Exhibit 1.1
6,826,287 Shares
ITC HOLDINGS CORP.
Common Stock
UNDERWRITING
AGREEMENT
February 6, 2007
CREDIT SUISSE SECURITIES (USA)
LLC
Eleven Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
ITC Holdings Corp., a Michigan
corporation (the “ Company ”) and International
Transmission Holdings Limited Partnership (the “ Selling
Stockholder ”), confirm their agreement (this “
Agreement ”) with Credit Suisse Securities (USA) LLC
(the “ Underwriter ”), with respect to the sale
by the Selling Stockholder and the purchase by the Underwriter of
an aggregate of 6,826,287 shares (the “ Stock ”)
of the Company’s common stock, no par value (the “
Common Stock ”), being sold by the Selling
Stockholder.
1. Representations,
Warranties and Agreements of the Company . The Company represents, warrants and
agrees that:
(a) A registration
statement on Form S-3 relating to the Stock (i) has been prepared
by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the “ Securities
Act ”), and the rules and regulations (the “
Rules and Regulations ”) of the United States
Securities and Exchange Commission (the “ Commission
”) promulgated thereunder; (ii) has been filed with the
Commission under the Securities Act; and (iii) is effective under
the Securities Act. As used in this Agreement:
(i)
“ Applicable Time ” means 7:45 p.m. (New York
City time) on the date of this Agreement;
(ii)
“ Effective Date ” means any date as of which
such registration statement relating to the Stock became, or is
deemed to have become, effective under the Securities Act in
accordance with the Rules and Regulations;
(iii)
“ Issuer Free Writing Prospectus ” means each
“free writing prospectus” (as defined in Rule 405 of
the Rules and Regulations)
prepared by or on
behalf of the Company or used or referred to by the Company
relating to the offering of the Stock;
(iv)
“ Preliminary
Prospectus ” means any preliminary
prospectus relating to the Stock included in such registration
statement or filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations, including any preliminary
prospectus supplement thereto relating to the Stock;
(v)
“ Pricing Disclosure
Package ” means, as of the
Applicable Time, the most recent Preliminary Prospectus, together
with the price to the public and the number of shares and each
Issuer Free Writing Prospectus filed or used by the Company on or
before the Applicable Time, other than a road show that is an
Issuer Free Writing Prospectus but is not required to be filed
under Rule 433 of the Rules and Regulations, including each Issuer
Free Writing Prospectus listed on Schedule 1
hereto;
(vi)
“ Prospectus
” means the
final prospectus relating to the Stock, including any prospectus
supplement thereto relating to the Stock, as filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations;
and
(vii)
“ Registration
Statement ” means such
registration statement, as amended as of the Effective Date,
including any Preliminary Prospectus or the Prospectus and all
exhibits to such registration statement.
Any reference to
any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any documents incorporated by reference
therein pursuant to Form S-3 under the Securities Act as of the
date of such Preliminary Prospectus or the Prospectus, as the case
may be. Any reference to the “ most recent Preliminary Prospectus
” shall be
deemed to refer to the latest Preliminary Prospectus included in
the Registration Statement or filed pursuant to Rule 424(b) prior
to or on the date hereof (including, for purposes hereof, any
documents incorporated by reference therein prior to or on the date
hereof). Any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include any document filed under the Securities Exchange Act
of 1934, as amended (the “ Exchange Act ”), as of and after the
date of such Preliminary Prospectus or the Prospectus, as the case
may be, and incorporated by reference in such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference
to any amendment to the Registration Statement shall be deemed to
include any annual report of the Company on Form 10-K filed with
the Commission pursuant to Section 13(a) or 15(d) of the Exchange
Act after the Effective Date that is incorporated by reference in
the Registration Statement.
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The Commission has not issued any
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending the effectiveness of the
Registration Statement, and no proceeding or examination for such
purpose has been instituted or, to the Company’s knowledge,
threatened by the Commission. The Commission has not notified
the Company of any objection to the use of the form of the
Registration Statement.
