necessary to evaluate the merits and risks related to his investment in the Stock and to verify the information contained in the
information received as indicated in this Section 2(f), and he has relied solely on such information. In addition, if the Management
Stockholder is an Ontario, Canada resident, the Management Stockholder represents and warrants that he (A) is entitled under Ontario
securities laws to purchase the shares of Stock without the benefit of a prospectus qualified under the securities laws; (B) is basing his
investment decision solely on the Private Placement Memorandum and not on any other information concerning the Company and its
subsidiaries; (C) has reviewed Section 6 of this Agreement containing resale restrictions and acknowledges and agrees that the shares of Stock
purchased under this Agreement are subject to resale restrictions under applicable securities legislation as well as under Section 6 of this
Agreement containing resale restrictions; (D) is an officer or employee of the Company or a subsidiary of the Company; and (E) is purchasing
shares of Stock as principal for its own account.

                   (g)            The Management Stockholder further represents and warrants that (i) his financial condition is such that he
can afford to bear the economic risk of holding the Stock for an indefinite period of time and has adequate means for providing for his current
needs and personal contingencies, (ii) he can afford to suffer a complete loss of his or her investment in the Stock, (iii) he understands and has
taken cognizance of all risk factors related to the purchase of the Stock and (iv) his knowledge and experience in financial and business matters
are such that he is capable of evaluating the merits and risks of his purchase of the Stock as contemplated by this Agreement.

                   3.              Transferability of Stock . The Management Stockholder agrees that he will not transfer any shares of the
Stock at any time during the period commencing on the Effective Date and ending on the fifth anniversary of the Effective Date; provided ,
however , that the Management Stockholder may transfer shares of Stock during such time pursuant to one of the following exceptions: (a)
transfers permitted by clauses (x), (y) and (z) of Section 2(a); and/or (b) a sale of shares of Common Stock pursuant to an effective registration
statement under the Act filed by the Company (excluding any registration on Form S-8, S-4 or any successor or similar form) pursuant to
Section 10 of this Agreement; and/or (c) transfers permitted pursuant to

                                                                         4
the Sale Participation Agreement (as defined in Section 7). No transfer of any such shares in violation hereof shall be made or recorded on the
books of the Company and any such transfer shall be void ab initio and of no effect. Notwithstanding anything in this Agreement to the
contrary, this Section 3 shall terminate and be of no further force or effect upon the occurrence of a Change of Ownership.

                    4.              Right of First Refusal . (a) If, at any time after the fifth anniversary of the Effective Date and prior to the
date of consummation of a Qualified Public Offering, the Management Stockholder receives a bona fide offer to purchase any or all of his
Stock (the ― Third Party Offer ‖) from a third party (the ― Offeror ‖), which the Management Stockholder wishes to accept, the Management
Stockholder shall cause the Third Party Offer to be reduced to writing and shall notify the Company in writing of his wish to accept the Third
Party Offer. The Management Stockholder’s notice to the Company shall contain an irrevocable offer to sell such Stock to the Company (in
the manner set forth below) at a purchase price equal to the price contained in, and on the same terms and conditions of, the Third Party Offer,
and shall be accompanied by a copy of the Third Party Offer (which shall identify the Offeror). At any time within 30 days after the date of
the receipt by the Company of the Management Stockholder’s notice, the Company shall have the right and option to purchase, or to arrange
for a third party to purchase, all of the shares of Stock covered by the Offer, pursuant to Section 4(b).

