THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

ITC Holdings Corp. (ITC)

4/10/2006 Proxy Information

On February 28, 2003, the Company entered into agreements with ITHLP and certain affiliates of the Limited Partners for management, consulting and financial services in exchange for annual fees. The Company incurred general and administrative expenses under these agreements of $0.8 million in 2005, excluding out-of-pocket costs. In connection with the Company’s initial public offering in 2005, these agreements were amended to terminate further annual fees in exchange for payment of one-time fees totaling $6.7 million.

The Company, ITCTransmission and ITHLP were also parties to a partnership services letter agreement whereby ITHLP or its designee performed certain management, consulting, and financial services, which included participation on the Company’s Board of Directors. In addition, ITHLP designated Mr. Eisenberg to the Board of Directors. The Company incurred $1.1 million of expenses in 2005 relating to this agreement, including a one-time payment of $1.0 million to the General Partner in connection with the termination of such agreement with the completion of the Company’s initial public offering.

The Company has entered into certain waiver and agreement arrangements pursuant to which all of its executive officers agreed to waive their right to exercise their “piggyback” registration rights with respect to the Company’s initial public offering in exchange for the right to sell, at any time after 180 days following the Company’s initial public offering, an aggregate 91,349 shares of common stock that they hold (assuming sale of such shares at $23.00 per share and payment of taxes relating to the sale of such shares); and the grant (other than to Mr. Oginsky) of options to purchase an aggregate of 475,849 shares of common stock at an exercise price of $23.00 per share that vest 20% per year as long as the executive officer remains employed with the Company.

In connection with the investment by Management Stockholders in the Company, CIBC, Inc., a bank affiliated with one of the Limited Partners, and Comerica Bank, a non-affiliated bank, provided some Management Stockholders with loans to acquire shares of our common stock. The loans are evidenced by notes made by the Management Stockholders and require a pledge of each Management Stockholder’s shares of our common stock. We refer to CIBC and Comerica together as the Lenders. As a condition to making these loans, the Company entered into put agreements with the Lenders pursuant to which the Company agreed that upon the occurrence of certain events, the Company would be assigned the note and pledge and would either pay the Lenders the aggregate principal amount outstanding of the note plus interest thereon or execute a demand promissory note in a principal amount equal to the aggregate principal amount outstanding of the note plus interest thereon. The maximum potential amount of future payments for the Company under these put agreements for all Management Stockholders was approximately $0.6 million at December 31, 2005. In 2005, prior to the Company’s initial public offering, the put agreement relating to executive officers of the Company was terminated.

With the knowledge and consent of the Board of Directors, Clayton Welch, Jennifer Welch and Jessica Welch, each of whom is a son or daughter of Joseph Welch, the Company’s Chief Executive Officer, were employed by ITCTransmission as Associate Engineer, Analyst, and Logistics Specialist, respectively, during 2005 and continue to be employed by ITCTransmission. These individuals are employed on an “at will” basis and compensated on the same basis as other employees of the Company of similar function, seniority and responsibility without regard to their relationship with Joseph Welch. These three individuals, none of whom resides with or is supported financially by Joseph Welch, received aggregate salary, bonus and taxable perquisites for services rendered in the above capacities totaling $108,114 during 2005. Each individual has also received a grant of stock under the Company’s 2003 Stock Purchase and Option Plan for Key Employees, as amended. Jennifer Welch received a grant of 3,343 shares of restricted stock on April 8, 2003 (with a value of $25,000 on the date of grant). Clayton Welch received a grant of 2,674 shares of restricted stock on April 18, 2005 (with a value of $40,352 on the date of grant). Jessica Welch received a grant of 2,000 shares of restricted stock on October 17, 2005 (with a value of $55,400 on the date of grant). These grants were made in the normal administration of the Company’s employee stock grant program and under the same terms and conditions as grants made to other employees of ITCTransmission. The terms of the grants are those set forth in the Management Stockholder’s Agreements, which are described in this proxy statement under the heading “— Management Stockholder’s Agreements”.