(b)
The Company has been since the time of initial filing of the
Registration Statement and continues to be a “well-known
seasoned issuer” (as defined in Rule 405) eligible to use
Form S-3 for the offering of the Stock, including not having been
an “ineligible issuer” (as defined in Rule 405) at any
such time or date. The Registration Statement is an
“automatic shelf registration statement” (as defined in
Rule 405) and was filed not earlier than the date that is three
years prior to the Closing Date (as defined in Section
5).
(c)
The Registration Statement conformed in all material respects on
the Effective Date, and any amendment to the Registration Statement
filed after the date hereof will conform in all material respects
when filed, to the requirements of the Securities Act and the Rules
and Regulations. The Preliminary Prospectus conformed, and
the Prospectus will conform, in all material respects when filed
with the Commission pursuant to Rule 424(b) to the requirements of
the Securities Act and the Rules and Regulations. The
documents incorporated by reference in any Preliminary Prospectus
or the Prospectus conformed, and any further documents so
incorporated will conform, when filed with the Commission, in all
material respects to the requirements of the Exchange Act or the
Securities Act, as applicable, and the rules and regulations of the
Commission thereunder.
(d)
The Registration Statement did not, as of the Effective Date,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; provided that no
representation or warranty is made as to information contained in
or omitted from the Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or
on behalf of the Underwriter specifically for inclusion therein,
which information is specified in Section 10(g).
(e)
The Prospectus will not, as of its date and on the Closing Date,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that no
representation or warranty is made as to information contained in
or omitted from the Prospectus in reliance upon and in conformity
with written information furnished to
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the Company by or on behalf of the
Underwriter specifically for inclusion therein, which information
is specified in Section 10(g).
(f)
The documents incorporated by reference in any Preliminary
Prospectus or the Prospectus did not, and any further documents
filed and incorporated by reference therein will not, when filed
with the Commission, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not
misleading.
(g)
The Pricing Disclosure Package, when considered together with the
price of the Stock included on the cover page of the Prospectus and
disclosures directly relating thereto, did not, as of the
Applicable Time, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided that no representation or warranty is made as to
information contained in or omitted from the Pricing Disclosure
Package in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Underwriter
specifically for inclusion therein, which information is specified
in Section 10(g).
(h)
Each Issuer Free Writing Prospectus (including, without limitation,
any road show that is a free writing prospectus under Rule 433),
when considered together with the Pricing Disclosure Package and
the price of the Stock included on the cover page of the Prospectus
and disclosures directly relating thereto, did not, as of the
Applicable Time, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not
misleading.
(i)
Each Issuer Free Writing Prospectus conformed or will conform in
all material respects to the requirements of the Securities Act and
the Rules and Regulations on the date of first use, and the Company
has complied with all prospectus delivery and any filing
requirements applicable to such Issuer Free Writing Prospectus
pursuant to the Rules and Regulations. The Company has not
made any offer relating to the Stock that would constitute an
Issuer Free Writing Prospectus without the prior written consent of
the Underwriter, except as set forth on Schedule 1
hereto. The Company has retained in accordance with the Rules
and Regulations all Issuer Free Writing Prospectuses that were not
required to be filed pursuant to the Rules and
Regulations.
(j)
The Company and each of its subsidiaries (as defined in Section 17
hereof) have been duly organized, are validly existing and
are
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in good standing as a corporation or
other business entity under the laws of their respective
jurisdictions of organization and are duly qualified to do business
and are in good standing as a foreign corporation or other business
entity in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses
requires such qualification, except where the failure to be so
qualified or in good standing would not reasonably be expected to
have a material adverse effect on the general affairs, consolidated
financial position, stockholders’ equity, results of
operations, properties or business of the Company and its
subsidiaries taken as a whole (a “ Material Adverse
Effect ”). The Company and each of its subsidiaries
have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they
are engaged and, as of the date of this Agreement, except for
International Transmission Company and Michigan Electric
Transmission Company LLC (“ METC ”), none of the
subsidiaries of the Company is a “significant
subsidiary,” as such term is defined in Rule 405 of the Rules
and Regulations.
