IROQUOIS GAS TRANSMISSION SYSTEM

                              AMENDED AND RESTATED

                               OPERATING AGREEMENT

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                                TABLE OF CONTENTS


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<S>                                                                                                        <C>

                                                                                                           Page

 1.      Definitions                                                                                          2

         1.1  Completion Date                                                                                 2
         1.2  Day                                                                                             2
         1.3  Month                                                                                           2
         1.4  Year                                                                                            2
         1.5  Party                                                                                           3
         1.6  Partnership                                                                                     3
         1.7  Operator                                                                                        3

 2.      Relationship of the Parties                                                                          3

         2.1  Appointment as Operator                                                                         3
         2.2  Operator's Authority to Execute Contracts                                                       3

 3.      Operator's Design, Construction, Operation, Maintenance, and Administration Responsibilities         4

         3.1  Operator's Responsibilities                                                                     4
         3.2  Operator's Authority to Construct Certain Facilities                                           10
         3.3  Operator's Authority to Perform Unbudgeted Maintenance and                                     10
              Repairs
         3.4  Operator's Right to Request Instructions From Management                                       11
              Committee
         3.5  Operator's Subcontract                                                                         11

 4.      Employees, Consultants and Subcontractors                                                           13

         4.1  Operator's Employees, Consultants and Contractors                                              13
         4.2  Affiliates of Operator or Partners                                                             14
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<S>                                                                                                        <C>

         4.3  Standards for Operator and its Employees                                                       14
         4.4  Non-Discrimination                                                                             15

 5.      Financial and Accounting                                                                            15

         5.1  Accounting and Compensation                                                                    15
         5.2  Budgets                                                                                        16
         5.3  Disputed Charges                                                                               17
         5.4  Rate Reviews                                                                                   18
         5.5  Audit and Examination                                                                          18

 6.      Agent                                                                                               20

         6.1  Agent                                                                                          20

 7.      Intellectual Property                                                                               20

         7.1  Inventions and Copyrights                                                                      20
         7.2  Confidentiality                                                                                20
         7.3  License to Operator                                                                            21

 8.      Indemnification, Claims, Insurance and Liability                                                    22

         8.1  Operator's Indemnity                                                                           22
         8.2  Claims                                                                                         22
         8.3  Insurance                                                                                      24
         8.4  Limitation of Liability                                                                        26

 9.      Term                                                                                                26

         9.1  Term                                                                                           26

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                                       ii

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<S>                                                                                                        <C>
 10.     Termination                                                                                         27

         10.1 Removal of Operator                                                                            27
         10.2 Continuing Default by Partnership                                                              28
         10.3 Additional Events of Termination                                                               28
         10.4 Operator's Costs, Expenses and Actions Upon Termination                                        30

 11.     Survival of Obligations                                                                             30

 12.     Accounting and Taxes                                                                                31

         12.1 Consistent with Partnership Agreement                                                          31

 13.     Law of the Contract and Arbitration                                                                 31

         13.1 Law of the Contract                                                                            31
         13.2 Arbitration                                                                                    32

 14.     Force Majeure                                                                                       34

         14.1 Effect of Force Majeure                                                                        34
         14.2 Nature of Force Majeure                                                                        34
         14.3 Non-Force Majeure Situations                                                                   35
         14.4 Resumption of Normal Performance                                                               36
         14.5 Strikes and Lockouts                                                                           36

 15.     General                                                                                             37

         15.1 Effect of Agreement                                                                            37
         15.2 Notices                                                                                        37
         15.3 Counterparts                                                                                   38
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<S>                                                                                                        <C>
         15.4 Headings                                                                                       38
         15.5 Waiver                                                                                         38
         15.6 Assignability                                                                                  39
         15.7 References to Money                                                                            40
         15.8 Severability                                                                                   40
         15.9 Third Persons                                                                                  41
         15.10 Laws and Regulatory Bodies                                                                    41
         15.11 Remedies Cumulative                                                                           41
         15.12 Conflicts                                                                                     41
         15.13 Approval of Partnership or Management Committee                                               41
         15.14 Operator's Office                                                                             42
         15.15 Section Numbers                                                                               42
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                            OPERATING AGREEMENT

              This Agreement entered into as of the 28th day of February, 1997,
by and between Iroquois Gas Transmission System, L.P., a Delaware limited
partnership ("Partnership"), and Iroquois Pipeline Operating Company, a Delaware
corporation ("IPOC").

                                   WITNESSETH:

              WHEREAS, the Partnership and IPOC are parties to an Operating
Agreement initially entered into by their predecessors in interest as of the
10th day of January 1989, as amended by the First and Second Amendments (the
"Original Operating Agreement");

              WHEREAS, the Partnership and IPOC now desire to restate the
Original Operating Agreement to incorporate the First and Second Amendments and
to further amend the Original Operating Agreement as reflected herein;

              WHEREAS, the Partnership and IPOC desire to continue under this
Operating Agreement (this "Agreement") the contractual relationship established
under the Original Operating Agreement and to terminate the original Operating
Agreement as of the effective date of this Agreement;

              WHEREAS, pursuant to Section 9.8 of the Iroquois Gas Transmission
System, L.P. Limited Partnership Agreement ("Partnership Agreement"), the
Partnership has designated IPOC to manage the design, construction, operation,
maintenance, and administration of the Iroquois Gas Transmission System, L.P.;
and

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              WHEREAS, IPOC is willing and able to assume such responsibilities
on the terms and conditions set forth below;

              NOW THEREFORE, in consideration of the representations, covenants
and premises hereinafter set forth, the Parties agree as follows:

1.            Definitions.

              As used in this Agreement, the definitions used in the Partnership
Agreement shall, except as specifically provided herein, have the same meanings
in this Agreement. In addition, the following words and terms shall have the
meanings set forth herein:

               1.1  Completion Date. The date on which the construction of the
                    Facilities is completed.

               1.2  Day. A period of twenty-four (24) consecutive hours
                    commencing at 8:00 a.m. Eastern Standard Time.

               1.3  Month. A period of time beginning on the first Day of a
                    calendar month and ending at the same time on the first Day
                    of the next succeeding calendar month.

               1.4  Year. Each twelve (12) Month period beginning on the first
                    Day of a calendar year and ending on the first Day of the
                    next calendar year, provided that the last contract year
                    shall end at the end of the term


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                    provided in Section 9.1 of this Agreement, unless extended
                    by mutual agreement between Partnership and Operator.


               1.5  Party. Partnership or Operator and "Parties" shall mean both
                    Partnership and Operator.



               1.6  Partnership. The Iroquois Gas Transmission System, L.P. and
                    any successor entities thereto.


               1.7  Operator. Iroquois Pipeline Operating Company and any
                    successor entities thereto.


2.             Relationship of the Parties.


               2.1  Appointment as Operator. Upon and subject to the terms and
                    conditions of this Agreement, Partnership has appointed
                    Iroquois Pipeline Operating Company as the Operator of
                    Partnership to act as Operator hereunder, and Iroquois
                    Pipeline Operating Company has accepted such appointment and
                    agreed to act pursuant to the provisions of the Partnership
                    Agreement, the terms of which are incorporated herein by
                    reference.

