Document:

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                                                                     Exhibit 4.2

                             DATAPATH SYSTEMS, INC.
                   AMENDED AND RESTATED 1997 STOCK OPTION PLAN

        1. PURPOSE OF THE PLAN

        The DataPath Systems, Inc. Amended and Restated 1997 Stock Option Plan
(the "Plan") amends and restates the 1997 Stock Option Plan and is intended to
promote the interests of DataPath Systems, Inc. (the "Corporation") by providing
incentives to (i) certain employees of the Corporation who are responsible for
the management, growth, or financial success of the Corporation, (ii) certain
non-employee members of the Corporation's Board of Directors (the "Board"), and
(iii) certain non-employee consultants who perform valuable services for the
Corporation ("Optionees"), in order to encourage them to acquire a proprietary
interest, or increase their proprietary interest, in the Corporation and to
continue to perform services for the Corporation.

        2. ADMINISTRATION OF THE PLAN

               (a) The Plan shall be administered by the Board. The Board may at
any time appoint a committee ("Committee") of two (2) or more individuals and
delegate to such Committee one or more of the administrative powers allocated to
the Board pursuant to the provisions of the Plan. Members of the Committee shall
serve for such period of time as the Board may determine and shall be subject to
removal by the Board at any time. The Board may also at any time terminate the
functions of the Committee and reassume all powers and authority previously
delegated to the Committee.

               (b) The Plan Administrator, either the Board or the Committee to
the extent the Committee is at the time responsible for the administration of
the Plan, shall have full power and authority to determine (i) which employees
shall receive option grants, (ii) the number of shares to be covered by each
such option grant. (iii) whether each granted option is to be an incentive stock
option ("Incentive Option")which satisfies the requirements of Section 422 of
the Internal Revenue Code (the "Code") or a Non-Statutory option not intended to
meet such requirements, (iv) the time or times at which each such option is to
become exercisable, (v) the option price for each such option, (vi) the maximum
term for which such option is to be outstanding, and (vii) all other terms and
conditions upon which such option may be exercised. The Plan Administrator shall
have the full power and authority, subject to the provisions of the Plan, to
establish such rules and regulations it may deem appropriate for the proper
administration of the Plan and to make such determinations under, and issue such
interpretations of, the Plan and any outstanding option as it may deem necessary
or advisable. Decisions of the Plan Administrator shall be final and binding on
all parties who have an interest in the Plan or any outstanding option. No
person acting under this subsection shall be held liable for any action or
determination made in good faith with respect to the Plan or any option granted
under the Plan.

        3. DEFINITIONS

               (a) Change in Control means the acquisition of twenty-five
percent (25%) or more of the Company's outstanding voting securities pursuant to
a tender or exchange offer (i) which is made by a person or group of related
persons other than the Corporation or a person that directly or indirectly
controls, is controlled by or is under common control with, the Corporation and
(ii) which the Board does not recommend the Corporation's shareholders accept.

               (b) Corporate Transaction means (i) a consolidation or merger of
the Corporation in which the Corporation is not the continuing or surviving
entity, except for a transaction, the principal purpose of which is to change
the state of the Corporation's incorporation, (ii) a merger, consolidation, or
reorganization of the Corporation pursuant to which more than fifty percent
(50%) of its outstanding voting securities are converted into cash or other
securities, (iii) the sale, transfer, or other disposition of all or
substantially all of the assets of the Corporation, or (iv) a -reverse merger in
which the Corporation is the surviving entity but in which fifty percent (50%)
or more of the Corporation's

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outstanding voting securities are transferred to holders different from those
who held them immediately prior to such merger.

               (c) Fair Market Value of one (1) share of Common Stock shall be
determined in accordance with subsections (i) through (iv) below. No Shareholder
shall have the right to contest the determination of Fair Market Value pursuant
to subsections (i) through (iii) below.

                      (i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange or the NASDAQ National Market System,
but is traded in the over-the-counter market, the Fair Market Value shall be the
mean between the highest bid price and the lowest asked price per share of
Common Stock on the date in question in the over-the-counter market, as such
prices are reported by the National Association of Securities Dealers through
its NASDAQ system or any successor system (the "NASDAQ NMS System"). If there
are no reported bid and asked prices for the Common Stock on the date in
question, then the mean between the highest bid price and lowest asked price on
the last preceding date for which such quotations exist shall be determinative
of Fair Market Value.

                      (ii) If the Common Stock is at the time traded
over-the-counter on the NASDAQ NMS System, the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in question as such
price is reported by the NASDAQ NMS System. If there is no reported closing
selling price for Common Stock on the date in question, then the closing selling
price on the last preceding date for which such quotation exists shall be
determinative of Fair Market Value.

                      (iii) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the Fair Market Value shall be
the closing selling price per share of Common Stock on the date in question on
the stock exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no reported sale of Common Stock
on such exchange on the date in question, then the Fair Market Value shall be
the closing selling price on the exchange on the last preceding date for which
such quotation exists.

                      (iv) If the Common Stock is at the time not listed or
admitted to trading on any stock exchange, the NASDAQ NMS System, or traded in
the over-the-counter market, then the Plan Administrator shall determine Fair
Market Value after taking into account such factors as it deems appropriate and
as are reasonable pursuant to the Code, including one (1) or more independent
professional appraisals. If the Plan Administrator is unable to agree upon the
Fair Market Value within ninety (90) days after the close of the Corporation's
fiscal year or within sixty (60) days after a request for determination by an
Optionee or the Board, then within five (5) days after the end of such period,
the Board, in good faith, shall appoint a qualified appraiser, and the
Corporation shall pay the fees and expenses of such appraiser. Each Optionee
shall be entitled to provide to the qualified appraiser such information as the
Optionee deems relevant. The qualified appraiser shall be instructed to
determine the Fair Market Value and give written notice to the Board and/or the
Optionee within thirty (30) days following his appointment. If he fails,
refuses, or is unable to make a determination of Fair Market Value, then a new
qualified appraiser shall be appointed by the Board and the provisions with
regard to the initial appraiser shall apply.

        If an Optionee contests such Fair Market Value, he shall be entitled, at
his expense, to appoint a second (2nd) qualified appraiser. If the lower of the
two (2) appraisals is greater than or equal to ninety percent (90%) of the
higher appraisal, the Fair Market Value shall be equal to the arithmetic mean of
the two (2) appraisals. If the lower of the two (2) appraisals is less than
ninety percent (90%) of the higher appraisal, then the two (2) appraisers shall
select a third (3rd) appraiser within fifteen (15) days from completion of the
two (2) appraisals, or if they cannot agree upon a third (3rd) appraiser, shall
apply to the Superior Court of California located in Santa Clara County to
select a third (3rd) qualified appraiser. Within forty-five (45) days of his
appointment, the third (3rd) appraiser shall independently determine the Fair
Market Value and it shall be equal to the arithmetic mean of the two (2) closest
appraisals. The Optionee shall pay the fees and expenses of the second (2nd)
appraiser and the Optionee and the Corporation shall split payment of the fees
and expenses of the third (3rd) appraiser, if appointed.

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               (d) Service Provider means an individual for so long as he/she
renders periodic services to the Corporation or one or more of its parent or
subsidiary corporations, whether as an employee, non-employee member of the
Board, or an independent, non-employee consultant.

        4. ELIGIBILITY FOR OPTION GRANTS

        Employees of the Corporation, whether or not they are officers and/or
members of the Board, members of the Board who are not employees of the
Corporation, and non-employee consultants to the Corporation shall be eligible
for selection to receive option grants under the Plan.

        5. STOCK SUBJECT TO THE PLAN

               (a) The stock issuable under the Plan shall consist of shares of
the Corporation's authorized but unissued or reacquired common stock ("Common
Stock"). The aggregate number of shares issuable over the term of the Plan shall
be one million (1,000,000), subject to adjustment as provided in subsection (b)
or subject to adjustment by a vote of the majority of the Board. If an option
expires or terminates for any reason prior to exercise or surrender in full,
including options canceled in accordance with the cancelation-regrant provisions
of Section 10, the shares subject to the portion of the option not so exercised
or surrendered shall be available for subsequent option grants under the Plan.
Shares subject to an option, or portion of an option, surrendered in accordance
with Section 8 and shares repurchased by the Corporation pursuant to its
repurchase rights under the Plan shall not be available for subsequent option
grants under the Plan.