(k)
The Company has an authorized capitalization as set forth in each
of the most recent Preliminary Prospectus and the Prospectus and
all of the issued shares of capital stock of the Company, including
the Stock, have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description
thereof contained in each of the most recent Preliminary Prospectus
and the Prospectus. All of the Company’s options,
warrants and other rights to purchase or exchange any securities
for shares of the Company’s capital stock have been duly
authorized and validly issued, conform to the description thereof
contained in each of the most recent Preliminary Prospectus and the
Prospectus and were issued in compliance with federal and state
securities laws. All of the issued and outstanding shares of
capital stock or other ownership interests of each subsidiary of
the Company have been duly and validly authorized and issued and
are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, except as described in the
Prospectus, and none of such shares of capital stock or other
ownership interests were issued in violation of preemptive or other
similar rights arising by operation of law, under the Amended and
Restated Articles of Incorporation of the Company or the Amended
and Restated Bylaws of the Company or similar organizational
documents of any of the Company’s subsidiaries or under any
agreement to which the Company or any of its subsidiaries is a
party or otherwise.
(l)
The shares of Stock to be sold by the Selling Shareholder will be
sold in compliance with federal and state securities
laws.
(m)
The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this
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Agreement and to execute and deliver
on behalf of Midwest (as defined below) and cause Midwest to
perform its obligations under that certain asset sale agreement
(the “ Asset Sale Agreement ”) dated as of
January 18, 2007 by and between Interstate Power and
Light Company (“ IP&L ”) and ITC Midwest LLC
(“ Midwest ”) whereby the Company is proposing
to acquire through Midwest certain assets of IP&L (the “
Acquisition ”) and any ancillary agreements thereto
(together with Asset Sale Agreement, the “ Acquisition
Documents ”) according to their terms.
(n)
This Agreement has been duly and validly authorized, executed and
delivered by the Company.
(o)
The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated
hereby will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, impose any lien,
charge or encumbrance upon any property or assets of the Company or
its subsidiaries, or constitute a default under, any transmission
agreement, interconnection agreement, service agreement, indenture,
mortgage, deed of trust, loan agreement or other agreement, license
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of
its subsidiaries is subject, (ii) result in any violation of the
provisions of the Amended and Restated Articles of Incorporation of
the Company or the Amended and Restated Bylaws of the Company or
similar organizational documents of any of the Company’s
subsidiaries or (iii) result in any violation of any statute or any
order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets, except in the
cases of clauses (i) and (iii), to the extent that any such
conflict, breach, violation or default would not, individually or
in the aggregate, have a Material Adverse Effect; and, except for
(A) the registration of the Stock under the Securities Act, (B) the
authorization by the Federal Energy Regulatory Commission (the
“ FERC ”) pursuant to Section 203 of the Federal
Power Act, as amended (the “ Federal Power Act
”) and (C) such consents, approvals, authorizations,
registrations or qualifications as may be required under (I) the
Securities Exchange Act of 1934, as amended (the “
Exchange Act ”) and (II) applicable state or foreign
securities laws in connection with the purchase and sale of the
Stock by the Underwriter, no consent, approval, authorization or
order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery
and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated
hereby.
(p)
Except as described in the most recent Preliminary Prospectus,
there are no contracts, agreements or understandings
between
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the Company or any of its
subsidiaries and any person granting such person the right (other
than rights which have been waived in writing or otherwise
satisfied) to require the Company or any of its subsidiaries to
file a registration statement under the Securities Act with respect
to any securities of the Company or any of its subsidiaries owned
or to be owned by such person or to require the Company or any of
its subsidiaries to include such securities in the securities
registered pursuant to the Registration Statement or in any
securities registered or to be registered pursuant to any other
registration statement filed by or required to be filed by the
Company or any of its subsidiaries under the Securities
Act.
(q)
The Company has not sold or issued any securities that would be
integrated with the offering of the Stock contemplated by this
Agreement pursuant to the Securities Act, the Rules and Regulations
or the interpretations thereof by the Commission.