               2.2  Operator's Authority to Execute Contracts. Subject to any
                    procedures established and approved by the Management
                    Committee and to the prior approval of the Management
                    Committee with respect to those


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                    matters enumerated in Sections 9.2.6 and 9.2.7 of the
                    Partnership Agreement, contracts relating to Partnership
                    business may be executed by Operator on behalf of
                    Partnership. Copies of all contracts entered into by
                    Operator which affect the Partnership or the Facilities
                    shall be provided to Partnership. Operator shall have the
                    authority to execute, on behalf of the Partnership and
                    without further approval of the Management Committee, (i)
                    Gas Transportation Contracts for Firm Reserved Service for a
                    term not to exceed one year that do not require for their
                    performance the construction of an Incremental Expansion but
                    will instead be performed using otherwise existing and
                    available capacity; (ii) Gas Transportation Contracts for
                    Interruptible Service; (iii) Capacity Release Agreements;
                    (iv) Gas Transportation Contracts with Replacement Shipper;
                    and (v) Park and Loan Service Contracts, in each case
                    conforming to the pro forma contracts set forth in the
                    tariff approved by FERC for the Partnership's Facilities.


3.              Operator's Design, Construction, Operation, Maintenance, and
                Administration Responsibilities.

                3.1 Operator's Responsibilities. Section 9.2.6(h) of the
                    Partnership Agreement permits Partnership to change the
                    authority and responsibility delegated to the Operator under
                    this Section 3 of this Agreement. It is understood and
                    agreed that any such change made by

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                    the Partnership pursuant to such Section 9.2.6(h) of the
                    Partnership Agreement shall be effective and binding on the
                    Operator under this Agreement thirty (30) days after notice
                    of such change is given to the Operator provided, however,
                    that all costs, expenses and liabilities incurred by
                    Operator in implementing, or as a result of, such change
                    shall be reimbursable costs under Section 5 of this
                    Agreement. Subject to (i) the prior approval of the
                    Management Committee with respect to those matters
                    enumerated in Sections 9.2.6 and 9.2.7 of the Partnership
                    Agreement (unless otherwise specifically provided therein),
                    and (ii) prior budget authorizations by the Management
                    Committee pursuant to Section 5.2 of this Agreement, the
                    Operator shall have the general responsibility for the
                    day-to-day management of the design, construction,
                    operation, maintenance, and administration of the Facilities
                    as set forth herein:


                    3.1.1  Provide the day-to-day management, supervision,
                           operating and maintenance services, administrative
                           liaison and related services to Partnership,
                           including but not limited to legal, accounting,
                           engineering, construction, repair, replacement,
                           operational planning, budgeting, technical services,
                           insurance administration, tax services, and
                           regulatory matters.

                    3.1.2  Prepare, file and prosecute applications for
                           regulatory and governmental authority required by the
                           Partnership, make

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                           periodic filings required of the Partnership by
                           governmental or regulatory agencies having
                           jurisdiction. Operator shall have the authority to
                           prepare, file and prosecute, on behalf of the
                           Partnership and without further approval of the
                           Management Committee, tariff compliance filings and
                           to accept regulatory approvals if the terms of such
                           approvals do not vary materially from the
                           authorization(s) sought in the related regulatory
                           applications.

                    3.1.3  Prepare financing plans for the Partnership (but not
                           for the individual Partners) and negotiate for
                           Financing Commitments, if any, to be entered into by
                           the Partnership for the construction of the
                           Facilities; provided, however, that each Partner
                           shall be entitled to be present and to participate in
                           such negotiations.

                    3.1.4  Maintain accurate and itemized accounting records in
                           accordance with Required Accounting Practice for
                           design, planning, construction, operation and
                           maintenance of the Facilities, together with any
                           information reasonably required by Partnership
                           relating to such records.





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                    3.1.5  Prepare proposed budgets and schedules for the review
                           and approval of Partnership pursuant to Section 5.2
                           of this Agreement.

                    3.1.6  Prepare the financial statements set forth in Section
                           8.5 of the Partnership Agreement.

                    3.1.7  Cause the Facilities to be designed and constructed
                           in accordance with the requirements of all federal,
                           state, or other governmental agencies having
                           jurisdiction, including but not limited to the
                           requirements of the United States Department of
                           Transportation set forth in 49 CFR Part 192, and in
                           accordance with sound and prudent natural gas
                           pipeline industry practices and provide or cause to
                           be provided such appropriate supervisory, audit,
                           administrative, technical and other services as may
                           be required.

                    3.1.8  Prepare tax returns required of the Partnership and
                           pay such taxes as are required and approved to be
                           paid by Partnership.

                    3.1.9  Maintain custody of such funds, notes, drafts,
                           acceptances, commercial paper and other securities
                           belonging to Partnership; keep funds belonging to
                           Partnership on deposit in one or more banking
                           institutions selected by the Management Committee as

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                           provided in Section 8.9 of the Partnership Agreement;
                           and disburse such funds.

                    3.1.10 Recommend to the Partnership and negotiate service
                           agreements with counsel, Certified Public
                           Accountants, and financial and other consultants to
                           be retained by the Partnership. The General Counsel
                           of the Operator shall, upon advice to the Chairman of
                           the Management Committee and without further approval
                           of the Management Committee, be authorized to retain
                           counsel for services to be performed at a cost of no
                           more than $50,000 annually.

                    3.1.11 Supervise and administer Gas Transportation Contracts
                           in accordance with Partnership's service agreements
                           and tariff, including, but not limited to,
                           preparation and collection of all bills for services
                           rendered thereunder.

                    3.1.12 As soon as practicable after the end of each month
                           subsequent to the Completion Date, Operator shall
                           furnish Partnership with a statement showing total
                           volumes and Btu content of the gas delivered into and
                           from the Facilities during the preceding month, the
                           volumes and Btu content of gas consumed or lost in
                           operations during the preceding month, and each
                           Shipper's


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                           proportionate share of all such volumes, together
                           with all applicable gas volume statements and Btu
                           analyses.

                    3.1.13 Make reports to and consult with the Management
                           Committee regarding all duties, responsibilities and
                           actions of the Operator under this Agreement in the
                           form and at the times reasonably requested by the
                           Management Committee.

                    3.1.14 Except as otherwise provided by applicable laws or
                           governmental regulations or as otherwise directed by
                           the Partnership, retain all charts, records, books of
                           account, Partnership tax returns, plans, designs,
                           studies and reports and other documents related to
                           the design, construction, operation, maintenance and
                           administration of the Facilities for a period of
                           three (3) years from the date of completion of the
                           activity to which such records relate.

