Exhibit 99.1
$100,000,000
INTERNATIONAL TRANSMISSION COMPANY
6.125% FIRST MORTGAGE BONDS, SERIES X, XXX XXXXX 00, 0000
XXXXXXXX AGREEMENT
March 22, 2006
CREDIT SUISSE SECURITIES (USA) LLC ("CREDIT SUISSE")
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000-0000
Dear Sirs:
1. Introductory. International Transmission Company, a Michigan corporation
(the "COMPANY"), proposes, subject to the terms and conditions stated herein, to
issue and sell to Credit Suisse Securities (USA) LLC (the initial "PURCHASER")
U.S. $100,000,000 principal amount of its 6.125% First Mortgage Bonds, Series C,
due March 31, 2036 ("OFFERED SECURITIES") to be issued under a First Mortgage
and Deed of Trust (the "ORIGINAL INDENTURE"), dated as of July 15, 2003, as
amended and supplemented by two indentures supplemental thereto, and as to be
amended and supplemented by a third supplemental indenture thereto, dated as of
March 28, 2006 (the "THIRD SUPPLEMENTAL INDENTURE") between the Company and The
Bank of New York Trust Company, N.A. (as successor to BNY Midwest Trust
Company), as Trustee (the Original Indenture, as so amended and supplemented,
the "INDENTURE"). The United States Securities Act of 1933, as amended, is
herein referred to as the "SECURITIES ACT."
The Company hereby agrees with the Purchaser as follows:
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Purchaser that:
(a) A preliminary offering circular (the "PRELIMINARY OFFERING
CIRCULAR") relating to the Offered Securities to be offered by the
Purchaser and a final offering circular (the "FINAL OFFERING CIRCULAR")
disclosing the offering price and other final terms of the Offered
Securities and dated as of the date of this Agreement (even if finalized
and issued subsequent to the date of this Agreement) have been or will be
prepared by the Company. "GENERAL DISCLOSURE PACKAGE" means the Preliminary
Offering Circular, together with any Issuer Free Writing Communication (as
hereinafter defined) existing at the Applicable Time (as hereinafter
defined) and the information which is intended for general distribution to
prospective investors, as evidenced by its being specified in Schedule B to
this Agreement (including the term sheet listing the final terms of the
Offered Securities and their offering, set forth in Schedule C to this
Agreement, which is referred to as the "TERMS COMMUNICATION"). "APPLICABLE
TIME" means 3:03 P.M. (Eastern Standard Time) on the date of this
Agreement. As of the date of this Agreement, the Final Offering Circular
does not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances
under which they were made, not misleading. At the Applicable Time neither
(i) the General Disclosure Package, nor (ii) any individual Supplemental
Marketing Material (as hereinafter defined), when considered together with
the General Disclosure Package, included any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The preceding two sentences do not apply to
statements in or omissions from the Preliminary or Final Offering Circular,
the General Disclosure Package or any Supplemental Marketing Material based
upon written information furnished to the Company by Credit Suisse
specifically for use therein, it being understood and agreed that the only
such information is that described as such in Section 8(b) hereof.
"FREE WRITING COMMUNICATION" means a written communication (as such term is
defined in Rule 405 under the Securities Act) that constitutes an offer to
sell or a solicitation of an offer to buy the Offered Securities and is
made by means other than the Preliminary Offering Circular or the Final
Offering Circular. "ISSUER FREE WRITING COMMUNICATION" means a Free Writing
Communication prepared by or on behalf of the Company, used or referred to
by the Company or containing a description of the final terms of the
Offered Securities or of their offering, in the form retained in the
Company's records. "SUPPLEMENTAL MARKETING MATERIAL" means any Issuer Free
Writing Communication other than any Issuer Free Writing Communication
specified in Schedule B to this Agreement.
(b) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Michigan, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the General Disclosure Package and the Final
Offering Circular; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to have all requisite power
and authority or to be so qualified would not reasonably be expected to (x)
result, individually or in the aggregate, in a material adverse effect on
the properties, business, results of operations, conditions (financial or
otherwise) or the affairs of the Company, (y) interfere with the
marketability of the Offered Securities or (z) draw into question the
validity of this Agreement or the Indenture or the transactions described
in the Preliminary Offering Circular or the Final Offering Circular under
the caption "Use of Proceeds" (any of the events set forth in clause (x),
(y) or (z), a "MATERIAL ADVERSE EFFECT").
(c) The Company has no subsidiaries.
