THIS AGREEMENT,
dated as of August 13, 2008 (the “Grant Date”), is
made by and between ITC Holdings Corp., a Michigan corporation (the
“Company”), and an employee of the Company or a
Subsidiary of the Company (the “Optionee”). Any
capitalized terms herein but not otherwise defined shall have the
meaning set forth in the Company’s Amended and Restated 2006
Long Term Incentive Plan (the “Plan”).
WHEREAS, the
Company wishes to afford the Optionee the opportunity to purchase
shares of its common stock (the “Common Stock”)
pursuant to the terms and conditions of this Agreement and the
Plan, the terms of which are hereby incorporated by reference and
made a part of this Agreement; and
WHEREAS, this
Agreement and the grant made pursuant to this Agreement are not
subject to and shall not be governed by the Management
Stockholder’s Agreement between the Company and Optionee;
and
WHEREAS, the
Committee has determined that it would be in the best interest of
the Company and its shareholders to grant the Option provided for
herein to the Optionee as an incentive for increased efforts during
his term of office with the Company or its Subsidiaries, has
approved the grant of the Option on the Grant Date and has advised
the Company thereof and instructed the undersigned officer to issue
said Option.
NOW, THEREFORE, in
consideration of the mutual covenants herein contained and other
good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as
follows:
1.1. Grant of
Options . For good and valuable consideration, on and as of the
date hereof, the Company irrevocably grants to the Optionee a
Nonqualified Stock Option to purchase the number of shares of
Common Stock identified in a letter to the Optionee dated
August 15, 2008 and on the Optionee’s Solium Capital
account upon the terms and conditions set forth in this Agreement
(the “Option”).
1.2. Exercise
Price . Subject to Section 2.1, the exercise price of the
shares of Common Stock covered by the Option shall be $56.88 per
share without commission or other charge (which is the Fair Market
Value per share of the Common Stock on the Grant Date).
2.1.
Adjustments to Option . In the event of a merger,
reorganization, consolidation, recapitalization, dividend or
distribution (whether in cash, shares or other property), stock
split,
reverse stock
split, spin-off or similar transaction or other change in corporate
structure affecting the Common Stock or the value thereof, such
adjustments and other substitutions shall be made to the Option as
the Committee, in its sole discretion, deems equitable or
appropriate, including adjustments in the number, class, kind and
exercise price of securities subject to the Option (including, if
the Committee deems appropriate, the substitution of similar
options to purchase the shares of another company, as the Committee
may determine to be appropriate in its sole discretion).
ARTICLE III
PERIOD OF EXERCISABILITY
3.1.
Exercisability of Option .
(a) So long
as the Optionee continues to be employed by the Company or any of
its Subsidiaries, or in the event Optionee’s employment
terminates due to Retirement, the Option shall become exercisable
pursuant to the following schedule:
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Percentage of Shares As to Which
Option Is
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Date Option
Becomes Exercisable
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Exercisable On and After Such
Date
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On and after the first anniversary of the Grant
Date
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33 1/3
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%
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On and after the second anniversary of the Grant
Date
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66 2/3
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%
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On and after the third anniversary of the Grant
Date
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100
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%
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(b) Notwithstanding
the foregoing, the Option shall become immediately exercisable as
to 100% of the shares of Common Stock subject to such Option (but
only to the extent such Option has not otherwise terminated or
become exercisable) (i) if the Optionee ceases to be employed
due to Optionee’s death or Disability, or
(ii) immediately prior to a Change in Control; provided,
however, that this Section 3.1(b)(ii) is subject to the
Committee’s rights, in the event of a Change in Control, to
cash out the Option pursuant to Section 9.2(b) of the Plan.
The Committee has irrevocably determined not to, and shall not (and
shall not permit the Board to), exercise any right it may have
under the Plan, including without limitation under such
Section 9.2(c), to determine that the Option shall not become
immediately exercisable upon a Change in Control.
3.2 Expiration
of Option . The Option may not be exercised after the first to
occur of the following events and shall in no event be exercisable
after the tenth anniversary of the Grant Date:
2
(a) If,
prior to the date when the Option first becomes exercisable,
Optionee’s employment terminates for any reason other than
death, Disability or Retirement, Optionee’s right to exercise
the Option shall terminate and all rights thereunder shall cease;
or
(b) If,
on or after the date when the Option first becomes exercisable,
Optionee’s employment terminates for any reason other than
death, Disability or Retirement, Optionee shall have the right,
within three months after termination of employment to exercise the
Option to the extent that it was exercisable and unexercised on the
date of Optionee’s termination of employment, subject to any
other limitation on the exercise of the Option in effect on the
date of exercise.
If
Optionee’s employment terminates due to death, Disability or
Retirement before the tenth anniversary of the Grant Date, Optionee
or the person or persons to whom the Option shall have been
transferred by will or the laws of des
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