(r)
Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included
or incorporated by reference in the most recent Preliminary
Prospectus, any loss or interference with their respective
businesses from fire, explosion, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, in each case that would
reasonably be expected to have a Material Adverse Effect, otherwise
than as set forth or contemplated in the most recent Preliminary
Prospectus; and, since such date, except as set forth or
contemplated in the most recent Preliminary Prospectus, there has
not been any change in the capital stock or material increase in
long-term debt of the Company or any of its subsidiaries or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
consolidated financial position, stockholders’ equity,
results of operations, properties or business of the Company and
its subsidiaries.
(s)
Since the date as of which information is given in the most recent
Preliminary Prospectus and except as may otherwise be described in
the most recent Preliminary Prospectus, the Company has not (i)
incurred any liability or obligation, direct or contingent, other
than liabilities and obligations that were incurred in the ordinary
course of business, (ii) entered into any material transaction not
in the ordinary course of business or (iii) declared or paid any
dividend on its capital stock.
(t)
The historical consolidated financial statements (including the
related notes and supporting schedules) of the Company and
International Transmission Company, LLC (“ Predecessor ITC
Transmission ”) included or incorporated by reference in
the most recent Preliminary Prospectus and the Prospectus comply as
to form in all
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material respects with the
requirements of Regulation S-X under the Securities Act and present
fairly the financial position, results of operations, changes in
stockholders’ equity and cash flows of the Company and
Predecessor ITC Transmission purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in
conformity with accounting principles generally accepted in the
United States (“ GAAP ”) applied on a consistent
basis throughout the periods involved. The other financial
data, the pro forma financial information, operating data and
statistical information with respect to the Company and Predecessor
ITC Transmission included or incorporated by reference in the
Prospectus is presented fairly and has been prepared on a basis
consistent in all material respects with the consolidated financial
statements and the books and records of the Company and Predecessor
ITC Transmission.
(u)
The historical consolidated financial statements (including the
related notes and supporting schedules) of Michigan Transco
Holdings, Limited Partnership (“ MTH ”) included
or incorporated by reference in the most recent Preliminary
Prospectus comply as to form in all material respects with the
requirements of Regulation S-X under the Securities Act and present
fairly the financial position, results of operations, changes in
partners’ equity and cash flows of MTH purported to be shown
thereby, at the dates and for the periods indicated, and have been
prepared in conformity with GAAP applied on a consistent basis
throughout the periods involved. The other financial data,
the pro forma financial information, operating data and statistical
information with respect to MTH included or incorporated by
reference in the most recent Preliminary Prospectus is presented
fairly and has been prepared on a basis consistent in all material
respects with the consolidated financial statements and the books
and records of MTH.
(v)
The pro forma financial information included or incorporated by
reference in the most recent Preliminary Prospectus includes
assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and
events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma
adjustments reflect the proper application of those adjustments to
the historical financial statement amounts in the pro forma
financial statements included or incorporated by reference in the
most recent Preliminary Prospectus. The pro forma financial
statements included or incorporated by reference in the most recent
Preliminary Prospectus comply as to form in all material respects
with the applicable requirements of Regulation S-X under the
Securities Act.
(w)
Deloitte & Touche LLP, who have audited certain financial
statements of the Company and of Predecessor ITC Transmission,
whose
8
reports appear in the most recent
Preliminary Prospectus or are incorporated by reference therein and
who have delivered the Initial Letter referred to in Section 9(j)
hereof, are independent public accountants with respect to the
Company and Predecessor ITC Transmission as required by the
Securities Act and the Rules and Regulations; and
PricewaterhouseCoopers, LLP, who have audited certain financial
statements of MTH and its consolidated subsidiaries, whose report
appears in the most recent Preliminary Prospectus or is
incorporated by reference therein and who have delivered the
Initial Letter referred to in Section 9(j) hereof, were independent
public accountants with respect to MTH and its consolidated
subsidiaries as required by the Securities Act and the Rules and
Regulations during the periods covered by the financial statements
on which they reported contained in the most recent Preliminary
Prospectus.