(d) The Indenture has been duly authorized; the Offered Securities
have been duly authorized; and when the Offered Securities are delivered
and paid for pursuant to this Agreement on the Closing Date (as hereinafter
defined), the Indenture will have been duly executed and delivered by the
Company and such Offered Securities will have been duly executed, issued
and delivered by the Company and will be consistent with the information in
the General Disclosure Package; and will conform to the description thereof
contained in the Final Offering Circular and the Indenture and such Offered
Securities, when such Offered Securities are authenticated in accordance
with the terms of the Indenture and delivered against payment therefore in
accordance with the terms hereof and thereof, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles, and the Offered Securities will be entitled to the benefit and
security afforded by the Indenture.
(e) The Company has good and sufficient title to all the properties
described as owned by it in, and subject to the lien of, the Indenture (the
"PROPERTIES"), subject only to Permitted Liens (as defined in the
Indenture) and to minor defects and irregularities customarily found in
properties of like size and character that do not materially impair the use
of the property affected thereby in the operation of the business of the
Company; the descriptions in the Indenture of the Properties are accurate
in all material respects; and the Indenture constitutes a valid first
mortgage lien on the Properties, which include substantially all of the
real property and tangible personal property of the Company (other than
those expressly excepted), subject only to the exceptions enumerated above
in this Section.
2
(f) Except as disclosed in the General Disclosure Package, the Company
holds leased real or personal property under valid and enforceable leases
except where the failure to have such valid and enforceable leases would
not, individually or in the aggregate, have a Material Adverse Effect.
(g) The capitalization of the Company is, as of the date specified, as
set forth in the section of the Preliminary Offering Circular and the Final
Offering Circular entitled "Capitalization."
(h) The Company has obtained the approval of the Federal Energy
Regulatory Commission with respect to the issuance and sale of the Offered
Securities; and no other consent, approval, authorization, or order of, or
filing with, any governmental agency or body, including the Michigan Public
Service Commission, or any court is required for the consummation of the
transactions contemplated by this Agreement in connection with the issuance
and sale of the Offered Securities by the Company.
(i) The execution, delivery and performance of the Indenture and this
Agreement and the issuance and sale of the Offered Securities and
compliance with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, (i) any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any of its properties, or (ii) any
agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the properties of the Company is
subject, or (iii) the charter or by-laws of the Company, except, in the
case of clauses (i) and (ii) above, for such breaches, violations or
defaults that do not and would not have, individually or in the aggregate,
a Material Adverse Effect, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement.
(j) This Agreement has been duly authorized, executed and delivered by
the Company.
(k) The Company possesses adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to
conduct the business it now operates and has not received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the
Company, would individually or in the aggregate result in a Material
Adverse Effect.
(l) No labor dispute with the employees of the Company exists or, to
the knowledge of the Company, is imminent that would have a Material
Adverse Effect.
(m) The Company owns, possesses or can acquire on reasonable terms,
adequate trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual
property (collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary to
conduct the business the Company now operates, or presently employs, and
has not received any notice of infringement of or conflict with asserted
rights of others with respect to any intellectual property rights that, if
determined adversely to the Company, would individually or in the aggregate
have a Material Adverse Effect.
(n) Except as disclosed in the General Disclosure Package, the Company
is not in violation of any statute, any rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances
or relating to the protection or restoration of the environment or human
exposure to hazardous or toxic substances (collectively, "ENVIRONMENTAL
LAWS"), does not own or operate any real property that, to the knowledge of
the Company, is contaminated with any substance requiring investigation or
remediation under any environmental laws, is not, to the knowledge of the
Company, liable for any off-site disposal or contamination pursuant to any
environmental laws and has not received (and is not aware of any pending
investigation that would lead to) any claim relating
3
to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse
Effect.
(o) Except as disclosed in the General Disclosure Package, there are
no pending actions, suits or proceedings against or affecting the Company
or any of its properties that, if determined adversely to the Company,
would individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to perform
its obligations under the Indenture or this Agreement, or which are
otherwise material in the context of the sale of the Offered Securities;
and no such actions, suits or proceedings are threatened or, to the
Company's knowledge, contemplated.
(p) The financial statements included in the General Disclosure
Package and the Final Offering Circular present fairly the financial
position of the Company, as of the dates shown and the results of
operations and cash flows for the periods shown, and, except as otherwise
disclosed in the General Disclosure Package, such financial statements have
been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis.