                   (b)             The Company shall have the right and option to purchase, or to arrange for a third party to purchase, all of the
shares of Stock covered by the Third Party Offer at the same price and on substantially the same terms and conditions as the Third Party Offer
(or, if the Third Party Offer includes any consideration other than cash, then at the sole option of the Company, at the equivalent all cash price,
determined in good faith by the Company’s Board), by delivering a certified bank check or checks in the appropriate amount (or by wire
transfer of immediately available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) (and any
such non-cash consideration to be paid) to the Management Stockholder at the principal office of the Company against delivery of certificates
or other instruments representing the shares of Stock so purchased, appropriately endorsed by the Management Stockholder. If at the end of
the 30-day period, the Company has not tendered the purchase price for such shares in the manner set forth above, the Management
Stockholder may, during the succeeding 60-day period, sell not less than all of the shares of Stock covered by the Third Party Offer, to the
Offeror on terms no less favorable to the Management Stockholder than those contained in the Third Party Offer. Promptly after such sale, the
Management Stockholder shall notify the Company of the consummation thereof and shall furnish such evidence of the completion and time of
completion of such sale and of the terms thereof as may reasonably be requested by the Company. If, at the end of 60 days following the
expiration of the 30-day period during which the Company is entitled hereunder to purchase the Stock, the Management Stockholder has not
completed the sale of such shares of the Stock as aforesaid, all of the restrictions on sale, transfer or assignment contained in this Agreement
shall again be in effect with respect to such shares of the Stock.

                   (c)           Notwithstanding anything in this Agreement to the contrary, this Section 4 shall terminate and be of no further
force or effect upon the occurrence of a Change of Ownership.

                                                                         5
                  5.              The Management Stockholder’s Right to Resell Stock and Options to the Company .

                    (a)             Except as otherwise provided herein, if, prior to the fifth anniversary of the Effective Date, the Management
Stockholder is still in the employ of the Company (and/or, if applicable, any Subsidiary) and the Management Stockholder’s employment is
terminated as a result of the death or Permanent Disability of the Management Stockholder, then the applicable Management Stockholder
Entity, shall, for sixty (60) days (the ― Put Period ‖) following the date of such death or Permanent Disability, have the right to:

                 (i)               With respect to the Stock, sell to the Company, and the Company shall be required to purchase, on one
         occasion, all of the shares of Stock then held by the applicable Management Stockholder Entities, at a per share price equal to the Fair
         Market Value Per Share (the ― Section 5 Repurchase Price ‖); and

                  (ii)            With respect to any outstanding Options, sell to the Company, and the Company shall be required to purchase,
         on one occasion, all of the exercisable Options then held by the applicable Management Stockholder Entities, at a price equal to the
         product of (x) the excess, if any, of the Section 5 Repurchase Price over the Option Exercise Price and (y) the number of Exercisable
         Option Shares in respect of the termination of all or any portion of the outstanding exercisable Options held by the applicable
         Management Stockholder Entity. In the event the foregoing Option Excess Price is zero or a negative number, all outstanding
         exercisable stock options granted to the Management Stockholder under the Option Plan shall be automatically terminated without any
         payment in respect thereof. In the event that the Management Stockholder Entities do not exercise the foregoing rights, all
         exercisable but unexercised Options shall terminate pursuant to the terms of Section 3.2(b) of the Stock Option Agreement. All
         unexercisable Options held by the applicable Management Stockholder Entities shall terminate without payment immediately upon
         termination of employment.

                   (b)             In the event the applicable Management Stockholder Entities intend to exercise their rights pursuant to
Section 5(a), such Entities shall send written notice to the Company, at any time during the Put Period, of their intention to sell shares of Stock
in exchange for the payment referred in Section 5(a)(i) and/or to terminate such Options in exchange for the payment referred to in
Section 5(a)(ii) and shall indicate the number of shares of Stock to be sold and the number of Options to be terminated with payment in respect
thereof (the ― Redemption Notice ‖). The completion of the purchases shall take place at the principal office of the Company on the tenth
business day after the giving of the Redemption Notice. The applicable Repurchase Price and any payment with respect to the Options as
described above shall be paid by delivery to the applicable Management Stockholder Entities, of a certified bank check or checks in the
appropriate amount payable to the order of each of the applicable Management Stockholder Entities (or by wire transfer of immediately
available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions), against delivery of certificates or
other instruments representing the Stock so purchased and appropriate documents cancelling the Options so terminated appropriately endorsed
or executed by the applicable Management Stockholder Entities or any duly authorized representative.