               (b) In the event any change is made to the Common Stock issuable
under the Plan by reason of (i) any Corporate Transaction or (ii) any stock
split, stock dividend, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without receipt of
consideration, then unless such change results in the termination of all
outstanding options under the Plan as a result of the Corporate Transaction,
appropriate adjustments shall be made to (i) the aggregate class and/or number
of shares issuable under the Plan and (ii) the class and/or number of shares and
price per share of the Common Stock subject to each outstanding option in order
to prevent the dilution or enlargement of benefits thereunder.

        6. TERMS AND CONDITIONS OF OPTIONS

               (a) General Requirements. Each option granted under the Plan (i)
shall be authorized by action of the Plan Administrator and (ii) shall be
evidenced by a Stock Option Agreement ("Stock Option Agreement") that complies
with each of the terms and conditions of this Section and identifies such option
as either an Incentive Option or as a Non-Statutory option. Individuals who are
not employees of the Corporation may only be granted Non-Statutory options.

               (b) Option Price

                      (i) The option price per share shall be fixed by the Plan
Administrator, but in no event shall the option price per share be less than
eighty-five percent (85%) of the Fair Market Value of one (1) share of Common
Stock on the date of the option grant.

                      (ii) If the Optionee is, on the date of grant, an owner of
stock, as determined under Section 424(d) of the Code, who possesses more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Corporation (a "10% Shareholder"), then the option price per share shall not
be less than one hundred ten percent (110%) of the Fair Market Value of one (1)
share of Common Stock on the date of the option grant.

                      (iii) The option price shall be paid upon exercise of the
option and shall, subject to the provisions of Section 11 and the Stock Option
Agreement, be payable in one of the following alternative forms (as determined
by the Plan Administrator):

                             (A) Full payment in cash or check; or

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                             (B) Full payment in shares of Common Stock held by
the Optionee for at least six (6) months and having a Fair Market Value on the
date of exercise equal to the option price; or

                             (C) Full payment through a combination of shares of
Common Stock held by the Optionee for at least six (6) months and having a Fair
Market Value on the date of exercise and cash or check, equal in the aggregate
to the option price.

        For purposes of this subsection (iii), the date of exercise shall be the
first date on which the Corporation shall have received both written notice of
the exercise of the option and payment of the option price for the purchased
shares.

               (c) Term and Exercise of Options. Each option granted under the
Plan shall be exercisable at such time or times, during such period and for such
number of shares as shall be determined by the Plan Administrator and set forth
in the Stock Option Agreement evidencing such option, however, no option granted
under the Plan shall have a term in excess of ten (10) years from its date of
grant, or, in the case of an option granted to a 10% Shareholder, a term in
excess of five (5) years from the date of grant, and no option granted under the
Plan shall become exercisable at a rate less than twenty percent (20%) per year
over the five (5) year period from the date of the option grant, subject to
Optionee continuing to be a Service Provider to the Corporation. Exercisable
installments may be exercised in whole or in part, and, to the extent not
exercised, shall accumulate and be exercisable at any time on or before the
expiration date of the option term ("Expiration Date") or sooner termination of
the option term. In no event shall any option be exercisable for any fractional
shares. An option by its terms shall not be assignable or transferable by
Optionee other than by will or by the laws of descent and distribution; during
the lifetime of Optionee, such option shall be exercisable only by Optionee.
Options shall be exercised by written notice to the Corporation (in such terms
as the Plan Administrator may specify), together with payment of the option
price.

               (d) Effect of Termination of Employment

                      (i) If Optionee ceases to be a Service Provider for any
reason ("Termination Date"), except death, or permanent and total disability as
defined in Section 22(e)(3) of the Code, while the holder of one (1) or more
outstanding options under the Plan, then such option(s) shall not (except to the
extent otherwise provided pursuant to Section 12 below) remain exercisable for
more than a ninety (90) day period (or such shorter period determined by the
Plan Administrator and specified in the Stock Option Agreement evidencing the
grant) following the Termination Date. In no event shall such option be
exercisable after the Expiration Date. Each such option shall, during such
ninety (90) day or shorter period, be exercisable only to the extent of the
number of shares, if any, for which the option was exercisable on the
Termination Date. Upon the expiration of such ninety (90) day or shorter period
or, if earlier, upon the Expiration Date, the option shall terminate and cease
to be exercisable. If Optionee ceases to be a Service Provider by reason of
death, or permanent and total disability as defined in Section 22(e)(3) of the
Code, while the holder of one (1) or more outstanding options under the Plan,
then all of the above provision of this Section 6(d)(i) shall apply except that,
if the cessation is due to death, then the applicable period shall be six (6)
months, and if the cessation is due to permanent and total disability, then the
applicable period shall be one (1) year.

                      (ii) Any option granted to an Optionee under the Plan and
exercisable in whole or in part on the date of the Optionee's death may be
subsequently exercised, but only to the extent of the number of shares, if any,
for which the option was exercisable on the date of Optionee's death, by the
personal representative of Optionee's estate or by the person(s) to whom the
option was transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution but such exercise must occur prior to the
earlier of (i) one hundred (180) days from the date of the Termination Date or
(ii) the Expiration Date. Upon the occurrence of the earlier event, the option
shall terminate and cease to be exercisable.

                      (iii) Notwithstanding subsections (i) and (ii) above, the
Plan Administrator shall have complete discretion, exercisable either at the
time the option is granted or at the time the Termination Date, to establish as
a provision applicable to the exercise of one or more options granted under the
Plan that during the limited period of exercisability following the Termination
Date as provided in Section 6(d)(i) above, the option may be exercised not only
with respect to the number of shares for which it is exercisable at the time of
the Termination Date but also with respect

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to one or more subsequent installments of purchasable shares for which the
option would otherwise have become exercisable had the Termination Date not
occurred.

               (e) Restrictions Applicable to Common Stock Issued on Exercise

                      (i) Common Stock issuable upon exercise of any option
granted under the Plan may be subject to such restrictions on transfer,
repurchase rights, or other restrictions as may be determined by the Plan
Administrator, including the right of the Corporation, exercisable upon the
Termination Date, to repurchase at the then existing Fair Market Value all or
any portion of the shares of Common Stock previously acquired by the Optionee
upon the exercise of such option. Any such repurchase right shall be exercisable
by the Corporation upon such terms and conditions as the Plan Administrator may
specify in the instrument evidencing such right, subject to the limitations set
forth in Rule 260.140.41(k) of the Regulations of the California Corporations
Commission. The Plan Administrator shall also have full power and authority to
accelerate the termination of the Corporation's outstanding repurchase rights,
in whole or in part, and thereby vest Optionees in one or more purchased shares,
upon the occurrence of any Corporate Transaction.

                      (ii) The Plan Administrator may assign the Corporation's
repurchase rights specified under subsection (i) above to any person or entity
selected by the Plan Administrator, including one or more shareholders of the
Corporation. If the selected assignee is other than a parent or subsidiary
corporation of the Corporation then the assignee must make a cash payment to the
Corporation, upon the assignment of the repurchase rights, in an amount equal to
the excess (if any) of the Fair Market Value of the unvested shares at the time
subject to the repurchase rights and the aggregate repurchase price payable for
such unvested shares thereunder.

                      (iii) The Plan Administrator may also in its discretion
establish as a term and condition of one or more options granted under the Plan
that the Corporation shall have a right of first refusal with respect to any
proposed sale or other disposition by Optionee (or any successor in interest by
reason of purchase, gift, or other mode of transfer) of any shares of Common
Stock issued upon the exercise of such options. Any such right of first refusal
shall be exercisable by the Corporation (or its assignees) in accordance with
the terms and conditions set forth in the instrument evidencing such right.

               (f) Investment Purpose. If necessary or advisable to comply with
applicable Federal or state securities laws, any option granted under the Plan
may be granted on the condition that Optionee agrees that the purchase of shares
of Common Stock thereunder is for investment and not with a view to the resale
or distribution of such stock and that such shares shall be disposed of only in
accordance with such laws. As a condition to issuance of any shares purchased
upon the exercise of any option granted pursuant to the Plan, Optionee, his
executor, administrator, heir or legatee (as the case may be) receiving such
shares may be required to deliver to the Corporation an instrument, in form and
substance satisfactory to the Plan Administrator and its counsel, implementing
such agreement. Any such condition may be eliminated by the Plan Administrator
if the Plan Administrator determines it is no longer necessary or advisable.