(q) Except as disclosed in the General Disclosure Package, since the
date of the latest audited financial statements included in the General
Disclosure Package there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company, and, except as disclosed in or contemplated by
the General Disclosure Package, there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
(r) The Company is not an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be
registered under Section 8 of the United States Investment Company Act of
1940, as amended (the "INVESTMENT COMPANY ACT"); and the Company is not
and, after giving effect to the offering and sale of the Offered Securities
and the application of the proceeds thereof as described in the General
Disclosure Package, will not be an "investment company" as defined in the
Investment Company Act.
(s) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Offered Securities are listed
on any national securities exchange registered under Section 6 of the
United States Securities Exchange Act of 1934, as amended ("EXCHANGE ACT"),
or quoted in a U.S. automated inter-dealer quotation system.
(t) The offer and sale of the Offered Securities in the manner
contemplated by this Agreement will be exempt from the registration
requirements of the Securities Act by reason of Section 4(2) thereof and
Regulation S thereunder; and it is not necessary to qualify an indenture in
respect of the Offered Securities under the United States Trust Indenture
Act of 1939, as amended (the "TRUST INDENTURE ACT").
(u) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf (i) has, within the six-month period prior to
the date hereof, offered or sold in the United States or to any U.S. person
(as such terms are defined in Regulation S under the Securities Act) the
Offered Securities or any security of the same class or series as the
Offered Securities or (ii) has offered or will offer or sell the Offered
Securities (A) in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) under
the Securities Act or (B) with respect to any such securities sold in
reliance on Rule 903 of Regulation S ("REGULATION S") under the Securities
Act, by means of any directed selling efforts within the meaning of Rule
902(c) of Regulation S. The Company, its affiliates and any person acting
on its or their behalf have complied and will comply with the offering
restrictions requirement of Regulation S. The Company has not entered and
will not enter into any contractual arrangement with respect to the
distribution of the Offered Securities except for this Agreement.
4
(v) The Company has not taken, directly or indirectly, any action
designed to cause or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Offered Securities.
(w) The Company (i) makes and keeps books, records, and accounts,
which, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Company and (ii) maintains a system
of internal accounting controls sufficient to provide reasonable assurances
that (1) transactions are executed in accordance with management's general
or specific authorization; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles in the United States or any other criteria
applicable to such statements and to maintain accountability for assets;
(3) access to assets is permitted only in accordance with management's
general or specific authorization; and (4) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x) Deloitte & Touche LLP, the accountants who have audited certain
financial statements of the Company, whose report appears in the
Preliminary Offering Circular and the Final Offering Circular and who will
deliver the letters referred to in Sections 7(a) and (i) hereof, are
independent public accountants with respect to the Company as required by
the Securities Act and the applicable published rules and regulations
thereunder.
(y) No "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Securities Act (i)
has imposed (or has informed either the Company or its parent company ("ITC
Holdings") that it is considering imposing) any condition (financial or
otherwise) on either the Company's or ITC Holdings' retaining any rating
assigned to either the Company or ITC Holdings on any securities of either
the Company or ITC Holdings or (ii) has indicated to either the Company or
ITC Holdings that it is considering (a) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate
the direction of the possible change in, any rating so assigned or (b) any
negative change in the outlook for any rating of either the Company or ITC
Holdings, or any securities of either the Company or ITC Holdings.
Any certificate signed by an officer of the Company and delivered to the
Purchaser or counsel for the Purchaser in connection with the offering of the
Offered Securities shall be deemed a representation and warranty to the
Purchaser as of the date hereof and as of the Closing Date and an agreement with
the Purchaser.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements set forth herein and subject to the
terms and conditions set forth herein, the Company agrees to sell to the
Purchaser and the Purchaser agrees herein to purchase from the Company, at a
purchase price of 99.015% of the principal amount thereof plus accrued interest,
if any, from March 28, 2006 to the Closing Date (as hereinafter defined), the
principal amount of Offered Securities set forth opposite the name of the
Purchaser in Schedule A hereto.