(x)
The Company and each of its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and
clear of all liens, encumbrances and defects (collectively, the
“ Liens ”) except for (i) Liens that are
described in the most recent Preliminary Prospectus or (ii) Liens
that may interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries, but would not
reasonably be expected to, individually or in the aggregate with
any Liens described in clause (i) above, have a Material Adverse
Effect; and all assets held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material to the
Company and its subsidiaries taken as a whole and such as do not
materially interfere with the use made and proposed to be made of
such property and buildings by the Company and its
subsidiaries.
(y)
The Company and each of its subsidiaries have such permits,
licenses, patents, franchises, certificates of need and other
approvals or authorizations of governmental or regulatory
authorities (“ Permits ”) as are necessary under
applicable law to own their properties and to conduct their
businesses in the manner described in the most recent Preliminary
Prospectus or in or by the documents incorporated by reference
therein, except as disclosed in or contemplated by the most recent
Preliminary Prospectus or in the documents incorporated by
reference herein and except for any failure to have any such
Permits that would not reasonably be expected to have a Material
Adverse Effect; each of the Company and its subsidiaries has
fulfilled and performed all of its material obligations with
respect to the Permits, and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of
the rights of the holder of any such Permits, except as disclosed
in the most recent Preliminary Prospectus or in the documents
incorporated by
9
reference therein, except for any of
the foregoing that would not reasonably be expected to have a
Material Adverse Effect.
(z)
The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate
for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies
engaged in similar businesses in similar industries, except where
the failure to maintain such insurance would not reasonably be
expected to have a Material Adverse Effect.
(aa)
The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of their
respective businesses as currently operated by them and have no
reason to believe that the conduct of their respective businesses
will infringe on or conflict with, and have not received any notice
of any claim of infringement of or conflict with, any such rights
of others.
(bb)
Except as described in the most recent Preliminary Prospectus or in
the documents incorporated by reference therein, there are no legal
or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries,
would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and to the Company’s
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or others.
(cc)
There are no contracts or other documents which are required to be
described in the most recent Preliminary Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by
the Rules and Regulations which have not been described in the most
recent Preliminary Prospectus or filed as exhibits to the
Registration Statement.
(dd)
No relationship, direct or indirect, exists between or among the
Company and/or its subsidiaries, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the
Company and/or its subsidiaries, on the other hand, which is
required to be described in the most recent Preliminary Prospectus
or the Prospectus which is not so described.
(ee)
No labor disturbance by the employees or independent contractors of
the Company or its subsidiaries exists or, to the knowledge of the
Company, is imminent, which would reasonably be expected to have a
Material Adverse Effect.
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(ff)
Except as would not reasonably be expected to have a Material
Adverse Effect (i) the Company and each of its subsidiaries is in
compliance with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder (“
ERISA ”); no “reportable event” (as
defined in ERISA) has occurred with respect to any “pension
plan” (as defined in ERISA) for which the Company or any of
its subsidiaries would have any liability; (ii) the Company and its
subsidiaries have not incurred and do not reasonably expect to
incur liability under (A) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan”
or (B) Sections 412 or 4971 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations
thereunder (the “ Code ”); (iii) each
“pension plan” for which the Company or any of its
subsidiaries may have any liability that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service as to the
qualification of such plan and nothing has occurred, whether by
action or by failure to act, which would reasonably be expected to
cause the loss of such qualification and (iv) the Company and each
of its subsidiaries have not incurred any unpaid liability to the
Pension Benefit Guaranty Corporation (other than for payment of
premiums in the ordinary course of business).