                                                                         6
                    (c)            Notwithstanding anything in Section 5(a) to the contrary and subject to Section 11(a), if there exists and is
continuing a default or an event of default on the part of the Company or any subsidiary of the Company under any loan, guarantee or other
agreement under which the Company or any subsidiary of the Company has borrowed money or if the repurchase referred to in Section 5(a)
would result in a default or an event of default on the part of the Company or any subsidiary of the Company under any such agreement or if a
repurchase would not be permitted under the Michigan Business Corporation Act (the ― MBCA ‖) or would otherwise violate the MBCA (or if
the Company reincorporates in another state, the business corporation law of such state) (each such occurrence being an ― Event ‖), the
Company shall not be obligated to repurchase any of the Stock or the Options from the applicable Management Stockholder Entities, until the
first business day which is 10 calendar days after all of the foregoing Events have ceased to exist (the ― Repurchase Eligibility Date ‖);
provided , however , that (i) the number of shares of Stock subject to repurchase under this Section 5(c) shall be that number of shares of Stock,
and (ii) in the case of a repurchase pursuant to Section 5(a)(ii), the number of Exercisable Option Shares for purposes of calculating the Option
Excess Price payable under this Section 5(c) shall be the number of Exercisable Option Shares, specified in the Redemption Notice and held by
the applicable Management Stockholder Entities, at the time of delivery of a Redemption Notice in accordance with Section 5(b) hereof. All
Options exercisable as of the date of a Redemption Notice, in the case of a repurchase pursuant to Section 5(a), shall continue to be exercisable
until the repurchase of such Options pursuant to such Redemption Notice, provided that to the extent any Options are exercised after the date of
such Redemption Notice, the number of Exercisable Option Shares for purposes of calculating the Option Excess Price shall be reduced
accordingly.

                   (d)             Effect of Change of Ownership . Notwithstanding anything in this Agreement to the contrary, except for any
payment obligation of the Company, which has arisen prior to such termination pursuant to this Agreement, this Section 5 shall terminate and
be of no further force or effect upon the occurrence of a Change of Ownership.

                 6.               The Company’s Option to Purchase Stock and Options of Management Stockholder Upon Certain
Terminations of Employment .

                    (a)           Termination for Cause by the Company, Termination without Good Reason by the Management Stockholder
and other Call Events . Except as otherwise provided herein or in the Restricted Stock Agreement, if, prior to the fifth anniversary of the
Effective Date, (i) the Management Stockholder’s active employment with the Company (and/or, if applicable, its subsidiaries) is terminated by
the Company (or any subsidiary) for Cause, (ii) the Management Stockholder’s active employment with the Company (and/or, if applicable, its
subsidiaries) is terminated by the Management Stockholder without Good Reason, (iii) the beneficiaries of a Management Stockholder’s Trust
shall include any person or entity other than the Management Stockholder, his spouse (or ex-spouse) or his lineal descendants (including
adopted children), (iv) the Management Stockholder shall otherwise effect a transfer of any of the Stock other than as permitted in this
Agreement (other than as may be required by applicable law or an order of a court having competent jurisdiction) after notice from the
Company of such impermissible transfer and a reasonable opportunity to cure such transfer (each, a ― Section 6(a) Call Event ‖):

                                                                        7
                            (A)           With respect to the Stock, the Company may purchase all or any portion of the shares of the Stock
then held by the applicable Management Stockholder Entities at a per share purchase price equal to the lesser of (x) the Base Price and (y) the
Book Value Per Share before a Public Offering (after a Public Offering, the Fair Market Value Per Share) (any such applicable repurchase
price, the ― Section 6(a) Repurchase Price ‖); and

                       (B)              With respect to the Options, all Options (whether or not then exercisable) held by the applicable
Management Stockholder Entities will terminate immediately without payment in respect thereof.