The Company will deliver against payment of the purchase price the Offered
Securities to be offered and sold by the Purchaser in reliance on Regulation S
(the "REGULATION S SECURITIES") in the form of one or more global securities in
registered form without interest coupons (the "OFFERED REGULATION S GLOBAL
SECURITIES") which will be deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") for the respective accounts of the DTC
participants for Euroclear S.A./N.V. ("EUROCLEAR"), and Clearstream Banking,
Societe Anonyme ("CLEARSTREAM, LUXEMBOURG") and registered in the name of Cede &
Co., as nominee for DTC. The Company will deliver against payment of the
purchase price the Offered Securities to be purchased by the Purchaser hereunder
and to be offered and sold by the Purchaser in reliance on Rule 144A ("RULE
144A") under the Securities Act (the "144A SECURITIES") in the form of one or
more permanent global securities in definitive form without interest coupons
(the "RESTRICTED GLOBAL SECURITIES") deposited with the Trustee as custodian for
DTC and registered in the name of Cede & Co., as nominee for
5
DTC. The Offered Regulation S Global Securities and the Restricted Global
Securities shall be assigned separate CUSIP numbers. The Restricted Global
Securities shall include the legend regarding restrictions on transfer set forth
under "Transfer Restrictions" in the Preliminary Offering Circular and the Final
Offering Circular. Until the termination of the distribution compliance period
(as defined in Regulation S) with respect to the offering of the Offered
Securities, interests in the Offered Regulation S Global Securities may only be
held by the DTC participants for Euroclear and Clearstream, Luxembourg.
Interests in any permanent global Securities will be held only in book-entry
form through Euroclear, Clearstream, Luxembourg or DTC, as the case may be,
except in the limited circumstances described in the Preliminary Offering
Circular and the Final Offering Circular.
Payment for the Regulation S Securities and the 144A Securities shall be
made by the Purchaser in Federal (same day) funds by official check or checks or
wire transfer to an account at a bank specified in writing by the Company, at
the office of Milbank, Tweed, Xxxxxx & XxXxxx LLP, 1 Chase Manhattan Plaza, New
York, New York at 10:00 A.M. (New York time), on March 28, 2006, or at such
other time not later than five full business days thereafter as Credit Suisse
and the Company jointly determine, such time being herein referred to as the
"Closing Date," against delivery to the Trustee as custodian for DTC of (i) the
Offered Regulation S Global Securities representing all of the Regulation S
Securities for the respective accounts of the DTC participants for Euroclear and
Clearstream, Luxembourg and (ii) the Restricted Global Securities representing
all of the 144A Securities. The Offered Regulation S Global Securities and the
Restricted Global Securities will be made available for checking at the above
office of Milbank, Tweed, Xxxxxx & XxXxxx LLP at least 24 hours prior to the
Closing Date.
4. Representations by Purchaser; Resale by Purchaser. (a) The Purchaser
represents and warrants to the Company that it is an "accredited investor"
within the meaning of Regulation D under the Securities Act.
(b) The Purchaser acknowledges that the Offered Securities have not
been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Regulation S or pursuant to an exemption
from the registration requirements of the Securities Act. The Purchaser
represents and agrees that it has offered and sold the Offered Securities,
and will offer and sell the Offered Securities (i) as part of its
distribution at any time and (ii) otherwise until 40 days after the later
of the commencement of the offering and the Closing Date, only in
accordance with Rule 903 or Rule 144A. Accordingly, neither the Purchaser
nor its affiliates, nor any persons acting on its or their behalf, have
engaged or will engage in any directed selling efforts with respect to the
Offered Securities, and the Purchaser, its affiliates and all persons
acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S. The Purchaser agrees
that, at or prior to confirmation of sale of the Offered Securities, other
than a sale pursuant to Rule 144A, the Purchaser will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Offered Securities from it during the
restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
or sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the date of the
commencement of the offering and the closing date, except in either
case in accordance with Regulation S (or Rule 144A if available) under
the Securities Act. Terms used above have the meanings given to them
by Regulation S."
Terms used in this subsection (b) have the meanings given to them by
Regulation S.
(c) The Purchaser agrees that it and each of its affiliates has not
entered and will not enter into any contractual arrangement with respect to
the distribution of the Offered Securities except with the prior written
consent of the Company.
6
(d) The Purchaser agrees that it and each of its affiliates will not
offer or sell the Offered Securities in the United States by means of any
form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act, including, but not limited to (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio,
or (ii) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. The Purchaser agrees, with
respect to resales made in reliance on Rule 144A of any of the Offered
Securities, to deliver either with the confirmation of such resale or
otherwise prior to settlement of such resale a notice to the effect that
the resale of such Offered Securities has been made in reliance upon the
exemption from the registration requirements of the Securities Act provided
by Rule 144A.
5. Certain Agreements of the Company. The Company agrees with the
Purchaser that:
(a) The Company will advise Credit Suisse promptly of any proposal to
amend or supplement the Preliminary or Final Offering Circular and will not
effect such amendment or supplementation without Credit Suisse's consent,
which consent shall not be unreasonably withheld or delayed. If, at any
time prior to the completion of the resale of the Offered Securities by the
Purchaser, there occurs an event or development as a result of which the
Preliminary Offering Circular, Final Offering Circular or any document
included in the General Disclosure Package or any Supplemental Marketing
Material included or would include an untrue statement of a material fact
or omitted or would omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances prevailing
at such time, not misleading, the Company promptly will notify Credit
Suisse of such event and promptly will prepare, at its own expense, an
amendment or supplement which will correct such statement or omission.