(gg)
Except as disclosed in the most recent Preliminary Prospectus or in
the documents incorporated by reference therein, the Company and
each of its subsidiaries have filed all foreign, federal, state and
local income and franchise tax returns required to be filed through
the date hereof, subject to any permitted extensions, and paid all
taxes due thereon, except where failure to pay such taxes or file
such returns would not reasonably be expected to have a Material
Adverse Effect; no tax deficiency has been determined adversely to
the Company or any of its subsidiaries which would reasonably be
expected to have a Material Adverse Effect; and the Company does
not have any knowledge of any tax deficiency which, if determined
adversely to the Company or any of its subsidiaries, would
reasonably be expected to have a Material Adverse
Effect.
(hh)
Since the date as of which information is given in the most recent
Preliminary Prospectus, the Company and its subsidiaries have not
(i) issued or granted any securities, (ii) incurred any liability
or obligation, direct or contingent, which is material to the
Company and its subsidiaries taken as a whole, other than
liabilities or obligations which were incurred in the ordinary
course of business, (iii) entered into any transaction which is
material to the Company and its subsidiaries taken as a whole, not
in the ordinary course of business or (iv) declared or paid any
dividend on their capital stock, except, in each case, as set forth
or contemplated in the most recent Preliminary
Prospectus.
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(ii)
The Company and each of its subsidiaries (i) make and keep accurate
books and records and (ii) maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (A)
transactions are executed in accordance with management’s
general or specific authorization; (B) transactions are recorded as
necessary to permit preparation of the Company’s financial
statements in conformity with accounting principles generally
accepted in the United States and to maintain accountability for
their assets; (C) access to their assets is permitted only in
accordance with management’s general or specific
authorization; and (D) the recorded accountability for their assets
is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(jj)
Neither the Company nor any of its subsidiaries (i) is in violation
of the Amended and Restated Articles of Incorporation of the
Company or the Amended and Restated Bylaws of the Company or
similar organizational documents of any of the Company’s
subsidiaries, (ii) is in default, and no event has occurred which,
with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant
or condition contained in any transmission agreement,
interconnection agreement, service agreement, indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) is in violation of any
law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets is subject or has failed to
obtain any license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of
its property or to the conduct of its business as described in the
most recent Preliminary Prospectus, except, in the case of clauses
(ii) and (iii) of this paragraph, to the extent that any such
conflict, breach, violation or default would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(kk)
Neither the Company nor any of its subsidiaries, nor, to the best
of the Company’s knowledge, any director, officer, agent,
employee or other person associated with or acting on behalf of the
Company or any of its subsidiaries, has made any unlawful
contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect
unlawful payment to any government official or employee; or made
any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(ll)
The Company and each of its subsidiaries (i) are, and at all prior
times were in compliance with any and all applicable foreign,
federal, state and local laws, regulations, ordinances, rules,
orders, judgments, decrees, permits or other legal requirements
relating to the protection of human health and safety, the
environment, natural resources
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or hazardous or toxic substances or
wastes, pollutants or contaminants (“ Environmental
Laws ”), which compliance includes obtaining, maintaining
and complying with all permits and authorizations and approvals
required of them by Environmental Laws to conduct their respective
businesses in the manner described in the most recent Preliminary
Prospectus and (ii) have not received notice of any actual or
potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except in the case of clause (i) or
(ii) of this paragraph where such non-compliance with or liability
under Environmental Laws would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has
been named as a “potentially responsible party” under
the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or any other similar
Environmental Law, except with respect to any matters that,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. Except as described in the
most recent Preliminary Prospectus or in documents incorporated by
reference therein, (i) none of the Company and its subsidiaries is
a party to any proceeding under Environmental Laws in which a
governmental authority is also a party, other than such proceedings
regarding which the Company believes monetary penalties of $100,000
or more will not be imposed and (ii) none of the Company and its
subsidiaries anticipates incurring material capital expenditures
required by Environmental Laws.
(mm) No
subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making
any other distribution on such subsidiary’s capital stock,
from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such
subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated
by the most recent Preliminary Prospectus.
(nn)
None of the Company, International Transmission Company or METC is
an “investment company” within the meaning of such
terms under the Investment Company Act of 1940, as amended (the
“ Investment Company Act ”), and the rules and
regulations of the Commission thereunder.