               (g) Shareholder Rights. No Optionee shall have any of the rights
of a shareholder with respect to any shares covered by an option until such
Optionee has exercised the option.

               (h) Withholding on Non-Statutory Options

                      (i) In the event that an Optionee is required to pay to
the Corporation an amount with respect to income and employment tax withholding
obligations in connection with the exercise of a Non-Statutory option, the Plan
Administrator may, in its discretion and subject to such rules as it may adopt,
permit the Optionee to satisfy the obligation, in whole or in part, by making an
irrevocable election that a portion of the total value of the shares of Common
Stock subject to the Non-Statutory option be paid in the form of cash in lieu of
the issuance of Common Stock and that such cash payment be applied to the
satisfaction of the withholding obligations.

                      (ii) If Optionee is subject to the trading restrictions of
Section 16(b) of the Securities Exchange Act of 1934 (the "1934 Act") at the
time of exercise of an option, an election under this subsection (h) by such
individual shall be made either (i) at least six (6) months prior to the date
the amount of withholding tax due with respect

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to the exercise is calculated (the "Tax Date") or (ii) on or prior to the Tax
Date, within the period as defined in Rule 16b-3(e)(3) under the 1934 Act; and
shall apply only to options exercised six (6) months or more after the date of
grant (unless the Optionee dies or becomes permanently and totally disabled
prior to the expiration of such six (6) month period). Should the Tax Date be
deferred for six (6) months following the exercise date, the full amount of
shares purchased under the exercised option shall be issued to Optionee upon
exercise, but such individual shall be obligated unconditionally, upon arrival
of his withholding election to tender back to the Corporation on the Tax Date
the requisite number of shares of Common Stock (plus cash for any fractional
amount) needed to satisfy the designated percentage of his Federal and state
income and employment tax withholding liability.

        7. INCENTIVE OPTIONS

               (a) General Conditions. The terms and conditions set forth in
this Section shall apply to all Incentive Options granted under the Plan.
Incentive Options may only be granted to individuals who are employees of the
Corporation or any of its parent or subsidiary corporations. Options that are
specifically designated as "Non-Statutory" options when issued under the Plan
shall not be subject to such terms and conditions.

               (b) Option Price. The option price per share of the Common Stock
subject to an Incentive Option shall not be less than one hundred (100%) of the
Fair Market Value of a share of Common Stock on the date of grant. If Optionee
is a 10% Shareholder however, then the option price per share of the Common
Stock shall not be less than one hundred ten percent (110%) of the Fair Market
Value of a share of Common Stock on the date of grant.

               (c) Dollar Limitation. The aggregate Fair Market Value
(determined as of the respective date or dates of grant) of the Common Stock for
which one or more options granted to any Employee under this Plan may become
exercisable as Incentive Options during any one calendar year shall not exceed
the sum of One Hundred Thousand Dollars ($100,000.00). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability thereof as Incentive Options under the Federal tax laws shall be
applied on the basis of the order in which such options are granted.

        Except as modified by the preceding provisions of this Section 7, all
the provisions of the Plan shall be applicable to the Incentive Options granted
hereunder.

        8. LIMITED SURRENDER RIGHTS

               (a) In the event of a Change in Control at a time when one or
more classes of the Corporation's equity securities are registered under Section
12(g) of the 1934 Act, then each Optionee who is an officer or director at the
time subject to the short-swing profit restrictions of the Federal securities
laws shall have the right to surrender any or all options held by such
individual under this Plan, to the extent such options are at the time
exercisable for vested shares, and receive in exchange therefore an appreciation
distribution from the Corporation. The appreciation distribution shall be equal
in amount to the excess of (i) the Change in Control Price (on the date of
surrender) of the number of shares in which the Optionee is at the time vested
under the surrendered option or portion thereof over (ii) the aggregate option
price payable for such vested shares. The limited surrender right provided by
this Section 8 shall be exercisable for a period not to exceed thirty (30) days
from the occurrence of the Change in Control. The approval of the Board shall
not be required for such surrender and the distribution to which such individual
shall become entitled upon such surrender shall be made entirely in cash.

               (b) For purposes of subparagraph (a) above, the Change in Control
Price per share of the vested Common Stock subject to the surrendered option
shall be deemed to be equal to the Fair Market Value.

        9. SALE, MERGER, REORGANIZATION, ETC.

               (a) In the event of a Corporate Transaction, each outstanding
option to the extent not otherwise fully exercisable, shall immediately prior to
the effective date of the Corporate Transaction, become fully exercisable for up
to the total number of shares of Common Stock purchasable under such option and
may be exercised for all or any portion

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of such shares. Upon consummation of a Corporate Transaction, this option shall,
to the extent not previously exercised, paid in full, or assumed by the
successor corporation or an affiliate thereof, terminate.

               (b) In no event shall any such acceleration in connection with a
Corporate Transaction occur if: (i) the terms of the agreement of the Corporate
Transaction require as a condition to consummation that the option shall either
to be assumed by the successor corporation or affiliate thereof or be replaced
with a comparable option to purchase shares of the capital stock of the
successor corporation or affiliate thereof, (ii) such option is to be replaced
by a comparable cash incentive program of the successor corporation based on the
value of the option at the time of the Corporate Transaction, or (iii) the
acceleration of such option is subject to other applicable limitations imposed
by the Plan Administrator in the relevant stock option agreement. The
determination of comparability under clause (i) or (ii) above shall be made by
the Plan Administrator, and its determination shall be final, binding, and
conclusive.

               (c) In no event shall any such acceleration occur in connection
with a Corporate Transaction unless the Plan Administrator, in its discretion,
determines that such acceleration is appropriate. Notwithstanding the above, in
the event of any Corporate Transaction the Plan Administrator shall have the
discretion to cancel any options, in whole or in part, subject to such
conditions as the Plan Administrator may determine, upon payment to Optionee
with respect to each option then exercisable an amount in cash equal to the
excess of (a) the Fair Market Value, at the effective date of such Corporate
Transaction, of the consideration Optionee would have received if the option had
been exercised immediately prior to the effective date of such Corporate
Transaction over (b) the option price.

               (d) In connection with any such Corporate Transaction, the
exercisability as an Incentive Option of any accelerated options under the Plan
shall remain subject to the applicable dollar limitation of Section 7(c).

               (e) The grant of options under this Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize, or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate, sell, or transfer all or any part of its business or assets.

        10. CANCELLATION AND NEW GRANT OF OPTIONS

        The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefore new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than eighty-five percent (85%) of Fair Market Value (one hundred percent (100%)
of Fair Market Value in the case of an Incentive Option or, in the case of a 10%
Shareholder, not less than one hundred ten (110%) of Fair Market Value) on the
new grant date.

        11. LOANS OR GUARANTEE OF LOANS

        The Plan Administrator may, in its discretion, assist any Optionee
(including an Optionee who is an officer or member of the Board) in the exercise
of one or more options under the Plan, including the satisfaction of any Federal
and state income and employment tax obligations arising therefrom by (i)
authorizing the extension of a loan from the Corporation to such Optionee, (ii)
permitting the Optionee to pay the option price in installments over a period of
years, or (iii) authorizing a guarantee by the Corporation of a third party loan
to the Optionee. Any such assistance shall be upon such terms (including the
interest rate and terms of repayment) as the Plan Administrator specifies in the
Stock Option Agreement. Loans, installment payments, and guarantees may be
granted with or without security or collateral (other than to Optionees who are
consultants or independent contractors, in which event the loan must be
adequately secured by collateral other than the purchased shares), but the
maximum credit available to the Optionee shall not exceed the sum of (i) the
aggregate option price payable for the purchased shares plus (ii) any Federal
and state income and employment tax liability incurred by the Optionee in
connection with the exercise of the option.

        12. EXTENSION OF EXERCISE PERIOD

        The Plan Administrator shall have full power and authority to extend the
period of time for which the option is to remain exercisable following the
Termination Date from the ninety (90) day or shorter period set forth in the
Stock

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Option Agreement to such greater period of time as the Plan Administrator shall
deem appropriate. In no event shall such option be exercisable after the
specified expiration date of the option term.