                    3.1.15 Prepare and negotiate in the name of the Partnership
                           rights-of-way, land in fee, permits and contracts
                           necessary for construction, operation and maintenance
                           of the Facilities; resist the perfection of any
                           involuntary liens against Partnership property and,
                           to the extent permitted by law, hold Partnership
                           property free of all involuntary liens.




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                    3.1.16 Make immediate reports to Partnership of all
                           non-routine occurrences that the Operator determines
                           may have a significant adverse impact upon the
                           operation of the Facilities and make a follow-up
                           report at an appropriate time on the response to each
                           non-routine occurrence.

                    3.1.17 Perform such other duties as are reasonably requested
                           by the Management Committee or as are necessary or
                           appropriate to discharge Operator's responsibilities
                           under this Agreement.

               3.2  Operator's Authority to Construct Certain Facilities.
                    Operator is authorized to develop and construct, on behalf
                    of the Partnership and without further approval of the
                    Management Committee, Incremental Expansions or other
                    capital facilities which (i) do not exceed in any one
                    instance a cost of one million dollars ($1,000,000); (ii)
                    will be constructed pursuant to the Partnership's blanket
                    certificate; and (iii) have been included in the most recent
                    budget approved by the Management Committee pursuant to
                    Section 5.2 of this Agreement.

               3.3  Operator's Authority to Perform Unbudgeted Maintenance and
                    Repairs. Operator is authorized to perform maintenance and
                    repairs to the Facilities which have not been included in
                    the most recent budget approved by the Management Committee
                    pursuant to Section 5.2 of this


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                    Agreement, provided that the total cost of all such
                    unbudgeted maintenance and repairs in any of the
                    Partnership's fiscal years shall not exceed $100,000 or the
                    amount permitted under Section 5.2 of this Agreement,
                    whichever is greater. Operator is authorized to make
                    emergency maintenance and repairs to the Facilities at any
                    time irrespective of budget authorization. Operator shall
                    give prompt written notice to the Partnership of the nature,
                    extent and cost of such emergency maintenance and/or
                    repairs.

               3.4  Operator's Right to Request Instructions From Management
                    Committee. Operator may at any time, if it reasonably deems
                    it to be necessary or appropriate, request instructions from
                    the Management Committee with respect to any matter
                    contemplated by this Agreement and may defer action thereon
                    pending the receipt of such instructions. Operator shall be
                    fully protected in acting in accordance with the
                    instructions of the Management Committee or in omitting to
                    act pending the receipt of such instructions, and shall have
                    no liability for any act in good faith in compliance
                    therewith, or for its good faith failure to act pending
                    receipt thereof.

               3.5  Operator's Subcontract. Operator and Tennessee Gas Pipeline
                    Company ("Tennessee") have executed an Agreement with
                    Respect to Iroquois Gas Transmission System, L.P.
                    ("Tennessee Subcontract"), pursuant to

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                    which Tennessee has assumed responsibility for performing
                    certain of the duties and obligations delegated by
                    Partnership to Operator under this Agreement. Any
                    replacement or substitute subcontract with Tennessee or any
                    other entity shall, prior to its execution and as a
                    condition thereto, be approved by the Management Committee.
                    All costs, liabilities and expenses incurred by Operator
                    under the Tennessee Subcontract, and all costs, liabilities
                    and expenses incurred by Operator under any replacement or
                    substitute subcontract approved by the Management Committee
                    ("Approved Substitute Subcontract"), shall be reimbursable
                    costs pursuant to Section 5 of this Agreement.

                    Partnership further agrees that Operator shall not be liable
                    in any manner for any default under this Agreement which
                    results in whole or in part, directly or indirectly from a
                    default by Tennessee under the Tennessee Subcontract, or by
                    any substitute subcontractor under an Approved Substitute
                    Subcontract. In the event of a default by Operator under
                    this Agreement which results in whole or in part, directly
                    or indirectly from a default by Tennessee under the
                    Tennessee Subcontract, or by any substitute subcontractor
                    under an Approved Substitute Subcontract, Operator hereby
                    assigns to Partnership any rights which Operator may have
                    under the Tennessee Subcontract or the Approved Substitute


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                    Subcontract (as the case may be) to seek and receive damages
                    from Tennessee or the substitute subcontractor (as the case
                    may be) in connection with such default.

                    Partnership further acknowledges and consents to the
                    assignment by Operator to Tennessee in the Tennessee
                    Subcontract and/or to a substitute subcontractor in an
                    Approved Substitute Subcontract of certain of Operator's
                    rights to receive payments from Partnership under this
                    Agreement in the event of a default by Operator under the
                    Tennessee Subcontract or Approved Substitute Subcontract
                    which results in whole or in part, directly or indirectly
                    from a default by Partnership under this Agreement.

4.             Employees, Consultants and Contractors.


               4.1  Operator's Employees, Consultants and Contractors. Operator
                    shall employ or retain and have supervision over the Persons
                    (including consultants and professional service or other
                    organizations) required by Operator to perform its duties
                    and responsibilities hereunder in an efficient and
                    economically prudent manner. Operator shall pay all
                    reasonable expenses in connection therewith, including
                    compensation, salaries, wages, overhead and administrative
                    expense incurred by Operator and its Affiliates, and, if
                    applicable, social security taxes,

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                    workers' compensation insurance, retirement and insurance
                    benefits and other such expenses. The compensation for
                    Operator's employees shall be determined by Operator. All
                    authorized expenses pursuant to this Section shall be
                    reimbursable costs under Section 5 of this Agreement.

               4.2  Affiliates of Operator or Partners. The Operator shall be
                    authorized to utilize, as it deems necessary, the services
                    of its corporate Affiliates, provided that such services are
                    utilized on terms materially no less favorable to the
                    Partnership than those prevailing at the time for comparable
                    services of unaffiliated independent Parties. The Operator
                    shall also be authorized to utilize, as it deems necessary,
                    the services of independent contractors, including the
                    services of any Partner's corporate Affiliates, provided
                    that the services of any such corporate Affiliate are
                    utilized on terms materially no less favorable to the
                    Partnership than those prevailing at the time for comparable
                    services of unaffiliated independent parties, and the
                    Operator shall negotiate contracts for such services and
                    execute the same.

               4.3  Standards for Operator and its Employees. Operator shall
                    perform its services and carry out its responsibilities
                    hereunder and shall require all of its employees and
                    contractors, subcontractors, and materialmen furnishing
                    labor, material or services for the construction and
                    operation of the Facilities to carry out their
                    responsibilities, in accordance with


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                    sound, workmanlike and prudent practices of the gas pipeline
                    industry and in compliance with all relevant laws, statutes,
                    ordinances, safety codes, regulations and rules of
                    governmental authorities having jurisdiction applicable to
                    the Facilities.