                   (b)             Termination for Good Reason by Management Stockholder or without Cause by the Company . Except as
otherwise provided herein, if, prior to the fifth anniversary of the Effective Date, the Management Stockholder’s employment is terminated as a
result of a termination (i) by the Management Stockholder for Good Reason or (ii) by the Company (and/or, if applicable, any Subsidiary)
without Cause (each, a ― Section 6(b) Call Event ‖), then the Company may:

                           (A)          With respect to the Stock, purchase all or any portion of the shares of Stock then held by the
applicable Management Stockholder Entities at a per share purchase price equal to: (x) before a Public Offering, (I) in the event of the
Management Stockholder’s termination for Good Reason, the Book Value Per Share and (II) in the event of the Management Stockholder’s
termination by the Company (and/or, if applicable, any Subsidiary) without Cause, the Fair Market Value Per Share or (y) after a Public
Offering, the Fair Market Value Per Share (any such applicable repurchase price, the ― Section 6(b) Repurchase Price ‖); and

                           (B)            With respect to the Options, purchase all or any portion of the exercisable Options held by the
applicable Management Stockholder Entities for an amount equal to the product of (x) the excess, if any, of the Section 6(b) Repurchase Price
over the Option Exercise Price and (y) the number of Exercisable Option Shares in respect of the termination of all or any portion of the
outstanding exercisable Options held by the applicable Management Stockholder Entity. In the event the foregoing Option Excess Price is
zero or a negative number, all outstanding exercisable stock options granted to the Management Stockholder under the Option Plan shall be
automatically terminated without any payment in respect thereof. In the event that the Company does not exercise the foregoing rights all
exercisable but unexercised Options shall terminate pursuant to the terms of Section 3.2(d) of the Stock Option Agreement. All unexercisable
Options held by the applicable Management Stockholder Entities shall also terminate without payment immediately upon termination of
employment, pursuant to the Stock Option Agreement.

                   (c)           Termination for Death or Disability . Except as otherwise provided herein, if, prior to the fifth anniversary of
the Effective Date, the Management Stockholder’s employment with the Company (and/or, if applicable, any Subsidiary) is terminated as a
result of the death or Permanent Disability of the Management Stockholder (each a ― Section 6(c) Call Event ‖), then the Company may:

                                                                        8
                        (A)           With respect to the Stock, purchase all or any portion of the shares of Stock then held by the
applicable Management Stockholder Entities, at a per share price equal the Section 5 Repurchase Price; and

                            (B)             With respect to the Options, purchase all or any portion of the exercisable Options for an amount
equal to the product of (x) the excess, if any, of the Section 5 Repurchase Price over the Option Exercise Price and (y) the number of
Exercisable Option Shares in respect of the termination of all or any portion of the outstanding exercisable Options held by the applicable
Management Stockholder Entity. In the event the foregoing Option Excess Price is zero or a negative number, all outstanding exercisable
stock options granted to the Management Stockholder under the Option Plan shall be automatically terminated without any payment in respect
thereof. In the event that the Company does not exercise the foregoing rights all exercisable but unexercised Options shall terminate pursuant
to the terms of Section 3.2(b) of the Stock Option Agreement. All unexercisable Options held by the applicable Management Stockholder
Entities shall also terminate without payment immediately upon termination of employment, pursuant to the Stock Option Agreement.

                    (d)             Call Notice . The Company shall have a period of sixty (60) days from the date of any Call Event (or, if later,
with respect to a Section 6(a) Call Event, the date after discovery of, and the applicable cure period for, an impermissible transfer constituting a
Section 6(a) Call Event), in which to give notice in writing to the Management Stockholder of its election to exercise its rights and obligations
pursuant to this Section 6 (― Repurchase Notice ‖). The completion of the purchases pursuant to the foregoing shall take place at the principal
office of the Company on the tenth business day after the giving of the Call Notice. The applicable Repurchase Price and any payment with
respect to the Options as described in this Section 6 shall be paid by delivery to the applicable Management Stockholder Entities of a certified
bank check or checks in the appropriate amount payable to the order of each of the applicable Management Stockholder Entities (or by wire
transfer of immediately available funds, if the Management Stockholder Entities provide to the Company wire transfer instructions) against
delivery of certificates or other instruments representing the Stock so purchased and appropriate documents cancelling the Options so
terminated, appropriately endorsed or executed by the applicable Management Stockholder Entities or its authorized representative.