        13. AMENDMENT OF THE PLAN AND OPTIONS

               (a) The Board shall have complete and exclusive power and
authority to amend the Plan and the Plan Administrator may amend or modify
outstanding options issued under the Plan in any or all respects whatsoever not
inconsistent with the terms of the Plan; however, except to the extent necessary
to qualify options under the Plan as Incentive Options, no such amendment shall
adversely affect the rights and obligations of an Optionee with respect to
options at the time outstanding under the Plan unless the Optionee consents to
such amendment and the Board shall not, without the approval of the
Corporation's shareholders, amend the Plan to (i) alter the number of shares
issuable under the Plan, except for permissible adjustments under Section 5(b)
or subsection (b), (ii) materially increase the benefits accruing to individuals
who participate in the Plan, or (iii) modify the eligibility requirements for
the grant of options under the Plan.

               (b) Options may be granted under the Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance under
the Plan, provided (i) an amendment to increase the maximum number of shares
issuable under the Plan is adopted by the Board prior to the initial grant of
any such option and is thereafter submitted to the Corporation's shareholders
for approval and (ii) each option so granted is not to become exercisable, in
whole or in part, at any time prior to obtaining such shareholder approval.

        14. EFFECTIVE DATE AND TERM OF PLAN

        Unless the Plan is sooner terminated in accordance with Section 9, no
option may be granted under the Plan after the earlier of (i) approval by the
Board of Directors or (ii) the date on which all shares available for issuance
under the Plan have been issued or canceled pursuant to the exercise or
surrender of options granted hereunder.

        15. USE OF PROCEEDS

        Any cash proceeds received by the Corporation from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.

        16. INFORMATION TO OPTIONEES

        The Corporation shall deliver financial and other information regarding
the Corporation, on an annual or more frequent basis, to each individual holding
an outstanding option under the Plan, to the extent the Corporation is required
to provide such information pursuant to Rule 260.140.46 of the Regulations of
the California Corporations Commissioner.

        17. WITHHOLDING

        The Corporation's obligation to (a) deliver stock certificates upon the
exercise of any option or (b) pay cash upon the surrender of any option granted
under the Plan shall be subject to the Optionee's satisfaction of all applicable
Federal, state, and local income and employment tax withholding requirements.

        18. REGULATORY APPROVALS

        The implementation of the Plan, the granting of any option under the
Plan, and the issuance of Common Stock upon the exercise of any such option
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it, and the Common Stock issued pursuant to it.<PAGE>
                                                                   EXHIBIT 10(a)

                          WHOLESALE POWER COORDINATION

                        AND DISPATCH OPERATING AGREEMENT

                                     Between

                              MINNESOTA POWER, INC.

                                       and

                              SPLIT ROCK ENERGY LLC

<PAGE>

         This WHOLESALE  POWER  COORDINATION  AND DISPATCH  OPERATING  AGREEMENT
("AGREEMENT")  is dated as of this 14th day of April,  2000,  between  Minnesota
Power,  Inc,  a  Minnesota  corporation  ("MP"),  and SPLIT ROCK  ENERGY  LLC, a
Minnesota  limited  liability  company  ("Split  Rock").  For  purposes  of this
AGREEMENT,  MP or Split Rock shall be referred to  individually as a "Party" and
collectively as the "Parties."

                                    RECITALS

         WHEREAS,  MP is an  investor-owned  electric utility that owns electric
generation,  transmission  and  distribution  facilities  and is  engaged in the
generation,  transmission  and sale of  electric  power  and  energy  to  retail
customers in the state of Minnesota and to wholesale  customers in Minnesota and
throughout the Midwest; and

         WHEREAS,  Great River Energy ("GRE") is an electric cooperative company
that owns electric generation and transmission  facilities and is engaged in the
generation,  transmission, and sale of electric power and energy at wholesale in
the state of Minnesota; and

         WHEREAS,  MP and GRE, operate their respective  electric systems within
the  interconnected  electrical  transmission  network  in  accordance  with the
requirements  and  guidelines  set forth by the  Mid-Continent  Area  Power Pool
("MAPP"); and

         WHEREAS,  MP and GRE,  have  agreed to enter into a  business  alliance
intended to mutually  benefit  them in such areas as risk  management,  economic
commitment and dispatch of generating and purchased  power  resources,  load and
capability  responsibilities  under MAPP,  and  wholesale  power  marketing  and
brokering; and

         WHEREAS,  Split  Rock was  formed by MP and GRE as a limited  liability
company,  with MP and GRE as its original members,  and MP and GRE have executed
and entered into a Member Control  Agreement to set out the terms and conditions
of the business alliance; and

         WHEREAS,  MP desires to enter into a power coordination  agreement with
Split Rock setting out the terms and conditions under which MP will, among other
things,  make its generating and purchased  power  resources  available to Split
Rock for  commitment  and  dispatch,  and Split Rock will,  among other  things,
commit and dispatch  those  resources  on an economic  basis to meet MP's native
load needs and obligations  under power sales  contracts with third parties,  be
responsible  for meeting MP's load and capability  responsibilities  under MAPP,
and facilitate joint resource planning.

                                      -2-

<PAGE>

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable  consideration,  the  receipt,  adequacy and  sufficiency  of which are
hereby acknowledged, and intending to be legally bound, MP and Split Rock hereto
agree as follows:

                                   SECTION 1.

                       TERM OF AGREEMENT AND DEFINITIONS

Section 1.01      Term of Agreement.

         This  AGREEMENT  shall become  effective on the latest of: (1) the date
this  AGREEMENT  is approved  by the  Administrator  of the RUS or accepted  for
filing by any other  regulatory  agencies  as  required  by law; or (2) the date
hereof.  After such effective date, unless earlier terminated in accordance with
its provisions,  this AGREEMENT shall remain in effect as long as MP is a member
of Split Rock and a party to the Member Control Agreement.

Section 1.02      Purpose of Agreement.

         The purpose of this AGREEMENT,  among other things, is to establish the
terms and conditions  under which Split Rock shall:  (i) become  responsible for
integrating  the commitment and dispatch of MP's Generation  Resources,  and the
procurement  of capacity  and energy,  with the  Generation  Resources  of other
Members to serve safely and reliably,  and at the lowest  reasonable  costs, the
full  requirements of MP's End-Use Loads and the End-Use Loads of other Members;
(ii)  become  a  member  of  MAPP  and  undertake  those  MAPP  obligations  and
responsibilities  necessary  for Split  Rock to  assume  the MAPP  End-Use  Load
Obligation  for the  Members'  combined  electric  loads  and to  represent  the
Members'  interests  in MAPP  and its  subcommittees  for  that  purpose;  (iii)
cooperate  with the Members to establish  an equitable  sharing of the costs and
benefits of Split Rock  membership;  (iv)  facilitate  joint  resource  planning
between and among the Members;  and (v) market excess Generation  Resources on a
coordinated basis to maximize the value of the Members' Generating Resources.

Section 1.03      Definitions.