               4.6  Non-Discrimination. In performing under this Agreement,
                    Operator will not discriminate against any employee or
                    applicant for employment because of race, creed, color,
                    religion, sex, national origin, age or disability, or
                    because he or she is a disabled veteran or a veteran of the
                    Vietnam era, and will comply with all provisions of
                    Executive Order 11246 of September 24, 1965 and any
                    successor order thereto, to the extent that such provisions
                    are applicable to Operator and/or Partnership. The
                    provisions of this Section 4.4 shall be applicable to any
                    contractors, consultants and/or subcontractors retained in
                    connection herewith.

5.             Financial and Accounting.

               5.1  Accounting and Compensation.


                    5.1.1  Operator shall keep a full and complete account of
                           all costs, expenses and expenditures incurred by it
                           on behalf of the Partnership in connection with its
                           obligations hereunder.



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                    5.1.2  Operator shall be reimbursed by Partnership for all
                           reasonable and proper costs, expenses and
                           expenditures incurred by it on behalf of the
                           Partnership in accordance with the provisions of this
                           Agreement; provided, however, that costs incurred by
                           the Operator under Section 8.1 of this Agreement
                           shall not be reimbursed by the Partnership. It is the
                           intent of the Parties that Operator shall carry out
                           its services hereunder on a fully reimbursed basis,
                           pursuant to the provisions of this Agreement, without
                           profit or loss. To the extent that Operator incurs
                           such profit or loss appropriate adjustments will
                           promptly be made to eliminate such profit or loss.
                           Since Operator maintains custody of Partnership funds
                           and maintains the books and records of the
                           Partnership, the Operator's reimbursement under this
                           Agreement shall be made by appropriate accounting
                           entries and Operator shall not be required to render
                           bills or statements to the Partnership.

               5.2  Budgets. On or before each November 1, Operator shall
                    prepare and submit for approval of the Management Committee
                    an estimate of capital expenditures and operating income and
                    expenses which Operator anticipates for the ensuing Year
                    broken down into such individual line items and including
                    such supporting documentation and data as the

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                    Management Committee may reasonably require. Except as the
                    Management Committee may otherwise direct, the budget
                    approved by the Partnership and then in effect shall
                    constitute authorization of Operator to incur the
                    expenditures contained in such budget and to incur
                    expenditures up to ten percent (10%) in excess of the amount
                    set forth for any line item in such budget, provided that
                    the total of all such expenditures in excess of budgeted
                    line item amounts shall not exceed five percent (5%) of the
                    total amount of such budget. Operator shall immediately
                    inform the Management Committee of any facts which the
                    Operator believes may increase or decrease any line item in
                    the most recent budget approved by the Management Committee
                    by ten percent (10%) or more or increase or decrease the
                    total amount of such budget by five percent (5%) or more.

               5.3  Disputed Charges. Subject to the provisions of Section 3.5,
                    Partnership may, within twenty-four (24) months after the
                    expenditure, take written exception to any expenditure or
                    any part thereof, on the ground that the same was not a
                    reasonable, authorized and proper cost incurred by Operator
                    on behalf of the Partnership in connection with the design,
                    construction, operation, maintenance, or administration of
                    the Facilities. If the amount as to which such written
                    exception is taken or any part thereof is ultimately
                    determined in accordance with Section 13 of this

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                    Agreement not to be a reasonable, authorized, and proper
                    expense incurred by Operator on behalf of the Partnership in
                    connection with the design, construction, operation,
                    maintenance, or administration of the Facilities, such
                    amount or portion thereof (as the case may be) shall be
                    refunded by Operator to Partnership together with interest
                    thereon at a rate (which in no event shall be higher than
                    the maximum rate permitted by applicable law) equal to the
                    rate designated by Morgan Guaranty Trust Company from time
                    to time as its prime rate, plus one percent, during the
                    period from the date of payment by Partnership to the date
                    of refund by Operator.

               5.4  Rate Reviews. Operator shall review from time to time the
                    rates and fees charged for transportation services and
                    recommend to Partnership revision in such rates and fees as
                    necessary to reflect increased or decreased costs or other
                    changes in the conditions of service in order to assure that
                    all costs are reflected in the tariffs of Partnership.
                    Operator shall have the authority to prepare, file and
                    prosecute, on behalf of the Partnership and without further
                    approval of the Management Committee, revisions to such
                    rates and fees which will not affect annual revenues by more
                    than $100,000.

               5.5  Audit and Examination. In addition to the audit
                    responsibilities assigned by the Partnership Agreement to
                    the Audit Committee, any Partner(s),

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                    the Partnership or their designated representatives
                    (including in the case of the Partnership representatives
                    from each Partner), after fifteen (15) Days' notice in
                    writing to Operator, shall have the right during normal
                    business hours to audit or examine, at the expense of the
                    Person (Partner(s) or Partnership) conducting the audit or
                    examination, all books and records maintained by the
                    Operator as well as the relevant books of account of
                    Operator's contractors relating to the design, construction,
                    operation, maintenance, and administration of the
                    Facilities, provided, however, that the total number of full
                    audits commenced in any Year shall not exceed two. Such
                    right shall include the right to meet with Operator's
                    internal and independent auditors to discuss matters
                    relevant to the audit or examination. Partnership shall have
                    two (2) Years after the close of a Year in which to make an
                    audit of Operator's records for such Year; provided,
                    however, that any audits relating to construction costs may
                    be made up to twenty-four (24) Months after the Completion
                    Date. Absent fraud or intentional concealment or
                    misrepresentation by Operator or its employees, and except
                    for any adjustments which may arise from FERC compliance
                    audits, Operator shall neither be required nor permitted to
                    adjust any item unless a claim therefor is presented or
                    adjustment is initiated within two (2) Years after the close
                    of the Year in which the cost was incurred,


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                    and in the absence of such timely claims or adjustments, the
                    costs incurred shall be conclusively established as correct;
                    provided, however, this shall not prevent adjustment
                    resulting from physical inventory of the Facilities and
                    other property or audit adjustments relating to construction
                    costs incurred during the construction phase as set forth in
                    this Section 5.5.

6.             Agent.

               6.1  Agent. In performing services pursuant to this Agreement,
                    Operator shall be an agent of Partnership.

7.             Intellectual Property.

               7.1  Inventions and Copyrights. Any (i) inventions, whether
                    patentable or not, developed or invented, or (ii)
                    copyrightable material, developed by Operator or its
                    employees while engaged exclusively in the performance of
                    services under this Agreement shall, unless otherwise
                    directed, be assigned to Partnership, which shall have the
                    exclusive right to the exploitation thereof.

               7.2  Confidentiality. Operator and Partnership shall comply with
                    the provisions applicable to confidential information set
                    out in Section 13.12

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                    of the Partnership Agreement, which provisions are
                    incorporated herein by reference as if set out in full.