Neither Credit Suisse's consent to, nor the Purchaser's delivery to
offerees or investors of, any such amendment or supplement shall constitute
a waiver of any of the conditions set forth in Section 6. The first
sentence of this subsection does not apply to statements in or omissions
from the Preliminary Offering Circular, Final Offering Circular or any
document included in the General Disclosure Package or any Supplemental
Marketing Material made in reliance upon and in conformity with written
information furnished to the Company by Credit Suisse specifically for use
therein, it being understood and agreed that the only such information is
that described as such in Section 8(b) hereof.
(b) The Company will furnish to Credit Suisse copies of the
Preliminary Offering Circular, the Final Offering Circular and each
document comprising a part of the General Disclosure Package and all
amendments and supplements to such documents and each item of Supplemental
Marketing Material, if any, in each case as soon as available and in such
quantities as Credit Suisse requests. At any time when the Company is not
subject to Section 13 or 15(d) of the Exchange Act, the Company will
promptly furnish or cause to be furnished, upon request of Credit Suisse
and, upon request of holders and prospective purchasers of the Offered
Securities to such holders and purchasers, copies of the information
required to be delivered to holders and prospective purchasers of the
Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or
any successor provision thereto) in order to permit compliance with Rule
144A in connection with resales by such holders of the Offered Securities.
The Company will pay the expenses of printing and distributing to the
Purchaser all such documents.
(c) The Company will arrange for the qualification of the Offered
Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions in the United States and
Canada as Credit Suisse designates and will continue such qualifications in
effect so long as required for the resale of the Offered Securities by the
Purchaser, provided that the Company will not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any such state or jurisdiction.
(d) During the period of three years hereafter, the Company will
furnish to Credit Suisse, as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such year; and
the Company will furnish to Credit Suisse as soon as available, a copy of
each report, notice or communication sent to the Company's stockholders.
7
(e) During the period of two years after the Closing Date, the Company
will, upon request, furnish to Credit Suisse and any holder of Offered
Securities a copy of the restrictions on transfer applicable to the Offered
Securities.
(f) During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to, resell any of the Offered Securities that
have been reacquired by any of them.
(g) The Company will pay all expenses incidental to the performance of
its obligations under this Agreement and the Indenture including (i) the
fees and expenses of the Trustee and its professional advisers; (ii) all
expenses in connection with the execution, issue, authentication, packaging
and initial delivery of the Offered Securities, the preparation and
printing of this Agreement, the Offered Securities, the Indenture, the
Preliminary Offering Circular, any other documents comprising part of the
General Disclosure Package, the Final Offering Circular, all amendments and
supplements thereto, each item of Supplemental Marketing Material and any
other document relating to the issuance, offer, sale and delivery of the
Offered Securities; (iii) the cost of any advertising approved by the
Company in connection with the issue of the Offered Securities; (iv) for
any expenses (including fees and disbursements of counsel) incurred in
connection with qualification of the Offered Securities for sale under the
laws of such jurisdictions in the United States and Canada as Credit Suisse
designates and the printing of memoranda relating thereto; (v) for any fees
charged by investment rating agencies for the rating of the Offered
Securities; and (vi) for expenses incurred in distributing the Preliminary
Offering Circular, any other documents comprising part of the General
Disclosure Package, the Final Offering Circular (including any amendments
and supplements thereto) and any Supplemental Marketing Materials to the
Purchaser. The Company will also pay or reimburse the Purchaser (to the
extent incurred by it) for all reasonably incurred travel expenses of the
Purchaser and the Company's officers and employees and any other expenses
of the Purchaser and the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities from the
Purchaser. Such amount may be deducted from the purchase price for the
Offered Securities set forth in Section 3 hereof.
(h) In connection with the offering, until Credit Suisse shall have
notified the Company of the completion of the resale of the Offered
Securities, neither the Company nor any of its affiliates has or will,
either alone or with one or more other persons, bid for or purchase for any
account in which it or any of its affiliates has a beneficial interest any
Offered Securities or attempt to induce any person to purchase any Offered
Securities; and neither it nor any of its affiliates will make bids or
purchases for the purpose of creating actual, or apparent, active trading
in, or of raising the price of, the Offered Securities.