                   (e)             Delay of Call . Notwithstanding any other provision of this Section 6 to the contrary and subject to
Section 11(a), if there exists and is continuing any Event, the Company shall delay the repurchase of any of the Stock or the Options (pursuant
to a Call Notice timely given in accordance with Section 6(d) hereof) from the applicable Management Stockholder Entities until the
Repurchase Eligibility Date; provided , however , that (i) the number of shares of Stock subject to repurchase under this Section 6 shall be that
number of shares of Stock, and (ii) in the case of a repurchase pursuant to Section 6(b) or Section 6(c), the number of Exercisable Option
Shares for purposes of calculating the Option Excess Price payable under this Section 6 shall be the number of Exercisable Option Shares, held
by the applicable Management Stockholder Entities at the time of delivery of a Call Notice in accordance with Section 6(d) hereof. All
Options exercisable as of the date of a Repurchase Notice, in the case of a repurchase pursuant to Section 6(b) or 6(c), shall continue to be
exercisable until the repurchase of such Options pursuant to such Call Notice, provided that to the extent that any Options are exercised after
the date of such Call Notice, the number of

                                                                         9
Exercisable Option Shares for purposes of calculating the Option Excess Price shall be reduced accordingly.

                  (f)             Effect of Change of Ownership . Notwithstanding anything in this Agreement to the contrary, this Section 6
shall terminate and be of no further force or effect upon the occurrence of a Change of Ownership.

                  7.              Adjustment of Repurchase Price; Definitions .

                  (a)             Adjustment of Repurchase Price . In determining the applicable repurchase price of the Stock and Options, as
provided for in Sections 5 and 6, above, appropriate adjustments shall be made for any stock dividends, splits, combinations, recapitalizations
or any other adjustment in the number of outstanding shares of Stock in order to maintain, as nearly as practicable, the intended operation of the
provisions of Sections 5 and 6.

                  (b)            Definitions . All capitalized terms used in this Agreement and not defined herein shall have such meaning as
such terms are defined in the Option Plan. Terms used herein and as listed below shall be defined as follows:

         ―Act‖ shall have the meaning set forth in Section 2(a)(i) hereof.

         ―Agreement‖ shall have the meaning set forth in the introductory paragraph.

         ―Base Price‖ shall have the meaning set forth in Section 1(a) hereof.

         ―Board‖ shall mean the board of directors of the Company.

         ―Book Value Per Share‖ shall mean the quotient of (a) (i) $25.00 plus (ii) the aggregate net income of the Company from and after the
Closing Date (as decreased by any net losses from and after the Closing Date) excluding any one time costs and expenses charged to income
associated with the Acquisition and any related transactions plus (iii) the aggregate dollar amount contributed to (or credited to common
stockholders’ equity of) the Company after the Closing Date as equity of the Company (including consideration that would be received upon
the exercise of all outstanding stock options and other rights to acquire Common Stock and the conversion of all securities convertible into
Common Stock and other stock equivalents) plus (iv) to the extent reflected as deductions to Book Value Per Share in clause (ii) above,
unusual or other items recognized by the Company (including, without limitation, extraordinary charges, and one time or accelerated write-offs
of good will, net of the related impact on the provision for income taxes), in each case, if and to the extent determined in good faith by the
Board, plus (v) the amortization of purchase accounting adjustments occurring as a result of the Acquisition, minus (vi) to the extent reflected
as additions to Book Value Per Share in clause (ii) above, unusual or other items recognized by the Company, in each case, if and to the extent
determined in good faith by the Board, minus (vii) the aggregate dollar amount of any dividends paid by the Company after the Closing Date,
divided by (b) the sum of the number of shares of Common Stock then outstanding and the number of shares of Common Stock issuable upon
the exercise of all outstanding stock options and other rights to acquire Common Stock. The items referred to in the calculations set forth in
clauses (a)(ii) through (vii) of the immediately preceding sentence shall be determined in good faith, and to the extent possible, in accordance
with generally

                                                                        10
accepted accounting principles applied on a basis consistent with any prior periods as reflected in the consolidated financial statements of the
Company,

         ―Call Events‖ shall mean, collectively, Section 6(a) Call Events, Section 6(b) Call Events, and Section 6(c) Call Events.