               7.3  License to Operator. Each Partner which is a signatory to
                    this Operating Agreement hereby grants to the Operator on
                    behalf of the Partnership an irrevocable, royalty-free,
                    non-exclusive and a non-assignable license to use, during
                    the term of this Operating Agreement, any confidential
                    information provided to the Partnership or Operator by said
                    Partner and designated as such by the Partner, or generated
                    by the Partnership or Operator on behalf of said Partner or
                    Partnership during the term of the aforesaid Partnership
                    Agreement. For purposes of this Section 7.3, confidential
                    information shall include, but shall not be limited to,
                    inventions (whether patented or not) and copyrighted or
                    copyrightable material. As a condition precedent to the
                    effectiveness of the aforesaid license to use, Operator
                    hereby expressly agrees that it will utilize such
                    confidential information solely in connection with the
                    performance of its duties hereunder and further expressly
                    agrees that it will be subject to and bound by the
                    provisions set forth in Section 13.12 of the Partnership
                    Agreement as if it were a Partner, which provisions are
                    incorporated herein by reference as if set out in full. Upon
                    termination of this operating Agreement or its removal as
                    Operator, Operator shall return all confidential information
                    which has been provided to it, together with all


                                       21
<PAGE>


                    reproductions thereof in the Operator's possession, pursuant
                    to the aforesaid license to use to the Person (Partner(s) or
                    the Partnership) from which it obtained such confidential
                    information.

8.             Indemnification, Claims, Litigation, Insurance and Liability.

               8.1  Operator's Indemnity. Operator shall indemnify and hold
                    Partnership, its employees or agents harmless from and
                    against:

                    8.1.1  all actions or failure to act by the Operator which
                           are not within the scope of this Operating Agreement
                           or any express direction of the Partnership;


                    8.1.2  claims for non-payment of any and all contributions,
                           withholding deductions or taxes measured by the
                           wages, salaries or compensation paid to Persons
                           employed by Operator in connection herewith except
                           for claims associated with or resulting from good
                           faith efforts to contest such taxes.

               8.2  Claims.

                    8.2.1  Partnership will include in each Gas Transportation
                           Contract a provision requiring the Shipper, in the
                           absence of gross negligence or willful misconduct on
                           the part of Operator, its officers, employees or
                           agents, to waive any and all claims against

                                       22
<PAGE>


                           Operator, its officers, employees or agents, arising
                           out of or in any way connected with (i) the quality,
                           use or condition of the gas after delivery from the
                           Iroquois system for the account of such Shipper; (ii)
                           any losses or shrinkage of gas during or resulting
                           from transportation pursuant to the Gas
                           Transportation Contract; and (iii) all other claims
                           and demands arising out of the performance of the
                           duties of the Operator, its officers, employees or
                           agents. Partnership will further include in each Gas
                           Transportation Contract a provision requiring the
                           Shipper to agree to supply Operator with a waiver of
                           subrogation of Shipper's insurance company for all
                           claims subject to the waiver set out in the first
                           sentence of this Section 8.2.1.



                    8.2.2  Any and all claims, damages or causes of action
                           against the Partnership in favor of anyone other than
                           the Partnership or the Operator arising out of the
                           design, construction, operation, maintenance, and
                           administration of the Facilities which are not
                           covered by insurance as per Section 8.3 of this
                           Agreement shall be settled or litigated and defended
                           by Operator in accordance with its best judgment and
                           discretion when either (A) (i) the amount involved is
                           less than $100,000, (ii) no injunctive or

                                       23
<PAGE>

                           similar relief is sought, and (iii) no criminal
                           sanction is sought; or (B) the action is one for
                           which the Operator is required to provide
                           indemnification pursuant to Section 8.1 of this
                           Agreement; otherwise, such decision shall be made by
                           the Management Committee, and any settlement or
                           defense thereof by the Partnership shall be
                           controlled by the Management Committee.

               8.3  Insurance.

                    8.3.1  Operator shall carry and maintain insurance which it
                           reasonably deems adequate to protect Operator, its
                           officers, agents and employees against all actions,
                           claims, demands, costs and liabilities arising out of
                           the negligence of Operator, its officers, agents and
                           employees in connection with their good faith acts
                           (or failure to act) within the scope of Operator's
                           authority under this Operating Agreement. Operator
                           shall, subject to the approval of the Management
                           Committee, carry and maintain such other insurance
                           for the benefit of the Partnership and Operator and
                           require contractors, subcontractors or consultants to
                           carry and maintain insurance deemed adequate by the
                           Operator, as approved by the Management Committee,
                           (i) to

                                       24
<PAGE>


                           protect the Partnership and Operator and (ii) satisfy
                           any other requirement of the law.

                    8.3.2  Insurance maintained by the Operator pursuant to
                           Section 8.3.1 of this Agreement shall be a
                           reimbursable cost pursuant to Section 5 of this
                           Agreement.

                    8.3.3  Operator may carry and maintain such other insurance
                           for its own account as it may deem necessary, but in
                           the event other insurance is carried, unless
                           otherwise directed by the Partnership, Operator
                           agrees to waive, and agrees to undertake in good
                           faith to have its insurers waive, any rights of
                           subrogation they may have against the Partnership and
                           the individual Partners thereof, or the Affiliates of
                           any of them, and/or their directors, officers,
                           employees, servants or agents.

                    8.3.4  With respect to claims and losses for damage, injury
                           or destruction of property which is a part of the
                           Facilities, which property is covered by insurance
                           other than insurance provided for in Section 8.3.1 of
                           this Agreement, it is agreed that neither Operator
                           nor the Partnership or any of its Partners shall have
                           any rights of recovery against one another, nor
                           against the Affiliates of each, nor the insurers of
                           any of them, and their rights of

                                       25
<PAGE>

                           recovery are mutually waived. All such policies of
                           insurance purchased to cover the Facilities or any
                           part thereof, or the operation (in any respect) of
                           the Facilities or any part thereof, or any gas
                           transported or handled therein, shall be endorsed
                           properly to effectuate this waiver of recovery,
                           provided, however, that if Partnership, any of the
                           Partners, or Operator is unable, despite its best
                           efforts, to obtain such an endorsement, then the
                           other parties may waive or appropriately modify this
                           requirement.

               8.4  Limitation of Liability. Partnership and Operator hereby
                    agree that any claim against Partnership which may arise
                    hereunder shall be made only against the assets of the
                    Partnership and that all rights to proceed against the
                    Partners and the assets of the Partners, other than their
                    interests in the Partnership, as a result of any such claim
                    or any obligation arising therefrom, are hereby expressly
                    waived.