         The following terms, when used herein, shall have the meanings
specified below

a.       "Due  Diligence"  means the  exercise  of good  faith  efforts  to
perform a required or  requested  act on a timely basis and in  accordance  with
Good  Utility  Practice,  using the  technical  and human  resources  reasonably
available.

b.       "End-Use  Load" means the load of persons or other  entities that
purchase  or  produce  electric  energy  for their own  consumption  and not for
resale,  as defined in the MAPP Restated  Agreement or by any similar  successor
organization.

c.       "End-Use Load Obligation" means an obligation imposed by law,
regulation  or contract to serve  End-Use Load within the MAPP Region  including
any obligation imposed by an assignment

                                      -3-

<PAGE>

of End-Use Load Obligation, as defined in the MAPP Restated Agreement, or by any
similar successor organization.

d.       "FERC" means the Federal Energy Regulatory Commission (or its
successor).

e.       "Force  Majeure"  means any cause  beyond the control of the Party
affected,  including,  without  limitation,  the  following:  acts of God, fire,
flood,  landslide,  lightning,  earthquake,  tornado,  storm,  freeze,  drought,
blight,  famine,  epidemic  or  quarantine;  strike,  lockout,  or  other  labor
difficulty;  act or  failure  to act on the part of any Party  that  impedes  or
prevents the others Party's performance;  theft, casualty,  accident,  equipment
breakdown,  failure or shortage of, or  inability  to obtain from usual  sources
goods, labor, equipment,  information or drawings, machinery,  supplies, energy,
fuel,  or  materials;  embargo;  injunction;   litigation  or  arbitration  with
suppliers or  manufacturers;  civil unrest,  war, civil disorder or disturbance,
explosion,  or breach of contract by any  supplier,  contractor,  subcontractor,
laborer or  materialman,  including,  but not limited to, failure of facilities,
flood,   earthquake,   storm,  fire,  lightning,   epidemic,  war,  riot,  civil
disturbance,  labor  disturbance,  sabotage,  and  restraint  by court or public
authority.

f.       "Generation Resources" means a Member's electric generation resources,
whether owned or under contract.

g.       "Good Utility Practice" means any of the practices, methods, and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant  time period,  or any of the  practices,  methods,  and acts
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made,  could have been expected to accomplish  the desired
result at the lowest  possible cost  consistent  with good  business  practices,
reliability,  and safety. Good Utility Practice is not intended to be limited to
the optimum practice,  method, or act to the exclusion of all others, but rather
as a spectrum  of  possible  practices,  methods,  or acts which could have been
expected to accomplish the desired result at the lowest possible cost consistent
with good business  practices,  reliability,  and safety.  Good Utility Practice
includes  due regard  for  manufacturers'  warranties  and the  requirements  of
regulatory authorities.

h.       "Hedges" means (a) futures or forward transactions,  (b) transactions
for the  purchase  or sale of  Power,  (c) the  purchase  or sale of put or call
options,  (d)  transactions  for  the  purchase  or sale of  fuel,  (e)  similar
transactions;  in each case the  purpose of which is to offset the price risk of
transactions  envisioned  under this  AGREEMENT.  Hedges may be entered  into by
Split Rock with the Parties or third parties. "Hedge", used as a verb, means the
act of entering into Hedges.

i.       "MAPP" means the Mid-Continent Area Power Pool or its successor
organization.

j.       "MAPP Agreement" means the Mid-Continent  Area Power Pool Restated
Agreement dated January 12, 1996, as amended, and as may be further amended from
time to time.

k.       "Member" means a utility that has executed the Member Control Agreement
and has become a participant in Split Rock.

l.       "NERC" means the North American Electric Reliability Council or its
successor reliability entity.

                                      -4-

<PAGE>

m.       "Off-System  Transaction"  means a wholesale  purchase or sale of
capacity or energy by Split Rock or MP from or to an entity that is not a Member
of Split Rock.

n.       "Power" means either electric capacity or energy or both.

o.       "RUS" means the U.S.D.A. Rural Utilities Service or its successor.

p.       "Scheduling Center" means a center responsible for one or more of the
following functions, consistent with FERC standards of conduct requirements:
marketing, 24-hour transaction (buying and selling) scheduling, and Generation
Resource commitment and dispatch decisions.

                                   SECTION 2.

                            MEMBERSHIP IN SPLIT ROCK

         Throughout the term of this AGREEMENT, MP shall maintain its membership
in Split Rock as provided for under the Member Control  Agreement,  and shall be
subject  fully to the  terms  and  conditions  of that  Agreement,  as it may be
amended from time to time.

                                   SECTION 3.

                            PARTIES' RESPONSIBILITIES

Section 3.01      MP Authorized Split Rock Representative.

         MP shall  designate  in writing  an  Authorized  Representative,  which
person shall have full authority to, among other things, coordinate MP's actions
under this  AGREEMENT,  to provide  support to Split Rock for the services to be
provided  hereunder,  and to review and recommend  revisions of the cost-sharing
and transfer  price  principles  agreed to by the Members.  MP may, at any time,
designate a new Authorized  Representative  by providing written notice to Split
Rock and the other Members. In addition, MP's Authorized  Representative may, by
providing  written  notice  to  Split  Rock  and the  other  Members,  designate
Alternate Authorized  Representatives who, unless explicitly provided otherwise,
shall,  for the  duration  of their  designation,  have the full  authority  and
responsibility  to  act  on  behalf  of MP  as  if  they  were  MP's  Authorized
Representative.

Section 3.02      Split Rock Responsibilities.

         The   responsibilities   of  Split  Rock  shall  include  but  are  not
necessarily limited to the following:

a.       Establish  procedures and operating protocols  consistent with the
provisions  hereof governing the  coordination of MP's Generation  Resources and
other  Members'  Generation  Resources to serve  End-Use  Load  pursuant to this
AGREEMENT.

b.       Review  MP's  estimates  of future  loads and  projected  fuel and
resource  requirements  and  recommend  resource  plans  to  meet  Split  Rock's
obligations  to the  Members;  provided,  however,  that  nothing  herein  shall
obligate MP to acquire any  additional  generation  resources for itself and for
any Member as a result of Split Rock's recommendations.

                                      -5-

<PAGE>

c.       Perform the dispatch, scheduling, commodity trading, and marketing
functions in this AGREEMENT.

d.       Represent   MP's  End-Use  Load  interests  in  NERC  and  MAPP  and
other  organizations or reliability  councils in regions in which Split Rock may
transact,  and perform,  on behalf of MP, those  responsibilities  and undertake
those  obligations  that are consistent with and required by such  organizations
and/or councils.

e.       Prepare and distribute for MP's and the other Members' review and
approval annual operational budgets.

f.       Take such other actions and perform such other duties as may be
required in  connection  with the terms of this  AGREEMENT  and  approved by the
Members.

         Section 3.02.1  Arrangements with Affiliates.  MP recognizes that Split
         Rock may fulfill some or all of its  obligations  under this  AGREEMENT
         through  contracts and arrangements  with other parties,  and that such
         parties  may be  affiliated  with a Member.  To the  extent  Split Rock
         contracts with a Member or a Member's  affiliate for the performance of
         one or more of Split Rock's  obligations  hereunder,  the other Members
         must consent to any such arrangement.

         Section 3.02.2  Limitation on Split Rock  Responsibilities.  Nothing in
         this  AGREEMENT or otherwise  shall be  interpreted  as requiring  that
         Split Rock assume any responsibility, and Split Rock shall not have any
         responsibility, for the physical operation and/or maintenance of any of
         MP's Generation Resources or facilities,  employees,  fuel arrangements
         or  obligations,  or for any MP debt or other  obligations  related  to
         ownership  or  operation  and   maintenance   of  those   resources  or
         facilities.

Section 3.03      MP Responsibilities.

         The  responsibilities  of MP under this AGREEMENT shall include but are
not necessarily limited to the following:

a.       MP shall pay fifty percent (50%) of the costs and charges for the
Scheduling Center, and related  facilities,  staff, and other operating expenses
incurred by Split Rock in performing the functions hereunder.

b.       MP shall make  available  to Split Rock  under an  applicable
Administrative  Services  Agreement  those of MP's  staff and  resources  as are
reasonably  necessary  and  available  to support  Split  Rock's  functions  and
responsibilities hereunder, consistent with applicable regulatory principles and
standards of conduct.

c.       MP shall be  responsible  for the costs of owning and  operating  its
control  center and  providing or  obtaining  from third  parties all  necessary
control area  functions  and  services.  MP shall  provide to Split Rock control
center information and coordinate control area functions and services with Split
Rock and/or any of the Members as reasonably necessary for Split Rock to fulfill
its obligations hereunder.

d.       MP shall  coordinate  with Split Rock, and designate  Split Rock as its
agent where necessary, to obtain from third parties the transmission service
necessary to implement this AGREEMENT.

                                      -6-

<PAGE>

                                   SECTION 4.