         ―Call Notice‖ shall have the meaning set forth in Section 6(d) hereof.

         ―Cause‖ shall mean ―Cause‖ as such term may be defined in any employment agreement between the Management Stockholder and
the Company or any of its Subsidiaries or Affiliates, or, if there is no such employment agreement, ―Cause‖ shall mean (i) the Management
Stockholder’s continued failure substantially to perform Management Stockholder’s duties with the Company (or any Subsidiary of the
Company) (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 Company (or any Subsidiary of the Company) to the Management Stockholder of such failure, (ii) dishonesty in the performance of the
Management Stockholder’s duties with the Company (or any Subsidiary of the Company), (iii) the Management Stockholder’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, (iv) the Management Stockholder’s willful malfeasance or willful misconduct in connection with the Management
Stockholder’s duties with the Company (or any Subsidiary of the Company) or any act or omission which is injurious to the financial condition
or business reputation of the Company or its Affiliates or (v) the Management Stockholder’s breach of the provisions of Section 25 of this
Agreement.

          ―Change of Ownership‖ means (i) the sale of all or substantially all of the assets of the Company or ITC to an Unaffiliated Person; (ii)
a sale resulting in more than 50% of the voting stock of the Company or ITC being held by an Unaffiliated Person; (iii) a merger,
consolidation, recapitalization or reorganization of the Company or ITC with or into another Unaffiliated Person; if and only if any such event
listed in clauses (i) through (iii) above results in the inability of ITH LP, Ironhill, the Limited Partner Group, or any member or members of the
Limited Partner Group, to designate or elect a majority of the Board (or the board of directors of the resulting entity or its parent
company). For purposes of this definition, the term ― Unaffiliated Person ‖ means any Person or Group who is not (x) ITH LP, Ironhill, the
Limited Partner Group or any member of the Limited Partner Group, (y) an Affiliate of ITH LP, Ironhill, the Limited Partner Group or any
member of the Limited Partner Group, or (z) an entity in which ITH LP, Ironhill, the Limited Partner Group, or any member of the Limited
Partner Group holds, directly or indirectly, a majority of the economic interests in such entity.

         ―Closing Date‖ shall have the meaning set forth in the first ―whereas‖ paragraph.

         ―Common Stock‖ shall have the meaning set forth in the second ―whereas‖ paragraph.

         ―Company‖ shall have the meaning set forth in the introductory paragraph.

         ―Confidential Information‖ shall mean all non-public information concerning trade secret, know-how, software, developments,
inventions, processes, technology, designs, the financial data, strategic business plans or any proprietary or confidential information, documents

                                                                        11
or materials in any form or media, including any of the foregoing relating to research, operations, finances, current and proposed products and
services, vendors, customers, advertising and marketing, and other non-public, proprietary, and confidential information of the Restricted
Group.

         ―Custody Agreement and Power of Attorney‖ shall have the meaning set forth in Section 10 hereof.

         ―Event‖ shall have the meaning set forth in Section 5(c) hereof.

         ―Exchange Act‖ shall mean the Securities Exchange Act of 1934, as amended (or any successor section thereto).

        ―Exercisable Option Shares‖ shall mean the shares of Common Stock that, at the Repurchase Calculation Date, could be purchased by
the Management Stockholder upon exercise of his or her outstanding and exercisable Options.

          ―Fair Market Value Per Share‖ shall mean, on the Repurchase Calculation Date, the price per share equal to (i) the average of the last
sale price of the Common Stock for the five trading days ending on the Repurchase Calculation Date on each stock exchange on which the
Common Stock may at the time be listed or, (ii) if there shall have been no sales on any such exchanges on the Repurchase Calculation Date on
any given day, the average of the closing bid and asked prices on each such exchange for the five trading days ending on the Repurchase
Calculation Date or, (iii) if there is no such bid and asked price on the Repurchase Calculation Date, on the next preceding date when such bid
and asked price occurred or, (iv) if the Common Stock shall not be so listed, the average of the closing sales prices as reported by NASDAQ for
the five trading days ending on the Repurchase Calculation Date in the over-the-counter market or, (v) if there have been no such sales, bid or
asked prices, or if there has been no Public Offering, the fair market value of the Common Stock as determined in the good faith discretion of
the Board.