9.             Term.

               9.1  Term. The Original Operating Agreement shall terminate and
                    this Agreement shall be effective as of February 28, 1997
                    and, subject to the provisions of the Partnership Agreement,
                    shall continue until November 30, 2011, and thereafter on a
                    year-to-year basis subject to


                                       26
<PAGE>

                    termination by either Party upon one year's written notice
                    to the other Party, unless sooner terminated pursuant to
                    Section 10 of this Agreement.

10.            Termination.

               10.1 Removal of Operator.

                    10.1.1 The Operator may be removed as Operator as provided
                           in Section 9.8 of the Partnership Agreement. If the
                           Management Committee votes to remove the Operator in
                           accordance with such procedures, then this Agreement
                           shall terminate upon one year's notice to the
                           Operator after such vote and Partnership shall
                           reimburse Operator for any unreimbursed costs
                           incurred by Operator pursuant to Section 5.1 of this
                           Agreement.

                    10.1.2 In the event of a material default by Operator in the
                           performance of its obligations under this Agreement
                           which shall have continued for a period of sixty (60)
                           Days after written notice thereof by Partnership to
                           Operator, Partnership may terminate this Agreement by
                           written notice to Operator, provided, however, that
                           no termination shall occur if: (i) Operator has
                           initiated action to cure such material default but,
                           despite its best efforts, has been unable to complete
                           cure


                                       27
<PAGE>


                           within such sixty (60) Day period and Operator's
                           actions to complete cure are continuing in good faith
                           beyond the end of the sixty (60) Day period, or (ii)
                           such default results in whole or in part, directly or
                           indirectly, from a default by Tennessee under the
                           Tennessee Subcontract or by a substitute
                           subcontractor under an Approved Substitute
                           Subcontract.

               10.2 Continuing Default by Partnership. In the event of a
                    material default by Partnership in the performance of its
                    obligations under this Agreement and the continuance of such
                    material default for a period of sixty (60) Days after
                    written notice thereof by Operator to Partnership, Operator
                    may, by written notice to Partnership, terminate this
                    Agreement, provided, however, that no termination shall
                    occur if Partnership has initiated action to cure such
                    material default but, despite its best efforts, has been
                    unable to complete such cure within such sixty (60) Day
                    period, and Partnership's actions to complete cure are
                    continuing in good faith beyond the end of the sixty (60)
                    Day period.

               10.3 Additional Events of Termination. In addition to termination
                    in accordance with Sections 10.1 and 10.2, this Agreement
                    shall terminate when:

                                       28
<PAGE>

                    10.3.1 An Affiliate of the Operator ("Operator Affiliate")
                           becomes a Withdrawn Partner under the Partnership
                           Agreement, unless the remaining Partners vote, by 65%
                           or more of their Percentage Interests, to retain
                           Operator as Operator within thirty (30) Days of the
                           date that Operator Affiliate becomes a Withdrawn
                           Partner and Operator agrees to continue as Operator.

                    10.3.2 Operator Affiliate transfers all or substantially all
                           of its interest in the Partnership, unless such a
                           transfer is a transfer to an Affiliate of Operator
                           Affiliate permitted under Sections 11.3 and 11.4 of
                           the Partnership Agreement.

                    10.3.3 The Partnership is dissolved in accordance with
                           Sections 12.2 or 12.5 of the Partnership Agreement.

                    10.3.4 The Partnership and Operator mutually agree to
                           terminate this Agreement.

                    10.3.5 The Operator, upon one year's prior notice to the
                           Partnership, terminates this Agreement.

                    10.3.6 A court enters a decree or order for relief, unstayed
                           on appeal or otherwise and in effect for 90 days, in
                           an involuntary case under the federal bankruptcy
                           laws, or any such order adjudicating the


                                       29
<PAGE>


                           Operator as bankrupt or insolvent under any other
                           applicable bankruptcy, insolvency or liquidation law,
                           or the commencement by the Operator of a voluntary
                           case under any bankruptcy or insolvency law.

               10.4 Operator's Costs, Expenses and Actions Upon Termination. In
                    addition to any costs for which Partnership may be obliged
                    to reimburse Operator pursuant to Section 5 of this
                    Agreement, upon any termination of this Agreement
                    Partnership shall pay to Operator any and all costs and
                    expenses reasonably incurred by Operator in connection with
                    the winding up of Operator's duties as Operator and the
                    transfer of such responsibilities and any assets of
                    Partnership held hereunder to Partnership or any other
                    entity as may be directed by Partnership. In the event of
                    any such termination, Operator shall, if so directed by
                    Partnership, transfer to Partnership, or to another entity,
                    any and all assets of Partnership held by Operator
                    hereunder, including but not limited to all permits,
                    licenses, contract rights and other real and personal
                    property, whether tangible or intangible.

11.            Survival of Obligations. The termination of this Agreement shall
               not discharge either Party from any obligation which it owes to
               the other Party by reason of any transaction, commitment or
               agreement entered into, or any loss, cost, damage, expense or
               liability which shall occur or arise (or the circumstances,


                                       30
<PAGE>


               events or basis of which shall occur or arise) prior to such
               termination. It is the intent of the Parties that any obligation
               owed by a Party to the other Party (whether the same shall be
               known or unknown at the termination hereof, or whether the
               circumstances, events or basis of the same shall be known or
               unknown at the termination hereof) shall survive the termination
               of this Agreement.

12.            Accounting and Taxes.

               12.1 Consistent with Partnership Agreement. The accounting and
                    tax service provided by Operator shall be consistent with
                    the applicable provisions of Section 8 of the Partnership
                    Agreement which are incorporated by reference herein as if
                    set forth in full. Matters of tax policy for the Partnership
                    shall be the responsibility of, and ultimately determined by
                    the Management Committee in accordance with Section 8.6 of
                    the Partnership Agreement.

13.            Law of the Contract and Arbitration.

               13.1 Law of the Contract. This Agreement shall be construed and
                    interpreted under the laws of the State of Delaware, without
                    regard to the principles of conflicts of laws.


                                       31
<PAGE>

               13.2 Arbitration.

                    13.2.1 In the event that the Parties are unable to agree on
                           any of the matters set forth herein, either
                           Partnership or Operator may upon written notice prior
                           to the commencement of legal proceedings related to
                           such dispute call for submission of such matter to
                           arbitration. The Party requesting arbitration shall
                           set forth in such notice in adequate detail the
                           issues to be arbitrated, and within ten (10) Days
                           from the receipt of such notice, the other Party may
                           set forth in adequate detail additional related
                           issues to be arbitrated. If arbitration is invoked by
                           either Party, the decision of the arbitrators shall
                           be final and binding upon all parties.