(i) For a period of 30 days after the date of the initial offering of
the Offered Securities by the Purchaser, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Securities
Act relating to, any United States dollar-denominated debt securities
issued or guaranteed by the Company and having a maturity of more than one
year from the date of issue, or publicly disclose the intention to make any
such offer, sale, pledge, disposition or filing, without the prior written
consent of Credit Suisse. The Company will not at any time offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
any securities under circumstances where such offer, sale, pledge, contract
or disposition would cause the exemption afforded by Section 4(2) of the
Securities Act or the safe harbor of Regulation S thereunder to cease to be
applicable to the offer and sale of the Offered Securities.
6. Free Writing Communications. (a) The Company represents and agrees
that, unless it obtains the prior consent of Credit Suisse, it has not made and
will not make any offer relating to the Offered Securities that would constitute
an Issuer Free Writing Communication.
8
(b) The Company consents to the use by the Purchaser of a Free Writing
Communication that contains only (A) information describing the preliminary
terms of the Offered Securities or their offering or (B) information that
describes the final terms of the Offered Securities or their offering and,
in each case that is included in the Terms Communication or is subsequently
included in the Final Offering Circular, it being understood and agreed
that any such Free Writing Communication (other than the Terms
Communication) shall not be an Issuer Free Writing Communication for
purposes of this Agreement.
7. Conditions of the Obligations of the Purchaser. The obligations of
the Purchaser to purchase and pay for the Offered Securities will be subject to
the accuracy of the representations and warranties on the part of the Company
herein, to the accuracy of the statements of officers of the Company made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) The Purchaser shall have received a letter, dated the date of this
Agreement, of Deloitte & Touche LLP in form and substance satisfactory to
the Purchaser concerning the financial information with respect to the
Company set forth in the General Disclosure Package.
(b) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company which, in the
judgment of Credit Suisse, is material and adverse and makes it impractical
or inadvisable to proceed with completion of the offering or the sale of
and payment for the Offered Securities; (ii) any downgrading in the rating
of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Securities Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt
securities of the Company or ITC Holdings (other than an announcement with
positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (iii) any change in U.S. or
international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in the judgment of Credit
Suisse, be likely to prejudice materially the success of the proposed
issue, sale or distribution of the Offered Securities, whether in the
primary market or in respect of dealings in the secondary market; (iv) any
material suspension or material limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (v) any banking moratorium declared by U.S. Federal or New York
authorities; (vi) any major disruption of settlements of securities or
clearance services in the United States; or (vii) any attack on, outbreak
or escalation of hostilities or act of terrorism involving the United
States, any declaration of war by Congress or any other national or
international calamity or emergency if, in the judgment of Credit Suisse,
the effect of any such attack, outbreak, escalation, act, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the offering or sale of and payment for the Offered
Securities.
9
(c) The Purchaser shall have received an opinion and negative
assurance letter, dated the Closing Date, of the General Counsel for the
Company substantially in the form of Exhibit A with only such changes as
are in form and substance satisfactory to the Purchaser.
(d) The Purchaser shall have received an opinion and negative
assurance letter, dated the Closing Date, of Xxxxxxx Xxxxxxx & Xxxxxxxx
LLP, counsel for the Company, substantially in the form of Exhibit B with
only such changes as are in form and substance satisfactory to the
Purchaser.
(e) The Purchaser shall have received an opinion, dated the Closing
Date, of Xxxxxx Xxxxxxx PLLC, Michigan counsel for the Company,
substantially in the form of Exhibit C with only such changes as are in
form and substance satisfactory to the Purchaser.
(f) The Purchaser shall have received from Milbank, Tweed, Xxxxxx &
XxXxxx LLP, counsel for the Purchaser, such opinion or opinions, dated the
Closing Date, with respect to the validity of the Offered Securities, the
General Disclosure Package and the Final Offering Circular, the exemption
from registration for the offer and sale of the Offered Securities by the
Company to the Purchaser and the resales by the Purchaser as contemplated
hereby and other related matters as Credit Suisse may require, and the
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(g) The Purchaser shall have received an opinion, dated the Closing
Date, of Xxxxxx, Xxxxx & Xxxxxxxx, P.C., special regulatory counsel for the
Company, substantially in the form of Exhibit D with only such changes as
are in form and substance satisfactory to the Purchaser.
(h) The Purchaser shall have received a certificate, dated the Closing
Date, of the Chief Executive Officer or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, and that, subsequent to the date of the
most recent financial statements in the General Disclosure Package there
has been no material adverse change, nor any development or event involving
a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Company except
as set forth in the General Disclosure Package or as described in such
certificate.