              INTEGRATED DISPATCH OF MEMBERS' GENERATION RESOURCES

Section 4.01      Integrated Dispatch and Scheduling.

a.       Split Rock shall  provide  services that are  necessary and appropriate
to  economically  commit and dispatch the  Members'  Generation  Resources on an
integrated basis to serve the Members'  combined End-Use Load and any Off-System
Transactions arranged by Split Rock on behalf of itself and/or the Member(s). In
order to  effectuate  a  least-cost,  economic  dispatch,  MP shall  operate its
Generation  Resources  consistent  with  Split  Rock's  instructions;  provided,
however, as to such MP Generation  Resources,  MP operators may take any and all
actions that they reasonably believe, based on the circumstances and information
available  to them at the  time,  are  necessary  and  appropriate  to  avoid or
alleviate emergency conditions or to protect the safety of persons or property.

b.       MP shall  provide  and  maintain,  at its own  expense,  in  accordance
with  specifications  and  procedures   satisfactory  to  meet  its  obligations
hereunder,  such  telecommunications and other facilities at its premises as are
necessary  to transfer  data  relating to its  Generation  Resources,  and other
necessary operating data, to and from the Split Rock Scheduling Center.

c.       Split Rock shall operate and  maintain a Scheduling Center as necessary
to commit and dispatch the Members' Generating Resources to serve their combined
End-Use Loads on an economic  basis and to  consolidate  Split Rock's and/or the
Members' wholesale trading, marketing and scheduling activities.

d.       Should MP or any other Member provide notice of its intent to retire,
dispose  of, or let lapse any of its  Generation  Resources,  Split  Rock  shall
recommend  to the  Members  alternative  generation  resources  to replace  such
retired, disposed, or lapsed Generation Resources.

Section 4.02      Ownership and Maintenance of Generation Resources.

a.       MP shall have the  responsibility, at its cost, to operate and maintain
its Generation  Resources,  including  maintaining any necessary  accreditation,
consistent with Good Utility  Practice and any operating  practices or protocols
implemented by Split Rock pursuant to this AGREEMENT.

b.       MP may retire or  dispose of any of its  existing Generation Resources,
or choose not to renew or extend the  contractual  arrangements  for  Generation
Resources  under contract,  upon  reasonable  notice to Split Rock and the other
Members, and MP shall have no obligation to Split Rock or the Members to replace
any retired, disposed or lapsed Generation Resource.

c.       Should an event of Force Majeure or other event of partial or complete
outage of MP's Generation  Resources  occur, MP shall  immediately  notify Split
Rock and the other  Members  of such  event,  its  expected  duration,  and MP's
intentions  to address such event.  During such Force Majeure  events,  MP shall
take all reasonable  actions,  in  coordination  with Split Rock, to restore the
operation and rating of any Generation Resource adversely affected by such Force
Majeure events.

                                      -7-

<PAGE>

d.       Should MP experience an outage of any of its  Generation Resources that
may affect the ability of Split Rock to fulfill its responsibilities  under this
AGREEMENT or any applicable prevailing regional reliability requirements,  Split
Rock will  take any  actions  that it  reasonably  believes  are  necessary  and
appropriate  to obtain  replacement  capacity  or energy  from other  resources.
Unless other arrangements have been made and agreed to by the other Members, the
cost of such replacement capacity and energy shall be borne by MP.

e.       MP shall be responsible for procuring any fuel or other resources
needed for the operation of its  Generation  Resources and for  maintaining  and
administering  any  contacts  for the  purchase  and  delivery  of such  fuel or
resources;   provided,   however,   that  consistent  with  any  confidentiality
obligations or  restrictions,  MP shall  coordinate  with Split Rock and provide
such  information as may be reasonably  necessary for Split Rock to maximize the
Members' efficient use and procurement of fuel and other resources.

                                   SECTION 5.

                              END-USE LOAD SERVICE

Section 5.01      Split Rock Obligations.

         As provided for in Section 6.4.3(f) of the MAPP Restated Agreement,  MP
hereby assigns to Split Rock, and Split Rock hereby accepts such assignment from
MP,  all  of  MP's  End-Use  Load  Obligation.   Notwithstanding   Split  Rock's
obligations hereunder, MP at all times retains all of the rights and obligations
it may have under its own contracts to provide  electric service to MP's End-Use
Loads, including contracts with municipal electric utility customers.

Section 5.02.     Dispatch to Serve Other Members.

         In the event  that  Split  Rock's  dispatch  directions  result in MP's
Generation  Resources  being used to serve end-use Loads other than MP's End-Use
Load or other Members' Off-System Transactions, MP shall sell to Split Rock that
capacity or energy transferred to serve such other Members' requirements,  under
MP's  market-based  rate  tariff.  In  the  event  that  Split  Rock's  dispatch
directions result in MP's End-Use Load or Off-System  Transactions  being served
from the capacity and energy of other Members'  Generation  Resources,  MP shall
purchase  from Split Rock that  capacity  and energy  transferred  to serve MP's
requirements.  To the extent that Split Rock's dispatch directions result in the
need to serve all or a portion of MP's End-Use Load or  Off-System  Transactions
other than from MP's  Generation  Resources,  MP shall purchase that capacity or
energy to serve those requirements at the price,  terms, and conditions for such
transactions   determined  in  accordance  with  transfer   pricing   principles
established by Split Rock and approved by the Members.  Such transactions  shall
be identified by Split Rock, and shall be accounted for and settled  between the
Members on a monthly basis.

Section 5.03      Generation Resource Obligations.

         MP shall designate a level of Generation Resources,  and be required to
operate and maintain  such  Generation  Resources  consistent  with Good Utility
Practices,  sufficient to meet

                                      -8-

<PAGE>

MP's  contribution  to Split Rock's End-Use Load  Obligation.  Unless  otherwise
agreed to by the Members,  MP shall be solely responsible for any costs incurred
by Split Rock as a result of MP's failure to meet its obligations herein.

                                   SECTION 6.

                MARKETING AND SALE OF EXCESS CAPACITY AND ENERGY

Section 6.01      Existing MP Off-System Transactions.

         MP shall  retain its  rights  and  obligations  under the  existing  MP
Off-System  Transactions  described  in  Appendix  A.  Split  Rock will  provide
scheduling  and dispatch  services for MP in  connection  with these  Off-System
Transactions.

Section 6.02      Marketing of MP's Power Resources.

         Split Rock shall market the excess Power available from MP's Generation
Resources, including the purchase and resale of Power from non-Members, with the
goal to maximize the economic value of MP's Generation  Resources and reduce the
cost to MP of serving MP's End-Use Loads. Split Rock may fulfill its obligations
hereunder by contracting  with MPEX under the Wholesale  Marketing and Operating
Services Agreement Between MPEX and Split Rock Energy LLC.

Section 6.03.     Purchase and Resale of Members' Excess Power.

         MP hereby  grants to Split Rock the  exclusive  option to purchase  for
resale to non-Member  customers any excess Power  available from MP's Generation
Resources,  after  deduction  for the Power  dispatched  from  those  Generation
Resources to serve MP's End-Use Loads, any existing MP Off-System  Transactions,
and any released energy  available as a result of arrangements  with MP's retail
customers.  The Power for any such sales to  non-Members  shall be dispatched as
part of Split Rock's dispatch  services under this AGREEMENT,  and shall be sold
by MP to Split Rock under MP's  market-based  rate tariff at the transfer  price
and under the terms and conditions agreed to by the Members.  If Split Rock does
not  exercise its option  hereunder  to purchase  excess Power from MP, MP shall
have the right,  consistent with its other obligations under this AGREEMENT,  to
separately  enter  into  transactions  with third  parties  for the sale of such
excess Power.

Section 6.04      Duration of Split Rock's Contracts to Supply Power to
                  Non-Members.

         No transaction for the purchase or sale of Power between Split Rock and
non-Members  shall have a duration longer than the notice period for terminating
this AGREEMENT unless one or more of the Members agrees in writing to assume the
obligation  to provide  service  and assume any and all  liabilities  under such
transactions  after the  dissolution  of Split Rock and the  termination of this
AGREEMENT.

                                      -9-

<PAGE>
                                   SECTION 7.

                               MEMBERSHIP IN MAPP

Section 7.01      End-Use Load and Reliability Membership.

         In  recognition  of the End-Use Load  Obligation  assumed by Split Rock
under this AGREEMENT,  Split Rock shall apply for and become an End-Use Load and
Reliability Member of MAPP, taking  responsibility for the End-Use Loads and the
Generation  Resources of MP and satisfying  MP's related  obligations  under the
MAPP Agreement.

Section 7.02      MAPP Application.