                    13.2.2 It is the intent of the Parties that, to the extent
                           practicable, such binding arbitration shall be
                           conducted by a person knowledgeable and experienced
                           in the type of matter that is the subject of the
                           dispute. In the event the Parties are unable to agree
                           upon such person, then each Party shall select a
                           person that it believes has the qualifications set
                           forth above as its designated arbitrator, and such
                           arbitrators so designated shall mutually agree upon a
                           similarly qualified third person to complete the
                           arbitration panel, provided, however, that if one of

                                       32
<PAGE>

                           the Parties fails to select its designated arbitrator
                           as specified herein within thirty (30) Days of
                           receiving written notice from the other Party that
                           such other Party has selected its designated
                           arbitrator, then the arbitration provided for herein
                           shall be conducted by the one arbitrator so
                           designated. In the event that the persons selected by
                           the Parties are unable to agree on a third member of
                           the panel within sixty (60) Days after their
                           selection, such person shall be designated by the
                           American Arbitration Association. Upon final
                           selection of the entire panel, such panel shall, as
                           expeditiously as possible, render a decision on the
                           matter submitted for arbitration. The arbitration
                           shall be conducted in accordance with the commercial
                           arbitration rules of the American Arbitration
                           Association.

                    13.2.3 Upon the determination of any such dispute, the
                           arbitrators shall bill the costs attributable to such
                           binding arbitration to the Party whose position they
                           determine is farthest away from the actual decision
                           rendered; provided, however, that the arbitrators
                           shall be empowered to apportion such cost between the
                           Parties if they deem it appropriate.

                    13.2.4 It is the intent of the Parties that once arbitration
                           is invoked by either Party pursuant to the provisions
                           of this Section 13 that

                                       33
<PAGE>

                           the matters set for arbitration be decided as set
                           forth herein and they shall not seek to have this
                           Section 13 rendered unenforceable or to have such
                           matter decided in any other way, provided, however,
                           that nothing herein shall prevent the Parties from
                           negotiating a settlement of any issue at any time.

14.            Force Majeure.

               14.1 Effect of Force Majeure. In the event that either
                    Partnership or Operator is rendered unable, by reason of an
                    event of force majeure, as defined herein, to perform,
                    wholly or in part, any obligation or commitment set forth in
                    this contract, then upon such Party's giving notice and full
                    particulars of such event as soon as practicable after the
                    occurrence thereof, the obligations of both Parties, except
                    for unpaid financial obligations arising prior to such event
                    of force majeure, shall be suspended to the extent and for
                    the period of such force majeure condition.

               14.2 Nature of Force Majeure. The term "force majeure" as
                    employed in this Agreement shall mean acts of God, strikes,
                    lockouts or industrial disputes or disturbances, civil
                    disturbances, arrests and restraint from rulers of people,
                    interruptions by government or court orders, present and
                    future valid orders, decisions or rulings of any government
                    or regulatory entity


                                       34
<PAGE>


                    having proper jurisdiction, acts of the public enemy, wars,
                    riots, blockades, insurrections, inability to secure labor
                    or inability to secure materials, including inability to
                    secure materials by reason of allocations promulgated by
                    authorized governmental agencies, epidemics, landslides,
                    lightning, earthquakes, fire, storms, floods, washouts,
                    inclement weather which necessitates extraordinary measures
                    and expense to construct facilities and/or maintain
                    operations, explosions, breakage or accident to machinery or
                    lines of pipe, freezing of pipelines, inability to obtain or
                    delays in obtaining easements or rights-of-way, the making
                    of repairs or alterations to pipelines or plants, or any
                    other cause, whether of the kind herein enumerated or
                    otherwise, not reasonably within the control of the Party
                    claiming force majeure.

               14.3 Non-Force Majeure Situations. Neither Operator nor
                    Partnership shall be entitled to the benefit of the
                    provisions of Section 14.1 of this Agreement under the
                    following circumstances:

                    14.3.1 To the extent that the failure was caused by the
                           Party claiming suspension having failed to remedy the
                           condition by taking all reasonable acts, short of
                           litigation, if such remedy requires litigation, and
                           having failed to resume performance of such
                           commitments or obligations with reasonable dispatch;

                                       35
<PAGE>

                    14.3.2 If the failure was caused by failure of the Party
                           claiming suspension to request or pay necessary funds
                           in a timely manner, or with respect to the payment of
                           any amounts then due hereunder;

                    14.3.3 To the extent that the failure was caused or
                           contributed to by the gross negligence or willful
                           misconduct of the Party claiming suspension.

               14.4 Resumption of Normal Performance. Should there be an event
                    of force majeure affecting performance hereunder, the
                    Parties shall cooperate to take all reasonable steps to
                    remedy such event with all reasonable dispatch to insure
                    resumption of normal performance.

               14.5 Strikes and Lockouts. Settlement of strikes and lockouts
                    shall be entirely within the discretion of the party
                    affected, and the requirement in Sections 14.3.1 and 14.4 of
                    this Agreement that any event of force majeure shall be
                    remedied with all reasonable dispatch shall not require the
                    settlement of strikes or lockouts by acceding to the demands
                    of the parties directly or indirectly involved in such
                    strikes or lockouts when such course is inadvisable in the
                    discretion of the party having such difficulty.


                                       36
<PAGE>

15.            General.

               15.1 Effect of Agreement. This Agreement and the Partnership
                    Agreement reflect the whole and entire agreement among the
                    Parties with respect to the subject matter hereof and
                    supersede all prior agreements and understandings, oral and
                    written, among the Parties with respect to the subject
                    matter hereof. This Agreement can be amended, restated or
                    supplemented only by the written agreement of the Operator
                    and the Partnership.

               15.2 Notices. Unless otherwise specifically provided in this
                    Agreement, any written notice or other communication shall
                    be sufficiently given or shall be deemed given on the fifth
                    (5th) business day following the date on which the same is
                    mailed by registered or certified mail, postage prepaid,
                    addressed:

                    15.2.1 if to the Operator, to President, Iroquois Pipeline
                           Operating Company, One Corporate Drive, Suite 600,
                           Shelton, CT 06484, or such other person and/or
                           address as may be designated from time to time by
                           written notice to Partnership.

                    15.2.2 if to Partnership, to each of the Partners as set
                           forth in Section 13.2.1 of the Partnership Agreement
                           or to such other Person and/or address as may be
                           designated from time to time by any

                                       37
<PAGE>


                           Partner by written notice to Operator. Any Partner
                           may request that additional copies of notices be
                           given to an Affiliate of such Partner at such address
                           as is designated by such Partner by written notice to
                           Operator; provided, however, that any failure to give
                           such notice shall not affect the validity of any
                           notice given to any Partner or the Partnership in
                           accordance with this Section 15.2. Operator agrees to
                           give such notice to any such Affiliate.

               15.3 Counterparts. This Agreement may be executed in
                    counterparts, each of which shall be deemed an original, but
                    all of which together shall constitute one and the same
                    instrument.

               15.4 Headings. The headings contained in this Agreement are for
                    reference purposes only and shall not affect the meaning or
                    interpretation of this Agreement.