(i) The Purchaser shall have received a letter, dated the Closing
Date, of Deloitte & Touche LLP which meets the requirements of subsection
(a) of this Section, except that (x) such letter shall also apply to the
financial information set forth in the Final Offering Circular and (y) the
specified date referred to in such subsection will be a date not more than
three days prior to the Closing Date for the purposes of this subsection.
The Company will furnish the Purchaser with such conformed copies of such
opinions, certificates, letters and documents as the Purchaser shall reasonably
request. Credit Suisse may in its sole discretion waive compliance with any
conditions to the obligations of the Purchaser hereunder.
8. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless the Purchaser, its
officers, partners, members, directors and its affiliates and each person,
if any, who controls the Purchaser within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Purchaser may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of any untrue statement or
alleged untrue statement of any material fact contained in the Preliminary
Offering Circular or the Final Offering Circular, in each case as amended
or supplemented, or any Issuer Free Writing Communication at any time, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, including any losses, claims, damages or liabilities arising
out of or based upon the Company's failure to perform its obligations under
Section 5(a) of this Agreement, and will
10
reimburse the Purchaser for any legal or other expenses reasonably incurred
by the Purchaser in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon
and in conformity with written information furnished to the Company by the
Purchaser specifically for use therein, it being understood and agreed that
the only such information consists of the information described as such in
subsection (b) below.
(b) The Purchaser will indemnify and hold harmless the Company, its
directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities to which the Company may become subject,
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Preliminary Offering Circular or Final Offering
Circular, in each case as amended or supplemented, or any Issuer Free
Writing Communication at any time or arise out of or are based upon the
omission or the alleged omission to state therein a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by the Purchaser
specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that
the only such information furnished by the Purchaser consists of the
following information in the Preliminary and Final Offering Circular: under
the caption "Plan of Distribution" paragraphs three, ten and thirteen;
provided, however, that the Purchaser shall not be liable for any losses,
claims, damages or liabilities arising out of or based upon the Company's
failure to perform its obligations under Section 5(a) of this Agreement.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the failure to notify the indemnifying party
shall not relieve it from any liability that it may have under subsection
(a) or (b) above except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by
such failure; and provided further that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have
to an indemnified party otherwise than under subsection (a) or (b) above.
In case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes (i) an unconditional
release of such indemnified party from all liability on any claims that are
the subject matter of such action and (ii) does not include a statement as
to or an admission of fault, culpability or failure to act by or on behalf
of any indemnified party.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Purchaser on the other from
the offering of the Offered Securities or (ii) 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) above but
11
also the relative fault of the Company on the one hand and the Purchaser on
the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Purchaser on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total discounts and
commissions received by the Purchaser from the Company under this
Agreement. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by the Company or the Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim
which is the subject of this subsection (d). Notwithstanding the provisions
of this subsection (d), the Purchaser shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Offered Securities purchased by it were resold exceeds the amount of any
damages which the Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls the Purchaser within the meaning of the Securities Act or the
Exchange Act; and the obligations of the Purchaser under this Section shall
be in addition to any liability which the Purchaser may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the Purchaser set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Purchaser, the Company or any of their respective representatives, officers
or directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If for any reason the purchase of the Offered
Securities by the Purchaser is not consummated, the Company shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Section
5 and the respective obligations of the Company and the Purchaser pursuant to
Section 8 shall remain in effect. If the purchase of the Offered Securities by
the Purchaser is not consummated for any reason other than solely because of the