(oo)
The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the
Exchange Act) designed to ensure that information required to be
disclosed by the reports that it will be required to file or submit
under the Exchange Act from and after the date of this Agreement
are recorded, processed, summarized and reported in accordance with
the Exchange Act and the rules and regulations thereunder; and the
Company has carried out
13
evaluations, under the supervision
and with the participation of the management of the Company, of the
effectiveness of the design and operation of the Company’s
disclosure controls and procedures in accordance with Rule 13a-15
of the Exchange Act.
(pp)
Since the date of the most recent balance sheet of the Company and
its consolidated subsidiaries reviewed or audited by Deloitte &
Touche LLP and the audit committee of the board of directors of the
Company, (i) the Company has not been advised of (A) any
significant deficiencies in the design or operation of internal
controls that could adversely affect the ability of the Company and
each of its subsidiaries to record, process, summarize and report
financial data, or any material weaknesses in internal controls or
(B) any fraud, whether or not material, that involves management or
other employees who have a significant role in the internal
controls of the Company and each of its subsidiaries; and (ii)
there has been no significant change in internal controls or in
other factors that could significantly affect internal controls,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
(qq)
The Company is in compliance in all material respects with the
applicable provisions of the Sarbanes-Oxley Act of 2002 and
the rules and regulations promulgated in connection
therewith.
(rr)
The Company has not distributed and, prior to the Closing Date and
completion of the distribution of the Stock, will not distribute
any offering material in connection with the offering and sale of
the Stock other than the Preliminary Prospectus, the Prospectus,
any Issuer Free Writing Prospectus to which the Underwriter has
consented in accordance with Section 1(h) or 6(g) and any Issuer
Free Writing Prospectus set forth on Schedule 1
hereto.
(ss)
None of the Company, any of its subsidiaries or, to the
Company’s knowledge, any person acting on its or their behalf
(other than the Underwriter) has taken or will take, directly or
indirectly, any action that is designed to or has constituted or
would reasonably have been expected to cause or result in the
stabilization or manipulation of the price of any security of the
Company or its subsidiaries in connection with the sale or resale
of the Stock.
(tt)
The Stock has been approved for listing on the New York Stock
Exchange, Inc. (the “ NYSE ”).
(uu)
There are no affiliations or associations between any member of the
National Association of Securities Dealers, Inc. (the “
NASD ”) and any of the officers or directors of the
Company or the Selling Stockholder.
14
(vv)
Each of (i) the agreements described under Item 1 of the
Company’s Form 10-K for the year ended December 31, 2005
under the caption “Business—Operating
Contracts—ITCTransmission” and in the Company’s
Registration Statement on Form S-3, filed on January 17, 2007
(Registration No. 33-140026) under the caption “METC
Acquisition—METC’s Operating Contracts,” is a
valid and binding agreement, enforceable against each party thereto
in accordance with their respective terms, except as such
enforceability (i) may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws affecting the enforcement of creditors’
rights generally and (ii) is subject to general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(ww) Each of
the Company and International Transmission Company has conducted
its businesses, and fulfilled and performed all of its material
obligations, as necessary for International Transmission Company to
be considered independent from “market participants”
(as such term is defined in 18 C.F.R. Section 35.45(b)(2)) and
thereby eligible for incentive rate treatment in accordance with
the FERC’s orders to the Company and International
Transmission Company dated February 20, 2003 and May 5, 2005; METC
has been found by the FERC to be and continues to be an independent
stand-alone transmission company and thereby eligible for incentive
rate treatment in accordance with FERC’s orders to METC dated
December 30, 2005 and August 22, 2006; and no action has been taken
or, to the Company’s knowledge, is threatened or contemplated
to be taken by the FERC with respect to the independence of
International Transmission Company.
(xx)
The offering and sale of the Stock contemplated by this Agreement
and as described in the Prospectus will not cause the Company or
any of its subsidiaries to violate any provisions of the Federal
Power Act or any rule or regulation promulgated under the Federal
Power Act or any order issued pursuant to the Federal Power Act,
including without limit