               15.5 Waiver. No waiver by any Party of any default by any other
                    Party in the performance of any provision, condition or
                    requirement herein shall be deemed to be a waiver of, or in
                    any manner release the other Party from, performance of any
                    other provision, condition or requirement herein, nor shall
                    such waiver be deemed to be a waiver of, or in any manner a
                    release of, the other Party from future performance of the
                    same


                                       38
<PAGE>

                    provision, condition or requirement. Any delay or omission
                    of any Party to exercise any right hereunder shall not
                    impair the exercise of any such right, or any like right,
                    accruing to it thereafter. No waiver of a right created by
                    this Agreement by one Party shall constitute a waiver of
                    such right by the other Party except as may otherwise be
                    required by law with respect to Persons not parties hereto.
                    The failure of one Party to perform its obligations
                    hereunder shall not release the other Party from the
                    performance of such obligations.

               15.6 Assignability. This Agreement shall not be assigned by
                    either Partnership or Operator, without the written consent
                    of the other, which consent shall not be unreasonably
                    withheld by either Party, provided, however, that either
                    Party may assign this Agreement to a corporation which is an
                    Affiliate of the transferor on the same terms and conditions
                    specified in Section 11.3.1 of the Partnership Agreement for
                    a transfer by a Partner of its interest in the Partnership
                    Agreement, which provisions are incorporated herein by
                    reference as if set out in full (the Party which is not
                    seeking to transfer its interest in the Operating Agreement
                    shall determine whether the conditions set forth in Sections
                    11.3.1(a) and (b) have been satisfied), and further provided
                    that the licenses granted by the individual Partners in
                    Section 7.3 of this Agreement shall not be subject to
                    assignment. Any assignment hereunder shall be effective on
                    the first


                                       39
<PAGE>

                    Day of the Month following the month during which the
                    assignment is completed. This Agreement and all of the
                    obligations and rights herein established shall extend to
                    and be binding upon and shall inure to the benefit of the
                    respective successors and assigns of the respective Parties
                    hereto.

               15.7 References to Money. All references in this Agreement to,
                    and transactions hereunder in, money shall be to or in
                    Dollars of the United States of America.

               15.8 Severability. Should any provision of this Agreement be
                    deemed in contradiction with the laws of any jurisdiction in
                    which it is to be performed or unenforceable for any reason,
                    such provision shall be deemed null and void, but this
                    Agreement shall remain in force in all other respects.
                    Should any provision of this Agreement be or become
                    ineffective because of changes in applicable laws or
                    interpretations thereof or should this Agreement fail to
                    include a provision that is required as a matter of law, the
                    validity of the other provisions of this Agreement shall not
                    be affected thereby. If such circumstances arise, the
                    Parties hereto shall negotiate in good faith appropriate
                    modifications to this Agreement to reflect those changes
                    that are required by law.

                                       40
<PAGE>

               15.9  Third Persons. Except as contemplated herein, nothing
                     herein expressed or implied is intended or shall be
                     construed to confer upon or to give any Person not a Party
                     hereto any rights or remedies under or by reason of this
                     Agreement.

               15.10 Laws and Regulatory Bodies. This Agreement and the
                     obligations of the Parties hereunder are subject to all
                     applicable laws, rules, orders and regulations of
                     governmental authorities having jurisdiction and, in the
                     event of conflict, such laws, rules, orders and regulations
                     of governmental authorities having jurisdiction shall
                     control.

               15.11 Remedies Cumulative. Remedies provided under the provisions
                     of this Agreement shall be cumulative and, except as to the
                     agreement for binding arbitration contained in Section 13
                     hereof, shall be in addition to the remedies provided by
                     law or in equity.

               15.12 Conflicts. In the event there is any conflict between this
                     Agreement and any schedule or subsequent agreement referred
                     to herein, the provisions hereof shall be deemed
                     controlling, except in the event of a conflict with the
                     Partnership Agreement, in which event the Partnership
                     Agreement shall be deemed controlling.

               15.13 Approval of Partnership or Management Committee. Unless
                     otherwise specified, when the approval or other action of
                     the Partnership is



                                       41
<PAGE>

                     required under this Agreement such requirement shall be
                     deemed to require approval of the Management Committee
                     pursuant to the provisions of Section 9 of the Partnership
                     Agreement, provided, however, that, if the Operator or an
                     Operator Affiliate is a Partner, approval of actions to be
                     taken by the Partnership against or with respect to the
                     Operator under Sections 5.3, 5.5, 10.1.2, 13.2.1, 13.2.2 of
                     this Agreement shall require approval by vote of 65 percent
                     or more of the total Percentage Interests of the Partners
                     (voting individually and not as members of any bloc) other
                     than: (i) the Operator or its Affiliate and (ii) any
                     Partner which is, or the Affiliate of which is, a
                     subcontractor of the Operator under this Agreement. It is
                     not intended that ownership of the Operator by the
                     Partnership shall cause any Partner to be deemed to be an
                     Affiliate of the Operator for any purpose hereunder or
                     otherwise. Unless otherwise specified, when approval or
                     other action of the Management Committee is required under
                     this Agreement, Section 9 of the Partnership Agreement
                     shall govern such approval.

               15.14 Operator's Office. Operator may select the location of its
                     office or offices to perform its obligations hereunder.

               15.15 Section Numbers. Unless otherwise indicated, references to
                     Section numbers are to Sections of this Agreement.

                                       42
<PAGE>

              IN WITNESS WHEREOF, the Parties have caused this Amended and
Restated Agreement to be executed by their duly authorized representatives as of
this 28th day of February, 1997.



                                       OPERATOR

                                       IROQUOIS PIPELINE OPERATING COMPANY



                                       By:
                                          -----------------------------------



                                       By:
                                          -----------------------------------


                                       IROQUOIS GAS TRANSMISSION SYSTEM, L.P.


                                       By each of its Partners:


                                       ALENCO IROQUOIS PIPELINES INC.



                                       By:
                                          -----------------------------------



                                       NORTHEAST TRANSMISSION CO.



                                       By:
                                          -----------------------------------


                                       TEN TRANSMISSION COMPANY




                                        By:
                                          -----------------------------------


                                       43
<PAGE>

                                        NJNR PIPELINE COMPANY




                                        By:
                                          -----------------------------------


                                        JMC-IROQUOIS, INC.



                                        By:
                                          -----------------------------------


                                        LILCO ENERGY SYSTEMS, INC.



                                        By:
                                          -----------------------------------


                                        ANR NEW ENGLAND PIPELINE COMPANY



                                        By:
                                          -----------------------------------


                                        ANR IROQUOIS, INC.



                                        By:
                                          -----------------------------------


                                        CNG IROQUOIS, INC.



                                        By:
                                          -----------------------------------

                                       44
<PAGE>


                                        TRANSCANADA IROQUOIS LIMITED




                                        By:
                                          -----------------------------------




                                       45