         MP and  Split  Rock,  in  conjunction  with the  other  Members,  shall
mutually  cooperate in preparation of Split Rock's MAPP membership  application,
and MP shall support the application  through the MAPP approval process. As part
of that process, MP shall prepare and submit to MAPP an application for a change
in its MAPP membership status consistent with Split Rock's assumption of End-Use
Load Obligation and Reliability Membership for MP's End-Use Loads and Generation
Resources. Notwithstanding the foregoing, MP intends to participate in MAPP as a
Transmission Owning Member.

         Section 7.02.1  Change in MAPP Membership Status.

         If,  during  the term of this  AGREEMENT,  (a) MP  ceases  to be a MAPP
         Member,  (b) the MAPP  Agreement is terminated or materially  modified,
         (c) some or all of MAPP's  functions and  responsibilities  are assumed
         under a successor or different  organization  or entity,  all terms and
         conditions  with  respect to MAPP shall remain in force until new terms
         and conditions are mutually agreed upon by the Members.

Section 7.03      Costs of MAPP Membership.

         The costs of Split  Rock's  application  to and  participation  in MAPP
shall be  considered  a Split Rock cost and shall be charged to MP and the other
Members pursuant to this AGREEMENT.

                                   SECTION 8.

                         STANDARDS FOR SYSTEM OPERATIONS

Section 8.01      Operating Standards.

         To the extent  applicable,  MP shall operate its electrical systems and
Split Rock shall carry out its responsibilities  under this AGREEMENT consistent
with Good Utility Practice and in compliance with NERC and MAPP requirements.

                                      -10-

<PAGE>

Section 8.02      Scheduling, Metering, and Systems Coordination

         Split  Rock shall  adopt  principles  and  procedures  to  address  the
scheduling of MP's Generation Resources, metering,  record-keeping, and electric
systems coordination.

Section 8.03      Information Requirements.

         The Parties shall maintain records reflecting hourly schedules of power
and  energy  generated  and  actual  deliveries  of  power  and  energy  from MP
Generation Resources, and shall make such records available to each other and to
the other Members upon request.  Nothing in this AGREEMENT shall obligate either
Party to retain records longer than the period prescribed by FERC, RUS, MAPP, or
other applicable regulatory body, reliability council or operational standard.

                                   SECTION 9.

                                   TERMINATION

Section 9.01      Notice of Termination.

         This  AGREEMENT  may be  terminated  by MP upon one  year's  notice  of
termination,  provided,  however,  that such  termination  shall not take effect
between May 1 and September 30 of any year. Termination will be effective on the
first day of the month, and written notice of termination must be given at least
one year prior to the first day of the month  that MP intends  for its notice to
become  effective  and for the  AGREEMENT  to  terminate.  Upon  termination  in
accordance  with this  Section  9.01,  MP shall be excused  and  relieved of all
obligations  and  liabilities  under this  AGREEMENT,  except those  liabilities
incurred  before  the  effective  date  of  termination  or as a  result  of the
termination.  Each  Party  shall use every  reasonable  effort to  mitigate  any
damages resulting from a breach and/or termination of this AGREEMENT.

Section 9.02      Effect of Termination.

         If,  upon  termination  of this  AGREEMENT,  the  Parties are unable to
mutually agree as to the effects of termination, any dispute over the effects of
termination  shall be  resolved  through  arbitration  under  Section 11 of this
AGREEMENT.  The Parties shall allocate the responsibility for purchase and sales
obligations  under  Split  Rock  contracts  outstanding  as  of  termination  in
accordance  with  principles to be adopted and  implemented by the Members.  The
termination  of this  AGREEMENT  shall  not  discharge  either  Party  from  any
obligation  it owes  to the  other  or to any  other  Member  by  reason  of any
transaction,  cost, damage, expense,  investment, or liability which shall occur
or arise prior to such termination.  The Parties intend that any such obligation
owed  (whether  the same shall be known or unknown  at the  termination  of this
AGREEMENT) shall survive the termination of this AGREEMENT.

                                      -11-

<PAGE>
                                   SECTION 10.

                                     GENERAL

Section 10.01     Continuity of Operation.

a.       Unless otherwise  directed by Split Rock as part of its integrated
dispatch,  the  operating  performance  of MP's  electrical  system  under  this
AGREEMENT shall be continuous, except for the following:

(1)      Interruptions or reductions due to Force Majeure, which, by exercise of
due diligence and foresight, could not reasonably have been avoided.

(2)      Interruptions or reductions due to operation of devices installed for
power system protection.

(3)      Temporary  interruptions or reductions which are necessary or desirable
for  the  purposes  of  maintenance,  repairs,  replacements,   installation  of
equipment or  investigation  and  inspection.  MP will give Split Rock and other
Members reasonable advance notice of such interruptions or reductions, except in
cases  of  emergency  make  such  advance  notice  impracticable  as  reasonably
determined  by MP, and MP will use best  reasonable  efforts to remove the cause
thereof as quickly as practicable under the circumstances.

b.       The Party  prevented from  performing its  obligations for any of the
reasons set forth in Section  10.01(a),  above,  shall exercise Due Diligence in
attempting  to remove the cause of its  failure to perform,  and nothing  herein
shall be construed as permitting that Party to continue to fail to perform after
said cause has been removed;  however, the Party shall not be obligated to agree
to any  settlement  of a strike or labor  dispute  which,  in that  Party's sole
discretion, may be inadvisable or detrimental to its interests.

Section 10.02.    Character of Power and Energy.

         All deliveries of electric power and energy  hereunder  shall be of the
character  commonly known as three-phase,  sixty-Hertz power and energy,  unless
explicitly stated otherwise.

Section 10.03     Successors and Assigns.

         This  AGREEMENT  shall be binding upon the  respective  Parties,  their
successors  and assigns,  on and after the  effective  date hereof.  None of the
provisions of this AGREEMENT, whether in whole or in part, shall be assigned nor
their performance  delegated by any Party to any third party without the written
consent of the other,  which  shall not be  unreasonably  withheld,  unless such
assignment  is to an affiliate  or successor  that assumes all of the rights and
obligations  hereunder so long as such assignment would not adversely affect any
of the federal,  state or reliability  council approvals or findings required or
in place for Split Rock's operations under this AGREEMENT.

                                      -12-

<PAGE>

Section 10.04     No Third Party Beneficiary.

         No provision of this AGREEMENT shall in any way inure to the benefit of
any customer, or any other third party, so as to constitute any such person as a
third party beneficiary under this AGREEMENT, or of any one or more of the terms
hereof,  or otherwise give rise to any cause of action in any person not a Party
hereto.

Section 10.05     Notices.

         Any notice, demand, request, or communication required or authorized by
this  AGREEMENT  shall be either  hand-delivered  or mailed by  certified  mail,
return-receipt requested, with postage prepaid, to:

                  Minnesota Power, Inc.
                  30 West Superior Street
                  Duluth, Minnesota  55802
                  Attn:  Donald J. Shippar
                  Chief Operating Officer - Minnesota Power Electric

with copies to:

                  Steven W. Tyacke
                  Assistant General Counsel
                  Minnesota Power, Inc.
                  30 West Superior Street
                  Duluth, Minnesota  55802

On behalf of Split Rock to:

                  Split Rock Energy LLC
                  17845 East Highway 10
                  P.O. Box 800
                  Elk River, MN  55330-0800
                  Attn:  David Saggau

         The designation and titles of the persons to be notified or the address
of such person may be changed at any time by written notice.

Section 10.06     Billing and Payment Procedure.

         Unless governed by separate written  agreement,  the Parties shall bill
and make payments in accordance with the following procedures:

a.       The Party (selling Party) providing any billable  services to the other
Party  (buying  Party) shall issue an invoice by the fifteenth of each month for
services provided during the previous month.