         ―Good Reason‖ shall mean ―Good Reason‖ as defined in any employment agreement between the Management Stockholder and the
Company or any of its Subsidiaries or Affiliates, or, if there is no such employment agreement, ―Good Reason‖ shall mean (i) a substantial
reduction in the total value of the Management Stockholder’s rate of annual base salary, target annual bonus, and the aggregate employee
benefits provided to the Management Stockholder by the Company or its Subsidiaries; (ii) the Management Stockholder’s job responsibility
and authority are substantially diminished; and (iii) the Management Stockholder’s work location is relocated to more than fifty (50) miles
from Detroit, Michigan or Ann Arbor, Michigan; and provided , further , that ―Good Reason‖ shall cease to exist for an event on the 60 th day
following the later of its occurrence or the Management Stockholder’s knowledge thereof, unless the Management Stockholder has given the
Company written notice thereof prior to such date.

         ―Group‖ shall mean ―group,‖ as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act.

        ―Ironhill‖ means Ironhill Transmission LLC, which is the general partner of ITH LP, of which the Company is a majority-owned
Subsidiary.

                                                                       12
         ―ITH LP‖ means International Transmission Holdings Limited Partnership, a Michigan limited partnership.

         ―Limited Partner Group‖ shall mean the KKR Millennium Fund L.P., KKR Partners III, L.P. and Trimaran Capital Partners,
collectively.

         ―Management Stockholder‖ shall have the meaning set forth in the introductory paragraph.

       ―Management Stockholder Entities‖ shall mean the Management Stockholder’s Trust, the Management Stockholder and the
Management Stockholder’s Estate, collectively.

         ―Management Stockholder’s Estate‖ shall mean the conservators, guardians, executors, administrators, testamentary trustees, legatees
or beneficiaries of the Management Stockholder.

           ―Management Stockholder’s Trust‖ shall mean a limited partnership, limited liability company, trust or custodianship, the
beneficiaries of which may include only the Management Stockholder, his spouse (or ex-spouse) or his lineal descendants (including adopted)
or, if at any time after any such transfer there shall be no then living spouse or lineal descendants, then to the ultimate beneficiaries of any such
trust or to the estate of a deceased beneficiary.

         ―Maximum Repurchase Amount‖ shall have the meaning set forth in Section 11(a) hereof.

         ―MBCA‖ shall have the meaning set forth in Section 5(c) hereof.

         ―Notice‖ shall have the meaning set forth in Section 10(b) hereof.

         ―Offeror‖ shall have the meaning set forth in Section 4 hereof.

         ―Option Excess Price‖ shall mean the aggregate amount paid by the Company in respect of Exercisable Option Shares pursuant to
Section 5 or 6, as applicable.

         ―Option Exercise Price‖ shall mean the exercise price of the shares of Common Stock covered by the applicable Option.

         ―Option‖ shall have the meaning set forth in the third ―whereas‖ paragraph.

         ―Option Plan‖ shall have the meaning set forth in the third ―whereas‖ paragraph.

         ―Option Stock‖ shall have the meaning set forth in Section 2(a) hereof.

         ―Other Management Stockholders‖ shall have the meaning set forth in the fourth ―whereas‖ paragraph.

         ―Other Management Stockholders’ Agreements‖ shall have the meaning set forth in the fourth ―whereas‖ paragraph.

         ―Parties‖ shall have the meaning set forth in the introductory paragraph.

                                                                         13
          ―Permanent Disability‖ shall mean the Management Stockholder becomes physically or mentally incapacitated and is therefore unable
for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period, to perform
the Management Stockholder’s duties with the Company (and/or, if applicable, any Subsidiary) thereof. Any question as to the existence of
the Permanent Disability of the Management Stockholder as to which the Management Stockholder and the Company cannot agre