occurrence of any event specified in clause (iii), (iv), (v), (vi) or (vii) of
Section 7(b), the Company will reimburse the Purchaser for all out-of-pocket
expenses (including fees and disbursements of counsel) reasonably incurred by it
in connection with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Purchaser will be mailed, delivered or telegraphed and confirmed to
the Purchaser at c/o Credit Suisse Securities (USA) LLC, Eleven Madison Avenue,
New York, N.Y. 10010-3629, Attention: LCD-IBD, or, if sent to the Company, will
be mailed, delivered or telegraphed and confirmed to it at International
Transmission Company, 00000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxx, Xxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxxx; provided, however, that any notice to the
Purchaser pursuant to Section 8 will be mailed, delivered or telegraphed and
confirmed to the Purchaser.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 8, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Company as if such
holders were parties thereto.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
12
13. Absence of Fiduciary Relationship. The Company acknowledges and
agrees that:
(a) the Purchaser has been retained solely to act as initial purchaser
in connection with the initial purchase, offering and resale of the Offered
Securities and that no fiduciary, advisory or agency relationship between
the Company and the Purchaser has been created in respect of any of the
transactions contemplated by this Agreement or the Preliminary Offering
Circular or Final Offering Circular, irrespective of whether the Purchaser
has advised or is advising the Company on other matters;
(b) the purchase price of the Offered Securities set forth in this
Agreement was established by the Company following discussions and
arms-length negotiations with the Purchaser and the Company is capable of
evaluating and understanding and understands and accepts the terms, risks
and conditions of the transactions contemplated by this Agreement;
(c) the Company has been advised that the Purchaser and its affiliates
are engaged in a broad range of transactions which may involve interests
that differ from those of the Company and that the Purchaser has no
obligation to disclose such interests and transactions to Company by virtue
of any fiduciary, advisory or agency relationship; and
(d) the Company waives, to the fullest extent permitted by law, any
claims it may have against the Purchaser for breach of fiduciary duty or
alleged breach of fiduciary duty and agrees that the Purchaser shall have
no liability (whether direct or indirect) to the Company in respect of such
a fiduciary duty claim or to any person asserting a fiduciary duty claim on
behalf of or in right of the Company, including stockholders, employees or
creditors of the Company.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
13
If the foregoing is in accordance with the Purchaser's understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the
Purchaser in accordance with its terms.
Very truly yours,
INTERNATIONAL TRANSMISSION COMPANY
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Vice President,
Secretary and General Counsel
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE SECURITIES (USA) LLC
By /s/ Xxxx X. Xxxxx
--------------------------------
Director
14
SCHEDULE A
PRINCIPAL AMOUNT OF
-------------------
INITIAL PURCHASER OFFERED SECURITIES
----------------- ------------------
Credit Suisse Securities (USA) LLC.................................... $100,000,000
------------
Total................................ $100,000,000
============
15
SCHEDULE B
LIST OF ISSUER FREE WRITING COMMUNICATIONS, INCLUDING DOCUMENTS DELIVERED WITH
THE PRELIMINARY OFFERING CIRCULAR
Terms Communication set forth in Schedule C.
16
SCHEDULE C
FORM OF TERMS COMMUNICATION
INTERNATIONAL TRANSMISSION COMPANY
6.125% FIRST MORTGAGE BONDS, SERIES C, DUE MARCH 31, 2036
FINAL TERMS AND CONDITIONS
March 22, 2006
ISSUER: International Transmission Company
MARKET TYPE: First Mortgage Bonds
RATINGS: Standard & Poor's: BBB+
Moody's: A3
TRADE DATE: Xxxxx 00, 0000
XXXXXXXXXX DATE: March 28, 2006 (T+4)
PRINCIPAL AMOUNT: $100,000,000
COUPON DATES: March 31 and September 30 each year
INTEREST ACCRUAL
COMMENCEMENT DATE: March 28, 2006
FIRST PAYMENT DATE: September 30, 2006 (Long 1st Coupon)
FINAL MATURITY: March 31, 2036
CALL DATE & TERMS: Make-Whole Call at T +25 bps
UST BENCHMARK: T 5.375% due 02/15/2031
TREASURY PRICE: 107-25+
TREASURY YIELD: 4.833%
RE-OFFER SPREAD: +130 bps
RE-OFFER YIELD TO INVESTOR: 6.133%
COUPON: 6.125%
PRICE TO INVESTOR: $99,890,000
UNDERWRITING FEE: $875,000
NET PROCEEDS: $99,015,000
DAY COUNT: 30/360
DENOMINATIONS: $1,000
17
LEAD MANAGER: Credit Suisse Securities (USA) LLC
CUSIPS: 144A: 46051M AC 6
Regulation S: U4604M AB 6
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT. THE BONDS
MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT TO
QUALIFIED INSTITUTIONAL BUYERS IN RELIANCE ON THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144A AND TO CERTAIN NON U.S. PERSONS IN OFFSHORE TRANSACTIONS
IN RELIANCE ON REGULATION S. YOU ARE HEREBY NOTIFIED THAT SELLERS OF THE BONDS
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A. BEFORE YOU INVEST, YOU SHOULD READ THE
FINAL OFFERING CIRCULAR. CREDIT SUISSE CAN ARRANGE TO SEND YOU THE FINAL
OFFERING CIRCULAR. PLEASE CALL CREDIT SUISSE AT 1-800-221-1037 TO REQUEST IT.
18