                                      -13-

<PAGE>

b.       The buying  Party's  payments to the selling Party shall be due if by
mail at the selling Party's general office, or if by wire transfer to a bank and
account  named by the selling  Party,  no later than fifteen days  following the
date of the invoice,  but such  payment  shall not be due before the 20th day of
the month.  The buying  Party  shall have the right to dispute the amount of any
such invoice by protest on or before the payment  date,  but such dispute  shall
not  relieve  the  buying  Party of the  obligation  to pay the  entire  amount,
including the disputed portion, by the payment date. If such due date falls on a
Saturday,  Sunday,  or  holiday,  such due date shall be the next  working  day.
Payments  received  after the due date shall be  considered  late and shall bear
interest  on the  payment  due at a rate  equal to the  rate set out in  Section
35.19a(a)  of FERC's  Regulations,  as such  section may be amended from time to
time,  for the number of days elapsed from and  including  the day after the due
date, to and including the payment date.

c.       Upon the failure of the buying Party to pay all amounts due within
thirty days of the due date, the buying Party shall be in default.

Section 10.07     Right of Access; Right to Audit.

a.       Each Party,  after receiving reasonable notice from another Party, will
give  authorized  agents  and  employees  of the  other  the  right to enter its
premises at all reasonable  times for the purpose of reviewing  hourly  metering
and scheduling  records,  for reading or checking meters,  or for  constructing,
testing,  repairing,  renewing,  exchanging,  or  removing  any  or  all  of its
equipment  which may be located on the  property  of the other,  or for any work
incident to  performing  system  operations  under this  AGREEMENT  or rendering
service contracted for.

b.       Each Party shall have the right from time to time, upon written request
and at its own expense,  to audit the other  Party's books and records to verify
the information provided by that Party as required under this AGREEMENT.

Section 10.08     Drafting Responsibility.

         No Member shall be deemed  solely  responsible  for drafting all or any
portion of this AGREEMENT and, in the event of a dispute, responsibility for any
ambiguities arising from any provision of this AGREEMENT shall be equally shared
by the Members.

Section 10.09     Captions.

         All titles,  subject  headings,  section titles,  and similar items are
provided for the purpose of reference and convenience and are not intended to be
inclusive, definitive, or to affect the meaning of the contents or scope of this
AGREEMENT.

Section 10.10     Governing Law.

         This  AGREEMENT  shall be  interpreted  and governed by the laws of the
state of Minnesota, or the laws of the United States, as applicable.

                                  -14-
<PAGE>

Section 10.11     Regulation.

         This  AGREEMENT,  and all rights and  obligations  of MP  hereunder  is
subject to all applicable  state and federal laws and  regulations.  The Parties
agree to defend this AGREEMENT  before any regulatory  body, and to cooperate to
seek to obtain any necessary regulatory approvals. Fees or costs associated with
obtaining approvals shall be the responsibility of MP.

Section 10.12     No Joint Venture or Partnership.

         No provision of this  AGREEMENT  shall be  interpreted to mean or imply
that the Members have  established  or intend to establish a joint  venture or a
partnership.

Section 10.13     Amendment.

         Any amendment,  alteration,  variation,  modification, or waiver of the
provisions of this AGREEMENT shall be valid only after it has been signed by the
Parties  and, if  required,  approved or  accepted by any  regulatory  body with
jurisdiction over MP or this AGREEMENT.

Section 10.14     Severability.

         If any  governmental  agency or court of competent  jurisdiction  holds
that any provision of this AGREEMENT is invalid,  or if, as a result of a change
in any  federal  or  state  law or  constitutional  provision,  or any  rule  or
regulation  promulgated  pursuant  thereto,  any provision of this  AGREEMENT is
rendered  invalid or results in the  impossibility of performance  thereof,  the
remainder of this AGREEMENT shall not be affected  thereby and shall continue in
full force and effect. In such an event, the Parties shall promptly  renegotiate
in good faith new  provisions to restore this AGREEMENT as nearly as possible to
its original intent and effect.

Section 10.15     Superseding Effect.

         This  AGREEMENT  supersedes  and has merged  into it all prior oral and
written agreements on the same subjects by or among the Parties, with the effect
that this AGREEMENT shall control.

                                   SECTION 11.

                                   ARBITRATION

Section 11.01     Arbitration.

         Any  controversy  or claim arising out of or relating to this AGREEMENT
or the breach  hereof  which  cannot be  resolved  amicably  shall be settled by
arbitration.  A Party desiring to invoke this arbitration  provision shall serve
written notice upon the other of its intention to do so. The  arbitration  shall
be conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration  then  prevailing.   The  American  Arbitration   Association  shall
administer the  arbitration  and act as appointing  authority of the arbitrator.
Each Party shall bear its own costs and

                                      -15-

<PAGE>

expenses of the  arbitration,  including  attorneys and expert witness fees, and
shall  equally  share  the  expense  of the  arbitrator  and the  administrative
expenses of the  arbitration.  The  arbitration  shall be governed by the United
States  Arbitration  Act, 9 U.S.C.  Sections  1-16.  The award of the arbitrator
shall be final,  and  judgment on the award  rendered by the  arbitrator  may be
entered by any court having jurisdiction.  The arbitration shall be conducted in
Minneapolis, Minnesota unless the Parties agree otherwise.

Section 11.02     Effect of Termination on Arbitration.

         This  Section 11 shall  survive the  termination  of this  AGREEMENT as
necessary to resolve any outstanding  disputes that arose prior to the time that
termination of this AGREEMENT became effective as well as any disputes involving
termination, as provided for in Section 9.02 herein

                      [The next page is the signature page]

                                     .-16-

<PAGE>

         IN WITNESS  WHEREOF,  the  Parties  have caused  this  AGREEMENT  to be
executed by their duly authorized  representatives  as of the day and year first
above written.

                                             MINNESOTA POWER, INC.

                                            By:         /s/ R. D. Edwards
                                                --------------------------------
                                                        Robert D. Edwards

                                            Title: Executive Vice President and
                                                   -----------------------------
                                                   President - MP Electric

                                             SPLIT ROCK ENERGY LLC

                                            By:           /s/ Ade Mussell
                                                -------------------------------
                                                          Ade Mussell

                                            Title:        President
                                                   -----------------------------

<PAGE>

                                   APPENDIX A

                       MP Existing Off-System Transactions
                       -----------------------------------

                                      -18-

<PAGE>
<TABLE>

                                                    MPE Existing
                                                    Transactions
                                                    (May 1, 2000)
<CAPTION>

                        CAPACITY
                        PURCHASES &
                        SALES

----------------------------------------------------------------------------------------------------------------------
        Company                Contract           MP Purchase/Sale               MW                 End of Term
        -------                --------           ----------------               --                 -----------
     <S>                    <C>                   <C>                       <C>                   <C>
          OH                  OM-L98-01               Purchase                 150 MW                 10/31/01
     Alliant (IPW)              ALT-1                   Sale                Summers-55 MW             4/30/01
     Alliant (WPL)              WPL-1                   Sale                    75 MW                 12/31/07
          MPC                    M-2                    Sale                    10 MW                 10/31/00
          NSP                   NSP-1                   Sale                   150 MW                 10/31/00
          OTP                   OTP-4                   Sale                    50 MW             5/1/01-10/31/01
                                                                                                  5/1/02-10/31/02
          OTP                OTP-5/NSP-8                Sale                    50 MW                 10/31/00

<CAPTION>
                        ENERGY SALES
                        & PURCHASES
----------------------------------------------------------------------------------------------------------------------
        Company                Contract           MP Purchase/Sale               MW                 End of Term
        -------                --------           ----------------               --                 -----------
        <S>                    <C>                <C>                           <C>                <C>
          GRE                   GRE-6                   Sale                    50 MW                 10/31/00
          WEP                    WEP                  Purchase                  50 MW              6/1/00-8/31/00

<CAPTION>
                         SERVICES
----------------------------------------------------------------------------------------------------------------------
        Company                Contract           MP Purchase/Sale       MP Service Provided        End of Term
        -------                --------           ----------------       -------------------        -----------
        <S>                    <C>                <C>                    <C>                       <C>
         MRES                    MR-2                   Sale             Operating Reserves        60 day notice
         NWPS                   NWPS-1                  Sale             Operating Reserves        30 day notice

<CAPTION>

                        BROKERING
----------------------------------------------------------------------------------------------------------------------
        Company                Contract           MP Purchase/Sale       MP Service Provided        End of Term
        -------                --------           ----------------       -------------------        -----------
      <S>                      <C>                <C>                    <C>                        <C>
         MHEB                                                            Real Time Services            1/1/01
       Enbridge                                                          Marketing Services
      Rainy River                                                        Marketing Services

</TABLE>

                                      -19-

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